Exhibit 5
REGEN BIOLOGICS, INC.
SERIES C CONVERTIBLE PREFERRED STOCK
PURCHASE AGREEMENT
Dated as of September __, 2003
REGEN BIOLOGICS, INC.
SERIES C CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
This Agreement, dated as of September 9, 2003, is entered into by and among
ReGen Biologics, Inc., a Delaware corporation (the "Company"), and the
individuals and entities listed on Exhibit A hereto (each a "Purchaser" and
collectively, the "Purchasers").
In consideration of the mutual promises and covenants contained in this
Agreement, the parties agree as follows:
1. Authorization and Sale of Shares and Warrants.
1.1 Authorization. The Company has, or before the Closing (as defined in
Section 2) will have, duly authorized the sale and issuance, pursuant to the
terms of this Agreement, of up to 17,900,000 million shares of its Series C
Convertible Preferred Stock, $0.01 par value per share (the "Series C
Preferred"), having the rights, restrictions, privileges and preferences set
forth in the Certificate of Designations, Preferences and Rights of Series C
Convertible Preferred Stock of the Company attached hereto as Exhibit B (the
"Certificate of Designations"). The Company has, or before the Closing will
have, adopted and filed the Certificate of Designations with the Secretary of
State of the State of Delaware.
1.2 Sale of Shares and Warrants. Subject to the terms and conditions of
this Agreement, at the Closing the Company will sell and issue to each of the
Purchasers, and each of the Purchasers will purchase from the Company, (i) the
number of shares of Series C Preferred set forth opposite such Purchaser's name
on Exhibit A for the purchase price of $0.4481 per share (the "Purchase Price")
such number of shares to be determined by rounding down any fractional shares to
the nearest whole number; and (ii) a warrant, substantially in the form attached
hereto as Exhibit C (a "Warrant"), to purchase its pro rata portion of an
aggregate of 1,600,000 shares of common stock, par value $0.01 per share of the
Company (the "Common Stock"), such pro rata portion will be determined according
to such Purchaser's percentage of participation in the Closing as defined in
Section 2 hereof. The shares of Series C Preferred sold under this Agreement are
referred to as the "Shares." The Company's agreement with each of the Purchasers
is a separate agreement, and the sale of Shares to each of the Purchasers is a
separate sale.
2. The Closing. The closing (the "Closing") of the sale and purchase of the
Shares under this Agreement shall take place at the offices of Xxxx Xxxxxxx LLP,
0000 Xxxxxx Xxxx., XxXxxx, Xxxxxxxx, at such time, date and place and in such
manner, including via facsimile or electronic delivery, as are mutually
agreeable to the Company and the Purchasers, but in no event later than
September 30, 2003. At the Closing, the Company shall deliver to each of the
Purchasers a certificate for the number of Shares and a Warrant being purchased
at the Closing by such Purchaser, registered in the name of such Purchaser and a
Warrant, against payment to the Company of the Purchase Price, by wire transfer
or other method acceptable to the Company. The date of the Closing is
hereinafter referred to as the "Closing Date." The Company may sell up to the
balance of the authorized number of shares of Series C Preferred not sold at the
Closing to additional purchasers at a price not less than $0.4481 per share.
3. Representations, Warranties and Covenants of the Company. Except as and
to the extent set forth in the Disclosure Schedule delivered to the Purchasers
concurrently herewith, the Company represents and warrants as follows:
3.1 Organization and Good Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has full corporate power and corporate authority to carry on its
business as it is now being conducted or is proposed to be conducted, and to own
the properties and assets that it now owns. The Company is duly qualified and
authorized to do business, and is in good standing as a foreign corporation, in
each jurisdiction where the nature of its activities and of its properties makes
such qualification necessary and where a failure to so qualify would have a
material adverse effect on the Company's business or properties. Copies of the
Company's original Certificate of Incorporation, as amended and restated to date
(the "Certificate of Incorporation"), and its bylaws, as amended and restated to
date (the "Bylaws"), heretofore delivered to the Purchasers, are complete and
correct copies of such instruments as presently in effect. The Company has no
subsidiaries other than those listed in Section 3.6 and does not otherwise own
or control any equity interest in any corporation or other business entity.
3.2 Power and Authority; Enforceability.
(a) The Company has full corporate power and authority to enter into this
Agreement to issue the Shares and Warrants hereunder and to carry out the
transactions contemplated hereby. The Company and its stockholders have, or by
the Closing will have, taken all action required by law, its Certificate of
Incorporation or its Bylaws to authorize the execution and delivery of this
Agreement, the issuance of the Shares and Warrants pursuant to the terms hereof,
and the consummation of the transactions contemplated hereby. This Agreement and
the Registration Rights Agreement, as defined in Section 5.4, have been duly
executed and delivered by the Company and, assuming the valid authorization,
execution and delivery of this Agreement by the Purchasers, are valid and
binding agreements of the Company, enforceable in accordance with its terms,
subject to laws of general application relating to bankruptcy, insolvency and
the relief of debtors, as well as judicial principles respecting election of
remedies or limiting the availability of specific performance, injunctive relief
and other equitable remedies.
(b) The Shares, when issued in compliance with the provisions of this
Agreement, and the shares of Common Stock issuable upon conversion of the Series
C Preferred and exercise of the Warrants (the "Underlying Shares"), when issued
upon such conversion in accordance with the terms of the Certificate of
Incorporation (i) will be validly issued, fully paid and nonassessable, and (ii)
will be free of any liens or encumbrances, other than any liens or encumbrances
created by or imposed upon the holders thereof through no action of the Company;
provided, however, that the Shares and the Underlying Shares will be subject to
restrictions on transfer under state and/or federal securities laws. There are
no rights of first refusal held by any stockholders of the Company with respect
to the issuance of the Shares. The Shares are not subject to any preemptive
rights.
3.3 No Conflicts or Violation. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby, will
violate any provision of the Certificate of Incorporation or the Bylaws, or
violate or be in conflict with, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, or result in
the termination of or accelerate the performance required by, or cause the
acceleration of the maturity of any debt or obligation pursuant to, or result in
the creation or imposition of any security interest, lien or other encumbrance
upon any property or assets of the Company under, any agreement or commitment to
which the Company is a party or by which the Company is bound, or to which the
property of the Company is subject, which would materially adversely affect the
financial condition of the Company, or, to the best knowledge of the Company,
violate any statute or law or any judgment, decree, order, regulation or rule of
any court or governmental authority.
3.4 Governmental Consents. No consent, approval, order or authorization of,
or registration, qualification, designation, declaration or filing with, any
federal, state or local governmental authority on the part of the Company is
required in connection with the consummation of the transactions contemplated by
this Agreement, except for the compliance with notice filing and other
requirements under federal and applicable state securities laws, which
compliance will have occurred within the appropriate time periods therefor.
3.5 Capitalization. At the Closing, the authorized capital stock of the
Company will consist of 117,900,000 shares of Common Stock, and 60,000,000
shares of preferred stock (the "Preferred Stock"), of which 15,298,351 shares
will have been designated Series A Convertible Preferred Stock (the "Series A
Stock"), of which 15,298,351 shares are outstanding, 30,000,000 shares of which
will have been designated as the Series C Preferred. All currently issued and
outstanding shares have been issued in compliance with applicable state and
federal securities laws. As of the Closing, the Company has reserved for
issuance, pursuant to its currently active Stock Option Plans, 8,450,000 shares
of Common Stock and has reserved for issuance pursuant to its currently inactive
Stock Option Plans 8,443,528 shares of Common Stock. As of the Closing, there
are outstanding options and warrants to purchase 12,791,540 and 5,473,554 shares
of Common Stock, respectively. Except as contemplated herein, or as set forth on
Section 3.5 of the Disclosure Schedule, (i) there are no commitments as of the
date hereof pursuant to which the Company is or may become obligated to issue
any of its capital stock, (ii) there are no preemptive or similar rights to
purchase or otherwise acquire from the Company any shares of capital stock
pursuant to any provision of law, the Certificate of Incorporation or Bylaws of
the Company, or any agreement to which the Company is a party or otherwise, and
(iii) there is no agreement, restriction or encumbrance with respect to the sale
or voting of any outstanding shares of the Company's capital stock. Neither the
execution and delivery of this Agreement, nor the consummation of the
transactions contemplated hereby will result in any antidilution adjustment for
the holders of the Company's capital stock or for the holder of any options or
warrants to acquire shares of the Company's capital stock.
3.6 Subsidiaries. The Company is the sole holder of the issued and
outstanding shares of capital stock of RBio, Inc. and MetaContent, Inc. (each a
"Subsidiary" and collectively, the "Subsidiaries"), and the Company holds of
record and beneficially owns all of the capital stock of each Subsidiary free
and clear of any hypothecation, assignment, deposit arrangement, Lien,
preference, priority or other security agreement, warrant, attachment, right of
first refusal, preemptive right, conversion, put, call or other restriction on
transfer (other than restrictions imposed by federal and state securities laws),
or preferential arrangement of any kind or nature whatsoever. There are no
proxies, voting rights, stockholders agreements or other agreements or
understandings with respect to the voting or transfer of the capital stock of
the Subsidiaries. There are no commitments pursuant to which any Subsidiary is
or may become obligated to issue any of its capital stock.
3.7 No Undisclosed Liabilities. Neither the Company nor any of its
Subsidiaries has any material liabilities or obligations of any nature (whether
absolute, accrued, contingent or otherwise) of the type that would be required
to be set forth on financial statements in accordance with GAAP, which are not
fully reflected on the financial statements which are a part of the Company's
annual report on Form 10K/A for the year ended December 31, 2002, filed with the
commission on April 14, 2003 or the financial statements which are a part of the
quarterly report on Form 10-Q for the quarter ended June 30, 2003, filed with
the Commission on August 14, 2003 (collectively, the "Financial Statements") and
there are no undisclosed loss contingencies (as such term is used in Statement
of Financial Accounting Standards No. 5 ("Statement No. 5") issued by the
Financial Accounting Standards Board in March, 1975) which are not adequately
provided for in the Financial Statements as required by Statement No. 5.
3.8 Absence of Changes. Except as set forth in Section 3.8 of the
Disclosure Schedule, since June 30, 2003, there has not been (a) any material
adverse change in the financial condition, results of operations, assets,
liabilities or business of the Company or any Subsidiary, (b) any material
increase in the liabilities or obligations of the Company or any Subsidiary of
any nature whatsoever (contingent or otherwise), (c) any asset or property of
the Company or any Subsidiary made subject to a lien of any kind, (d) any waiver
of any valuable rights of the Company, or the cancellation of any debts or
claims held by the Company or any Subsidiary, (e) any payment of dividends on,
or other distributions with respect to, or any direct or indirect redemption or
acquisition of, any shares of the capital stock of the Company or any
Subsidiary, or any agreement or commitment therefor, (f) any issuance of any
stock, bonds or other securities of the Company or any Subsidiary other than
pursuant to or in connection with transactions described herein or contemplated
by this Agreement, (g) any mortgage, pledge, sale, assignment or transfer of any
tangible or intangible assets of the Company or any Subsidiary, (h) any loan by
the Company or any Subsidiary to any officer, director, employee or stockholder
of the Company or any Subsidiary, or any agreement or commitment therefor, (i)
any damage, destruction or loss (whether or not covered by insurance) adversely
affecting the assets, property or business of the Company or any Subsidiary, (j)
any extraordinary increase in the aggregate amount of salaries or other
compensation paid or payable to employees or agents of the Company or any
Subsidiary, (k) any change in the accounting methods or practices followed by
the Company or any Subsidiary or any theretofore adopted, (l) any capital
expenditure in excess of US $75,000, or (m) any commitments with respect to any
of the foregoing.
3.9 Encumbrances. Except as set forth in Section 3.9 of the Disclosure
Schedule, the Company or its Subsidiaries own outright all the property and
assets, real, personal or mixed, tangible or intangible, reflected in the
Financial Statements, or not so reflected because not required to be reflected
but which are used or useful in the business of the Company or its Subsidiaries,
or acquired by the Company or any Subsidiary since June 30, 2003 (in each case
other than assets disposed of in the ordinary course of business since June 30,
2003), subject to no mortgages, liens, security interests, pledges, charges or
other encumbrances of any kind.
3.10 Litigation. There is no action, suit, customer claim, proceeding or
investigation at law or in equity, or by or before any governmental
instrumentality or other agency, now pending or threatened against or affecting
the Company or any Subsidiary nor, to the best knowledge of the Company, does
there exist any basis for any such pending or threatened action, suit, customer
claim, proceeding or investigation. Neither the Company nor any of its
Subsidiaries is a party to or subject to the provisions of any order, writ,
injunction, judgment or decree of any court or governmental agency or
instrumentality.
3.11 No Defaults. As of the date hereof, neither the Company nor any of its
Subsidiaries is in default (a) under its Certificate of Incorporation as
currently in effect or Bylaws, (b) under any indenture, mortgage, lease,
purchase or sales order or any other contract, agreement or instrument to which
the Company or any Subsidiary is a party or by which it is bound, or any order,
writ, injunction, judgment or decree of any court or governmental agency or
instrumentality. There exists no condition, event or act which constitutes, or
which after notice or lapse of time or both would constitute, a default under
any of the foregoing.
3.12 Compliance with Laws. To the best of its knowledge, the Company and
each of its Subsidiaries is in compliance with laws, rules, ordinances,
governmental regulations and orders of all governmental authorities and/or
jurisdictions currently applicable to the conduct of its business as conducted
or proposed to be conducted and has all permits, licenses, certificates and
authorizations required for the conduct of such business.
3.13 Title to Properties and Assets; Liens, Etc. The Company and each of
its Subsidiaries has good and marketable title to its material properties and
assets, and has good title to all its leasehold interests, in each case subject
to no mortgage, pledge, lien, lease, encumbrance or charge, other than for taxes
not yet due or payable or as set forth in the Financial Statements or the notes
thereto or in Section 3.13 of the Disclosure Schedule.
3.14 Copyrights, Patents and Other Intangible Assets.
(a) Except as set forth in Section 3.14 of the Disclosure Schedule, neither
the Company nor its Subsidiaries is obligated to make any payments by way of
royalties, fees or otherwise to any owner of, licensor of, or other claimant to,
any patent, trademark, proprietary process, trade name, copyright or other
intangible asset, with respect to the use thereof or in connection with its
business as currently conducted or as proposed to be conducted or otherwise and
it has not granted any licenses or manufacturing publication or production
rights with respect to its business as currently conducted or as proposed to be
conducted.
(b) Except as set forth in Section 3.14 of the Disclosure Schedule, the
Company and each of its Subsidiaries owns or has the right to use, free and
clear of all liens, claims and restrictions, all patents, trademarks,
proprietary processes, service marks, trade names, copyrights (and licenses with
respect to the foregoing) necessary to its business as now conducted and as
proposed to be conducted. Such rights are described in Section 3.14 of the
Disclosure Schedule and may be used in the conduct of its business as now
conducted or as proposed to be conducted without, to the best of the Company's
or applicable Subsidiary's knowledge, infringing upon or otherwise acting
adversely to the right or claimed right of any person under or with respect to
any of the foregoing.
(c) Each employee of the Company and its Subsidiaries has signed a
proprietary information agreement, each of which agreements will be in full
force and effect as of the Closing. Neither the Company nor any of its
Subsidiaries, after reasonable investigation, is aware that any of its employees
is or will be in violation thereof, and the Company and each of its Subsidiaries
will use its best efforts to prevent any such violation.
(d) Neither the Company nor any of its Subsidiaries has received any
communications alleging that the Company or any Subsidiary has violated or, by
conducting its business as proposed, would violate any of the patents,
trademarks, service marks, trade names, copyrights or trade secrets or other
proprietary rights of any other person or entity, nor is the Company or any
Subsidiary aware of any third party violation of any of the Company's patents,
trademarks, service marks, trade names, copyrights or trade secrets or other
proprietary rights. Except as set forth in Section 3.14 of the Disclosure
Schedule, neither the Company nor any of its Subsidiaries is aware that any of
its employees (or any person whom the Company or any Subsidiary presently
intends to hire) is obligated under any contract (including licenses, covenants
or commitments of any nature) or agreement, or subject to any judgment, decree
or order of any court or administrative agency, that would conflict with his
obligation to use such employee's best efforts to promote the interests of the
Company or any Subsidiary.
(e) Except as set forth in Section 3.14 of the Disclosure Schedule, neither
the carrying on of the Company's business or any Subsidiary's business by the
employees of the Company or any Subsidiary (or persons whom the Company
presently intends to hire), nor the conduct of the Company's or any Subsidiary's
business as currently conducted or as proposed to be conducted, will, to the
Company's or any Subsidiary's knowledge, conflict with or result in a breach of
the terms, conditions or provisions of, or constitute a default under, any
contract, covenant or instrument under which any of such persons is now
obligated. Except as set forth in Section 3.14 of the Disclosure Schedule,
neither the Company nor any of its Subsidiaries believe it is or will be
necessary to utilize any inventions of any of its employees (or persons it
currently intends to hire) made or owned prior to their employment by the
Company or any Subsidiary or that it is or will be necessary to utilize any
other assets or rights of any of its employees (or persons it currently intends
to hire) made or owned prior to their employment with the Company or any
Subsidiary in violation of any limitations or restrictions to which any such
person is a party or to which any of such assets or rights may be subject.
3.15 Material Agreements. Except as set forth in Section 3.15 of the
Disclosure Schedule, neither the Company nor any of its Subsidiaries is a party
to any written or oral contract not made in the ordinary course of business and,
whether or not made in the ordinary course of business, neither the Company nor
any of its Subsidiaries is a party to any written or oral (a) contract with any
labor union; (b) contract for the future purchase of fixed assets or for the
future purchase of materials, supplies or equipment in excess of US $75,000 per
year; (c) contract for the employment of any officer, individual employee or
other person on a full-time basis (other than an at-will employment contract) or
any contract with any person on a consulting basis; (d) bonus, pension,
profit-sharing, retirement, stock purchase, stock option, hospitalization,
medical insurance or similar plan, contract or understanding in effect with
respect to employees or any of them or the employees of others; (e) agreement or
indenture relating to the borrowing of money or to the mortgaging, pledging or
otherwise placing a lien on any assets of the Company or any of its
Subsidiaries; (f) guaranty by the Company or any of its Subsidiaries of any
obligation for borrowed money or otherwise; (g) lease or agreement under which
the Company or any of its Subsidiaries is lessee of or holds or operates any
property, real or personal, owned by any other party; (h) lease or agreement
under which the Company or any of its Subsidiaries is lessor of or permits any
third party to hold or operate any property, real or personal, owned or
controlled by the Company or any of its Subsidiaries; (i) agreement or other
commitment for capital expenditures; (j) contract, agreement or commitment under
which the Company or any of its Subsidiaries is obligated to pay any brokers
fees, finder's fees or any such similar fees to any third party; (k) contract,
agreement or commitment under which the Company or any of its Subsidiaries has
issued, or may become obligated to issue any shares of capital stock of the
Company or any of its Subsidiaries , or any warrants, options, convertible
securities or other commitments pursuant to which the Company or any of its
Subsidiaries is or may become obligated to issue any of its securities except as
are referred to in this Agreement; or (1) any other contract, agreement,
arrangement or understanding which is material to the business of the Company or
any of its Subsidiaries or which is material to, and which a prudent investor
would need to review in order to make, an informed investment decision with
respect to the purchase of the Shares hereunder.
3.16 Registration Rights; Co-Sale Rights. Except as set forth in the
Section 3.16 of the Disclosure Schedule, neither the Company nor any of its
Subsidiaries is under any contractual obligation to register for sale under the
Securities Act of 1933, as amended (the "Act"), any of its presently outstanding
securities or any of its securities which may hereafter be issued. Assuming the
accuracy of the Purchasers' representations to the Company, no registration of
the Series C Preferred Stock issued and sold pursuant to this Agreement will be
required. Except as set forth in Section 3.16 of the Disclosure Schedule, and
except as limited by state and Federal law, there are no obligations,
contractual arrangements or other understandings with respect to the
alienability or voting of the Company's or any of its Subsidiaries' Common Stock
or Preferred Stock.
3.17 Brokers or Finders; Other Offers. Except for fees payable to Xxxxxx
Xxxxxxx Xxxxxx, Inc. and Vail Securities Investment, Inc., neither the Company
nor any of its Subsidiaries has incurred, or will incur, directly or indirectly,
as a result of any action taken by the Company or any of its Subsidiaries, any
liability for brokerage or finders' fees or agents' commissions or any similar
charges in connection with this Agreement.
3.18 Tax Returns and Payments. The Company and each of its Subsidiaries
have accurately prepared and timely filed all tax returns (federal, state and
local) required to be filed by it. All taxes shown to be due and payable on said
returns, any assessments, fees or charges and all other taxes due and payable by
the Company or any Subsidiary on or before the date hereof have been paid prior
to the Company or any of its Subsidiaries becoming delinquent. No deficiency
assessment or proposed adjustment of the Company's or any of it Subsidiaries'
federal, state or local taxes is pending, and neither the Company nor any of its
Subsidiaries has knowledge of any proposed liability for any tax to be imposed
upon it, its properties or assets for which it does not have an adequate reserve
reflected in the Financial Statements. To the best of the Company's or any of
its Subsidiaries knowledge, none of the federal or state income tax returns or
state franchise tax returns of the Company or any Subsidiary has ever been
audited by federal or state tax officials, respectively.
3.19 Insurance. The Company and each of its Subsidiaries maintains
insurance coverage reasonably adequate for the operation of its business (taking
into account the cost and availability of such insurance).
3.20 Environmental and Safety Laws. To the best of its knowledge, neither
the Company nor any of its Subsidiaries is in violation of any applicable
statute, law or regulation relating to the environment or occupational health
and safety, and to the best of its knowledge, no material expenditures are or
will be required in order to comply with any such existing statute, law or
regulation.
3.21 Commission Documents.
(a) The Company has filed all required reports, schedules, forms,
statements and other documents (including exhibits and all other information
incorporated therein) with the Commission since December 31, 2002 (the "Company
SEC Documents"). As of their respective dates, the Company SEC Documents
complied in all material respects with the requirements of the Act or the
Securities Exchange Act of 1934, as amended and the Regulations (as defined in
Section 4.4), as the case may be, and none of the Company SEC Documents when
filed (unless amended or superseded by a Company Filed SEC Document filed prior
to the date hereof, then on the date of such later filing) contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. Except to the
extent that information contained in a Company SEC Document has been revised or
superseded in a subsequently filed Company SEC Document, none of the Company SEC
Documents contains any untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(b) The Financial Statements of the Company included in the Company SEC
Documents complied as to form, as of their respective dates of filing with the
Commission, in all material respects with applicable accounting requirements and
the published rules and regulations of the Commission with respect thereto (the
"Accounting Rules"), have been prepared in accordance with GAAP (except, in the
case of unaudited statements, as permitted by Form 10-Q of the Commission)
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly present, in all material respects,
the consolidated financial position of the Company and its consolidated
Subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal recurring non-material year-end audit
adjustments).
3.22 Full Disclosure. This Agreement, the representations and warranties by
the Company contained herein, the Disclosure Schedule and the Exhibits hereto,
and all certificates expressly required to be delivered or to be furnished to
the Purchasers pursuant to this Agreement, when read together, do not contain
any untrue statement of material fact or omit to state a material fact necessary
in order to make the statements contained herein or therein not misleading.
4. Representations, Warranties and Covenants of the Purchasers. Each
Purchaser severally represents, warrants and agrees as follows:
4.1 Information. Each Purchaser represents that it has had an opportunity
to ask questions of the principal officers of the Company and to obtain any
additional information necessary to permit an informed evaluation of the
benefits and risks associated with the investment made hereby. Each Purchaser
has made its own independent investigation of the Company and is aware of the
Company's proposed business and financial condition. The foregoing, however,
does not limit or modify the representations and warranties of the Company in
Section 3 herein or the right of the Purchasers to rely thereon.
4.2 Accredited Investors. Each Purchaser represents that it is an
accredited investor within the meaning of the Act and Regulation D thereunder,
or by reason of its business or financial experience, or the business or
financial experience of its professional advisor, it has the capacity to protect
its own interests in connection with this transaction.
4.3 Experience. Each Purchaser represents that it has had sufficient
experience in business, financial and investment matters to evaluate the merits
and risks involved in the investment made hereby and further represents that it
is able to bear the economic risk of such investment for an indefinite period of
time or to lose the entire investment made hereby, and has the capacity to
protect its own interests in connection with the transactions contemplated
herein.
4.4 Investment Intent. Each Purchaser represents that it is acquiring the
Shares for its own account and not with a view to any sale or distribution
thereof within the meaning of the Act, and the rules and regulations of the
Securities and Exchange Commission (the "Commission") thereunder as amended from
time to time (the "Regulations"), except to the extent permitted by the Act and
the Regulations. Each Purchaser agrees that it will make no sale, offer to sell
or transfer of any Shares in violation of the Act, the Regulations or any other
federal or state securities law, and each Purchaser understands that
certificates representing the same will bear a legend to such effect.
4.5 Restriction on Transfer. Each Purchaser understands that none of the
Shares nor the offer and sale thereof, has been registered under the Act or the
securities laws of any state and there is at the date hereof no public market
for such securities. Each Purchaser further understands and agrees that none of
the Shares may be sold, offered for sale or transferred in any manner for an
indefinite period of time unless and until (a) a registration statement with
respect thereto is in effect under the Act and applicable state laws, or (b) it
has been established to the reasonable satisfaction of the Company and its
counsel that the proposed transaction is exempt from registration under the Act
and applicable state laws or that registration under the Act and applicable
state laws is not required.
4.6 Binding Effect, etc. Each Purchaser represents that (a) such Purchaser
has full power and authority to purchase such Shares, (b) such Purchaser's
agreement to purchase the Shares constitutes a valid and binding agreement
enforceable in accordance with its terms, and (c) the purchase of the Shares as
contemplated hereby will not conflict with or otherwise violate any charter
documents or any other obligations of such Purchaser.
5. Conditions to the Obligations of the Purchasers. The obligation of each
of the Purchasers under Section 1.2 of this Agreement is subject to the
fulfillment, or the waiver by such Purchaser, of each of the following
conditions on or before the Closing:
5.1 Accuracy of Representations and Warranties. Each representation and
warranty contained in Section 3 shall be true on and as of the Closing Date with
the same effect as though such representation and warranty had been made on and
as of that date.
5.2 Performance. The Company shall have performed and complied with all
agreements and conditions contained in this Agreement required to be performed
or complied with by the Company prior to or at the Closing.
5.3 Certificates and Documents. The Company shall have delivered to the
Purchasers:
(a) The Certificate of Incorporation of the Company, as amended and
restated and in effect as of the Closing Date (including Certificates of
Designations), certified by the Secretary of State of the State of Delaware;
(b) The Bylaws of the Company, as amended and restated and in effect as of
the Closing Date, certified by its Secretary as of the Closing Date; and
(c) Resolutions of the Board of Directors of the Company, authorizing and
approving all matters in connection with this Agreement and the transactions
contemplated hereby, certified by the Secretary of the Company as of the Closing
Date.
5.4 Registration Rights Agreement. The Company shall have entered into an
Amended and Restated Registration Rights Agreement (each a "Registration Rights
Agreement" and collectively, the "Registration Rights Agreements") with each
Purchaser substantially in the form attached hereto as Exhibit D.
5.5 Opinion of Counsel. Purchasers shall have received from Xxxx Xxxxxxx,
LLP, special counsel to the Company, an opinion dated as of the Closing, in a
form set forth as Exhibit E.
5.6 Compliance Certificates. The Company shall have delivered to the
Purchasers a certificate, executed by the President of the Company, dated the
Closing Date, certifying to the fulfillment of the conditions specified in
paragraphs 5.1, 5.2 and 5.3 of this Agreement.
5.7 Other Matters. All corporate and other proceedings in connection with
the transactions contemplated by this Agreement and all documents and
instruments incident to such transactions shall be reasonably satisfactory in
substance and form to the Purchasers and their counsel, and the Purchasers and
their counsel shall have received all such counterpart originals or certified or
other copies of such documents as they may reasonably request.
6. Condition to the Obligations of the Company. The obligations of the
Company under Section 1.2 of this Agreement are subject to the fulfillment, or
the waiver by the Company, of the following condition on or before the Closing:
6.1 Accuracy of Representations and Warranties. The representations and
warranties of the Purchasers contained in Section 4 shall be true on and as of
the Closing Date with the same effect as though such representations and
warranties had been made on and as of that date.
7. Transfer of Shares.
7.1 Restricted Shares. "Restricted Shares" means (i) the Shares, (ii) the
shares of Common Stock issued or issuable upon conversion or exercise of the
Shares or the Warrants, (iii) any shares of capital stock of the Company
acquired by the Purchasers pursuant to any other agreement or instrument, and
(iv) any other shares of capital stock of the Company issued in respect of such
shares (as a result of stock splits, stock dividends, reclassifications,
recapitalizations, or similar events).
7.2 Requirements for Transfer.
(a) Restricted Shares shall not be sold or transferred unless either
(i) they first shall have been registered under the Act, or (ii) the Company
first shall have been furnished with an opinion of legal counsel, reasonably
satisfactory to the Company, to the effect that such sale or transfer is exempt
from the registration requirements of the Act.
(b) Notwithstanding the foregoing, no registration or opinion of counsel
shall be required for (i) a transfer by a Purchaser which is a corporation to a
wholly owned subsidiary of such corporation, a transfer by a Purchaser which is
a partnership to a partner of such partnership or a retired partner of such
partnership who retires after the date hereof, or to the estate of any such
partner or retired partner, or a transfer by a Purchaser which is a limited
liability company to (a) a member or officer of such limited liability company,
(b) a retired member who resigns after the date hereof or to the estate of any
such member or (c) a retired member; provided that the transferee in each case
agrees in writing to be subject to the terms of this Section 7 to the same
extent as if it were the original Purchaser hereunder, or (ii) a transfer made
in accordance with Rule 144 under the Act.
7.3 Legend. Each certificate representing Restricted Shares shall bear a
legend substantially in the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL SUCH SHARES ARE
REGISTERED UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
IS OBTAINED TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED."
The foregoing legend shall be removed from the certificates representing
any Restricted Shares, at the request of the holder thereof, at such time as
they become eligible for resale pursuant to Rule 144(k) under the Act.
8. Miscellaneous.
8.1 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their respective successors and permitted
assigns. This Agreement, and the rights and obligations of each Purchaser
hereunder, may be assigned by such Purchaser to any person or entity to which
Shares are transferred by such Purchaser, and such transferee shall be deemed a
"Purchaser" for purposes of this Agreement; provided that the transferee
provides written notice of such assignment to the Company. The Company may not
assign its rights under this Agreement.
8.2 Confidentiality. Each Purchaser agrees that he, she or it will keep
confidential and will not disclose, divulge or use for any purpose other than to
monitor his, her or its investment in the Company any confidential, proprietary
or secret information which such Purchaser may obtain from the Company pursuant
to financial statements, reports and other materials submitted by the Company to
such Purchaser pursuant to this Agreement or otherwise ("Confidential
Information"), unless such Confidential Information is known, or until such
Confidential Information becomes known, to the public (other than as a result of
a breach of this Section 8.2 by such Purchaser); provided, however, that a
Purchaser may disclose Confidential Information (i) to such Purchaser's
attorneys, accountants, consultants and other professionals to the extent
necessary to obtain their services in connection with monitoring its investment
in the Company, (ii) to any prospective purchaser of any Shares from such
Purchaser, provided that such prospective purchaser agrees in writing to be
bound by the provisions of this Section 8.2, (iii) to any affiliate of such
Purchaser or to a partner, stockholder or subsidiary of such Purchaser, provided
that such affiliate agrees in writing to be bound by the provisions of this
Section 8.2, or (iv) as may otherwise be required by law, provided that the
Purchaser takes reasonable steps to minimize the extent of any such required
disclosure. Notwithstanding any other provisions of this Section 8.2, a
Purchaser shall be free to use the Residuals (as defined below) of any
Confidential Information for any purpose, subject only to any patents or
copyrights of the Company in such Confidential Information. The term "Residuals"
shall mean any information in non-tangible form which is retained in the memory
of a Purchaser or any partner, officer, employee or representative of a
Purchaser.
8.3 Survival of Representations and Warranties. All agreements,
representations and warranties contained herein shall survive the execution and
delivery of this Agreement and the Closing of the transactions contemplated
hereby until thirty (30) days following the date on which the Form 10-K for
ReGen Biologics for the fiscal year ended December 31, 2003 shall have been
filed with the Commission; provided, however, that the representation and
warranties of Section 3.2 of this Agreement shall survive indefinitely.
8.4 Expenses. The Company shall pay, at the Closing, the reasonable fees,
up to a maximum of US $ 25,000 including fees, expenses and disbursements,
related to the representation of the Purchasers, such representatives to be
designated by the Purchasers, in connection with the preparation of this
Agreement and the other agreements contemplated hereby and thereby and the
closing of the transactions contemplated hereby and thereby.
8.5 Brokers. Each Purchaser represents and warrants to the other parties
hereto that he, she or it has not retained a finder or broker in connection with
the transactions contemplated by this Agreement, and the Company and each of the
Purchasers agrees that such party will indemnify and save the other parties
harmless from and against any and all claims, liabilities or obligations with
respect to brokerage or finders' fees or commissions, or consulting fees in
connection with the transactions contemplated by this Agreement asserted by any
person on the basis of any statement or representation alleged to have been made
by such indemnifying party.
8.6 Severability. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
8.7 Specific Performance. In addition to any and all other remedies that
may be available at law in the event of any breach of this Agreement, each
Purchaser shall be entitled to specific performance of the agreements and
obligations of the Company hereunder and to such other injunctive or other
equitable relief as may be granted by a court of competent jurisdiction.
8.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Delaware (without reference to
the conflicts of law provisions thereof).
8.9 Notices. All notices, requests, consents, and other communications
under this Agreement shall be in writing and shall be deemed delivered (i) two
business days after being sent by registered or certified mail, return receipt
requested, postage prepaid or (ii) one business day after being sent via a
reputable nationwide overnight courier service guaranteeing next business day
delivery, in each case to the intended recipient as set forth below:
If to the Company, at:
000 Xxxxxxxx Xxxxxx, Xxxx Wing
Xxxxxxxx Xxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx, Xx., Ph.D,
or at such other address or addresses as may have been furnished in writing
by the Company to the Purchasers;
If to a Purchaser, at the address set forth on Exhibit A for such
Purchaser, or at such other address or addresses as may have been furnished to
the Company in writing by such Purchaser.
Any party may give any notice, request, consent or other communication
under this Agreement using any other means (including, without limitation,
personal delivery, messenger service, telecopy, first class mail or electronic
mail), but no such notice, request, consent or other communication shall be
deemed to have been duly given unless and until it is actually received by the
party for whom it is intended. Any party may change the address to which
notices, requests, consents or other communications hereunder are to be
delivered by giving the other parties notice in the manner set forth in this
Section.
8.10 Complete Agreement. This Agreement (including its Exhibits and the
Disclosure Schedule delivered in accordance herewith) constitutes the entire
agreement and understanding of the parties hereto with respect to the subject
matter hereof and supersedes all prior agreements and understandings relating to
such subject matter.
8.11 Amendments and Waivers. Except as otherwise expressly set forth in
this Agreement, any term of this Agreement may be amended or terminated and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), with the written
consent of the Company and the holders of at least 50% of the shares of Common
Stock issued or issuable upon conversion of the Shares. Notwithstanding the
foregoing, this Agreement may be amended with the consent of the holders of less
than all of the shares of Common Stock issued or issuable upon conversion of the
Shares only in a manner which applies to all such holders in the same fashion
and any amendment, termination or waiver effected in accordance with this
Section 8.11 shall be binding upon each holder of any Shares (including shares
of Common Stock into which such Shares have been converted) even if they do not
execute such consent, each future holder of all such securities and the Company.
No waivers of or exceptions to any term, condition or provision of this
Agreement, in any one or more instances, shall be deemed to be, or construed as,
a further or continuing waiver of any such term, condition or provision.
8.12 Pronouns. Whenever the context may require, any pronouns used in this
Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular form of nouns and pronouns shall include the plural, and vice
versa.
8.13 Counterparts; Facsimile Signatures. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be an original, and
all of which shall constitute one and the same document. This Agreement may be
executed by facsimile signatures.
8.14 Section Headings. The section headings are for the convenience of the
parties only and in no way alter, modify, amend, limit, or restrict the
contractual obligations of the parties.
[Signature Page to Follow]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
ReGen Biologics, Inc.
By:
Name: Xxxxxx X. Xxxxxx, Xx., Ph.D.
Title: President, Chief Executive Officer
and Chairman
PURCHASERS:
If Individual:
Print Name:
Signature:
Contact Information:
Dollar Amount Purchased:
If Corporation, Partnership, Limited Liability
Company or Other Entity:
Print Name of Entity:
Signature By:
Contact Information:
Dollar Amount Purchased:
PURCHASERS:
If Individual:
Print Name:
Signature:
Contact Information:
Dollar Amount Purchased:
If Corporation, Partnership, Limited Liability
Company or Other Entity:
Print Name of Entity:
Signature By:
Contact Information:
Dollar Amount Purchased:
A-2
EXHIBIT A
Purchasers
Name Number of Shares of Series C Preferred Dollar Amount Purchased
Sanderling Companies 5,021,200 $ 2,250,000.00
X.X. Xxxx Co. 223,164 100,000.00
Xxxxxx Xxxx 312,430 140,000.00
F. Xxxxxx Xxxxxxx 171,836 77,000.00
Xxxxxxx X. and Xxxxxx X. Xxxxxx, 223,164 100,000.00
Trustees of Timkin Living Trust U/A/D
1949
J. Xxxxxxx Xxxxxxxx 111,582 50,000.00
Xxxxxx Xxxxxxxxx 223,164 100,000.00
Xxxxxxx Xxxxxx 223,164 100,000.00
Xx. Xxxxxxx Xx 223,164 100,000.00
Xxxxxx Family Trust 22,316 10,000.00
Xxxxxx Xxxxx PSP 111,582 50,000.00
Xxxx X. Xxxxxx 301,272 135,000.00
Xxxxxx X. Xxxxxx 100,424 45,000.00
Xxxx X. Xxxxxx, Xxxxxxx X. Xxxxxx 446,328 200,000.00
TTTIC
ANNUMC LLLP c/o Scott 55,791 25,000.00
Xxxxxxx
Xxxx Xxxxxxxx 55,791 25,000.00
Xxxxxxx X. Xxxxxxx 133,898 60,000.00
Bravo Colorado Music Festival 111,582 50,000.00
Endowment
Xxxx Xxxxx Xxxxxxx 22,316 10,000.00
Xxxxxxx Xxxxxxxxxxxx 100,000 44,810.00
Xxxxxx Xxxxxxx Trust 301,272 135,000.00
Xxxxxxxx X. Xxxxxx 200,848 90,000.00
Xxxxx X. Xxxxxx 44,588 19,980.00
Xxxxxxx X. Xxxxxx 468,734 210,040.00
Xxx Xxxx Xxxxxx 44,588 19,980.00
Shelka Gramshammer 33,474 15,000.00
Xxxx X. Xxxxx 223,164 100,000.00
Xxx Xxxxxxx 55,791 25,000.00
Xxxxxxx Xxxxx 11,158 5,000.00
Xxxxxx Xxxxx 17,853 8,000.00
Ranjle Liu 33,474 15,000.00
Xxxxxx XxXxxxx 32,135 14,400.00
Xxxxxxxxx X. Xxxxx 40,169 18,000.00
Xxx Xxxxx 338,540 151,700.00
Xxxx X. Xxxxxx 111,582 50,000.00
Xxxxxxx X. Xxxxxx 301,272 135,000.00
Xxxxxxxxx X. Xxxxxx 154,652 69,300.00
Xxxxxxx Xxxxxxxxxx 111,582 50,000.00
Xxxxxx X. Xxxxxxx 11,158 5,000.00
Vail Fishing Partners 446,328 200,000.00
Xxxxxx X. Xxxxxxx 55,791 25,000.00
Xxxxxx X. Xxxx 111,582 50,000.00
Xxxxx Xxxxx 55,791 25,000.00
Xxxx X. Xxxxxxxxxx 22,316 10,000.00
L-R Global Partners 2,939,542 1,317,209.00
DB Advisors, LLC 557,911 250,000.00
Xxxxxx Xxxxxxx 111,582 50,000.00
EXHIBIT B
Certificate of Designations
EXHIBIT C
Warrant
EXHIBIT D
Registration Rights Agreement
EXHIBIT E
Legal Opinion
