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FORM OF PURCHASE AGREEMENT

Note Purchase Agreement

FORM OF PURCHASE AGREEMENT | Document Parties: INSMED INC | INSMED INCORPORATED You are currently viewing:
This Note Purchase Agreement involves

INSMED INC | INSMED INCORPORATED

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Title: FORM OF PURCHASE AGREEMENT
Governing Law: New York     Date: 3/16/2005
Industry: Biotechnology and Drugs    

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Exhibit 4.1

 

PURCHASE AGREEMENT

 

dated as of March 15, 2005

 

by and between

 

INSMED INCORPORATED

 

and

 

[NAME OF PURCHASER]

 


 

5.5% SENIOR CONVERTIBLE NOTE DUE 2008-2010

 

and

 

COMMON STOCK PURCHASE WARRANT

 


INSMED INCORPORATED

 

PURCHASE AGREEMENT

 

5.5% SENIOR CONVERTIBLE NOTE DUE 2008-2010

 

and

 

COMMON STOCK PURCHASE WARRANT

 

TABLE OF CONTENTS

 

 

 

 

 

 

 

  

 

  

Page


 

1.

  

Definitions

  

1

2.

  

Purchases and Sales of the Note and Warrant

  

5

2.1

  

Purchase and Sale

  

5

2.2

  

Closing

  

6

3.

  

Representations and Warranties of the Company

  

6

3.1

  

Organization, Good Standing and Qualification

  

6

3.2

  

Authorization

  

6

3.3

  

Capitalization

  

6

3.4

  

Valid Issuance, Enforceable Obligation

  

7

3.5

  

Consents

  

7

3.6

  

Delivery of SEC Filings; Business; Non-Public Information

  

7

3.7

  

Use of Proceeds

  

8

3.8

  

No Material Adverse Change

  

8

3.9

  

Registration Statements

  

9

3.10

  

Form S-3 Eligibility

  

9

3.11

  

No Conflict, Breach, Violation or Default

  

9

3.12

  

Tax Matters

  

10

3.13

  

Title to Properties

  

10

3.14

  

Certificates, Licenses, Authorizations and Permits

  

10

3.15

  

No Labor Disputes

  

11

3.16

  

Intellectual Property

  

11

3.17

  

Environmental Matters

  

11

3.18

  

Litigation

  

12

3.19

  

Financial Statements

  

12

3.20

  

Insurance Coverage

  

12

3.21

  

Compliance with Nasdaq Continued Listing Requirements

  

12

3.22

  

Acknowledgement of Potential Dilution

  

12

3.23

  

Brokers and Finders

  

13

3.24

  

No Directed Selling Efforts or General Solicitation

  

13

3.25

  

Private Offering

  

13

3.26

  

Internal Accounting Controls

  

13

 

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3.27

  

Sarbanes-Oxley Act

  

13

3.28

  

Disclosures

  

14

3.29

  

Rights Agreement

  

14

4.

  

Representations and Warranties of the Purchaser

  

14

4.1

  

Purchase Entirely for Own Account

  

14

4.2

  

Investment Experience

  

14

4.3

  

Disclosure of Information

  

14

4.4

  

Restricted Securities

  

15

4.5

  

Investor Status

  

15

4.6

  

No General Solicitation

  

15

4.7

  

Residency of Purchaser

  

15

4.8

  

Brokers and Finders

  

15

4.9

  

Authorization

  

15

4.10

  

Risk Factors

  

15

4.11

  

Reliance

  

15

4.12

  

Absence of Certain Transactions

  

16

4.13

  

Survival

  

16

5.

  

Registration Rights Agreement

  

16

6.

  

Certain Covenants of the Company and the Purchaser

  

16

6.1

  

Rule 144

  

16

6.2

  

Limitation on Certain Transactions

  

16

6.3

  

Right of the Purchasers to Participate in Future Transactions

  

17

6.4

  

Reports and Information

  

20

6.5

  

Press Releases

  

21

6.6

  

No Conflicting Agreements

  

21

6.7

  

Insurance

  

21

6.8

  

Compliance with Laws

  

21

6.9

  

Listing of Underlying Shares and Warrant Shares and Related Matters

  

21

6.10

  

Form 8-K

  

21

6.11

  

Legends

  

22

6.12

  

Limitation on Certain Actions

  

23

6.13

  

Reasonable Best Efforts

  

23

6.14

  

Debt Obligation

  

23

6.15

  

Limitation on Material Non-Public Information

  

23

7.

  

Conditions to Closing

  

24

7.1

  

Conditions to the Company’s Obligations to Issue and Sell

  

24

7.2

  

Conditions to the Purchaser’s Obligations to Purchase

  

24

8.

  

Miscellaneous

  

25

8.1

  

Successors and Assigns

  

25

8.2

  

Counterparts

  

26

8.3

  

Titles and Subtitles

  

26

8.4

  

Notices

  

26

8.5

  

Expenses

  

26

8.6

  

Amendments and Waivers

  

27

 

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8.7

  

Severability

  

27

8.8

  

Entire Agreement

  

27

8.9

  

Further Assurances

  

28

8.10

  

Applicable Law

  

28

8.11

  

Remedies

  

28

8.12

  

Jurisdiction

  

28

8.13

  

Survival

  

28

8.14

  

Construction; Purchaser Status

  

29

8.15

  

Acknowledgment

  

29

8.16

  

Certain Waivers

  

29

 

EXHIBITS

 

 

Exhibit A – Form of Note

Exhibit B – Form of Warrant

Exhibit C – Form of Registration Rights Agreement

Exhibit D – Form of Opinion of Goodwin Procter LLP to Be Delivered on Closing Date

Exhibit E – Form of Opinion of Woods Rogers PLC to Be Delivered on Closing Date

Exhibit F – Form of Press Release

 

SCHEDULES

 

 

 

 

Schedule 3.3

  

Capitalization

 

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PURCHASE AGREEMENT

 

THIS PURCHASE AGREEMENT, dated as of March 15, 2005 (this “Agreement”), by and between INSMED INCORPORATED, a Virginia corporation (the “Company”), and [NAME OF PURCHASER] (the “Purchaser”).

 

W I T N E S S E T H :

 

WHEREAS, the Purchaser wishes to purchase from the Company, and the Company wishes to sell and issue to the Purchaser, upon the terms and subject to the conditions of this Agreement, for the Purchase Price (i) a Note (such capitalized term and all other capitalized terms used herein having the respective meanings provided herein) in principal amount set forth on the signature pages hereto and (ii) a Warrant initially entitling the holder to purchase the number of shares of Common Stock set forth on the signature pages hereto; and

 

WHEREAS, at or before the Closing, the parties hereto are executing and delivering, one to the other, the Registration Rights Agreement, pursuant to which, among other things, the Company will agree to provide certain registration rights under the 1933 Act, and the rules and regulations promulgated thereunder, and applicable state securities laws for the resale of the shares of Common Stock issuable upon conversion of, or otherwise issued in exchange for or respect of, the Note and issuable upon exercise of the Warrant;

 

NOW THEREFORE, in consideration of the premises and the mutual covenants made herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1. Definitions.

 

1.1 As used in this Agreement, the terms “Agreement”, “Company” and “Purchaser” shall have the respective meanings assigned to such terms in the introductory paragraph of this Agreement.

 

1.2 All the agreements or instruments herein defined shall mean such agreements or instruments as the same may from time to time be supplemented or amended or the terms thereof waived or modified to the extent permitted by, and in accordance with, the terms thereof and of this Agreement.

 

1.3 The following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

 

“Affiliate” means, with respect to any Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with the subject Person. For purposes of this definition, “control” (including, with correlative meaning, the terms “controlled by” and “under common control with”), as used with

 


respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or by contract or otherwise.

 

“AMEX” means the American Stock Exchange, Inc.

 

“Approved Markets” means Nasdaq, the NYSE and the AMEX.

 

“Board of Directors” means the Board of Directors of the Company.

 

“Business Day” means any day other than a Saturday, Sunday or a day on which commercial banks in The City of New York are authorized or required by law or executive order to remain closed.

 

“Closing” means the closing of the purchase and sale of the Note and Warrant on the Closing Date.

 

“Closing Date” means 10:00 a.m., New York City time, the date that is one Business Days after the date this Agreement is executed and delivered by the parties hereto, or such other time or date as mutually agreed by the parties hereto.

 

“Closing Location” means the offices of Goodwin Procter LLP, 599 Lexington Avenue, New York, New York.

 

“Common Stock” means the Common Stock, $0.01 par value, of the Company.

 

“Common Stock Equivalent” means any warrant, option, subscription or purchase right with respect to shares of Common Stock, any security convertible into, exchangeable for, or otherwise entitling the holder thereof to acquire, shares of Common Stock or any warrant, option, subscription or purchase right with respect to any such convertible, exchangeable or other security.

 

“Encumbrances” means all mortgages, deeds of trust, claims, security interests, liens, pledges, leases, subleases, charges, escrows, options, proxies, rights of occupancy, rights of first refusal, preemptive rights, covenants, conditional limitations, hypothecations, prior assignments, easements, title retention agreements, indentures, security agreements or any other encumbrances of any kind.

 

“Environmental Laws” shall have the meaning provided in Section 3.17.

 

“Event of Default” shall have the meaning to be provided or provided in the Note.

 

“Excluded Shares” shall have the meaning provided in Section 6.3(b).

 

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“Generally Accepted Accounting Principles” means, for any Person, the United States generally accepted accounting principles and practices applied by such Person from time to time in the preparation of its audited financial statements.

 

“Intellectual Property” means all franchises, patents, trademarks, service marks, tradenames (whether registered or unregistered), copyrights, corporate names, licenses, trade secrets, proprietary software or hardware, proprietary technology, technical information, discoveries, designs and other proprietary rights, whether or not patentable, and confidential information (including, without limitation, know-how, processes and technology) used in the conduct of the business of the Company or any Subsidiary, or in which the Company or any Subsidiary has an interest.

 

“Majority Holders” shall have the meaning to be provided or provided in the Note.

 

“Margin Stock” shall have the meaning provided in Regulation U of the Board of Governors of the Federal Reserve System (12 C.F.R. Part 221).

 

“Material Adverse Effect” means a material adverse effect on (i) the business, properties, operations, condition (financial or other) results of operations or financial prospects of the Company and the Subsidiaries, taken as a whole; (ii) the validity or enforceability of, or the ability of the Company to perform its obligations under, the Transaction Documents; or (iii) the rights and remedies of the Purchaser under the terms of the Transaction Documents.

 

“1934 Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder.

 

“1933 Act” means the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder.

 

“Nasdaq” means the Nasdaq National Market or the Nasdaq Small Cap Market .

 

“Note” means the 5.5% Senior Convertible Note due 2008-2010 in the principal amount set forth on the signature page hereto and in the form attached as Exhibit A issuable or issued by the Company.

 

“NYSE” means the New York Stock Exchange, Inc.

 

“Offering” means the offering that is the subject of this Agreement.

 

“Optional Redemption Price” shall have the meaning provided in the Note.

 

“Other Notes” means the 5.5% Senior Convertible Notes due 2008-2010 issued by the Company pursuant to the Other Purchase Agreements.

 

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“Other Purchase Agreements” means the several Purchase Agreements, dated as of the date hereof, between the Company and the purchasers parties thereto pursuant to which the Company is issuing other 5.5% Senior Convertible Notes due 2008-2010 and Common Stock Purchase Warrants.

 

“Person” means an individual, corporation, partnership, limited liability company, trust, business trust, association, joint stock company, joint venture, pool, syndicate, sole proprietorship, unincorporated organization, governmental authority or any other form of entity not specifically listed herein.

 

“Preferred Share Purchase Rights” means the Preferred Share Purchase Rights issued or issuable pursuant to the Rights Agreement (or any similar rights hereafter issued by the Company with respect to the Common Stock).

 

“Principal Market” shall have the meaning to be provided or provided in the Note.

 

“Pro Rata Share” means with respect to each capital raising transaction to which Section 6.3 applies an amount equal to the product obtained by multiplying (x) an amount equal to all of the securities being issued in such capital raising transaction times (y) a fraction of which the numerator is the total number of shares of Common Stock which would then be issuable upon conversion of the Note and upon exercise of the Warrant for cash (in each case determined without regard to any limitation on conversion or exercise thereof) and the denominator is the total number of shares of issued and outstanding Common Stock calculated on a fully diluted basis to include the total number of shares of Common Stock that could be issued upon the exercise or conversion of all outstanding Common Stock Equivalents.

 

“Purchase Price” means the amount shown on the signature pages to this Agreement as the Purchaser’s Purchase Price.

 

“Purchaser Share Notice” shall have the meaning provided in Section 6.11.

 

“Purchasers” shall mean the Purchaser of the Securities under this Agreement and the Purchasers purchasing securities under the Other Purchase Agreements.

 

“Registration Rights Agreement” means the Registration Rights Agreement by and between the Company and the Purchaser in the form attached as Exhibit C .

 

“Registration Statement” shall have the meaning provided in the Registration Rights Agreement.

 

“Regulation D” means Regulation D adopted by the SEC under the 1933 Act.

 

“Repurchase Event” shall have the meaning to be provided or provided in the Note.

 

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“Restricted Ownership Percentage” shall have the meaning provided in Section 6.3(b).

 

“Rights Agreement” mean the Rights Agreement, dated as of May 16, 2001, between the Company and First Union National Bank, as Rights Agent.

 

“SEC” means the U.S. Securities and Exchange Commission.

 

“SEC Filings” means the 2003 10-K and all other reports filed by the Company pursuant to Section 13 or 15(d) of the 1934 Act since December 31, 2003 and on or before the date of this Agreement.

 

“Securities” means the Note, the Underlying Shares, the Warrant and the Warrant Shares.

 

“Subsidiary” means any corporation or other entity of which a majority of the capital stock or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are at the time directly or indirectly owned by the Company.

 

“Trading Day” shall have the meaning to be provided or provided in the Note.

 

“Transaction Documents” means this Agreement, the Registration Rights Agreement, the Note and the Warrant.

 

“2003 10-K” means the Company’s Annual Report on Form 10-K for the year ended December 31, 2003, as filed as the SEC, as amended to the date of this Agreement.

 

“Underlying Shares” means the shares of Common Stock and the related Preferred Share Purchase Rights issued or issuable upon conversion of the Note.

 

“Warrant” means the Company’s Common Stock Purchase Warrant in the amount of shares of Common Stock set forth on the signature page and in the form attached as Exhibit B issuable or issued by the Company.

 

“Warrant Shares” means the shares of Common Stock and the related Preferred Share Purchase Rights issuable or issued upon exercise of or otherwise pursuant to the Warrant.

 

2. Purchases and Sales of the Note and Warrant.

 

2.1 Purchase and Sale. Upon the terms and subject to the conditions of this Agreement, the Purchaser hereby agrees to purchase from the Company, and the Company hereby agrees to sell to the Purchaser, on the Closing Date, the Note and the Warrant for the Purchase Price. The Closing shall be held at the Closing Location. The Purchase Price shall be allocated between the Note and the Warrant as may be agreed by the Company and the Purchaser.

 

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2.2 Closing. (a) On the Closing Date, upon the terms and subject to the conditions provided in this Agreement, the Company shall deliver or cause to be delivered to the Purchaser the following:

 

(1) the Note, duly executed by the Company, registered in the name of the Purchaser, and

 

(2) the Warrant, duly executed by the Company, registered in the name of the Purchaser.

 

(b) At the Closing, upon the terms and subject to the conditions provided in this Agreement, the Purchaser shall deliver or cause to be delivered to the Company an amount equal to the Purchase Price, by wire transfer of immediately available funds to such account as shall be specified by the Company to the Purchaser prior to the Closing Date.

 

3. Representations and Warranties of the Company. The Company hereby represents and warrants to, and covenants and agrees with, the Purchaser that:

 

3.1 Organization, Good Standing and Qualification. The Company and each Subsidiary is a corporation duly incorporated, validly existing and subsisting and in good standing under the laws of the jurisdiction of its incorporation and has all requisite corporate power and authority to carry on its business as now conducted and to own its properties. The Company and each Subsidiary is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property makes such qualification or licensing necessary unless the failure to so qualify could not be reasonably likely to have a Material Adverse Effect. The Company has no Subsidiaries other than those listed in Exhibit 21.1 to the 2003 10-K and has no investment in any other Person except such investments as would be classified as current assets on a balance sheet of the Company, prepared in accordance with Generally Accepted Accounting Principles.

 

3.2 Authorization. The Company has full corporate power and authority, and all requisite action on the part of the Company, its officers, directors and stockholders has been taken that is, necessary for (i) the authorization, execution and delivery of the Transaction Documents, (ii) authorization of the performance of all obligations of the Company under the Transaction Documents, and (iii) the authorization, issuance (or reservation for issuance) and delivery of the Securities. The Transaction Documents constitute the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, subject to bankruptcy, insolvency, reorganization, moratorium and similar laws of general applicability, relating to or affecting creditors’ rights generally.

 

3.3 Capitalization. Set forth on Schedule 3.3 hereto is (a) the authorized capital stock of the Company on the date hereof; (b) the number of shares of capital stock issued and outstanding on the date hereof; (c) the number of shares of capital stock issuable pursuant to the Company’s stock option, stock purchase, stock award and similar plans; and (d) the number of shares of capital stock issuable and reserved for issuance pursuant to all Common Stock

 

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Equivalents outstanding or which the Company has agreed to issue (other than the Note, the Other Notes, the Warrant and the Warrants issuable pursuant to the Other Purchase Agreements). All of the issued and outstanding shares of the Company’s capital stock have been duly authorized and validly issued and are fully paid, nonassessable. Except as set forth in Section 6.3 of this Agreement and the Other Purchase Agreements and except as set forth on Schedule 3.3 hereto, no Person is entitled to preemptive or similar statutory or contractual rights with respect to any securities of the Company. Except as set forth on Schedule 3.3 or in the SEC filings, there are no outstanding Common Stock Equivalents or other rights, agreements or arrangements of any character under which the Company is or may be obligated to issue any Common Stock Equivalents or other equity securities of any kind, and except as contemplated by this Agreement and the Other Purchase Agreements, the Company has no plans or proposals, and is not currently in negotiations, for the issuance of any Common Stock Equivalents or capital stock of any kind. The Company has no knowledge of any voting agreements, buy-sell agreements, option or right of first purchase agreements or other agreements of any kind among any of the security holders of the Company relating to the securities of the Company held by them. Except as set forth on Schedule 3.3 , except in connection with the Other Purchase Agreements and except for registration rights relating to registration statements on file with the SEC as of the date of this Agreement, the Company has not granted any Person the right (which is now outstanding or effective) to require the Company to register any securities of the Company under the 1933 Act, whether on a demand basis or in connection with the registration of securities of the Company for its own account or for the account of any other Person.

 

3.4 Valid Issuance, Enforceable Obligation. The Company does not have any obligation to issue shares of Common Stock for which it has not reserved the number of shares of Common Stock it may obligated to issue. The Company has duly reserved a sufficient number of shares of Common Stock for issuance upon conversion of the Notes and the Other Notes and upon exercise of the Warrants and the Warrants issuable pursuant to the Other Purchase Agreements. The Note and the Warrant are duly authorized by all necessary actions, corporate or otherwise, on the part of the Company; the Underlying Shares and the Warrant Shares have been duly authorized and when issued in accordance herewith and with the terms of the Note and the Warrant will be validly issued, fully paid, non-assessable and free and clear of all restrictions, except for restrictions on transfer imposed by applicable securities laws; and the Note and the Warrant, when issued in accordance with this Agreement, will be free and clear of all restrictions, except for restrictions on transfer imposed by applicable securities laws and the requirements for transfer set forth in this Agreement and the other Transaction Documents.

 

3.5 Consents. The execution, delivery and performance by the Company of the Transaction Documents and the offer, issuance and sale of the Securities do not require the consent of, action by or in respect of, or filing with, any Person, governmental body, agency, or official other than filings that have been or will be made pursuant to applicable state securities laws and the requirements of the Nasdaq and other than the filing of a Form D by the Company with the SEC, each of which the Company undertakes to file within the applicable time periods.

 

3.6 Delivery of SEC Filings; Business; Non-Public Information. The Company has timely filed all material reports and other documents required to be filed with the SEC pursuant to the 1934 Act for the past twelve months preceding the date hereof. At their

 

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respective times of filing with the SEC (or if amended or suspended by a filing prior to the date of the Agreement, then on the date of such filing, the SEC Filings complied in all material respects with the requirements of the 1934 Act and did not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading, in any such case that has not been corrected in a subsequent filing by the Company with the SEC under the 1934 Act made prior to the date of this Agreement. The Company and the Subsidiaries are engaged only in the business described in the SEC Filings, and the SEC Filings contain a complete and accurate description of the business of the Company and the Subsidiaries in all material respects. The Company has not provided to any Purchaser any information required to be filed or disclosed under the 1934 Act that has not been so filed or disclosed.

 

3.7 Use of Proceeds. The proceeds of the sale of the Note and the Warrant hereunder and of the exercise of the Warrant shall be used by the Company for working capital and general corporate purposes. None of such proceeds will be used, directly or indirectly (A) to make any loan to or investment in any other Person or (B) for the purpose, whether immediate, incidental or ultimate, of purchasing or carrying any Margin Stock or for the purpose of maintaining, reducing or retiring any indebtedness which was originally incurred to purchase or carry any stock that is currently a Margin Stock or for any other purpose which might constitute the transactions contemplated by this Agreement a “purpose credit” within the meaning of such Regulation U of the Board of Governors of the Federal Reserve System; and neither the Company nor any agent acting on its behalf has taken or will take any action which might cause this Agreement or the transactions contemplated hereby to violate Regulation T, Regulation U or any other regulation of the Board of Governors of the Federal Reserve System or to violate the 1934 Act, in each case as in effect now or as the same may hereafter be in effect.

 

3.8 No Material Adverse Change. Since the filing of the 2003 Form 10-K with the SEC, and except as otherwise identified and described in the SEC Filings subsequently filed by the Company with the SEC pursuant to the 1934 Act, there has not been:

 

(i) any material change in the consolidated assets, liabilities, financial condition or operating results of the Company and the Subsidiaries from that reflected in the financial statements included in the 2003 10-K, except changes in the ordinary course of business which have not had, in the aggregate, a Material Adverse Effect;

 

(ii) any declaration or payment of any dividend, or any authorization or payment of any distribution, on any of the capital stock of the Company, or any redemption or repurchase of any securities of the Company or any Subsidiary;

 

(iii) any material damage, destruction or loss, whether or not covered by insurance, to any assets or properties of the Company or any Subsidiary;

 

(iv) any waiver by the Company or any Subsidiary of a material right or of a material debt owed to it which waiver is adverse to the Company or any Subsidiary;

 

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(v) any satisfaction or discharge of any Encumbrance or payment of any obligation by the Company or any Subsidiary, except in the ordinary course of business and which is not material to the assets, properties, prospects, financial condition, operating results or business of the Company and the Subsidiaries taken as a whole (as such business is presently conducted and the Company has publicly disclosed it is proposed to be conducted);

 

(vi) any material change or amendment to a material contract or arrangement by which the Company or any Subsidiary or any of their respective assets or properties is bound or subject;

 

(vii) any material labor difficulties or labor union organizing activities with respect to employees of or contract workers for the Company or any Subsidiary;

 

(viii) any material transaction entered into by the Company or any Subsidiary other than in the ordinary course of business; or

 

(ix) any other event or condition of any character that would be reasonably likely to have a Material Adverse Effect.

 

3.9 Registration Statements. During the preceding two years, each registration statement and any amendment thereto filed by the Company pursuant to the 1933 Act, as of the date such registration statement or amendment became effective, complied as to form in all material respects with the 1933 Act, and did not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading; and each prospectus or supplement filed pursuant to Rule 424 under the 1933 Act, as of its issue date and as of the closing of any sale of securities pursuant thereto did not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading.

 

3.10 Form S-3 Eligibility. The Company is currently eligible to register the resale of its Common Stock in a secondary offering on a registration statement on Form S-3 under the 1933 Act, and the Company shall maintain such eligibility at least until the Registration Statement is ordered effective by the SEC.

 

3.11 No Conflict, Breach, Violation or Default. (a) The execution, delivery and performance of the Transaction Documents by the Company and the issuance and sale of the Securities will not conflict with or result in a breach or violation of any of the terms and provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge, security interest or encumbrance under (i) the Company’s Certificate of Incorporation (including any articles of amendment or articles designating series of shares) or the Company’s Bylaws, (ii) any statute, rule, regulation or order of any governmental agency or body or any court, domestic or foreign, having jurisdiction over the Company or any Subsidiary or any of their respective assets or properties, or (iii) any agreement or instrument to which the Company or any Subsidiary is a party or by which the Company or any Subsidiary is bound or to which

 

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any of the properties of the Company or any Subsidiary is subject, except for conflicts, breaches, violations, defaults or the creation or imposition of any lien, charge, security interest or encumbrance that has not had or would not reasonably be expected to have a Material Adverse Effect.

 

(b) The Company and each Subsidiary (i) is not in violation of any statute, rule or regulation applicable to the Company or any Subsidiary or its assets, (ii) is not in violation of any judgment, order or decree applicable to the Company or any Subsidiary or any of their respective assets, and (iii) is not in breach or violation of any agreement, note or instrument to which it or its assets are a party or are bound or subject, except for breaches or violations which, individually or in aggregate, could not reasonably be likely to have a Material Adverse Effect. Except as described in the SEC Filings, to the best of the Company’s knowledge, neither the Company nor any Subsidiary has received notice from any Person of any claim or investigation that, if adversely determined, would render the representations or warranties in the preceding sentence untrue or incomplete.

 

3.12 Tax Matters. The Company and the Subsidiaries have timely prepared and filed all tax returns required to have been filed by the Company with all appropriate governmental agencies and timely paid all taxes owed by them, except for taxes which it reasonably disputes in good faith or where failure to make such payment would not reasonably be expected to have a Material Adverse Effect. The charges, accruals and reserves on the books of the Company and the Subsidiaries in respect of taxes for all fiscal periods are adequate in all material respects, and there are no unpaid assessments against the Company or any Subsidiary nor, to the knowledge of the Company, any basis for the assessment of any additional taxes, penalties or interest for any fiscal period or audits by any foreign, U.S. federal, state, or local taxing authority, except such as would not reasonably be expected to result in a Material Adverse Effect. All taxes and other assessments and levies that the Company or any Subsidiary is required to withhold or to collect for payment have been duly withheld and collected and paid to the proper governmental entity or third party when due, except such as would not reasonably be expected to result in a Material Adverse Effect. There are no tax liens or claims pending or, to the Company’s knowledge, threatened against the Company or any Subsidiary or any of their respective assets or property which if adversely decided, would have a Material Adverse Effect.

 

3.13 Title to Properties. Except as disclosed in the SEC Filings, the Company and each Subsidiary has good and marketable title to all real properties and all other properties and assets owned by it, in each case free from Encumbrances and defects that would reasonably be expected to have a Material Adverse Effect on the Company; and except as disclosed in the SEC Filings, the Company and each Subsidiary holds any leased real or personal property under valid and enforceable leases with no exceptions that would reasonably be expected to have a Material Adverse Effect on the Company.

 

3.14 Certificates, Licenses, Authorizations and Permits. The Company and each Subsidiary possesses adequate certificates, licenses, authorizations or permits issued by appropriate governmental agencies or bodies necessary to conduct the business now operated by it except for those which, if not possessed by the Company or such Subsidiary, individually or in the aggregate would not be reasonably likely to have a Material Adverse Effect, and has not

 

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received any notice of proceedings relating to the revocation or modification of any such certificate, license, authorization or permit that, if determined adversely to the Company or any Subsidiary, would individually or in the aggregate be reasonably likely to have a Material Adverse Effect.

 

3.15 No Labor Disputes. Except such disputes as would not reasonably be expected to result in a Material Adverse Effect, no labor dispute with the employees of or contract workers for the Company or any Subsidiary exists or, to the knowledge of the Company, is imminent.

 

3.16 Intellectual Property. Except as would not reasonably be expected to result in a Material Adverse Effect, (1) the Company and each Subsidiary owns or possesses sufficient rights to use all Intellectual Property described or referred to in the Company’s filings pursuant to the 1934 Act as owned or possessed by the Company or that are necessary for the conduct of the business as now conducted or proposed to be conducted; (2) the use of the Intellectual Property by the Company or any Subsidiary does not, to the knowledge of the Company, violate or infringe on the rights of any other Person; (3) neither the Company nor any Subsidiary has received any written notice of any conflict between the asserted rights of others and the Company or any Subsidiary with respect to any Intellectual Property; (4) the Company and each Subsidiary has used its commercially reasonable best efforts to protect its rights in and to all Intellectual Property used by it in its business or in which it has an interest; (5) the Company and each Subsidiary are in compliance with all material terms and conditions of its agreements relating to the Intellectual Property; (6) neither the Company nor any Subsidiary is, or since December 31, 2001 has been, a defendant in any action, suit, investigation or proceeding relating to infringement or misappropriation by the Company or any Subsidiary of any Intellectual Property nor has the Company or any Subsidiary been notified of any alleged claim of infringement or misappropriation by the Company or any Subsidiary of any Intellectual Property; (7) to the knowledge of the Company, none of the products or services the Company and the Subsidiaries are researching, developing, propose to research and develop, make, have made, use, or sell, infringes or misappropriates any Intellectual Property right of any third party; (8) none of the trademarks and service marks used by the Company or any Subsidiary, to the knowledge of the Company, infringes the trademark or service mark rights of any third party; and (9) to the Company’s knowledge none of the processes and formulae, research and development results and other know-how relating to the Company’s or the Subsidiaries’ respective businesses, the value of which to the Company or any Subsidiary is contingent upon maintenance of the confidentiality thereof, has been disclosed to any Person other than Persons bound by written confidentiality agreements.

 

3.17 Environmental Matters. Neither the Company nor any Subsidiary is in violation of any statute, rule, regulation, decision or order of any governmental agency or body or any court, domestic or foreign, relating to the use, disposal or release of hazardous or toxic substances or relating to the protection or restoration of the environment or human exposure to hazardous or toxic substances (collectively, “Environmental Laws”), owns or operates any real property contaminated with any substance that is subject to any Environmental Laws, is liable for any off-site disposal or contamination pursuant to any Environmental Laws, or is subject to any claim relating to any Environmental Laws, except for any such violation, ownership or

 

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operation of contaminated property, liability or claim that would individually or in the aggregate not be reasonably likely to have a Material Adverse Effect; and neither the Company nor any Subsidiary is aware of any pending investigation that might lead to such a claim.

 

3.18 Litigation. Except as described in the SEC Filings, there are no pending actions, suits or proceedings against the Company or any Subsidiary or any of their respective properties that, if determined adversely to the Company or such Subsidiary, would individually or in the aggregate have a Material Adverse Effect, or which could otherwise have a material adverse affect on the validity or enforceability of, or the ability or authority of the Company to perform its obligations under the Transaction Documents; and to the Company’s knowledge, no such actions, suits or proceedings are threatened or contemplated.

 

3.19 Financial Statements. The consolidated financial statements included in each SEC Filing present fairly in all material respects the consolidated financial position of the Company and the Subsidiaries as of the dates reported and the consolidated results of operations, changes in stockholders’ equity and cash flows for the periods reported, all in conformity with Generally Accepted Accounting Principles applied on a consistent basis and in conformity with the rules and regulations of the SEC under the 1934 Act applicable to the Company, subject, in the case of unaudited financial statements, to (1) normal recurring year-end adjustments, all of which that are necessary for a fair presentation of such financial statements have been included, and (2) the absence of all required notes thereto. Except as set forth in the consolidated financial statements of the Company included in the SEC Filings filed prior to the date hereof, neither the Company nor any Subsidiary has any liabilities, contingent or otherwise, except those which individually or in the aggregate are not material to the financial condition or operating results of the Company and the Subsidiaries, taken as a whole. Generally Acc


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