Contract
Execution
Copy
AGREEMENT
entered into this 22nd day of September, 2008 by and between Xxxx Royalty Fund,
L.P. (the "Seller") and Forticell Bioscience, Inc. (the "Company").
WHEREAS,
in order to simplify the Company's capital structure and thereby facilitate
its
ability to obtain additional funding for continued operations of the Company,
the Company desires to purchase and redeem the Securities (as defined below)
from Seller,
WHEREAS,
Seller desires to sell the Securities to the Company;
NOW,
THEREFORE, in consideration of the premises and the mutual agreements herein
contained, the parties hereto agree as follows:
1. Subject
to the terms and conditions of this Agreement, at the Closing (as defined
below), Seller shall sell to the Company, and the Company shall purchase and
redeem from
Seller, all of the equity securities of the Company owned by Seller
which consists of the following (collectively, the "Securities"):
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(a)
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500
shares of the Company's Series A-1 Convertible Preferred
Stock;
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(b)
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500
shares of the Company's Series A-2 Convertible Preferred
Stock;
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(c)
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21,434
shares of the Company's Common Stock;
and
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(d)
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The
Company's Series E Warrant No. 20 entitling the Seller to purchase
556
shares of the Company's Common
Stock.
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The
purchase price for the Securities will be payable by the Company on a deferred
basis as described in and in accordance with Section 4 hereof.
2. Subject
to the terms and conditions of this Agreement and as a condition to Seller's
obligation to sell the Securities and to the Company's obligation to purchase
the Securities, at the Closing (a) Seller shall also execute and deliver to
the
Company a general release and non-disparagement agreement in the form attached
to this Agreement as Exhibit A (the "Seller/Forticell Release") and (b) the
Company
shall
execute and deliver
to Seller a general release and non-disparagement agreement in the form attached
as
Exhibit B (the "Forticell/Seller Release"). The
Seller/Forticell
Release and the Forticell/Seller Release, are
hereinafter collectively referred to as the "Releases".
3. The
closing of the transactions set forth in this Agreement (the "Closing"),
including execution and delivery of the Releases, is taking place simultaneously
with the execution and delivery of this Agreement. The time
and
date on which the Closing actually occurs is herein referred to as the "Closing
Date."
4. (a) In
addition to the exchange of releases occurring at the Closing, if and only
if
the FDA has granted approval hereafter to Forticell (or any successor,
assignee or affiliate of Forticell) for the marketing and commercial sale of
Forticell's cryo-preserved Orcel product
(the "FDA Approval") on or before the second anniversary of the Closing Date,
the Company shall pay to Seller an amount (the "Deferred Purchase Price")
equal
to
(a) $5 million (reduced by the amount of any reimbursement payment made by
the
Company to the Seller pursuant to Section 8 hereof) if the FDA Approval has
occurred on or before the first anniversary
of the Closing Date, or (b) $2 million (reduced
by the amount of any reimbursement payment made by the Company to the Seller
pursuant to Section 8 hereof)
if the
FDA Approval has occurred after the first anniversary of the Closing Date and
on
or before the second anniversary of the Closing Date. In the event the FDA
Approval has not occurred on or before the second anniversary of the Closing
Date, thereafter the Company will have no Deferred Purchase Price payment
obligation hereunder. The Company shall not retire the Securities while it
has
an outstanding Deferred Purchase Price payment obligation hereunder. The Company
will cause any subsequent transferee
of the Securities to assume the obligations of the Company to pay the Deferred
Purchase
Price. The obligation of the Company to pay the Deferred Purchase Price shall
survive and remain the obligation of the Company regardless of any subsequent
sale or transfer of the Securities by the Company to a third
party.
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(b) To
secure
payment and performance of the Company's obligations hereunder, including
payment of the Deferred Purchase Price pursuant to Section 4(a) hereof, the
Company is granting a security interest to the Seller in its Intellectual
Property, except that with respect to patents, patent registrations and patent
applications, the security interest is limited to U.S. patents and patent
registrations (the "Patents") and U.S. Patent applications listed in Exhibit
"C", by executing and delivering (i) a patent security agreement in the form
attached as Exhibit "D" (the "Patent Security Agreement") and (ii) a security
agreement in the form attached as Exhibit "E" (the "Security Agreement"). The
Patent Security Agreement and Security Agreement are hereinafter collectively
referred to as the "Security Documents". As used herein, the term "Intellectual
Property" shall mean, relating to cryo-preserved and fresh Orcel products,
all
inventions (whether patentable or unpatentable and whether or not reduced to
practice), all improvements thereto, and all patents, patent rights, patent
applications and invention disclosures, together with all reissuance,
continuations, continuations-in-part, revisions, extensions, and reexaminations
thereof, all registered or unregistered trademarks, trade names, service
marks, including all goodwill associated therewith, and copyrights and all
applications and registrations for any of the foregoing, and all Confidential
Information. As used herein, "Confidential Information" shall mean, relating
to
cryo-preserved and fresh Orcel products, know-how, trade secrets, confidential
business information, financial data and other like information (including
ideas, research and development, know-how, formulas, schematics, compositions,
technical data, specifications, customer and supplier lists, pricing and cost
information, and business and marketing plans and proposals), inventory, ideas,
algorithms, processes, computer software programs or applications (in both
source code and object code form), client lists and tangible or intangible
proprietary information or material. Notwithstanding the foregoing definition,
Confidential Information shall not include information already in the public
domain at the time such information is disclosed.
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5. The
Company represents and warrants that (a) it has the full power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder;
(b) this Agreement has been duly and validly executed by it and constitutes
its
valid
and
legally binding obligation enforceable in accordance with this Agreement's
terms
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization,
moratorium, or similar laws relating to or affecting the enforcement of
creditors rights in general and by general principles of equity; (c) the
execution, delivery and performance of this Agreement will not violate any
provision of, or result in the acceleration of any material obligation under,
any mortgage, lien, lease, agreement, instrument,
order , arbitration award, judgment or decree to which it is a party or by
which
it
is bound in a manner which would prevent it from consummating the transactions
contemplated hereby; and (d) it is the owner, free and clear of all liens or
security interests therein, of the Intellectual Property. Schedule 5 hereto
sets
forth a complete and accurate list of all the Company's (i) U.S. Patents and
U.S. Patent applications and (ii) registrations and applications for
registration with the U.S. Trademark Office of trade names, trademarks and
copyrights and all material unregistered trademarks and copyrights, if any,
relating to the development, manufacture, commercialization, marketing or other
use of cryo-preserved and fresh Orcel products.
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6. Seller
represents and warrants that (a) it is the owner of the Securities free and
clear of any liens thereon or security interests therein; (b) it has the full
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder; (c) this Agreement has been duly and validly executed
by
it and constitutes its valid and legally binding obligation enforceable in
accordance with this Agreement's terms except
as
such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium, or similar laws relating to or affecting the enforcement of
creditors rights in general
and by general principles of equity; and (d) the execution, delivery and
performance of this Agreement will not violate any provision of, or result
in
the acceleration of any material obligation under, any mortgage, lien, lease,
agreement, instrument, order , arbitration award, judgment or decree to which
it
is a party or by which
it
is bound in a manner which would prevent it from consummating the transactions
contemplated hereby.
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7. Seller
expressly disclaims any representations and warranties of any
kind
or nature, express or implied, as to the Securities (except as set forth in
Section 6(a)), the Company or its subsidiaries or affiliates or any of their
respective assets, liabilities, operations or prospects. The Company
acknowledges that no such representations and warranties have been made by
Seller and the Company
is
relying solely on its own knowledge of its own affairs
before
acquiring the Securities.
8. Each
of
the parties hereto shall pay without right of reimbursement from any other
party
all the costs incurred by it incident to
the
preparation, execution and delivery of this Agreement and the performance of
its
obligations hereunder, including without limitation the fees and expenses of
its
counsel, financial
advisors and accountants, except that the Company shall reimburse the Seller
for
$10,000 of such fees and expenses of counsel to Seller upon the earlier to
occur
of (a) the sixtieth day following the Closing Date and (b) the day the Company
has received, in one or more financings completed after the Closing, in the
aggregate, $100,000 or more of additional capital in any form.
9. Except
for the Releases and the Security Documents, this Agreement constitutes the
entire Agreement
between the parties hereto with respect to the subject matter
hereof.
10. Any
notice, demand, request, waiver or other communication required
or permitted to be given hereunder shall be in writing and shall be effective
(a) upon
hand
delivery, by telecopy or facsimile at the address or number designated below
(if
delivered on a business day during normal business hours where such notice
is to
be received), or the first business day following such delivery (if delivered
other than on a business
day during normal business hours where such notice is to be received) or (b)
on
the
second business day following the date of mailing by express courier service,
fully prepaid,
addressed to such address, or upon actual receipt of such mailing, whichever
shall
first occur.
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Address
of Seller
Xxxx
Royalty Fund, L.P.
c/o
Xxxx
Capital Advisors, L.L.C.
Two
Grand
Central Tower
000
Xxxx
00xx
Xxxxxx,
00xx
Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attention:
Xxxxxx Xxxxxxxxx
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
with
a copy to
Xxxxxxxxxx
& Xxxxx LLP
00
Xxxxxxxxxxx Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attention:
Xxxxxx X. Xxxxx and A. Xxxxxx Xxxxx
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
Address
of the Company
0000
Xxxxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attention:
Xxxx X. Xxxxxxxxxx
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
7
with
a copy to
Xxxxx
Kaszovitz Xxxxxxxx Xxxxx Xxxxx Bass & Rhine LLP
000
Xxxxxxxxx Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attention:
Xxxxxxx Xxxxxxxxx, Esq.
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
IN
WITNESS WHEREOF, the
undersigned have duly executed this Agreement as
of the
22nd day of September,
2008
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The
Company
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By:
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/s/
Xxxx X. Xxxxxxxxxx
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Name
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Xxxx
X. Xxxxxxxxxx
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Title:
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Chief
Executive Officer
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XXXX
ROYALTY FUND, L.P.
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(formerly
known as Xxxx Capital
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Royalty
Acquisition Fund, L.P.)
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Seller
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By:
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Xxxx
Capital Management, LLC, its
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General
Partner
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By:
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Xxxx
Capital Advisors, L.L.C.
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its
Manager
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By:
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/s/
Xxxxxx Xxxxxxxxx
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Name:
Xxxxxx Xxxxxxxxx
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Title:
Manager
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EXHIBIT
A
Form
of
Seller/Forticell Release
EXHIBIT
B
Form
of
/Forticell/Seller Release
EXHIBIT
C
List
of
U.S. Patents, Patent Registrations and Patent Applications
Patents
and Patent Registrations
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OrCel® U.S. Patents
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Title
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Expiration
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5282859/Re.
35399
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Composite
Living Skin Equivalent
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02/01/11
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6039760
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Composite
Living Skin Equivalent
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02/01/11
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6500464B2
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Trilayered
Collagen Construct
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12/28/20
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6638709
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Processes
for Making Cryopreserved Composite Living Constructs
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10/28/21
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Patent
Applications
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U.S.
Patent Application Serial No. 09/749,226
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Filing
Date – December 27, 2000
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U.S.
Patent Application Serial No. 10/032,925
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Filing
Date – December 26, 2001
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U.S.
Patent Application Serial No. 10/032,929
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Filing
Date – December 26, 2001
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EXHIBIT
D
Form
of
Patent Security Agreement
EXHIBIT
E
Form
of
Security Agreement
Schedule
5
(i) U.S.
Patents and Patent Applications
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OrCel® U.S. Patents
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Title
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Expiration
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5282859/Re.
35399
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Composite
Living Skin Equivalent
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02/01/11
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6039760
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Composite
Living Skin Equivalent
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02/01/11
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6500464B2
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Trilayered
Collagen Construct
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12/28/20
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6638709
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Processes
for Making Cryopreserved Composite Living Constructs
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10/28/21
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U.S.
Patent Application Serial No. 09/749,226
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Filing
Date – December 27, 2000
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U.S.
Patent Application Serial No. 10/032,925
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Filing
Date – December 26, 2001
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U.S.
Patent Application Serial No. 10/032,929
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Filing
Date – December 26, 2001
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(ii) Trademarks
and Trademark Applications
ORCEL,
Registration Number 2637146, Registration Date – October 15, 2002
ORCYTE,
Serial Number 76330744, Filing Date – October 25, 2001
