Exhibit 10.1
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Preferred Stock and Warrant Purchase Agreement
dated as of
July 19, 2002
by and among
Orthovita, Inc., as Issuer and Seller
and
OrbiMed Associates LLC, PW Juniper Crossover Fund LLC, Caduceus Private
Investment L.P. and certain other parties named herein, as Purchasers
with respect to
Series A 6% Cumulative Convertible Voting Preferred Stock
and Series A Warrants to Purchase Common Stock
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Table of Exhibits and Schedules
Exhibit A Form of Statement of Designation of the Series A 6%
Cumulative Convertible Voting Preferred Stock
Exhibit B Form of Series A Warrant
Exhibit C Form of Investor Rights Agreement
Exhibit D Form of Subsidiary Guaranty
Exhibit E Form of Bylaw Amendment
Exhibit F Form of Second Bylaw Amendment
Schedule 1 Purchasers
Schedule 3.11 Absence of Certain Changes
Schedule 3.15 Intellectual Property
Schedule 3.19 Investments
Schedule 3.20 Capitalization
Schedule 3.21 Rights, Warrants, Options
Schedule 3.22 Employment Agreements
Schedule 3.27 Brokers
PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT (the "Agreement") dated
as of July 19, 2002, by and among Orthovita, Inc., a Pennsylvania corporation
(the "Seller"), OrbiMed Associates LLC, PW Juniper Crossover Fund LLC or
Caduceus Private Investment L.P., and each of the other persons listed on
Schedule 1 hereto (each is individually referred to as a "Purchaser" and
collectively, the "Purchasers").
WITNESSETH:
WHEREAS, each of the Purchasers is willing to purchase from the Seller,
and the Seller desires to sell to the Purchasers, up to an aggregate of 2,000
shares of its Series A 6% Cumulative Convertible Voting Preferred Stock, stated
value $10,000 per share, par value $0.01 per share (the "Preferred Stock"), and
Series A Common Stock Purchase Warrants (the "Series A Warrants" or the
"Warrants") entitling the holders thereof to purchase up to an aggregate of
8,823,529 shares of the Seller's common stock, $0.01 par value (the "Common
Stock"), at a per share exercise price (the "Exercise Price") equal to $1.575
(subject to adjustment as more fully set forth herein and in the Initial Series
A Warrants).
NOW, THEREFORE, in consideration of the mutual promises and
representations, warranties, covenants and agreements set forth herein, the
parties hereto, intending to be legally bound, hereby agree as follows:
Article I - Purchase and Sale
1.1 Purchase and Sale.
(a) On the terms and subject to the conditions set forth
in this Agreement, at each of the Closings (as defined in Section 2.2), the
Seller will sell and each of the Purchasers will purchase (i) the Preferred
Stock in the amounts set forth on Schedule 1 hereto with respect to each
applicable Closing, and (ii) the number of Series A Warrants set forth on
Schedule 1 hereto with respect to each applicable Closing.
(b) The shares of Common Stock issuable upon conversion
of the Preferred Stock are referred to herein as the "Conversion Shares," and
the shares of Common Stock issuable upon exercise of the Series A Warrants are
referred to herein as the "Warrant Shares."
1.2 Terms of the Preferred Stock and Warrants. The terms and
provisions of the Preferred Stock are set forth in the Form of Series A 6%
Cumulative Convertible Voting Preferred Stock, in the form attached hereto as
Exhibit A (the "Statement of Designation"). The terms and provisions of the
Warrants are more fully set forth in the Form of Series A Common Stock Purchase
Warrant, in the form attached hereto as Exhibit B.
1.3 Transfers; Legends.
(a) Except as required by federal securities laws and the
securities law of any state or other jurisdiction within the United States, the
Preferred Stock, Conversion Shares, Warrants and Warrant Shares (collectively,
the "Securities") may be transferred, in whole or in part, by any of the
Purchasers at any time by delivering written transfer instructions to the
Seller, and the Seller shall reflect such transfer on its books and records and
reissue certificates
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evidencing the Preferred Stock upon surrender of certificates evidencing the
Preferred Stock being transferred. Any such transfer shall be made by a
Purchaser in accordance with applicable law. In connection with any transfer of
Securities other than pursuant to an effective registration statement or to the
Seller, except as otherwise set forth herein, the Seller may require the
transferor thereof to provide to the Seller an opinion of counsel selected by
the transferor, such counsel and the form and substance of which opinion shall
be reasonably satisfactory to the Seller and Seller's counsel, to the effect
that such transfer does not require registration under the Securities Act.
Notwithstanding the foregoing, the Seller hereby consents to and agrees to
register on the books of the Seller and with any transfer agent for the
securities of the Seller, without any such legal opinion, any transfer of
Securities by a Purchaser to an Affiliate of such Purchaser, provided that the
transferee certifies to the Seller that it is an "accredited investor" as
defined in Rule 501(a) under the Securities Act and that it is acquiring the
Securities solely for investment purposes (subject to the qualifications hereof)
and not with a view to, or for, resale, distribution or fractionalization
thereof in whole or in part in violation of the Securities Act. Any transferee
shall agree to be bound by the terms of the Investor Rights Agreement and
Sections 5.4 and 5.8 and Articles VII and VIII of the Purchase Agreement, and
shall deliver the Proxy (as such term is defined in the Investor Rights
Agreement) pursuant to the terms of the Investor Rights Agreement. The Seller
shall reissue certificates evidencing the Securities upon surrender of
certificates evidencing the Securities being transferred in accordance with this
Section 1.3(a). Any such transfer shall be made by a Purchaser in accordance
with applicable law. An "Affiliate" means any Person (as such term is defined
below) that, directly or indirectly through one or more intermediaries, controls
or is controlled by or is under common control with a Person, as such terms are
used in and construed under Rule 144 under the Securities Act. With respect to a
Purchaser, any investment fund or managed account that is managed on a
discretionary basis by the same investment manager as such Purchaser will be
deemed to be an Affiliate of such Purchaser. A "Person" means any individual or
corporation, partnership, trust, incorporated or unincorporated association,
joint venture, limited liability company, joint stock company, government (or an
agency or subdivision of any thereof) or other entity of any kind.
(b) The certificates representing the Securities shall
bear the following legends:
"THE SHARES REPRESENTED BY, OR ACQUIRABLE UPON CONVERSION OR
EXERCISE OF SECURITIES EVIDENCED BY, THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE OFFERED OR SOLD IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER SAID ACT UNLESS, IN THE OPINION
(WHICH SHALL BE IN FORM AND SUBSTANCE REASONABLY SATISFACTORY
TO THE COMPANY) OF COUNSEL REASONABLY SATISFACTORY TO THE
COMPANY, SUCH REGISTRATION IS NOT REQUIRED."
"THE SALE, TRANSFER OR ASSIGNMENT OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
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TERMS AND CONDITIONS OF A CERTAIN INVESTOR RIGHTS AGREEMENT
DATED AS OF JULY 19, 2002, AS AMENDED FROM TIME TO TIME, AMONG
THE COMPANY AND CERTAIN HOLDERS OF ITS OUTSTANDING SECURITIES.
COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN
REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO
THE SECRETARY OF THE COMPANY."
Article II - Purchase Price and Closing
2.1 Purchase Price. The aggregate purchase price (the "Purchase
Price") to be paid by the Purchasers to the Seller to acquire the Preferred
Stock and the Series A Warrants shall be the total amount set forth on Schedule
1 hereto.
2.2 The Closings.
(a) The first closing of the transactions contemplated
under this Agreement (the "First Closing") will take place as promptly as
practicable, but no later than five (5) business days following satisfaction or
waiver of the conditions set forth in Article 6.1(a) and 6.2(a) (other than
those conditions which by their terms are not to be satisfied or waived until
the First Closing), at the offices of Xxxxxxxx Xxxxx & Deutsch LLP, 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000. The date on which the First Closing occurs is
the "First Closing Date".
(b) The second closing of the transactions contemplated
under this Agreement (the "Second Closing") will take place as promptly as
practicable, but no later than five (5) business days following satisfaction or
waiver of the conditions set forth in Article 6.1(b) and 6.2(b) (other than
those conditions which by their terms are not to be satisfied or waived until
the Second Closing), at the offices of Xxxxxxxx Xxxxx & Deutsch LLP, 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000. The date on which the Second Closing occurs is
the "Second Closing Date".
(c) Notwithstanding anything to the contrary contained
herein, in no event shall the Seller be obligated to issue any securities at the
Second Closing in the absence of Shareholder Approval (as defined in Section
5.13 below).
Article III - Representations And Warranties of The Seller
The Seller represents and warrants to the Purchasers as follows:
3.1 Corporate Existence and Power; Subsidiaries. The Seller and
its Subsidiaries are corporations duly incorporated, validly existing and in
good standing under the laws of the state in which they are incorporated, and
have all corporate powers required to carry on their business as now conducted.
The Seller and its Subsidiaries are duly qualified to do business as a foreign
corporation and are in good standing in each jurisdiction where the character of
the property owned or leased by them or the nature of their activities makes
such qualification
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necessary, except for those jurisdictions where the failure to be so qualified
would not have a Material Adverse Effect on the Seller or any of its
Subsidiaries. For purposes of this Agreement, the term "Material Adverse Effect"
means, with respect to any person or entity, a material adverse effect on its
and its Subsidiaries' condition (financial or otherwise), business, properties,
assets, liabilities (including contingent liabilities), results of operations or
current prospects, taken as a whole. True and complete copies of the Seller's
Amended and Restated Articles of Incorporation, as amended, and Bylaws, as
amended (collectively, the "Articles and Bylaws") have previously been provided
to the Purchasers. For purposes of this Agreement, the term "Subsidiary" or
"Subsidiaries" means, with respect to any entity, any corporation or other
organization of which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions are directly or indirectly owned by such entity or
of which such entity is a partner or is, directly or indirectly, the beneficial
owner of 50% or more of any class of equity securities or equivalent profit
participation interests. The Seller has no Subsidiaries other than Ortho, Inc.,
Vita Licensing, Inc., Vita Special Purpose Corp. and Partisyn Corp., each of
which is wholly-owned by the Seller.
3.2 Corporate Authorization. The execution, delivery and
performance by Ortho, Inc. of the Subsidiary Guaranty have been duly authorized.
The execution, delivery and performance by the Seller of this Agreement, the
Warrants, Investor Rights Agreement, and each of the other documents executed
pursuant to and in connection with this Agreement (together with the Subsidiary
Guaranty, the "Related Documents"), and the consummation of the transactions
contemplated hereby and thereby (including, but not limited to, the sale and
delivery of the Preferred Stock and the Warrants, and the subsequent issuance of
the Conversion Shares upon conversion of the Preferred Stock, and the subsequent
issuance of the Warrant Shares upon exercise of the Warrants) have been duly
authorized, and no additional corporate action is required for the approval of
this Agreement. The Conversion Shares and the Warrant Shares have been duly
reserved for issuance by the Seller. This Agreement and the Related Documents
have been or, to the extent contemplated hereby or by the Related Documents,
will be duly executed and delivered and constitute the legal, valid and binding
agreement of the Seller or Ortho, Inc., as the case may be, enforceable against
the Seller or Ortho, Inc., as the case may be, in accordance with their terms,
except as may be limited by bankruptcy, reorganization, insolvency, moratorium
and similar laws of general application relating to or affecting the enforcement
of rights of creditors, and except as enforceability of its obligations
hereunder are subject to general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law).
3.3 Charter, Bylaws and Corporate Records. The minute books of the
Seller and its Subsidiaries contain complete and accurate records of all
meetings and other corporate actions of the board of directors, committees of
the board of directors, incorporators and shareholders of the Seller and its
Subsidiaries from the date of their incorporation to the date hereof. All
material corporate decisions and actions have been validly made or taken. All
corporate books, including without limitation the share transfer register,
comply with applicable laws and regulations and have been regularly updated.
Such books fully and correctly reflect all the decisions of the shareholders.
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3.4 Governmental Authorization. Except as otherwise specifically
contemplated in this Agreement and the Related Documents, and except for: (i)
the filings referenced in Section 5.12; (ii) the filing of the Statement of
Designation; (iii) the filing of a Form D with respect to the Preferred Stock
and Warrants under Regulation D under the Securities Act; (iv) the filing of the
Registration Statement with the Commission; (v) the application(s) to each
trading market for the listing of the Conversion Shares and the Warrant Shares
for trading thereon, (vi) any filings required under state securities laws that
are permitted to be made after the date hereof, and (vii) where the failure to
take such action or make such filing could not have or result in a Material
Adverse Effect, the execution, delivery and performance by the Seller of this
Agreement and the Related Documents, and the consummation of the transactions
contemplated hereby and thereby (including, but not limited to, the sale and
delivery of the Preferred Stock and Warrants and the subsequent issuance of the
Conversion Shares and Warrant Shares upon conversion of the Preferred Stock or
exercise of the Warrants, as applicable, but subject to any shareholder approval
contemplated by Section 5(k)(ii) of the Statement of Designation) by the Seller
require no action by or in respect of, or filing with, any governmental body,
agency, official or authority.
3.5 Non-Contravention. The execution, delivery and performance by
the Seller of this Agreement and the Related Documents, and the consummation by
the Seller of the transactions contemplated hereby and thereby (including the
issuance of the Conversion Shares and Warrant Shares) do not and will not (a)
contravene or conflict with the Articles and Bylaws of the Seller and its
Subsidiaries or any material agreement to which the Seller is a party or by
which it is bound; (b) contravene or conflict with or constitute a material
violation of any provision of any law, regulation, judgment, injunction, order
or decree binding upon or applicable to the Seller or its Subsidiaries; (c)
constitute a default under or give rise to a right of termination, cancellation
or acceleration or loss of any benefit under any material agreement, contract or
other instrument binding upon the Seller or its Subsidiaries or under any
material license, franchise, permit or other similar authorization held by the
Seller or its Subsidiaries; or (d) result in the creation or imposition of any
Lien (as defined below) on any material asset of the Seller or its Subsidiaries.
For purposes of this Agreement, the term "Lien" means, with respect to any
asset, any mortgage, lien, pledge, charge, security interest, claim or
encumbrance of any kind in respect of such asset.
3.6 SEC Documents. The Seller is obligated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") to file reports pursuant
to Sections 13 or 15(d) thereof (all such reports filed or required to be filed
by the Seller, including all exhibits thereto or incorporated therein by
reference, and all documents filed by the Seller under the Securities Act
hereinafter called the "SEC Documents"). The Seller has filed all reports or
other documents required to be filed under the Exchange Act. All SEC Documents
filed by the Seller as of or for any period beginning on or after January 1,
1999, (i) were prepared in all material respects in accordance with the
requirements of the Exchange Act and (ii) did not at the time they were filed
(or, if amended or superseded by a filing prior to the date hereof, then on the
date of such filing) contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The Seller has previously delivered to the Purchaser a
correct and complete copy of each report which the Seller filed with the
Securities and Exchange Commission (the "SEC" or the "Commission") under the
Exchange Act for any period ending on or after December 31, 2000 (the "Recent
Reports"). None of the information
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about the Seller or any of its Subsidiaries which has been disclosed to the
Purchasers herein or in the course of discussions and negotiations with respect
hereto which is not disclosed in the Recent Reports is or was required to be so
disclosed.
3.7 Financial Statements. Each of (i) the Seller's audited
consolidated balance sheet and related consolidated statements of income, cash
flows and changes in stockholders' equity (including the related notes) as of
and for the years ended December 31, 2001 and December 31, 2000, as contained in
the Recent Reports, and (ii) the Seller's unaudited consolidated balance sheet
and related consolidated statements of income, cash flows and changes in
stockholders' equity as of and for the three months ended March 31, 2002, as
contained in the Recent Reports (both (i) and (ii) collectively, the "Seller's
Financial Statements" or the "Financial Statements") (x) present fairly in all
material respects the financial position of the Seller and its Subsidiaries on a
consolidated basis as of the dates thereof and the results of operations, cash
flows and stockholders' equity as of and for each of the periods then ended,
except that the unaudited financial statements are subject to normal year-end
adjustments, and (y) were prepared in accordance with generally accepted
accounting principals ("GAAP") applied on a consistent basis throughout the
periods involved, in each case, except as otherwise indicated in the notes
thereto.
3.8 Compliance with Law. The Seller and its Subsidiaries are in
compliance in all material respects and have conducted their business so as to
comply in all material respects with all laws, rules and regulations, judgments,
decrees or orders of any court, administrative agency, commission, regulatory
authority or other governmental authority or instrumentality, domestic or
foreign, applicable to their operations. There are no judgments or orders,
injunctions, decrees, stipulations or awards (whether rendered by a court or
administrative agency or by arbitration), including any such actions relating to
affirmative action claims or claims of discrimination, against the Seller or its
Subsidiaries or against any of their properties or businesses.
3.9 No Defaults. The Seller and its Subsidiaries are not, nor have
they received notice that they would be with the passage of time, giving of
notice, or both, (i) in violation of any provision of their Articles and Bylaws
(ii) in default or violation of any term, condition or provision of (A) any
judgment, decree, order, injunction or stipulation applicable to the Seller or
its Subsidiaries or (B) any material agreement, note, mortgage, indenture,
contract, lease or instrument, permit, concession, franchise or license to which
the Seller or its Subsidiaries are a party or by which the Seller or its
Subsidiaries or their properties or assets may be bound, and no circumstances
exist which would entitle any party to any material agreement, note, mortgage,
indenture, contract, lease or instrument to which such Seller or its
Subsidiaries are a party, to terminate such as a result of such Seller or its
Subsidiaries, having failed to meet any material provision thereof including,
but not limited to, meeting any applicable milestone under any material
agreement or contract.
3.10 Litigation. Except as disclosed in the Recent Reports, there
is no action, suit, proceeding, judgment, claim or investigation pending or, to
the best knowledge of the Seller, threatened against the Seller and its
Subsidiaries which could, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Seller or its Subsidiaries or
which in any manner challenges or seeks to prevent, enjoin, alter or materially
delay any of the transactions contemplated hereby, and there is no basis for the
assertion of any of the foregoing.
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There are no claims or complaints existing or, to the knowledge of the Seller or
its Subsidiaries, threatened for product liability in respect of any product of
the Seller or its Subsidiaries, and the Seller and its Subsidiaries are not
aware of any basis for the assertion of any such claim.
3.11 Absence of Certain Changes. Since December 31, 2001, the
Seller has conducted its business only in the ordinary course and there has not
occurred, except as set forth in the Recent Reports or any exhibit thereto or
incorporated by reference therein:
(a) Any event that could reasonably be expected to have
a Material Adverse Effect on the Seller or any of its Subsidiaries;
(b) Any amendments or changes in the Articles or Bylaws
of the Seller and itsSubsidiaries, other than on account of the filing of the
Statement of Designation and the Bylaw Amendment;
(c) Any damage, destruction or loss, whether or not
covered by insurance, that would, individually or in the aggregate, have a
Material Adverse Effect on the Seller and its Subsidiaries;
(d) Any
(i) incurrence, assumption or guarantee by the
Seller or its Subsidiaries of any debt for
borrowed money other than for equipment
leases or working capital lines of credit,
except as set forth on Schedule 3.11(d);
(ii) issuance or sale of any securities
convertible into or exchangeable for
securities of the Seller other than to
directors, employees and consultants
pursuant to existing equity compensation or
stock purchase plans of the Seller or as set
forth on Schedule 3.11(d);
(iii) issuance or sale of options or other rights
to acquire from the Seller or its
Subsidiaries, directly or indirectly,
securities of the Seller or any securities
convertible into or exchangeable for any
such securities, other than options issued
to directors, employees and consultants in
the ordinary course of business in
accordance with past practice or as set
forth on Schedule 3.11(d);
(iv) issuance or sale of any stock, bond or other
corporate security;
(v) discharge or satisfaction of any material
Lien, other than current liabilities
incurred since December 31, 1999 in the
ordinary course of business;
(vi) declaration or making any payment or
distribution to shareholders or purchase
or redemption of any share of its capital
stock or other security;
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(vii) sale, assignment or transfer any of its
intangible assets except in the ordinary
course of business, or cancellation of any
debt or claim except in the ordinary course
of business;
(viii) waiver of any right of substantial value
whether or not in the ordinary course of
business;
(ix) material change in officer compensation
except in the ordinary course of business
and consistent with past practices; or
(x) other commitment (contingent or otherwise)
to do any of the foregoing.
(e) Any creation, sufferance or assumption by the Seller
or any of its Subsidiaries of any Lien on any asset (other than Liens existing
on the date hereof or in connection with equipment leases and working capital
lines of credit set forth on Schedule 3.11(e)) or any making of any loan,
advance or capital contribution to or investment in any Person in an aggregate
amount which exceeds $25,000 outstanding at any time;
(f) Any entry into, amendment of, relinquishment,
termination or non-renewal by the Seller or its Subsidiaries of any material
contract, license, lease, transaction, commitment or other right or obligation,
other than in the ordinary course of business; or
(g) Any transfer or grant of a right with respect to the
trademarks, trade names, service marks, trade secrets, copyrights or other
intellectual property rights owned or licensed by the Seller or its
Subsidiaries, except as among the Seller and its Subsidiaries.
3.12 No Undisclosed Liabilities. Except as set forth in the Recent
Reports, and except for liabilities and obligations incurred in the ordinary
course of business since December 31, 2001, as of the date hereof, (i) the
Seller and its Subsidiaries do not have any material liabilities or obligations
(absolute, accrued, contingent or otherwise) which, and (ii) there has not been
any aspect of the prior or current conduct of the business of the Seller or its
Subsidiaries which may form the basis for any material claim by any third party
which if asserted could result in any such material liabilities or obligations
which, are not fully reflected, reserved against or disclosed in the balance
sheet of the Seller as at December 31, 2001.
3.13 Taxes. All tax returns and tax reports required to be filed
with respect to the income, operations, business or assets of the Seller and its
Subsidiaries have been timely filed (or appropriate extensions have been
obtained) with the appropriate governmental agencies in all jurisdictions in
which such returns and reports are required to be filed, and all of the
foregoing as filed are correct and complete and, in all material respects,
reflect accurately all liability for taxes of the Seller and its Subsidiaries
for the periods to which such returns relate, and all amounts shown as owing
thereon have been paid. All income, profits, franchise, sales, use, value added,
occupancy, property, excise, payroll, withholding, FICA, FUTA and other taxes
(including interest and penalties), if any, collectible or payable by the Seller
and its Subsidiaries or relating to or chargeable against any of its material
assets, revenues or income or relating to any employee, independent contractor,
creditor, stockholder or other third party through May 31, 2002, and through the
Closing Date, were fully collected and paid by such date if due by such
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date or provided for by adequate reserves in the Financial Statements as of and
for the periods ended March 31, 2002 (other than taxes accruing after such date)
and all similar items due through the Closing Date will have been fully paid by
that date or provided for by adequate reserves, whether or not any such taxes
were reported or reflected in any tax returns or filings. No taxation authority
has sought to audit the records of the Seller or any of its Subsidiaries for the
purpose of verifying or disputing any tax returns, reports or related
information and disclosures provided to such taxation authority, or for the
Seller's or any of its Subsidiaries' alleged failure to provide any such tax
returns, reports or related information and disclosure. No material claims or
deficiencies have been asserted against or inquiries raised with the Seller or
any of its Subsidiaries with respect to any taxes or other governmental charges
or levies which have not been paid or otherwise satisfied, including claims
that, or inquiries whether, the Seller or any of its Subsidiaries has not filed
a tax return that it was required to file, and, to the best of the Seller's
knowledge, there exists no reasonable basis for the making of any such claims or
inquiries. Neither the Seller nor any of its Subsidiaries has waived any
restrictions on assessment or collection of taxes or consented to the extension
of any statute of limitations relating to taxation.
3.14 Interests of Officers, Directors and Other Affiliates. The
description of any interest held, directly or indirectly, by any officer,
director or other Affiliate of Seller (other than the interests of the Seller
and its Subsidiaries in such assets) in any property, real or personal, tangible
or intangible, used in or pertaining to Seller's business, including any
interest in the Seller's Intellectual Property (as defined in Section 3.15
hereof), as set forth in the Recent Reports, is true and complete, and no
officer, director or other Affiliate of the Seller has any interest in any
property, real or personal, tangible or intangible, used in or pertaining to the
Seller's business, including the Seller's Intellectual Property, other than as
set forth in the Recent Reports.
3.15 Intellectual Property. Other than as set forth in the Recent Reports:
(a) the Seller or a Subsidiary thereof has the right to use or is the sole and
exclusive owner of all right, title and interest in and to all foreign and
domestic patents, patent rights, trademarks, service marks, trade names, brands
and copyrights (whether or not registered and, if applicable, including pending
applications for registration) owned, used or controlled by the Seller and its
Subsidiaries (collectively, the "Rights") and in and to each material invention,
software, trade secret, technology, product, composition, formula, method of
process used by the Seller (the Rights and such other items, the "Intellectual
Property"), and, to the Seller's knowledge, has the right to use the same, free
and clear of any claim or conflict with the rights of others; (b) no royalties
or fees (license or otherwise) are payable by the Seller to any Person by reason
of the ownership or use of any of the Intellectual Property except as set forth
on Schedule 3.15; (c) there have been no claims made against the Seller
asserting the invalidity, abuse, misuse, or unenforceability of any of the
Intellectual Property, and, to its knowledge, there are no reasonable grounds
for any such claims; (d) the Seller has not made any claim of any violation or
infringement by others of its rights in the Intellectual Property, and to the
best of the Seller's knowledge, no reasonable grounds for such claims exist; and
(e) the Seller has not received any written notice or, other type of overt
notice that it is in conflict with or infringing upon the asserted rights of
others in connection with the Intellectual Property.
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3.16 Restrictions on Business Activities. Other than as set forth in the
Recent Reports, there is no agreement, judgment, injunction, order or decree
binding upon the Seller or its Subsidiaries which has or could reasonably be
expected to have the effect of prohibiting or materially impairing any business
practice of the Seller or its Subsidiaries, any acquisition of property by the
Seller or its Subsidiaries or the conduct of business by the Seller or its
Subsidiaries as currently conducted or as currently proposed to be conducted by
the Seller.
3.17 Preemptive Rights. None of the shareholders of the Seller possess any
preemptive rights in respect of the Preferred Stock or the Conversion Shares or
Warrant Shares to be issued to the Purchasers upon conversion of the Preferred
Stock or exercise of the Warrants, as applicable.
3.18 Insurance. The insurance policies providing insurance coverage to the
Seller or its Subsidiaries including for product liability are adequate for the
business conducted by the Seller and its Subsidiaries and are sufficient for
compliance by the Seller and its Subsidiaries with all requirements of law and
all material agreements to which the Seller or its Subsidiaries are a party or
by which any of their assets are bound. All of such policies are in full force
and effect and are valid and enforceable in accordance with their terms, and the
Seller and its Subsidiaries have complied with all material terms and conditions
of such policies, including premium payments. None of the insurance carriers has
indicated to the Seller or its Subsidiaries an intention to cancel any such
policy.
3.19 Subsidiaries and Investments. Except as set forth in the Recent
Reports or on Schedule 3.19, the Seller has no Subsidiaries or Investments. For
purposes of this Agreement, the term "Investments" shall mean, with respect to
any Person, all advances, loans or extensions of credit to any other Person, all
purchases or commitments to purchase any stock, bonds, notes, debentures or
other securities of any other Person, and any other investment in any other
Person, including partnerships or joint ventures (whether by capital
contribution or otherwise) or other similar arrangement (whether written or
oral) with any Person, including but not limited to arrangements in which (i)
the Person shares profits and losses, (ii) any such other Person has the right
to obligate or bind the Person to any third party, or (iii) the Person may be
wholly or partially liable for the debts or obligations of such partnership,
joint venture or other arrangement.
3.20 Capitalization. The authorized capital stock of the Seller consists
of 50,000,000 shares of common stock, $0.01 par value per share, of which
20,019,622 shares are issued and outstanding as of the date hereof, and
20,000,000 shares of preferred stock, issuable in one or more classes or series,
with such relative rights and preferences as the Board of Directors may
determine, none of which has been authorized for issuance other than the
Preferred Stock contemplated hereby and none of which, immediately prior to the
Closing, is outstanding. All shares of the Seller's issued and outstanding
capital stock have been duly authorized, are validly issued and outstanding, and
are fully paid and nonassessable. No securities issued by the Seller from the
date of its incorporation to the date hereof were issued in violation of any
statutory or common law preemptive rights. There are no dividends which have
accrued or been declared but are unpaid on the capital stock of the Seller. All
taxes required to be paid by Seller in connection with the issuance and any
transfers of the Seller's capital stock have been paid. Except as set forth on
Schedule 3.20, all permits or authorizations required to be obtained from or
registrations
10
required to be effected with any Person in connection with any and all issuances
of securities of the Seller from the date of the Seller's incorporation to the
date hereof have been obtained or effected, and all securities of the Seller
have been issued and are held in accordance with the provisions of all
applicable securities or other laws.
3.21 Options, Warrants, Rights. Except as set forth on Schedule 3.21 or in
the Recent Reports, there are no outstanding (a) securities, notes or
instruments convertible into or exercisable for any of the capital stock or
other equity interests of the Seller or its Subsidiaries; (b) options, warrants,
subscriptions or other rights to acquire capital stock or other equity interests
of the Seller or its Subsidiaries; or (c) commitments, agreements or
understandings of any kind, including employee benefit arrangements, relating to
the issuance or repurchase by the Seller or its Subsidiaries of any capital
stock or other equity interests of the Seller or its Subsidiaries, any such
securities or instruments convertible or exercisable for securities or any such
options, warrants or rights. Other than the rights of the Purchasers under the
Preferred Stock and the Warrants, and except as set forth on Schedule 3.21,
neither the Seller nor the Subsidiaries have granted anti-dilution rights to any
person or entity in connection with any option, warrant, subscription or any
other instrument convertible or exercisable for the securities of the Seller or
any of its Subsidiaries. Other than the rights granted to the Purchasers under
the Investor Rights Agreement, there are no outstanding rights which permit the
holder thereof to cause the Seller or the Subsidiaries to file a registration
statement under the Securities Act or which permit the holder thereof to include
securities of the Seller or any of its Subsidiaries in a registration statement
filed by the Seller or any of its Subsidiaries under the Securities Act, and
there are no outstanding agreements or other commitments which otherwise relate
to the registration of any securities of the Seller or any of its Subsidiaries
for sale or distribution in any jurisdiction, except as set forth on Schedule
3.21.
3.22 Employees, Employment Agreements and Employee Benefit Plans. Except
as set forth in the Recent Reports or on Schedule 3.22, there are no employment,
consulting, severance or indemnification arrangements, agreements, or
understandings between the Seller and any officer, director, consultant or
employee of the Seller or its Subsidiaries (the "Employment Agreements"). No
Employment Agreement provides for the acceleration or change in the award,
grant, vesting or determination of operations, warrants, rights, severance
payments, or other contingent obligations of any nature whatsoever of the Seller
or its Subsidiaries in favor of any such parties in connection with the
transactions contemplated by this Agreement. Except as disclosed in the Recent
Reports or on Schedule 3.22, the terms of employment or engagement of all
directors, officers, employees, agents, consultants and professional advisors of
the Seller and its Subsidiaries are such that their employment or engagement may
be terminated upon not more than two weeks' notice given at any time without
liability for payment of compensation or damages and the Seller and its
Subsidiaries have not entered into any agreement or arrangement for the
management of their business or any part thereof other than with their directors
or employees.
3.23 Absence of Certain Business Practices. Neither the Seller, nor any
Affiliate of the Seller, nor to the knowledge of the Seller, any agent or
employee of the Seller, any other Person acting on behalf of or associated with
the Seller, or any individual related to any of the foregoing Persons, acting
alone or together, has: (a) received, directly or indirectly, any rebates,
payments, commissions, promotional allowances or any other economic benefits,
regardless of
11
their nature or type, from any customer, supplier, trading company, shipping
company, governmental employee or other Person with whom the Seller has done
business directly or indirectly; or (b) directly or indirectly, given or agreed
to give any gift or similar benefit to any customer, supplier, trading company,
shipping company, governmental employee or other Person who is or may be in a
position to help or hinder the business of the Seller (or assist the Seller in
connection with any actual or proposed transaction) which (i) may subject the
Seller to any damage or penalty in any civil, criminal or governmental
litigation or proceeding, (ii) if not given in the past, may have had an adverse
effect on the Seller or (iii) if not continued in the future, may adversely
affect the assets, business, operations or prospects of the Seller or subject
the Seller to suit or penalty in any private or governmental litigation or
proceeding.
3.24 Products and Services. To the knowledge of the Seller, there exists
no set of facts (i) which could furnish a basis for the withdrawal, suspension
or cancellation of any registration, license, permit or other governmental
approval or consent of any governmental or regulatory agency with respect to any
product or service developed or provided by the Seller or its Subsidiaries, (ii)
which could furnish a basis for the withdrawal, suspension or cancellation by
order of any state, federal or foreign court of law of any product or service,
or (iii) which could have a Material Adverse Effect on the continued operation
of any facility of the Seller or its Subsidiaries or which could otherwise cause
the Seller or its Subsidiaries to withdraw, suspend or cancel any such product
or service from the market or to change the marketing classification of any such
product or service. Each product or service provided by Seller or its
Subsidiaries has been provided in accordance in all material respects with the
specifications under which such product or service normally is and has been
provided and the provisions of all applicable laws or regulations.
3.25 Environmental Matters. None of the premises or any properties owned,
occupied or leased by the Seller or its Subsidiaries (the "Premises") has been
used by the Seller or the Subsidiaries or, to the Seller's knowledge, by any
other Person, to manufacture, treat, store, or dispose of any substance that has
been designated to be a "hazardous substance" under applicable Environmental
Laws ("Hazardous Substances") in violation of any applicable Environmental Laws
(hereinafter defined). To its knowledge, the Seller has not disposed of,
discharged, emitted or released any Hazardous Substances which would require,
under applicable Environmental Laws, remediation, investigation or similar
response activity. No Hazardous Substances are present as a result of the
actions of the Seller or, to the Seller's knowledge, any other Person, in, on or
under the Premises which would give rise to any liability or clean-up
obligations of the Seller under applicable Environmental Laws. The Seller and,
to the Seller's knowledge, any other Person for whose conduct it may be
responsible pursuant to an agreement or by operation of law, are in compliance
with all laws, regulations and other federal, state or local governmental
requirements, and all applicable judgments, orders, writs, notices, decrees,
permits, licenses, approvals, consents or injunctions in effect on the date of
this Agreement relating to the generation, management, handling, transportation,
treatment, disposal, storage, delivery, discharge, release or emission of any
Hazardous Substance (the "Environmental Laws"). Neither the Seller nor, to the
Seller's knowledge, any other Person for whose conduct it may be responsible
pursuant to an agreement or by operation of law has received any written
complaint, notice, order, or citation of any actual, threatened or alleged
noncompliance with any of the Environmental Laws, and there is no proceeding,
suit or investigation pending or, to the Seller's knowledge, threatened against
the Seller or, to the
12
Seller's knowledge, any such Person with respect to any violation or alleged
violation of the Environmental Laws, and, to the knowledge of the Seller, there
is no basis for the institution of any such proceeding, suit or investigation.
3.26 Licenses; Compliance With FDA and Other Regulatory Requirements.
(a) General. The Seller holds all material authorizations, consents,
approvals, franchises, licenses and permits required under applicable law or
regulation for the operation of the business of the Seller and its Subsidiaries
as presently operated (the "Governmental Authorizations"). All the Governmental
Authorizations have been duly issued or obtained and are in full force and
effect, and the Seller and its Subsidiaries are in material compliance with the
terms of all the Governmental Authorizations. The Seller and its Subsidiaries
have not engaged in any activity that, to their knowledge, would cause
revocation or suspension of any such Governmental Authorizations. The Seller has
no knowledge of any facts which could reasonably be expected to cause the Seller
to believe that the Governmental Authorizations will not be renewed by the
appropriate governmental authorities in the ordinary course. Neither the
execution, delivery nor performance of this Agreement shall adversely affect the
status of any of the Governmental Authorizations.
(b) FDA. Without limiting the generality of the representations and
warranties made in paragraph (a) above, the Seller represents and warrants that
(i) the Seller and each of its Subsidiaries is in material compliance with all
applicable provisions of the United States Federal Food, Drug, and Cosmetic Act
(the "FDC Act"), (ii) its products and those of each of its Subsidiaries that
are in the Seller's control are not adulterated or misbranded and are in lawful
distribution, (iii) all of the products marketed by and within the control of
the Seller comply in all material respects with any conditions of approval and
the terms of the application submitted by the Seller to the United States Food
and Drug Administration (the "FDA"), (iv) the FDA has not initiated legal action
with respect to the manufacturing of the Seller's products, such as seizures or
FDA-required recalls, and Seller uses best efforts to comply with applicable FDA
good manufacturing practice regulations, (v) its products are labeled and
promoted by the Seller and its representatives in substantial compliance with
the applicable terms of the marketing application submitted by the Seller to the
FDA and the provisions of the FDC Act, (vi) all adverse events that were known
to and required to be reported by Seller to the FDA have been reported to the
FDA in a timely manner, (vii) neither the Seller nor any of its Subsidiaries is,
to their knowledge, employing or utilizing the services of any individual who
has been debarred under the FDC Act, (viii) all stability studies required to be
performed for products distributed by the Seller or any of its Subsidiaries have
been completed or are ongoing in material compliance with the applicable FDA
requirements, (ix) any products exported by the Seller or any of its
Subsidiaries have been exported in compliance with the FDC Act, and (x) the
Seller and its Subsidiaries is in compliance in all material respects with all
applicable provisions of the Controlled Substances Act.
3.27 Brokers. Except as set forth on Schedule 3.27, no broker, finder or
investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement,
based upon any arrangement made by or on behalf of the Seller.
13
3.28 Securities Laws. Neither the Seller nor its Subsidiaries nor any
agent acting on behalf of the Seller or its Subsidiaries has taken or will take
any action which might cause this Agreement or the Preferred Stock to violate
the Securities Act or the Exchange Act or any rules or regulations promulgated
thereunder, as in effect on the Closing Date. All offers and sales of capital
stock, securities and notes of the Seller were conducted and completed in
compliance with the Securities Act. All shares of capital stock and other
securities issued by the Seller and its Subsidiaries prior to the date hereof
have been issued in transactions that were either registered offerings or were
exempt from the registration requirements under the Securities Act and all
applicable state securities or "blue sky" laws and in compliance with all
applicable corporate laws.
3.29 Disclosure. No representation or warranty made by the Seller in this
Agreement, nor in any document, written information, financial statement,
certificate, schedule or exhibit prepared and furnished by the Seller or the
representatives of the Seller pursuant hereto or in connection with the
transactions contemplated hereby, contains or will contain any untrue statement
of a material fact, or omits to state a material fact necessary to make the
statements or facts contained herein or therein not misleading in light of the
circumstances under which they were furnished.
Article IV - Representations and Warranties of the Purchasers
Each Purchaser, for itself, hereby severally represents and warrants
to the Seller as follows:
4.1 Existence and Power. The Purchaser is duly organized, validly
existing and in good standing under the laws of the jurisdiction of such
Purchaser's organization. The Purchaser has all powers required to carry on such
Purchaser's business as now conducted.
4.2 Authorization. The execution, delivery and performance by the
Purchaser of this Agreement, the Related Documents to which such Purchaser is a
party, and the consummation by the Purchaser of the transactions contemplated
hereby have been duly authorized, and no additional action is required for the
approval of this Agreement. This Agreement and the Related Documents to which
the Purchaser is a party have been or, to the extent contemplated hereby, will
be duly executed and delivered and constitute valid and binding agreements of
the Purchaser, enforceable against such Purchaser in accordance with their
terms, except as may be limited by bankruptcy, reorganization, insolvency,
moratorium and similar laws of general application relating to or affecting the
enforcement of rights of creditors and except that enforceability of their
obligations thereunder are subject to general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or at
law).
4.3 Investment. The Purchaser is acquiring the Securities for its own
account for investment and not with a view to, or for sale in connection with,
any distribution thereof, nor with the intention of distributing or reselling
the same, provided, however, that by making the representation herein, the
Purchaser does not agree to hold any of the securities for any minimum or other
specific term and reserves the right to dispose of the Securities at any time in
accordance with or pursuant to a registration statement or an exemption under
the Securities Act. The Purchaser is aware that none of the Securities has been
registered under the Securities Act or
14
under applicable state securities or blue sky laws. The Purchaser is an
"Accredited Investor" as such term is defined in Rule 501 of Regulation D, as
promulgated under the Securities Act.
4.4 Reliance on Exemptions. The Purchaser understands that the Preferred
Stock and Warrants are being offered and sold to such Purchaser in reliance upon
specific exemptions from the registration requirements of United States federal
and state securities laws and that the Seller is relying upon the truth and
accuracy of, and such Purchaser's compliance with, the representations,
warranties, agreements, acknowledgments and understandings of such Purchaser set
forth herein in order to determine the availability of such exemptions and the
eligibility of such Purchaser to acquire the Securities.
4.5 Experience of such Purchaser. Such Purchaser, either alone or together
with its representatives, has such knowledge, sophistication and experience in
business and financial matters so as to be capable of evaluating the merits and
risks of the prospective investment in the Securities, and has so evaluated the
merits and risks of such investment. Such Purchaser is able to bear the economic
risk of an investment in the Securities and, at the present time, is able to
afford a complete loss of such investment.
4.6 General Solicitation. Such Purchaser is not purchasing the Securities
as a result of any advertisement, article, notice or other communication
regarding the Securities published in any newspaper, magazine or similar media
or broadcast over television or radio or presented at any seminar or any other
general solicitation or general advertisement.
4.7 Independence. Such Purchaser is neither an Affiliate of any other
Purchaser nor is a member of any "group" in which any other Purchaser is a
member, except that: (i) OrbiMed Associates LLC, PW Juniper Crossover Fund LLC
or Caduceus Private Investment L.P. are Affiliates of each other by virtue of
OrbiMed Advisors LLC acting as their investment advisor; (ii) Xmark Fund, L.P.
and Xmark Fund, Ltd. are Affiliates of each other; (iii) DMG Legacy Fund, LLC,
DMG Legacy Institutional Fund Ltd. and DMG Legacy International Fund Ltd. are
Affiliates of each other; and (iv) ProMed Partners, L.P. and ProMed Offshore
Fund, Ltd. are Affiliates of each other. For purposes hereof, "group" has the
meaning set forth in Section 13(d) of the Exchange Act and applicable
regulations of the Securities and Exchange Commission.
4.8 Designation of Directors.
(i) Such Purchaser does not have, nor will it have by virtue of the
consummation of the transactions contemplated hereunder, the right to designate
any director or any nominee for election as a director of the Seller, except as
set forth in the Seller's Bylaws (as amended by the Bylaw Amendment).
(ii) Such Purchaser does not have, nor will it have by virtue of the
consummation of the transactions contemplated hereunder, any obligation to vote
for any nominee for election as a director of the Seller.
(iii) Such Purchaser does not have, nor will it have by virtue of the
consummation of the transactions contemplated hereunder, any right to require
any other person to designate a nominee or vote for a nominee for election as a
director of the Seller.
15
(iv) Such Purchaser does not have, nor will it have by virtue of the
consummation of the transactions contemplated hereunder, any contractual or
other arrangement or agreement with any other person that would, directly or
indirectly, influence the management of the Seller; subject, however, to the
Purchaser's right to designate directors or nominees for election as directors
of the Seller in the manner described in the Seller's Bylaws (as amended by the
Bylaw Amendment).
Article V - Covenants of the Seller and Purchasers
5.1 Insurance. The Seller and its Subsidiary shall, from time to time upon
the written request of the Purchasers, promptly furnish or cause to be furnished
to the Seller evidence, in form and substance reasonably satisfactory to the
Purchasers, of the maintenance of all insurance maintained by it for loss or
damage by fire and other hazards, damage or injury to persons and property,
including from product liability, and under workmen's compensation laws.
5.2 Reporting Obligations. So long as any of the Preferred Stock is
outstanding, and so long as any Warrant has not been exercised and has not
expired by its terms, the Seller shall furnish to the Purchasers, or any other
persons who hold any of the Preferred Stock or Warrants (provided that such
holders give notice to the Seller that they hold Preferred Stock or Warrants and
furnish their addresses) promptly upon their becoming available one copy of each
report, notice or proxy statement sent by the Seller to its stockholders
generally, and of each regular or periodic report (pursuant to the Exchange Act)
and any registration statement, prospectus or written communication (other than
transmittal letters) pursuant to the Securities Act, in each case relating to
the issuance or registration of Conversion Shares and the Warrant Shares and
filed by the Seller with (i) the Commission or (ii) any securities exchange on
which shares of Common Stock are listed.
The Purchasers are hereby authorized to deliver a copy of any
financial statement or any other information relating to the business,
operations or financial condition of the Seller which may have been furnished to
the Purchasers hereunder, to any regulatory body or agency having jurisdiction
over the Purchasers or to any Person which shall, or shall have right or
obligation to succeed to all or any part of the Purchasers' interest in the
Seller or this Agreement.
5.3 Investigation. The representations, warranties, covenants and
agreements set forth in this Agreement shall not be affected or diminished in
any way by any investigation (or failure to investigate) at any time by or on
behalf of the party for whose benefit such representations, warranties,
covenants and agreements were made. Without limiting the generality of the
foregoing, the inability or failure of the Purchasers to discover any breach,
default or misrepresentation by the Seller under this Agreement or the Related
Documents (including under any certificate furnished pursuant to this
Agreement), notwithstanding the exercise by the Purchasers or other holders of
the Preferred Stock of their rights hereunder to conduct an investigation shall
not in any way diminish any liability hereunder.
5.4 Public Announcements. Neither the Purchasers nor the Seller shall (and
each such party shall use its reasonable efforts to cause its Subsidiaries,
Affiliates, directors, officers, employees and authorized representatives not
to), issue any press release, make any public announcement or furnish any
written statement to its employees or stockholders generally
16
concerning the transactions contemplated by this Agreement without the consent
of the other party (which consent shall not be unreasonably withheld), except to
the extent required by applicable law or the applicable requirements of
applicable stock exchange rules (including NASDAQ) or as otherwise contemplated
herein (and in either such case such party shall, to the extent consistent with
timely compliance with such requirement, consult with the other party prior to
making the required release, announcement or statement).
5.5 Use of Proceeds. The Seller covenants and agrees that the proceeds of
the Purchase Price shall be used by the Seller for working capital and general
corporate purposes; under no circumstances shall any portion of the proceeds be
applied to:
(i) accelerated repayment of debt existing on the date hereof;
(ii) the payment of dividends or other distributions on any capital
stock of the Seller other than the Preferred Stock;
(iii) increased executive compensation or loans to officers,
employees, shareholders or directors, unless approved by a
disinterested majority of the Board of Directors;
(iv) the purchase of debt or equity securities of any person,
including the Seller and its Subsidiaries, except in connection
with investment of excess cash in high quality (A1/P1 or better)
money market instruments having maturities of one year or less;
or
(v) any expenditure not directly related to the business of the
Seller.
5.6 Corporate Existence. So long as a Purchaser owns Preferred Stock or
Conversion Shares, the Seller shall preserve and maintain and cause its
Subsidiaries to preserve and maintain their corporate existence and good
standing in the jurisdiction of their incorporation and the rights, privileges
and franchises of the Seller and its Subsidiary (except, in each case, in the
event of a merger or consolidation in which the Seller or its Subsidiary, as
applicable, is not the surviving entity) in each case where failure to so
preserve or maintain could have a Material Adverse Effect on the financial
condition, business or operations of the Seller and its Subsidiaries taken as a
whole.
5.7 Licenses. The Seller shall, and shall cause its Subsidiaries to,
maintain at all times all material licenses or permits necessary to the conduct
of its business and as required by any governmental agency or instrumentality
thereof, including without limitation all FDA clearances and approvals.
5.8 Short Selling. Each of the Purchasers hereby irrevocably agrees that
it will not, without the prior written consent of the Seller, make any short
sale (including, but not limited to, a "short against the box") of the Seller's
Common Stock for a period beginning on the date of this Agreement and ending on
the date that is the twenty-seven month anniversary of the Closing Date.
17
5.9 Taxes and Claims. The Seller and its Subsidiaries shall duly pay and
discharge (a) all material taxes, assessments and governmental charges upon or
against the Seller or properties or assets prior to the date on which penalties
attach thereto, unless and to the extent that such taxes are being diligently
contested in good faith and by appropriate proceedings, and appropriate reserves
therefor have been established, and (b) all material lawful claims, whether for
labor, materials, supplies, services or anything else which might or could, if
unpaid, become a lien or charge upon the properties or assets of the Seller or
its Subsidiaries unless and to the extent only that the same are being
diligently contested in good faith and by appropriate proceedings and
appropriate reserves therefor have been established.
5.10 Perform Covenants. The Seller shall (a) make full and timely payment
of any and all payments on the Preferred Stock, and all other indebtedness of
the Seller to the Purchasers in connection therewith, whether now existing or
hereafter arising, and (b) duly comply with all the terms and covenants
contained herein and in each of the instruments and documents given to the
Purchasers in connection with or pursuant to this Agreement, all at the times
and places and in the manner set forth herein or therein.
5.11 Additional Covenants. (a) Except for transactions approved by a
majority of the disinterested directors of the Board of Directors, neither the
Seller nor any of its Subsidiaries shall enter into any transaction with any
director, officer, employee or holder of more than 5% of the outstanding capital
stock of any class or series of capital stock of the Seller or any of its
Subsidiaries, member of the family of any such person, or any corporation,
partnership, trust or other entity in which any such person, or member of the
family of any such person, is a director, officer, trustee, partner or holder of
more than 5% of the outstanding capital stock thereof, with the exception of
transactions which are consummated upon terms that are no less favorable than
would be available if such transaction had been effected at arms-length, in the
reasonable judgment of the Board of Directors.
(b) Promptly after the date hereof, the Seller shall apply to each
U.S. securities exchange, interdealer quotation system and other trading market
where its Common Stock is currently listed or qualified for trading or quotation
for the listing or qualification of the Conversion Shares and the Warrant Shares
for trading or quotation thereon in the time and manner required thereby and
shall from time to time advise the Purchaser of the status of such application,
and promptly give notice of any determination, whether or not final, and whether
or unfavorable, with respect to such applications.
(c) The Seller shall timely prepare and file with the Securities and
Exchange Commission the form of notice of the sale of securities pursuant to the
requirements of Regulation D regarding the sale of the Preferred Stock and
Warrants under this Agreement.
(d) The Seller shall timely prepare and file such applications,
consents to service of process (but not including a general consent to service
of process) and similar documents and take such other steps and perform such
further acts as shall be required by the state securities law requirements of
each jurisdiction where a Purchaser resides as indicated on Schedule 1 with
respect to the sale of the Preferred Stock and Warrants under this Agreement.
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5.12 Securities Laws Disclosure; Publicity. The Seller may (i) on or
promptly after the Closing Date, issue a press release disclosing the
transactions contemplated hereby and acceptable to Purchasers purchasing a
majority of the Preferred Stock at the First Closing, and (ii) after the Closing
Date, file with the Commission a Report on Form 8-K disclosing the transactions
contemplated hereby. Except as provided in the preceding sentence, neither the
Company nor the Purchasers shall make any press release or other publicity about
the terms of this Agreement or the transactions contemplated hereby without the
prior approval of the other unless otherwise required by law.
5.13 Shareholder Approval. The Company shall use its reasonable best
efforts to call a meeting of its shareholders to be held as promptly as
practicable after the date hereof for the purpose of voting upon and approving
(i) the issuance of the Preferred Shares and the Warrants at the Second Closing
and the issuance in full, without regard to whether such issuance is
below-market, of the Conversion Shares upon conversion of the Preferred Shares
or otherwise pursuant to the Statement of Designation (including, without
limitation, Dividend Shares) and the Warrant Shares upon exercise of or
otherwise pursuant to the Warrants and (ii) an amendment to the Bylaws
substantially in the form attached hereto as Exhibit F (the "Second Bylaw
Amendment") (the "Shareholder Approval"). The Company shall recommend to its
shareholders approval of such matters. The Company shall use its reasonable best
efforts to solicit from its shareholders proxies in favor of such matters
sufficient to comply with all relevant legal requirements, including, without
limitation, Rule 4350(i) promulgated by the National Association of Securities
Dealers, Inc., and shall vote such proxies and, shall use its reasonable best
efforts to cause all "affiliates" (as such term is defined in Rule 12b-2
promulgated under the Exchange Act) of the Company to vote any shares of Common
Stock beneficially owned by such persons or entities, in favor of such matters.
5.14 Nomination of Director. Each of the Purchasers nominates Xxxxxxxx
Xxxxxxxxxxx to the Board of Directors of the Seller in accordance with their
right to nominate the board member under Section 5.02(c)(1)(i) of the Bylaw
Amendment to the Seller's Bylaws.
5.15 Further Assurances. The Seller shall, at its cost and expense,
upon written request of the Purchasers, duly execute and deliver, or cause to be
duly executed and delivered, to the Purchasers such further instruments and do
and cause to be done such further acts as may be necessary, advisable or proper,
in the absolute discretion of the Purchasers, to carry out more effectually the
provisions and purposes of this Agreement. The parties shall use their best
efforts to timely satisfy each of the conditions described in Article VI of this
Agreement.
Article VI - Conditions to Closings
6.1 Conditions to Obligations of Purchasers to Effect the Closings.
The obligations of a Purchaser to effect the First Closing or the Second
Closing, as the case may be, and the transactions contemplated by this Agreement
shall be subject to the satisfaction at or prior to the First Closing or the
Second Closing, as applicable, of each of the following conditions, any of which
may be waived, in writing, by a Purchaser:
(a) With respect to the First Closing, the Seller shall deliver
or cause to be delivered to each of the Purchasers the following:
19
1. (i) One or more certificates evidencing the aggregate
number of shares of the Preferred Stock, duly authorized,
issued, fully paid and non-assessable, as is indicated on
Schedule 1 to be purchased at the First Closing by such
Purchaser, registered in the name of such Purchaser, in
such denominations as is indicated on Schedule 1 for such
Purchaser with respect to the First Closing (provided that
delivery of such certificates on the business day
immediately after the First Closing Date shall be deemed
to satisfy the Seller's obligation in this Section
6.1(a)(1)(i));
(ii) One or more certificates evidencing the Series A
Warrants, registered in the name of such Purchaser, in
such denominations as is indicated on Schedule 1 for such
Purchaser with respect to the First Closing, pursuant to
which such Purchaser shall be entitled to purchase an
aggregate of that number of shares of Common Stock as is
indicated on Schedule 1 to be purchased at the First
Closing by such Purchasers (provided that delivery of such
certificates on the business day immediately after the
First Closing Date shall be deemed to satisfy the Seller's
obligation in this Section 6.1(a)(1)(ii)).
2. The Investor Rights Agreement, in the form attached
hereto as Exhibit C (the "Investor Rights Agreement"),
duly executed by the Seller.
3. The Subsidiary Guaranty, in the form attached hereto as
Exhibit D (the "Subsidiary Guaranty"), duly executed by
Ortho, Inc., a wholly-owned Subsidiary of the Seller
("Ortho, Inc.").
4. A legal opinion of Xxxxxx, Xxxxx & Bockius LLP ("Seller's
Counsel"), counsel to the Seller, in form and substance
satisfactory to the Purchasers.
5. A certificate of the Secretary of the Seller (the
"Secretary's Certificate"), in form and substance
satisfactory to the Purchasers, certifying as follows:
(i) that the Statement of Designation authorizing the
Preferred Stock has been duly filed in the office
of the Department of State of the Commonwealth of
the Pennsylvania, and that attached to the
Secretary's Certificate is true and complete copy
of the Amended and Restated Articles of
Incorporation of the Seller and the Statement of
Designation;
(ii) that a true copy of the Bylaws of the Seller, as
amended to the Closing Date, is attached to the
Secretary's Certificate;
(iii) that attached thereto are true and complete copies
of the resolutions of the Board of Directors of the
Seller authorizing the execution, delivery and
performance of this Agreement and the Related
Documents, instruments and certificates required to
be executed by it in connection herewith and
approving the consummation of the
20
transactions in the manner contemplated hereby
including, but not limited to, the authorization
and issuance of the Preferred Stock,
(iv) the names and true signatures of the officers of
the Seller signing this Agreement and all other
documents to be delivered in connection with this
Agreement,
(v) such other matters as required by this Agreement,
and
(vi) such other matters as the Purchasers may reasonably
request.
6. A wire transfer representing the Purchasers' reasonable
legal fees and expenses as described in Section 8.2 hereof;
such fee may, at the election of the Seller, be paid out of
the funds due from the Purchasers at the First Closing.
7. Proof of due filing with the Department of State of the
Commonwealth of Pennsylvania of the Statement of
Designation authorizing the Preferred Stock.
8. A certificate of an officer of the Seller certifying that
the Board of Directors has approved an amendment to the
Bylaws of the Seller substantially in the form attached
hereto as Exhibit E (the "Bylaw Amendment").
9. Such other documents as the Purchasers shall reasonably
request.
(b) With respect to the Second Closing, the Seller shall
deliver or cause to be delivered the following to each of the Purchasers that is
to purchase shares of Preferred Stock at the Second Closing:
1. (i) One or more certificates evidencing the aggregate
number of shares of the Preferred Stock, duly
authorized, issued, fully paid and non-assessable,
as is indicated on Schedule 1 to be purchased at
the Second Closing by such Purchaser, registered in
the name of such Purchaser, in such denominations
as is indicated on Schedule 1 for such Purchaser
with respect to the Second Closing (provided that
delivery of such certificates on the business day
immediately after the Second Closing Date shall be
deemed to satisfy the Seller's obligation in this
Section 6.1(b)(1)(i));
(ii) One or more certificates evidencing the Series A
Warrants, registered in the name of such Purchaser,
in such denominations as is indicated on Schedule 1
for such Purchaser with respect to the Second
Closing, pursuant to which such Purchaser shall be
entitled to purchase an aggregate of that number of
shares of Common Stock as is indicated on Schedule
1 to be purchased at the Second Closing by such
Purchaser (provided that delivery of such
certificates on the business day immediately after
the Second Closing Date shall be deemed to satisfy
the Seller's obligation in this Section
6.1(b)(1)(ii)).
21
2. A certificate of an officer of the Seller certifying that the
Seller's Board of Directors and shareholders have approved (i)
the issuance of an additional 500 shares of Preferred Stock
and (ii) the Second Bylaw Amendment.
3. A certificate of an officer of the Seller certifying that each
of the representations and warranties of the Seller set forth
herein and each of the Related Documents is true and correct
as of the Second Closing Date, except (i) as may be indicated
in Schedules delivered as of the Second Closing Date and (ii)
for representations and warranties that speak as of a specific
date, which representations and warranties shall be true and
correct as of such date.
6.2 Conditions to Obligations of the Seller to Effect the Closings.
The obligations of the Seller to effect the First Closing or the Second Closing,
as the case may be, and the transactions contemplated by this Agreement shall be
subject to the satisfaction at or prior to the First Closing or the Second
Closing, as applicable of each of the following conditions, any of which may be
waived, in writing, by the Company:
(a) With respect to the First Closing, each of the Purchasers
shall deliver or cause to be delivered to the Seller (i) payment of the portion
of the Purchase Price set forth opposite each Purchaser's name on Schedule 1 for
the First Closing, in cash by either (x) wire transfer of immediately available
funds to an account designated in writing by Seller prior to the date hereof, or
(y) certified or cashier's check; (ii) an executed copy of this Agreement; (iii)
an executed copy of the Investor Rights Agreement; (iv) executed copies of the
proxy attached to the Investor Rights Agreement and (v) such other documents as
the Seller shall reasonably request.
(b) With respect to the Second Closing, each of the Purchasers
that is to purchase shares of Preferred Stock on the Second Closing Date shall
deliver or cause to be delivered to the Seller (i) payment of the portion of the
Purchase Price set forth opposite each Purchaser's name on Schedule 1 for the
Second Closing; and (ii) a certificate of an officer of the Purchaser certifying
that each of the representations and warranties of such Purchaser set forth
herein and each of the Related Documents is true and correct as of the Second
Closing Date.
Article VII - - Indemnification and Termination
7.1 Survival of Representations. Except as otherwise provided herein,
the representations and warranties of the Seller and the Purchasers contained in
or made pursuant to this Agreement shall survive the execution and delivery of
this Agreement and the Closing Date and shall continue in full force and effect
for a period of two (2) years from the Closing Date; provided, however, that the
Seller's warranties and representations under Sections 3.13 (Taxes), 3.19
(Subsidiaries and Investments), 3.20 (Capitalization), and 3.21 (Options,
Warrants, Rights), shall survive the Closing Date and continue in full force and
effect until the expiration of all applicable statutes of limitation; and
further provided that the Seller's warranties and representations under Section
3.25 (Environmental Matters) shall survive the Closing Date and continue in full
force and effect for a period of six (6) years from the Closing Date. The
Seller's
22
warranties and representations shall in no way be affected by any investigation
of the subject matter thereof made by or on behalf of the Seller or the
Purchasers.
7.2 Indemnification. (a) The Seller agrees to indemnify and hold
harmless the Purchasers, their Affiliates, each of their officers, directors,
employees and agents and their respective successors and assigns, from and
against any losses, damages, or expenses which are caused by or arise out of (i)
any breach or default in the performance by the Seller of any covenant or
agreement made by the Seller in this Agreement or in any of the Related
Documents; (ii) any breach of warranty or representation made by the Seller in
this Agreement or in any of the Related Documents (iii) any and all third party
actions, suits, proceedings, claims, demands, judgments, costs and expenses
(including reasonable legal fees and expenses) incident to any of the foregoing.
(b) The Purchasers, severally and not jointly,
agree to indemnify and hold harmless the Seller, its Affiliates, each of their
officers, directors, employees and agents and their respective successors and
assigns, from and against any third party losses, damages, or expenses which are
caused by or arise out of (A) any breach or default in the performance by the
Purchasers of any covenant or agreement made by the Purchasers in this Agreement
or in any of the Related Documents; (B) any breach of warranty or representation
made by the Purchasers in this Agreement or in any of the Related Documents; and
(C) any and all third party actions, suits, proceedings, claims, demands,
judgments, costs and expenses (including reasonable legal fees and expenses)
incident to any of the foregoing; provided, however, that a Purchaser's
liability under this Section 7.2(b) shall not exceed the Purchase Price paid by
such Purchaser hereunder.
7.3 Indemnity Procedure. A party or parties hereto agreeing to be
responsible for or to indemnify against any matter pursuant to this Agreement is
referred to herein as the "Indemnifying Party" and the other party or parties
claiming indemnity is referred to as the "Indemnified Party".
An Indemnified Party under this Agreement shall,
with respect to claims asserted against such party by any third party, give
written notice to the Indemnifying Party of any liability which might give rise
to a claim for indemnity under this Agreement within sixty (60) business days of
the receipt of any written claim from any such third party, but not later than
twenty (20) days prior to the date any answer or responsive pleading is due, and
with respect to other matters for which the Indemnified Party may seek
indemnification, give prompt written notice to the Indemnifying Party of any
liability which might give rise to a claim for indemnity; provided, however,
that any failure to give such notice will not waive any rights of the
Indemnified Party except to the extent the rights of the Indemnifying Party are
materially prejudiced.
The Indemnifying Party shall have the right, at
its election, to take over the defense or settlement of such claim by giving
written notice to the Indemnified Party at least fifteen (15) days prior to the
time when an answer or other responsive pleading or notice with respect thereto
is required. If the Indemnifying Party makes such election, it may conduct the
defense of such claim through counsel of its choosing (subject to the
Indemnified Party's approval of such counsel, which approval shall not be
unreasonably withheld), shall be solely responsible for the expenses of such
defense and shall be bound by the results of its defense or
23
settlement of the claim. The Indemnifying Party shall not settle any such claim
without prior notice to and consultation with the Indemnified Party, and no such
settlement involving any equitable relief or which might have an adverse effect
on the Indemnified Party may be agreed to without the written consent of the
Indemnified Party (which consent shall not be unreasonably withheld). So long as
the Indemnifying Party is diligently contesting any such claim in good faith,
the Indemnified Party may pay or settle such claim only at its own expense and
the Indemnifying Party will not be responsible for the fees of separate legal
counsel to the Indemnified Party, unless the named parties to any proceeding
include both parties or representation of both parties by the same counsel would
be inappropriate due to conflicts of interest or otherwise. If the Indemnifying
Party does not make such election, or having made such election does not, in the
reasonable opinion of the Indemnified Party proceed diligently to defend such
claim, then the Indemnified Party may (after written notice to the Indemnifying
Party), at the expense of the Indemnifying Party, elect to take over the defense
of and proceed to handle such claim in its discretion and the Indemnifying Party
shall be bound by any defense or settlement that the Indemnified Party may make
in good faith with respect to such claim. In connection therewith, the
Indemnifying Party will fully cooperate with the Indemnified Party should the
Indemnified Party elect to take over the defense of any such claim.
The parties agree to cooperate in defending such third party
claims and the Indemnified Party shall provide such cooperation and such access
to its books, records and properties as the Indemnifying Party shall reasonably
request with respect to any matter for which indemnification is sought
hereunder; and the parties hereto agree to cooperate with each other in order to
ensure the proper and adequate defense thereof.
With regard to claims of third parties for which indemnification is payable
hereunder, such indemnification shall be paid by the Indemnifying Party upon the
earlier to occur of: (i) the entry of a judgment against the Indemnified Party
and the expiration of any applicable appeal period, or if earlier, five (5) days
prior to the date that the judgment creditor has the right to execute the
judgment; (ii) the entry of an unappealable judgment or final appellate decision
against the Indemnified Party; or (iii) a settlement of the claim.
Notwithstanding the foregoing, the reasonable expenses of counsel to the
Indemnified Party shall be reimbursed on a current basis by the Indemnifying
Party if such expenses are a liability of the Indemnifying Party. With regard to
other claims for which indemnification is payable hereunder, such
indemnification shall be paid promptly by the Indemnifying Party upon demand by
the Indemnified Party.
Article VIII - Miscellaneous
8.1 Further Assurances. Each party agrees to cooperate fully with the
other parties and to execute such further instruments, documents and agreements
and to give such further written assurances as may be reasonably requested by
any other party to better evidence and reflect the transactions described herein
and contemplated hereby and to carry into effect the intents and purposes of
this Agreement, and further agrees to take promptly, or cause to be taken, all
actions, and to do promptly, or cause to be done, all things necessary, proper
or advisable under applicable law to consummate and make effective the
transactions contemplated hereby, to obtain all necessary waivers, consents and
approvals, to effect all necessary registrations and filings, and to remove any
injunctions or other impediments or delays, legal or otherwise, in
24
order to consummate and make effective the transactions contemplated by this
Agreement for the purpose of securing to the parties hereto the benefits
contemplated by this Agreement.
8.2 Fees and Expenses. The Seller shall be responsible for the payment of
the Purchasers' reasonable legal fees and expenses relating to the preparation
and negotiation of this Agreement, up to a maximum of $75,000.
8.3 Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
specified in this Section prior to 5:00 p.m. (New York City time) on a business
day, (b) the next business day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified in
this Section on a day that is not a business day or later than 5:00 p.m. (New
York City time) on any business day, or (c) the business day following the date
of mailing, if sent by U.S. nationally recognized overnight courier service such
as Federal Express. The address for such notices and communications shall be as
follows:
If to the Purchasers, to their respective If to the Seller, to:
addresses set forth on Schedule 1.
Orthovita, Inc.
If to OrbiMed Associates LLC, PW Juniper 00 Xxxxx Xxxxxx Xxxxxxx
Crossover Fund LLC or Caduceus Xxxxxxx, Xxxxxxxxxxxx 00000
Private Investment L.P., with a copy to: Att'n: Xxxxxx X. Xxxxx,
Xxxxxxxx Xxxxx & Deutsch LLP Chief Financial Officer
000 Xxxxx Xxxxxx Fax No. 000.000.0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
Fax No. 000.000.0000
With a copy in each case to:
With a copy in each other case to:
Xxxxxx, Xxxxx & Xxxxxxx LLP
Xxxx Xxxxxxx, P.C. 0000 Xxxxxx Xxxxxx
1350 Avenue of the Americas - 26th Floor Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Xxx Xxxx, Xxx Xxxx 00000 Att'n: Xxxxxxxxx X. Xxxxxx, Esq.
Attention: Xxxxxx X. Xxxxxxxx, Esq. Fax No. 000.000.0000
Fax No.: 000.000.0000
Unless otherwise stated above, such communications shall be effective when they
are received by the addressee thereof in conformity with this Section. Any party
may change its address for such communications by giving notice thereof to the
other parties in conformity with this Section.
8.4 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
enforced in accordance with the laws of the State of New York without reference
to the choice of law principles thereof.
25
8.5 Jurisdiction and Venue. This Agreement shall be subject to the
exclusive jurisdiction of the Xxxxxxx Xxxxxxxx Xxxxx, Xxxxxxxx Xxxxxxxx of New
York and if such court does not have proper jurisdiction, the State Courts of
New York County, New York. The parties to this Agreement agree that any breach
of any term or condition of this Agreement shall be deemed to be a breach
occurring in the State of New York by virtue of a failure to perform an act
required to be performed in the State of New York and irrevocably and expressly
agree to submit to the jurisdiction of the Xxxxxxx Xxxxxxxx Xxxxx, Xxxxxxxx
Xxxxxxxx of New York and if such court does not have proper jurisdiction, the
State Courts of New York County, New York for the purpose of resolving any
disputes among the parties relating to this Agreement or the transactions
contemplated hereby. The parties irrevocably waive, to the fullest extent
permitted by law, any objection which they may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to
this Agreement, or any judgment entered by any court in respect hereof brought
in New York County, New York, and further irrevocably waive any claim that any
suit, action or proceeding brought in Xxxxxxx Xxxxxxxx Xxxxx, Xxxxxxxx Xxxxxxxx
of New York and if such court does not have proper jurisdiction, the State
Courts of New York County, New York has been brought in an inconvenient forum.
8.6 Successors and Assigns. This Agreement is personal to each of the
parties and may not be assigned without the written consent of the other
parties; provided, however, that any of the Purchasers shall be permitted to
assign their rights under this Agreement to any Affiliate of such Purchaser to
whom it assigns or transfers Securities.
8.7 Severability. If any provision of this Agreement, or the application
thereof, shall for any reason or to any extent be invalid or unenforceable, the
remainder of this Agreement and application of such provision to other persons
or circumstances shall continue in full force and effect and in no way be
affected, impaired or invalidated.
8.8 Entire Agreement. This Agreement and the other agreements and
instruments referenced herein constitute the entire understanding and agreement
of the parties with respect to the subject matter hereof and supersedes all
prior agreements and understandings.
8.9 Other Remedies. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party shall be deemed cumulative with
and not exclusive of any other remedy conferred hereby or by law, or in equity
on such party, and the exercise of any one remedy shall not preclude the
exercise of any other.
8.10 Amendment and Waivers. Any term or provision of this Agreement may be
amended, and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or prospectively)
only by a writing signed by the Seller and the holders of a majority of the
Preferred Stock then outstanding, and such waiver or amendment, as the case may
be, shall be binding upon all Purchasers. The waiver by a party of any breach
hereof or default in the performance hereof shall not be deemed to constitute a
waiver of any other default or any succeeding breach or default. This Agreement
may not be amended or supplemented by any party hereto except pursuant to a
written amendment executed by the Seller and the holders of the a majority of
the Preferred Stock then outstanding.
26
8.11 No Waiver. The failure of any party to enforce any of the provisions
hereof shall not be construed to be a waiver of the right of such party
thereafter to enforce such provisions.
8.12 Construction of Agreement; Knowledge. For purposes of this Agreement,
the term "knowledge," when used in reference to a corporation means the
knowledge of the directors and executive officers of such corporation
(including, if applicable, any person designated as a chief scientific, medical
or technical officer) assuming such persons shall have made inquiry that is
customary and appropriate under the circumstances to which reference is made,
and when used in reference to an individual means the knowledge of such
individual assuming the individual shall have made inquiry that is customary and
appropriate under the circumstances to which reference is made.
8.13 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original as against any party whose
signature appears thereon and all of which together shall constitute one and the
same instrument. This Agreement shall become binding when one or more
counterparts hereof, individually or taken together, shall bear the signatures
of all of the parties reflected hereon as signatories. In the event that any
signature is delivered by facsimile transmission, such signature shall create a
valid and binding obligation of the party executing (or on whose behalf such
signature is executed) with the same force and effect as if such facsimile
signature page were an original thereof.
8.14 No Third Party Beneficiary. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person
other than the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and permitted assigns, any
rights or remedies under or by reason of this Agreement.
[Signature Page Follows:]
27
In Witness Whereof, the parties hereto have executed this Agreement as of
the date first above written.
PURCHASERS: Orthovita, Inc., a Pennsylvania corporation
ORBIMED ASSOCIATES LLC
By: /s/ Xxxxxxxx Xxxxxxxxxxx By: /s/ Xxxxxx Xxxxxxx
------------------------- -------------------
Name: Xxxxxxxx Xxxxxxxxxxx Xxxxxx Xxxxxxx, Chief Executive
Title: Director Officer
PW JUNIPER CROSSOVER FUND LLC
By: /s/ Xxxxxxxx Xxxxxxxxxxx
-------------------------
Name: Xxxxxxxx Xxxxxxxxxxx
Title: Director
CADUCEUS PRIVATE INVESTMENTS, L.P.
By: /s/ Xxxxxxxx Xxxxxxxxxxx
-------------------------
Name: Xxxxxxxx Xxxxxxxxxxx
Title: Director
SDS MERCHANT FUND, L.P.
by its Managing Member,
SDS Capital Partners, L.L.C.
By: /s/ Xxxxx X. Xxxxx
-------------------
Name: Xxxxx X. Xxxxx
Title: General Counsel
DMG LEGACY FUND LLC
by its Managing Member,
DMG Advisors LLC
By: /s/ Xxxxxx Xxxxxx
------------------
Name: Xxxxxx Xxxxxx
Title: Chief Financial Officer
28
DMG LEGACY INSTITUTIONAL FUND
LLC
by its Managing Member,
DMG Advisors LLC
By: /s/ Xxxxxx Xxxxxx
------------------
Name: Xxxxxx Xxxxxx
Title: Chief Financial Officer
DMG LEGACY INTERNATIONAL FUND LTD.
by its Investment Advisor
DMG Advisors LLC
By: /s/ Xxxxxx Xxxxxx
------------------
Name: Xxxxxx Xxxxxx
Title: Chief Financial Officer
PROMED PARTNERS, L.P.
By: /s/ Xxxxx Xxxxxxxx
-------------------
Name: Xxxxx Xxxxxxxx
Title: Managing Member and
Portfolio Manager
PROMED OFFSHORE FUND, LTD.
By: /s/ Xxxxx Xxxxxxxx
-------------------
Name: Xxxxx Xxxxxxxx
Title: Managing Member and
Portfolio Manager
XMARK FUND, L.P.
By: /s/ Xxxxxxxx X. Xxxx
---------------------
Name: Xxxxxxxx X. Xxxx
Title: CIO
XMARK FUND, LTD.
By: /s/ Xxxxxxxx X. Xxxx
---------------------
Name: Xxxxxxxx X. Xxxx
Title: CIO
SMALLCAPS ONLINE
By: /s/ Xxxxx Xxxxxxxxx
--------------------
Name: Xxxxx Xxxxxxxxx
Title: Chairman
By: /s/ Xxxx Xxxxxxxx
------------------
Xxxx Xxxxxxxx
29
Schedule 1
to
Preferred Stock and Warrant Purchase Agreement
Purchasers and Shares of Preferred Stock and Warrants Purchased
====================================================================================================================================
First Closing - Second Closing
Shares of Shares of
Common Stock Common Stock
First Closing Acquirable Second Closing - Acquirable
Shares of under First Closing - Shares of Under Second Closing -
Name and Address of Purchaser Preferred Stock Warrants Purchase Price Preferred Stock Warrants Purchase Price
------------------------------------------------------------------------------------------------------------------------------------
7 30,774 $ 70,000 500 (may be 2,198,125 (may $5,000,000 (may
OrbiMed Associates LLC allocated among be allocated be allocated
c/o OrbiMed Advisors LLC OrbiMed among OrbiMed among OrbiMed
000 Xxxxx Xxxxxx, 00xx Xxxxx Associates LLC, Associates Associates LLC,
Xxx Xxxx, Xxx Xxxx 00000 PW Juniper LLC, PW Juniper PW Juniper
Att'n: Xx. Xxxxxxxx Xxxxxxxxxxx Crossover Fund Crossover Fund Crossover Fund
Fax: 000.000.0000 LLC and Caduceus LLC and LLC and Caduceus
Private Caduceus Private
Investment L.P.)* Private Investment
Investment L.P.)*
L.P.)
------------------------------------------------------------------------------------------------------------------------------------
PW Juniper Crossover Fund LLC 158 694,607 $1,580,000 See OrbiMed See OrbiMed See OrbiMed
c/o OrbiMed Advisors LLC Associates LLC Associates LLC Associates LLC
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Att'n: Xx. Xxxxxxxx Xxxxxxxxxxx
Fax: 000.000.0000
------------------------------------------------------------------------------------------------------------------------------------
Caduceus Private Investment L.P. 335 1,472,743 $3,350,000 See OrbiMed See OrbiMed See OrbiMed
c/o OrbiMed Advisors LLC Associates LLC Associates LLC Associates LLC
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Att'n: Xx. Xxxxxxxx Xxxxxxxxxxx
Fax: 000.000.0000
------------------------------------------------------------------------------------------------------------------------------------
350 1,538,687 $3,500,000 0 0 0
SDS Merchant Fund, L.P.
00 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxxx 00000
Att'n: Xx. Xxxxxx Xxxxx
Fax: 000.000.0000
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
DMG Legacy Fund LLC 27 118,699 $ 270,000 0 0 0
c/o DMG Advisors LLC
00 Xxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Attn: Xx. Xxxxxx XxXxxxx
Fax: 000.000.0000
------------------------------------------------------------------------------------------------------------------------
DMG Legacy Institutional Fund 150 659,437 $ 1,500,000 0 0 0
LLC
c/o DMG Advisors LLC
00 Xxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Attn: Xx. Xxxxxx XxXxxxx
Fax: 000.000.0000
------------------------------------------------------------------------------------------------------------------------
DMG Legacy International Fund 173 760,551 $ 1,730,000 0 0 0
Ltd.
c/o DMG Advisors LLC
00 Xxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Attn: Xx. Xxxxxx XxXxxxx
Fax: 000.000.0000
------------------------------------------------------------------------------------------------------------------------
ProMed Partners, L.P. 44 193,435 $ 440,000 0 0 0
000 Xxxx Xxxxxx # 0000
Xxx Xxxx, XX 00000
Attn: Xx. Xxxxx Xxxxxxxx
Fax: 000.000.0000
------------------------------------------------------------------------------------------------------------------------
ProMed Offshore Fund, Ltd. 6 26,377 $ 60,000 0 0 0
000 Xxxx Xxxxxx # 0000
Xxx Xxxx, XX 00000
Attn: Xx. Xxxxx Xxxxxxxx
Fax: 000.000.0000
------------------------------------------------------------------------------------------------------------------------
Xmark Fund, L.P. 13 57,151 $ 130,000 0 0 0
c/x Xxxxx Xxxxxxx Partners
000 X. 00xx Xxxxxx, 00/xx/ Xxxxx
Xxx Xxxx, XX 00000
Attn: Mr. Xxxxxxxx Xxxx
Fax: 000.000.0000
------------------------------------------------------------------------------------------------------------------------
Xmark Fund, Ltd. 37 162,661 $ 370,000 0 0 0
c/x Xxxxx Xxxxxxx Partners
000 X. 00xx Xxxxxx, 00/xx/ Xxxxx
Xxx Xxxx, XX 00000
Attn: Mr. Xxxxxxxx Xxxx
Fax: 000.000.0000
------------------------------------------------------------------------------------------------------------------------
SCO Capital Partners LLC 65 285,756 $ 650,000 0 0 0
1285 Avenue of the Americas,
00/xx/ Xxxxx
Xxx Xxxx, XX 00000
Attn: Xx. Xxxxxx Xxxxxxxxx
Fax: 000.000.0000
------------------------------------------------------------------------------------------------------------------------
Xxxx Xxxxxxxx 35 153,869 $ 350,000 0 0 0
X.X. Xxx 000
Xxxxxxxxxx, XX 00000
Fax: 000.000.0000
------------------------------------------------------------------------------------------------------------------------
Totals 1,400 6,154,747 $14,000,000 500 2,198,125 $5,000,000
========================================================================================================================
EXHIBIT E
BYLAW AMENDMENT
New subparagraph under Section 5.02 of the Bylaws:
(c) Nomination of Directors by Holder of Preferred Stock.
(1) Commencing on the Date of Original Issue (as such term is defined in
the Statement of Designations, Rights and Preferences of the Series A 6%
Adjustable Cumulative Convertible Voting Preferred Stock of the Corporation, and
continuing for such time as holders of the Corporation's Series A 6% Adjustable
Convertible Voting Preferred Stock (the "Preferred Holders") continue to hold
375 shares of the Corporation's Series A 6% Adjustable Cumulative Convertible
Voting Preferred Stock (the "Series A Preferred Stock"), the Preferred Holders
shall have the right to:
(i) nominate one (1) director of the Corporation, which person
may be an employee of or affiliated with one or more of OrbiMed Associates LLC,
PW Juniper Crossover Fund LLC or Caduceus Private Investment L.P.; and
(ii) approve the nomination of up to one (1) additional director of
the Corporation, which person must be independent from each of the Preferred
Holders and constitute an "independent director" within the meaning of the rules
of the National Association of Securities Dealers, Inc. and have knowledge of
the financial or healthcare industries (the "Independent Director"), provided
that the Preferred Holders collectively own at least 1,125 shares of Series A
Preferred Stock. The nomination of the Independent Director by the Corporation
shall be subject to the approval of the Preferred Holders, which approval shall
not be unreasonably withheld.
(2) Nominations for the election of directors under this Section 5.02(c)
shall be valid only if the Preferred Holders making such determination (a) are
holders of record of Series A Preferred Stock on the date of the giving of the
notice provided for in this Section 5.02(c)(2) and on the record date for the
determination of shareholders entitled to vote at such meeting and (ii) comply
with the notice procedures set forth in this Section 5.02(c)(2).
In addition to any other applicable requirements, for a nomination to be
made by the Preferred Holders pursuant to this Section 5.02(c), the Preferred
Holders must have given timely notice thereof in proper written form to the
Secretary of the Corporation. To be timely, such notice to the Secretary must be
delivered to or mailed and received at the principal executive offices of the
Corporation (a) in the case of an annual meeting, not less than ninety (90) days
prior to the anniversary date of the immediately preceding annual meeting of
shareholders; provided, however, that in the event that the annual meeting is
called for a date that is not within thirty (30) days before or after such
anniversary date, notice by the Preferred Holders in order to be timely must be
so
received not later than the close of business on the tenth (10th) day following
the day on which such notice of the date of the annual meeting was mailed or
such public disclosure of the date of the annual meeting was made, whichever
first occurs; and (b) in the case of a special meeting of shareholders called
for the purpose of electing directors, not later than the close of business on
the tenth (10th) day following the day on which notice of the date of the
special meeting was mailed or public disclosure of the date of the special
meeting was made, whichever first occurs. Public disclosure shall include, but
not be limited to, information contained in a document publicly filed by the
Corporation with the Securities and Exchange Commission under Section 13, 14 or
15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
To be in proper written form, the Preferred Holders' notice to the
Secretary must set forth:
(A) as to each person whom the Preferred Holders proposes to nominate for
election as a director: (i) the name, age, business address and residence of the
person, (ii) the principal occupation or employment of the person, (iii) the
class or series and number of shares of capital stock of the Corporation which
are owned beneficially or of record by the person, and (iv) any other
information relating to the person that would be required to be disclosed in a
proxy statement or other filings required to be made in connection with
solicitations of proxies for election of directors pursuant to Section 14 of the
Exchange Act, and the rules and regulations promulgated thereunder; and
(B) (i) the name and record address of each of the Preferred Holders making such
nomination, (ii) the class or series and number of shares of capital stock of
the Corporation which are owned beneficially or of record by such Preferred
Holders , (iii) a description of all arrangements or understandings between such
Preferred Holders and each proposed nominee and any other person or persons
(including their names) pursuant to which the nomination(s) are to be made by
such Preferred Holders , and (iv) any other information relating to such
Preferred Holders that would be required to be disclosed in a proxy statement or
other filings required to be made in connection with solicitations of proxies
for election of directors pursuant to Section 14 of the Exchange Act and the
rules and regulations promulgated thereunder.
If the Chairman of the meeting determines that a nomination was not made in
accordance with the foregoing procedures, the Chairman shall declare to the
meeting that the nomination was defective and such defective nomination shall be
disregarded.
This subparagraph (c) shall be void and of no further effect immediately,
without any further action by the Board of Directors, upon the date on which the
Preferred Holders collectively cease to own at least 375 shares of Series A
Preferred Stock.
EXHIBIT F
SECOND BYLAW AMENDMENT
New subparagraph under Section 5.02 of the Bylaws:
(c) Nomination of Directors by Holder of Preferred Stock.
(1) Commencing on ________, 2002 and continuing for such time as holders
of the Corporation's Series A 6% Adjustable Convertible Voting Preferred Stock
(the "Preferred Holders") continue to hold 333 shares of the Corporation's
Series A 6% Adjustable Cumulative Convertible Voting Preferred Stock (the
"Series A Preferred Stock"), the Preferred Holders shall have the right to:
(i) nominate one (1) director of the Corporation, which person may be
an employee of or affiliated with one or more of OrbiMed Associates LLC, PW
Juniper Crossover Fund LLC or Caduceus Private Investment L.P.; and
(ii) approve the nomination of up to two (2) additional directors of the
Corporation, which persons must be independent from each of the Preferred
Holders , constitute "independent directors" within the meaning of the rules of
the National Association of Securities Dealers, Inc. and have knowledge of the
financial or healthcare industries (the "Independent Directors"), provided that
the Preferred Holders collectively own at least 1,667 shares of Series A
Preferred Stock; provided further, however that the Preferred Holders shall be
entitled to approve the nomination of only one Independent Director if they
collectively own less than 1,667 but more than 1,000 shares of Series A
Preferred Stock. The nomination of each Independent Director by the Corporation
shall be subject to the approval of the Preferred Holders, which approval shall
not be unreasonably withheld.
(2) Nominations for the election of directors under this Section 5.02(c)
shall be valid only if the Preferred Holders making such determination (a) are
holders of record of Series A Preferred Stock on the date of the giving of the
notice provided for in this Section 5.02(c)(2) and on the record date for the
determination of shareholders entitled to vote at such meeting and (ii) comply
with the notice procedures set forth in this Section 5.02(c)(2).
In addition to any other applicable requirements, for a nomination to be
made by the Preferred Holders pursuant to this Section 5.02(c), the Preferred
Holders must have given timely notice thereof in proper written form to the
Secretary of the Corporation. To be timely, such notice to the Secretary must be
delivered to or mailed and received at the principal executive offices of the
Corporation (a) in the case of an annual meeting, not less than ninety (90) days
prior to the anniversary date of the immediately preceding annual meeting of
shareholders; provided, however, that in the event that the annual meeting is
called for a date that is not within thirty (30) days before or after such
anniversary date, notice by the Preferred Holders in order to be timely must be
so
received not later than the close of business on the tenth (10/th/) day
following the day on which such notice of the date of the annual meeting was
mailed or such public disclosure of the date of the annual meeting was made,
whichever first occurs; and (b) in the case of a special meeting of shareholders
called for the purpose of electing directors, not later than the close of
business on the tenth (10th) day following the day on which notice of the date
of the special meeting was mailed or public disclosure of the date of the
special meeting was made, whichever first occurs. Public disclosure shall
include, but not be limited to, information contained in a document publicly
filed by the Corporation with the Securities and Exchange Commission under
Section 13, 14 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
To be in proper written form, the Preferred Holders' notice to the
Secretary must set forth:
(A) as to each person whom the Preferred Holders proposes to nominate for
election as a director: (i) the name, age, business address and residence of the
person, (ii) the principal occupation or employment of the person, (iii) the
class or series and number of shares of capital stock of the Corporation which
are owned beneficially or of record by the person, and (iv) any other
information relating to the person that would be required to be disclosed in a
proxy statement or other filings required to be made in connection with
solicitations of proxies for election of directors pursuant to Section 14 of the
Exchange Act, and the rules and regulations promulgated thereunder; and
(B) (i) the name and record address of each of the Preferred Holders making such
nomination, (ii) the class or series and number of shares of capital stock of
the Corporation which are owned beneficially or of record by such Preferred
Holders , (iii) a description of all arrangements or understandings between such
Preferred Holders and each proposed nominee and any other person or persons
(including their names) pursuant to which the nomination(s) are to be made by
such Preferred Holders , and (iv) any other information relating to such
Preferred Holders that would be required to be disclosed in a proxy statement or
other filings required to be made in connection with solicitations of proxies
for election of directors pursuant to Section 14 of the Exchange Act and the
rules and regulations promulgated thereunder.
If the Chairman of the meeting determines that a nomination was not made in
accordance with the foregoing procedures, the Chairman shall declare to the
meeting that the nomination was defective and such defective nomination shall be
disregarded.
This subparagraph (c) shall be void and of no further effect immediately,
without any further action by the Board of Directors, upon the date on which the
Preferred Holders collectively cease to own at least 333 shares of Series A
Preferred Stock.
