EXHIBIT 10.3
STOCK PURCHASE AGREEMENT
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Stock Purchase Agreement (this "Agreement") made as of October 16,
2001 by and between Orthovita, Inc., a Pennsylvania corporation (the "Company"),
and Xxxx Capital Royalty Acquisition Fund, L.P., Inc., a Delaware limited
partnership (the "Investor").
WHEREAS, the Company desires to offer for issuance (the "Offering")
shares of its common stock, par value $0.01 per share (the "Common Stock"), upon
the terms and subject to the conditions of this Agreement, and the Investor
desires to purchase the number of shares of the Common Stock set forth next to
its name on the signature page of this Agreement; and
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, the Company, Vita Special Purpose Corp., a Delaware corporation and a
wholly-owned indirect subsidiary of the Company, and the Investor shall execute
a Revenue Interests Assignment Agreement (the "Assignment Agreement") pursuant
to which the Investor will acquire certain interests in revenues generated by
certain sales of the Company's Products.
NOW, THEREFORE, in consideration of the mutual promises and
covenants hereinafter set forth, the Company and the Investor hereby agree as
follows:
Section 1. Purchase and Sale of Common Stock
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1.1. Sale and Purchase. Upon the terms and subject to the conditions
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contained in this Agreement, the Company agrees to issue and sell to the
Investor, and the Investor hereby agrees to purchase from the Company, 2,582,645
shares of Common Stock (the "Investor Shares").
1.2. Common Stock Purchase Price. The purchase price for the Common Stock
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is $1.936 per share.
1.3. The Closing. The closing of the purchase and sale of the shares of
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Common Stock (the "Closing") shall take place only when the Company deposits a
copy of this Agreement countersigned by a duly authorized officer of the
Company, in the mail or in an internationally recognized overnight courier
service, delivers a copy of such countersigned document by hand or transmits it
by facsimile to the Investor, and when the Investor delivers the Common Stock
Purchase Price as provided below.
1.4. Closing Deliveries. Except as set forth in Section 1.4(b) below,
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prior to or at the Closing:
(a) The Investor will pay or tender to the Company, by wire
transfer or check payable to the Company in immediately available U.S. funds,
$5,000,000 (five million dollars), representing the aggregate purchase price for
the number of Investor Shares purchased by the Investor (the "Common Stock
Purchase Price").
(b) The Company shall issue and deliver to the Investor within two
business days after the Closing a share certificate or certificates representing
the Investor Shares acquired hereunder by the Investor, which certificate or
certificates shall be registered in such Investor's name or such name as the
Investor designates;
(c) The Company and the Investor shall execute and deliver the
Assignment Agreement;
(d) The Company shall deliver to the Investor copies of the
Company's Articles of Incorporation, Stock Option Plan and Bylaws certified by
the secretary of the Company, in form and substance satisfactory to the
Investor, duly approved by the Board of Directors of the Company and, in the
case of the Articles of Incorporation, filed with the Department of State of the
Commonwealth of Pennsylvania.
(e) The Company shall deliver to the Investor a Certificate of
Subsistence issued by the Department of State of the Commonwealth of
Pennsylvania.
Section 2. Intentionally omitted.
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Section 3. Representations and Warranties
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3.1. Representations and Warranties of the Company. The Company hereby
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represents and warrants to the Investor as of the date hereof that:
(a) Organization, Good Standing and Qualification. The Company is a
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corporation duly organized and validly subsisting under the laws of the
Commonwealth of Pennsylvania and has all requisite corporate power and authority
to own and operate its assets and properties, to conduct its business as it is
currently being conducted (the "Business"), to execute and deliver this
Agreement and the Assignment Agreement and to issue and sell the Investor Shares
pursuant to this Agreement. The Company is duly qualified to transact business
and is in good standing in each jurisdiction wherein the properties owned or
leased or the business transacted by the Company makes such qualification to do
business as a foreign corporation necessary, except where the failure to be so
qualified would not have a material adverse effect on the business, assets,
financial condition, results of operations, prospects or properties of the
Company (a "Material Adverse Effect").
(b) Capitalization. The authorized capital of the Company consists
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of fifty million (50,000,000) shares of common stock, seventeen million one
hundred forty one thousand seven hundred and seventy-two (17,141,772) shares of
which are issued and outstanding prior to the Closing, and twenty million
(20,000,000) shares of preferred stock, none of which are issued and outstanding
prior to the Closing. The Investor Shares shall represent 10.6% of the issued
and outstanding shares of the Company's capital stock on a fully-diluted basis
(assuming that all warrants and options to purchase shares of the Company's
capital stock have been exercised in full) as of the date of the Closing.
Immediately after the consummation of the Offering, all issued and outstanding
shares of capital stock of the Company will have been duly authorized and be
validly issued and outstanding, fully paid and nonassessable.
Except as otherwise set forth on Schedule 3.1(b), there are, and
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immediately after consummation of the Offering there will be, no (i) outstanding
warrants, options, agreements, convertible securities or other commitments or
instruments pursuant to which the Company is or may become obligated to issue or
sell any shares of its capital stock or other securities (except for the stock
options issuable pursuant to the Company's stock option plan) or (ii) preemptive
or similar rights to purchase or otherwise acquire shares of the capital stock
or other securities of the Company pursuant to any provision of law, the
Company's certificate of incorporation or charter documents or any contract to
which the Company is a party. Except as otherwise set forth on Schedule 3.1(b),
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there is, and, immediately after the consummation of the Offering there will be,
no lien created by the Company (such as a right of first refusal, right of first
offer, proxy, voting trust, voting agreement, etc.) with respect to the sale or
voting of shares of capital stock or other securities of the Company (whether
outstanding or issuable).
(c) Subsidiaries and Other Equity Investments. Except as set forth
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on Schedule 3.1(c), the Company does not own, directly or indirectly, any
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capital stock, membership interest, partnership interest or joint venture
interest in, or any security issued by, any other person or entity. Schedule
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3.1(c) sets forth the amount and description of any capital stock, partnership
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interest or joint venture interest held by the Company. At the time of the
Closing, the Company will own 100% of the issued and outstanding capital stock
of Vita Licensing, Inc., and Vita Licensing, Inc. will own 100% of the issued
and outstanding capital stock of Vita Special Purpose Corp..
(d) Authorization. All corporate action on the part of the Company
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and its officers, directors and stockholders necessary for the authorization,
execution and delivery of this Agreement and the Assignment Agreement and
transactions contemplated hereby and thereby, the performance of all obligations
of the Company hereunder and thereunder and the authorization, issuance and
delivery of the Investor Shares being issued hereunder, have been taken or will
be taken prior to the Closing, and this Agreement and the Assignment Agreement
have been duly executed by the Company, and constitute valid and binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms.
(e) Valid Issuance of Common Stock. The shares of Common Stock, when
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issued, sold and delivered in accordance with the terms hereof for the
consideration stated herein, will be duly and validly issued,
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fully paid and nonassessable and free of any liens or encumbrances, except such
as may be created or suffered by the Investor.
(f) Broker's or Finder's Fee. The Company is unaware of any brokers,
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broker's fees, or finder's fees (collectively, "Broker's Fees"), existing or due
by either the Company or the Investor in connection with this Agreement or the
Assignment Agreement.
(g) Intentionally omitted.
(h) Commission Documents, Financial Statements. The Common Stock
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of the Company is registered pursuant to Section 12(b) or 12(g) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, the
Company has timely filed all reports, schedules, forms, statements and other
documents required to be filed by it with the Securities and Exchange Commission
(the "Commission") pursuant to the reporting requirements of the Exchange Act,
including material filed pursuant to Section 13(a) or 15(d) of the Exchange Act
(all of the foregoing including filings incorporated by reference therein being
referred to herein as the "Commission Documents"). As a result the Company
satisfies the "Registrant Requirements" set forth by General Instruction I.A. of
Form S-3, as promulgated by the Commission. The Company has delivered or made
available to the Investor true and complete copies of the Commission Documents
filed with the Commission since December 31, 2000. The Company has not provided
to the Investor any information which, according to applicable law, rule or
regulation, should have been disclosed publicly by the Company but which has not
been so disclosed, other than with respect to the transactions contemplated by
this Agreement. As of their respective dates, the Form 10-K for the year ended
December 31, 2000 and the Forms 10-Q for the fiscal quarters ended March 31,
2001 and June 30, 2001 complied as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations of the Commission
promulgated thereunder, and, as of their respective dates, none of the Form 10-K
and the Forms 10-Q referred to above contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the Commission Documents comply as to form
in all material respects with applicable accounting requirements and the
published rules and regulations of the Commission or other applicable rules and
regulations with respect thereto. Such financial statements have been prepared
in accordance with generally accepted accounting principles ("GAAP") applied on
a consistent basis during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto or (ii) in the case
of unaudited interim statements, to the extent they may not include footnotes or
may be condensed, and fairly present in all material respects the financial
position of the Company and its subsidiaries as of the dates thereof and the
results of operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments).
(i) Non-contravention. The execution, delivery and performance by the
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Company of this Agreement and the Assignment Agreement, the consummation of the
transactions contemplated hereby and thereby and compliance with the provisions
hereof and thereof, including the issuance, sale and delivery of the Investor
Shares have not and shall not, (a) violate any law to which the Company or any
of its assets is subject, (b) violate or conflict with any provision of the
Articles of Incorporation of the Company as in effect on the Closing, (c)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify
or cancel, or require any notice under any contract to which the Company is a
party or by which any of the assets of the Company are bound, or (d) result in
the imposition of any lien upon any of the assets of the Company other than any
such violations, conflicts, breaches, defaults or liens which individually or in
the aggregate could not reasonably be expected to result in a Material Adverse
Effect on the Company. Other than state "blue sky" securities filings and the
filing with the Commission of a Form D, the Company has not been or is not
required to give any notice to, make any filing with, or obtain any
authorization, consent or approval of any governmental entity or any other
person for the valid authorization, issuance and delivery of the Investor
Shares.
(j) Compliance with Laws. The Company (i) has complied in all
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material respects with, and is in material compliance with, all laws applicable
to it and its business and (ii) except for the regulatory clearances necessary
to market its CORTOSS, and RHAKOSS products in the Territories, has all material
governmental and other permits, licenses and other authorizations used or
necessary in the conduct of the Business, except where the failure to comply
with such laws or possess such governmental or other permits, licenses and other
authorizations would not have a Material Adverse Effect. Such permits are in
full force and effect, no violations with respect to
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any such permits have occurred, no material proceeding is pending or, to the
Knowledge of the Company, threatened to revoke or limit any such permits. None
of such permits shall be materially adversely affected as a result of the
Company's execution and delivery of, or the performance of its obligations
under, this Agreement or the Assignment Agreement, or the consummation of the
transactions contemplated hereby or thereby. The Company has not received any
written opinion or memorandum or written legal advice from legal counsel to the
effect that it is exposed, from a legal standpoint, to any liability or
disadvantage which may be material to the business, or to the Company's
financial condition, operations, property or affairs.
(k) Taxes. The Company and each of the subsidiaries has accurately
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prepared and filed all federal, state and other tax returns required by law,
domestic and foreign, to be filed by it, has paid or made provisions for the
payment of all taxes shown to be due and all additional assessments, and
adequate provisions have been and are reflected in the financial statements of
the Company and the subsidiaries for all current taxes and other charges to
which the Company or any subsidiary is subject and which are not currently due
and payable. None of the federal income tax returns of the Company or any
subsidiary for the years subsequent to December 31, 1998 have been audited by
the Internal Revenue Service or other foreign governmental tax agency. The
Company has no Knowledge of any additional assessments, adjustments or
contingent tax liability (whether federal or state) pending or threatened
against the Company or any subsidiary for any period, nor of any basis for any
such assessment, adjustment or contingency.
(l) No Consent or Approval Required. No consent, approval or
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authorization of, or declaration to or filing with, any person is required by
the Company for the valid authorization, execution and delivery by the Company
of this Agreement or the Assignment Agreement or for its consummation of the
transactions contemplated hereby and thereby or for the valid authorization,
issuance and delivery of the Investor Shares, other than those consents,
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approvals, authorizations, declarations or filings which have been obtained or
made, as the case may be (other than such "blue sky" and other securities law
filings as may be properly obtained subsequent to the Closing or as otherwise
disclosed in the Assignment Agreement).
(m) Litigation and Other Proceedings. There are no (i) proceedings
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pending or, to the Knowledge of the Company, threatened against or involving the
Company nor, to the Knowledge of the Company, threatened against or involving
any officer or director of the Company in his or her capacity as an officer or
director of the Company, whether at law or in equity, whether civil or criminal
in nature or by or before any governmental entity, or (ii) orders of any
governmental entity with respect to or involving the Company or, to the
Knowledge of the Company, any of the officers or directors of the Company in his
or her capacity as an officer or director of the Company.
(n) Indebtedness. The Company is not in default with respect to any
outstanding Indebtedness that individually or in the aggregate involves more
than $50,000 or any instrument or agreement relating thereto, and no such
Indebtedness or any instrument or agreement relating thereto purports to limit
the issuance of any securities by the Company or the operation of its business.
Complete and correct copies of all instruments and agreements (including all
amendments, supplements, waivers, and consents) that individually relate to any
Indebtedness of the Company in excess of $100,000 have been furnished or made
available to the Investor. "Indebtedness" means (a) all indebtedness for
borrowed money, whether current or long-term, or secured or unsecured, (b) all
indebtedness for the deferred purchase price of property or services represented
by a note or security agreement, (c) all indebtedness created or arising under
any conditional sale or other title retention agreement (even though the rights
and remedies of the seller or lender under such agreement in the event of
default may be limited to repossession or sale of such property), (d) all
indebtedness secured by a purchase money mortgage or other lien to secure all or
part of the purchase price of property subject to such mortgage or lien, (e) all
obligations under leases that have been or must be, in accordance with GAAP,
recorded as capital leases in respect of which it is liable as lessee, (f) any
liability in respect of banker's acceptances or letters of credit, and (g) all
indebtedness of any person that is directly or indirectly guaranteed by the
Company or that it has agreed (contingently or otherwise) to purchase or
otherwise acquire or in respect of which it has otherwise assured a creditor
against loss.
(o) Other Information. No written statement, information, report or
materials prepared by or on behalf of Orthovita and furnished to Investor by or
on behalf of Orthovita in connection with this Agreement or any Transaction
Document or any transaction contemplated hereby or thereby, no written
representation, warranty or statement made by Orthovita in any Transaction
Document, and no schedule or exhibit hereto, in each case with
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respect to any of the foregoing, when taken together with all other such items
constituting the foregoing, contains any untrue statement of a material fact or
omits any statement of material fact necessary in order to make the statements
made therein in light of the circumstances under which they were made not
misleading.
(p) Related Party Transactions. Except for compensation and stock
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options granted to employees, consultants and non-employee directors of the
Company and its subsidiaries, no current or former Affiliate of the Company is
now, (i) a party to any transaction or contract with the Company involving
amounts in excess of $60,000, (ii) indebted to the Company, or (iii) to the
Knowledge of the Company, the direct or indirect owner of an interest in any
person or entity which is a present or potential competitor, supplier or
customer of the Company (other than non-affiliated holdings in publicly held
companies). No current or former Affiliate of the Company is a guarantor or
otherwise liable for any liability (including Indebtedness) of the Company.
(q) Environmental Compliance. The Company and each of its
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subsidiaries have obtained all material approvals, authorization, certificates,
consents, licenses, orders and permits or other similar authorizations of all
governmental authorities, domestic or foreign, or from any other person, that
are required under any Environmental Laws except where the failure to obtain
such approvals, authorization, certificates, consents, licenses, orders and
permits or other similar authorizations would not have a Material Adverse
Effect. "Environmental Laws" shall mean all applicable laws relating to the
protection of the environment including, without limitation, all requirements
pertaining to reporting, licensing, permitting, controlling, investigating or
remediating emissions, discharges, releases or threatened releases of hazardous
substances, chemical substances, pollutants, contaminants or toxic substances,
materials or wastes, whether solid, liquid or gaseous in nature, into the air,
surface water, groundwater or land, or relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
hazardous substances, chemical substances, pollutants, contaminants or toxic
substances, material or wastes, whether solid, liquid or gaseous in nature.
Except for such instances as would not individually or in the aggregate have a
Material Adverse Effect, to the Company's Knowledge, there are no past or
present events, conditions, circumstances, incidents, actions or omissions
relating to or in any way affecting the Company or its subsidiaries that violate
or may violate any Environmental Law after the Closing or that may give rise to
any environmental liability, or otherwise form the basis of any claim, action,
demand, suit, proceeding, hearing, study or investigation (i) under any
Environmental Law, or (ii) based on or related to the manufacture, processing,
distribution, use, treatment, storage (including without limitation underground
storage tanks), disposal, transport or handling, or the emission, discharge,
release or threatened release of any hazardous substance. "Environmental
Liabilities" means all liabilities of a person (whether such liabilities are
owed by such person to governmental authorities, third parties or otherwise)
whether currently in existence or arising hereafter which arise under or relate
to any Environmental Law.
(r) ERISA. No liability to the Pension Benefit Guaranty Corporation
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has been incurred with respect to any Plan by the Company or any of its
subsidiaries which is or would be materially adverse to the Company and its
subsidiaries. The execution and delivery of this Agreement and the issue and
sale of the Shares will not involve any transaction which is subject to the
prohibitions of Section 406 of ERISA or in connection with which a tax could be
imposed pursuant to Section 4975 of the Internal Revenue Code of 1986, as
amended, provided that, if the Investor, or any person or entity that owns a
beneficial interest in the Investor, is an "employee pension benefit plan"
(within the meaning of Section 3(2) of ERISA) with respect to which the Company
is a "party in interest" (within the meaning of Section 3(14) of ERISA), the
requirements of Sections 407(d)(5) and 408(e) of ERISA, if applicable, are met.
As used in this Section 3.1(r), the term "Plan" shall mean an "employee pension
benefit plan" (as defined in Section 3 of ERISA) which is or has been
established or maintained, or to which contributions are or have been made, by
the Company or any subsidiary or by any trade or business, whether or not
incorporated, which, together with the Company or any subsidiary, is under
common control, as described in Section 414(b) or (c) of the Code.
(s) Accuracy of Reports. All reports required to be filed by the
Company on or after January 1, 2000 under the Securities Act of 1933, as amended
(the "Act"), or the Securities Exchange Act, have been duly filed, were in
substantial compliance with the requirements of their respective forms, were
complete and correct in all material respects as of the dates at which the
information was furnished, and contained (as of such dates) no untrue statement
of a material fact nor omitted to state a material fact necessary in order to
make the statements made therein in light of the circumstances under which they
were made not misleading.
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(t) Dilution. Except as set forth in Schedule 3.1(t), since July
11, 2001, the Company has not issued, created or granted (i) shares of its
capital stock or other securities, or warrants, options, agreements, convertible
securities or other commitments or instruments pursuant to which the Company is
or may become obligated to issue or sell any shares of its capital stock or
other securities (except for the stock options issuable pursuant to the
Company's stock option plan) or (ii) preemptive or similar rights to purchase or
otherwise acquire shares of the capital stock or other securities of the Company
pursuant to any provision of law, the Company's articles of incorporation or
charter documents or any contract to which the Company is a party.
3.2. Representations and Warranties of the Investor. The Investor hereby
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represents and warrants to the Company that:
(a) Receipt of Agreements. The Investor has received and reviewed
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this Agreement and the Assignment Agreement.
(b) No Registration of Shares. The Investor is aware that the
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Securities have not been registered under the Act, that the offer and sale of
the Securities are intended to be exempt from registration under the Act and the
rules promulgated thereunder by the Commission, and that none of the Investor
Shares may be sold, assigned, transferred or otherwise disposed of unless it is
registered under the Act or an exemption from such registration is available.
The Investor is also aware that the certificates for the Investor Shares will
bear appropriate legends restricting their transfer pursuant to applicable law.
(c) Suitability of Investment.
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(i) The Investor is acquiring the Investor Shares for its own
account for investment purposes only and not with a view to the resale or
distribution thereof.
(ii) The Investor has not and will not, directly or indirectly,
offer, sell, transfer, assign, exchange or otherwise dispose of all or any part
of the Investor Shares, except in accordance with applicable federal and state
securities laws and the provisions of this Agreement.
(iii) The Investor has such Knowledge and experience in financial,
business and tax matters that the Investor is capable of evaluating the merits
and risks relating to the Investor's investment in the Investor Shares and
making an investment decision with respect to the Company.
(iv) The Investor has been given the opportunity to obtain
information and documents relating to the Company and to ask questions of and
receive answers from representatives of the Company concerning the Company and
the investment in the Investor Shares.
(v) Neither the Investor nor any of its Affiliates has engaged in
any activity that would be deemed a "general solicitation" under the provisions
of Regulation D under the Act.
(vi) The Investor is able at this time, and in the foreseeable
future, to bear the economic risk of a total loss of its investment in the
Company.
(vii) The Investor is aware that there are substantial risks
incident to an investment in the Investor Shares.
(viii) The Investor is an "accredited investor" within the meaning of
Rule 501 of Regulation D under the Act as presently in effect.
(d) Authorization. All action on the part of the Investor
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necessary for the authorization, execution and delivery of this Agreement and
the Assignment Agreement and for the performance of all obligations of the
Investor hereunder and thereunder has been taken. This Agreement and the
Assignment Agreement have been duly executed and delivered by the Investor and
constitute valid and binding obligations of the Investor, enforceable against
the Investor in accordance with their respective terms .
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(e) Broker's or Finder's Fee. The Investor is unaware of any
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Broker's Fees existing or due by either the Company or the Investor in
connection with this Agreement or the Assignment Agreement.
Section 4. Covenants
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The Company hereby covenants and agrees as follows:
4.1 Rights of Inspection. So long as the Investor beneficially owns at
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least 7.5% of the Company's capital stock, the Investor shall have the right to
visit, at the Investor's expense, and inspect any of the properties, books or
records of the Company and to discuss its affairs, finances and accounts with
the officers of the Company, all with reasonable notice and at such reasonably
scheduled times during normal business hours and as often as may be reasonably
requested but no more frequently than once per quarter.
4.2 Board Meetings; Expenses. The Company covenants to hold meetings of
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its board of directors (the "Board") not less frequently than once per calendar
quarter.
4..3 Litigation. The Company shall notify the Investor in writing of any
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actual or threatened litigation or governmental proceeding in which the Company
is involved and which, if determined adversely, would reasonably be expected to
have a Material Adverse Effect on the Company, such notice to be given on the
earlier of the day on which the Company (a) publicly announces such event, or
(b) notifies its shareholders of such event.
4.4. Compliance with Laws. The Company will, and will cause its
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subsidiaries, if any, to, comply in all material respects with the requirements
of all material laws applicable to the Company, its subsidiaries, or their
respective business.
4.5 Use of Proceeds. The Company shall use substantially all of the
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Aggregate Purchase Price for the purposes set forth in Section 5.11(k) of the
Assignment Agreement.
4.6 Registration and Listing. The Company (i) use its best commercially
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practicable efforts to cause its Common Stock to continue to be registered under
Sections 12(b) or 12(g) of the Exchange Act, (ii) will comply in all respects
with its reporting and filing obligations under the Exchange Act, (iii) will
comply with all requirements related to any registration statement filed
pursuant to this Agreement, and (iv) will not take any action or file any
document (whether or not permitted by the Act or the rules promulgated
thereunder) to terminate or suspend such registration or to terminate or suspend
its reporting and filing obligations under the Exchange Act or Act, except as
permitted herein. The Company will take all commercially reasonable action
necessary to continue the listing or trading of its Common Stock on the NASDAQ
system, if applicable, at any time during which the Company's Common Stock is
eligible for listing thereon, and will comply in all material respects with the
Company's reporting, filing and other obligations under the bylaws or rules of
the NASD and NASDAQ system.
4.7 Registration Statement. Within 45 days after the Closing Date, the
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Company shall cause to be filed with the Commission an initial registration
statement on Form S-3 (the "Initial Registration Statement"), which Initial
Registration Statement shall provide for the resale of the Investor Shares. The
Company shall use its best commercially practicable efforts to cause the Initial
Registration Statement to be declared effective by the Commission as promptly as
possible after the filing thereof, and, subject to Section 5(b) of this
Agreement, shall maintain the effectiveness of the Initial Registration
Statement and any successor Registration Statement until the earlier of either:
(i) the date on which all Investor Shares have been sold pursuant to the Initial
Registration Statement or Rule 144 or (ii) two (2) years from the date of its
effectiveness (the "Initial Effectiveness Period"). If, at the end of the
Initial Effectiveness Period, Investor or Affiliates of the Investor
collectively own 50% or greater of the number of Investor Shares originally
issued to Investor, the Company shall maintain the effectiveness of the Initial
Registration Statement for an additional two years or , if sooner, until all
Investor Shares have been sold pursuant to the Initial Registration Statement or
under Rule 144; provided, however, that if the Initial Registration Statement
shall have lapsed or the Investor Shares registered thereunder shall have been
deregistered prior to the time during which the Company is obligated to maintain
the effectiveness of the Initial Registration Statement, within 45 days of
receipt by the Company of the Investor's written demand therefor, the Company
shall cause to be filed with the Commission a second Registration Statement on
Form S-3 (the "Second Registration Statement").
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The Company shall use its best commercially practicable efforts to cause the
Second Registration Statement to be declared effective by the Commission as
promptly as possible after the filing thereof, and shall maintain the
effectiveness of the Second Registration Statement and any successor
Registration Statement until the earlier of either: (i) the date on which all
Investor Shares have been sold pursuant to the Initial Registration Statement
and the Second Registration Statement or Rule 144 or (ii) for a period of two
(2) years from the date of its effectiveness. In the event the Investor is not
permitted to resell the Investor Shares pursuant to the Initial Registration
Statement or, if required, the Second Registration Statement, due to the
Company's non-compliance with its obligations under the Exchange Act or for any
other similar reason, but would be permitted to resell the Investor Shares
pursuant to a Registration Statement on another form prescribed by the
Commission, the Company shall use its best commercially practicable efforts
cause a Registration Statement on such other appropriate form to be filed within
60 days after the date the Form S-3 became unavailable for such resales, and to
become effective as promptly thereafter as practicable. Such Registration
Statement on such other form will permit the Investor to resell the Investor
Shares pursuant to such Registration Statement. All costs and expenses
associated with the Registration Statements described herein shall be borne by
the Company, except for any underwriting fees, discounts or commissions
attributable to the sale of Investor Shares by the Investor and not borne by the
Company pursuant to Section 5(a).
4.8 Notice. The Company shall notify the Investor of the happening of
------
any event known to the Company as a result of which the prospectus included in
any Registration Statement, as then in effect, contains an untrue statement of a
material fact or omits to state any fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances under which they were made, and, at the request of Investor, the
Company will prepare and furnish Investor a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so that, as
thereafter delivered to the Investor, such Prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading in
the light of the circumstances under which they were made.
Section 5. Disposition of Shares
---------------------
(a) Investor agrees not to make any sale of the Investor Shares
under the Registration Statement without effectively causing the prospectus
delivery requirement under the Act to be satisfied, and Investor acknowledges
and agrees that the Investor Shares are not transferable on the books of the
Company unless the certificate submitted to the transfer agent evidencing the
Investor Shares is accompanied by a separate officer's certificate, executed by
an officer of, or other authorized person designated by, Investor, to the effect
that (i) such Investor Shares have been sold pursuant to and in accordance with
the Registration Statement and the "Plan of Distribution" section of the
prospectus included therein and (B) the requirement of delivering a current
prospectus has been satisfied, unless exempt from registration and prospectus
delivery requirements.
(b) Investor acknowledges that there may occasionally be times when
the Company must suspend the use of the prospectus forming a part of the
Registration Statement (i) until such time as an amendment to the Registration
Statement has been filed by the Company and declared effective by the
Commission, or until such time as the Company has filed an appropriate report
with the Commission pursuant to the Exchange Act; or (ii) due to the existence
of material non-public information relating to the Company that, in the
reasonable opinion of the Company's board of directors or counsel, should not be
disclosed. Investor agrees that it will not sell any Investor Shares during the
period commencing at the time at which the Company gives Investor notice of the
suspension of the use of said prospectus and ending at the time the Company
gives Investor notice that Investor may thereafter effect sales pursuant to said
prospectus. The Company shall only be able to suspend the use of said prospectus
for periods aggregating no more than ninety (90) days in any twelve month period
(the "Aggregate Period"), of which no individual period shall be longer than
sixty (60) consecutive days; provided, that should a Lock-Up Period (as defined
below in Section 5(c)) occur, then the Aggregate Period for the twelve month
period during which such Lock-Up Period occurs shall be reduced by a number of
days equal to the number of days in such Lock-Up Period, but in no case shall
the Aggregate Period be reduced to a number of days that is less than sixty (60)
days. Investor further agrees to notify promptly the Company in writing of any
material changes in the information set forth in the Registration Statement
relating to Investor or its plan of distribution, or of any supplemental
information required to be included in the Registration Statement relating to
its plan of distribution. The number of days during which the use of the
prospectus is suspended under Section 5(b)(ii) (for reasons other than a Lock-Up
8
Period) shall be added to the duration of the period of time for which the
Company is required to maintain the effectiveness of a Registration Statement
under Section 4.7 hereof.
(c) Investor agrees, in connection with any firm commitment
underwritten offering of the Common Stock, upon the request of the managing
underwriters of such offering, not to directly or indirectly (i) offer for sale,
sell, pledge, contract to sell or otherwise dispose of (or enter into any
transaction or device which is designed to, or could be expected to, result in
the disposition by any person at any time in the future of) any shares of Common
Stock or securities convertible into or exercisable or exchangeable for shares
of Common Stock or (ii) enter into any swap or derivatives transaction that
transfers to another, in whole or in part, any of the economic benefits or risks
of ownership of shares of Common Stock, whether any such transaction described
in clause (i) or (ii) above is to be settled by delivery of shares of Common
Stock or other securities, in cash or otherwise, without the prior written
consent of such managing underwriters during the period of time beginning ten
days prior to the date when such managing underwriters advise the Company that
they expect to initiate such public offering and ending at a date not to exceed
ninety days from the commencement of such public offering (the "Lock-Up
Period"). Notwithstanding the foregoing, this obligation shall not apply to
Investor unless each of the Company's directors and executive officers who
beneficially owns shares of Common Stock enters into a similar agreement.
(d) The Company may require the Investor to furnish to the Company
information regarding the Investor and the distribution of the Investor Shares
as is required by law to be disclosed in a Registration Statement, and the
Investor agrees to furnish to the Company such information within a reasonable
amount of time after receiving such request.
Section 6. Indemnification
---------------
6.1. Company Indemnification. The Company covenants and agrees to defend,
-----------------------
indemnify and save and hold harmless the Investor, together with its officers,
directors, partners, shareholders, employees, trustees, affiliates (within the
meaning of Rule 405 of the Commission under the Act), beneficial owners,
attorneys and representatives, from and against any and all losses, costs,
expenses, liabilities, claims or legal damages (including, without limitation,
reasonable fees and disbursements of counsel and accountants and other costs and
expenses incident to any actual or threatened claim, suit, action or proceeding,
whether incurred in connection with a claim against the Company or a third party
claim) (collectively, "Investor Losses") alleged by any third parties not
affiliated with the Investor arising out of or resulting from any breach of any
representation, warranty, covenant or agreement made by the Company in this
Agreement, the Assignment Agreement, or any inaccuracy in any writing delivered-
pursuant to this Agreement at the Closing. Investor Losses resulting directly
from the gross negligence or willful misconduct of the Investor or any of its
respective officers, directors, employees, or any affiliate within the meaning
of Rule 405 of the SEC under the Act are not covered under this Section. If and
to the extent that the indemnification provided in this Section 6.1 is
unenforceable for any reason, the Company shall make the maximum contribution to
the payment and satisfaction of such indemnified liability which shall be
permissible under applicable laws. The Company shall not be liable for amounts
paid in settlement of any loss, claim, damage or liability if such settlement is
effected without the prior written consent of the Company.
6.2. Investor Indemnification. The Investor covenants and agrees to
------------------------
defend, indemnify and save and hold harmless the Company, together with its
officers, directors, partners, shareholders, employees, trustees, affiliates
(within the meaning of Rule 405 of the Commission under the Act), attorneys and
representatives, from and against any and all losses, costs, expenses,
liabilities, claims or legal damages (including, without limitation, reasonable
fees and disbursements of counsel and accountants and other costs and expenses
incident to any actual or threatened claim, suit, action or proceeding, whether
incurred in connection with a claim against the Investor or a third party claim)
(collectively, "Company Losses"), arising out of or resulting from: (i) any
breach of any representation, warranty, covenant or agreement made by the
Investor in this Agreement, the Assignment Agreement, or any inaccuracy in any
writing delivered pursuant to this Agreement at the Closing. Company Losses
resulting directly from the gross negligence or willful misconduct of the
Company or any of its respective officers, directors, employees, or any
affiliate within the meaning of Rule 405 of the Commission under the Act are not
covered under this Section. If and to the extent that the indemnification
provided in this Section 6.2 is unenforceable for any reason, the Investor shall
make the maximum contribution to the payment and satisfaction of such
indemnified liability which shall be permissible under applicable laws. The
Investor shall not be liable for
9
amounts paid in settlement of any loss, claim, damage or liability if such
settlement is effected without the prior written consent of the Investor.
6.3. Indemnification Procedure. Each party entitled to be indemnified
-------------------------
pursuant to Section 6.1 and 6.2 (each, an "Indemnified Party") shall notify the
other party in writing of any action against such Indemnified Party in respect
of which the other party is or may be obligated to provide indemnification
pursuant to Section 6.1 or 6.2, promptly after the receipt of notice or
Knowledge of the commencement thereof. The omission of any Indemnified Party so
to notify the other party of any such action shall not relieve such other party
from any liability which it may have to such Indemnified Party except to the
extent the other party shall have been materially prejudiced by the omission of
such Indemnified Party so to notify it, pursuant to this Section 6.3. In case
any such action shall be brought against any Indemnified Party and it shall
notify the other party of the commencement thereof, the other party shall be
entitled to participate therein and, to the extent that such other party may
wish, to assume the defense thereof, with counsel reasonably satisfactory to
such Indemnified Party, and after notice from it to such Indemnified Party of
its election so to assume the defense thereof, the other party will not be
liable to such Indemnified Party under Section 6.1 or 6.2 for any legal or other
expense subsequently incurred by such Indemnified Party in connection with the
defense thereof nor for any settlement thereof entered into without the consent
of the other party; provided, however, that (i) if the other party shall elect
-------- -------
not to assume the defense of such claim or action or (ii) if the Indemnified
Party reasonably determines (x) that there may be a conflict between the
positions of the other party and of the Indemnified Party in defending such
claim or action or (y) that there may be legal defenses available to such
Indemnified Party different from or in addition to those available to the other
party, then not more than one firm of separate counsel for the Indemnified Party
shall be entitled to participate in and conduct the defense, in the case of (i)
and (ii)(x), or such different defenses, in the case of (ii)(y), and the other
party shall be liable for any reasonable legal or other expenses incurred by the
Indemnified Party in connection with the defense.
6.4. Indemnification Non-Exclusive. The foregoing indemnification
-----------------------------
provisions are in addition to, and not in derogation of, any statutory,
equitable or common law remedy any party may have for breach of representation,
warranty, covenant or agreement.
Section 7. Transfer Restrictions
---------------------
7.1. Restrictions on Transfer. The Investor Shares have not been
------------------------
registered under the Act and may not be sold, assigned, transferred, or
otherwise disposed of unless they are registered under the Act or an exemption
from such registration is available. Sales or transfers of the Investor Shares
are further restricted by state securities laws and the provisions of this
Agreement.
7.2. Legend. Unless sold pursuant to an effective registration statement,
------
each certificate representing the Investor Shares shall bear a legend
substantially in the following form:
"The shares represented by this certificate have not been registered
under the United States Securities Act of 1933, as amended (the
"Act"), and may not be offered, sold or otherwise transferred,
pledged or hypothecated unless and until such shares are registered
under the Act or, except as otherwise permitted pursuant to Rule 144
under the Act or another exemption from registration under the Act or
an opinion of counsel reasonably satisfactory to Orthovita, Inc. is
obtained to the effect that such registration is not required."
7.3. Removal of Legend. The foregoing legend described in Section 7.2
-----------------
shall be removed from the certificates representing any Investor Shares at the
request of the holder thereof, at such time as (i) they are sold pursuant to an
effective registration statement, (ii) they become eligible for resale pursuant
to Rule 144(k) under the Act or another provision of Rule 144 of the Act
pursuant to which all or a portion of such Common Stock could be sold in a
single transaction, or (iii) an opinion of counsel reasonably satisfactory to
the Company is obtained to the effect that the proposed transfer is exempt from
the Act. The transfer agent for the Common Stock will issue new share
certificates without the legend upon receipt of a certificate from the Investor
stating that the Investor Shares have been registered or transferred pursuant to
an effective registration statement under the Act or can be sold in reliance
upon Rule 144 or if the Company has received an opinion of counsel reasonably
satisfactory to the Company to the effect that the proposed transfer is exempt
from the Act.
10
Section 8. Miscellaneous
-------------
8.1. Confidentiality. All information obtained by the Investor or the
---------------
Company pursuant to or related to the execution of this Agreement, the Revenue
Interests Assignment Agreement, or pursuant to information rights granted
hereunder, is confidential and each recipient shall (i) maintain the same in
confidence; provided, that, each recipient may disclose the same on a
confidential basis to its officers, directors, employees, partners, security
holders, consultants, attorneys, accountants, representatives and affiliates
(the "Permitted Recipients") so long as the Permitted Recipients agree to
maintain such information as confidential, and (ii) take all reasonable measures
to prevent any Permitted Recipient of such recipient from disclosing the same. A
recipient, however, shall not be required to maintain the confidentiality of
those portions of the confidential information received by such recipient that
(i) become generally available to the public other than as a result of a
disclosure by such recipient, (ii) were available to such recipient on a non-
confidential basis prior to the disclosure of such information to the recipient
pursuant to this Agreement or the Assignment Agreement, provided that the source
of such information was not known by the recipient to be bound by a
confidentiality agreement with or other contractual, legal or fiduciary
obligation of confidentiality to the Company or the Investor with respect to
such material or (iii) become available to such recipient on a non-confidential
basis from a source other than the Company or the Investor or their agents,
advisors or representatives, provided that the source of such information was
not known by the recipient to be bound by a confidentiality agreement with or
other contractual, legal or fiduciary obligation of confidentiality to the
Company or the Investor with respect to such material. If a recipient of
confidential information is required by applicable law or regulation or by legal
process to disclose any confidential information or any other information
concerning the Company or the Investor, then such recipient will promptly give
notice to the Company or the Investor, as appropriate, of such requirement in
order to enable the other party to seek an appropriate protective order or other
remedy, and consult with the other party in respect of taking steps to resist or
narrow the scope of such requirement or legal process. In the event that such
protective order or other remedy is not obtained, each recipient will disclose
only that portion of the confidential information which is legally required to
be disclosed and will use the best efforts to ensure that all confidential
information and other information that is so disclosed will be accorded
confidential treatment. Investor shall not trade or cause or encourage any third
party to trade, and shall instruct its Permitted Recipients, not to trade, and
Investor shall otherwise use its commercially reasonable efforts to assure that
none of its Permitted Recipients will trade (or cause or encourage any third
party to trade), in any securities of the Company (or securities convertible
into or exercisable for securities of the Company) while in possession of any
material non-public information including, without limitation, the confidential
information that may be disclosed by the Company hereunder or under any of the
other Transaction Documents.
8.2. Survival of Warranties and Covenants. The representations and
------------------------------------
warranties set forth in Section 3 and the covenants contained in Section 4
hereof shall survive for 5 years; provided, however, that the representations
and warranties set forth in Section 8.1 shall survive in perpetuity.
8.3. Successors and Assigns. This Agreement may not be assigned by the
----------------------
Investor or the Company without the prior written consent of the other party
hereto.
8.4. Waiver and Amendment. Neither this Agreement nor any provisions
--------------------
hereof shall be modified, amended, discharged or terminated, except by an
instrument in writing, signed by the party against whom any modification,
amendment, discharge or termination is sought. Any term or condition of this
Agreement may be waived at any time by the party that is entitled to the benefit
thereof, but no such waiver shall be effective unless set forth in a written
instrument duly executed by or on behalf of the party waiving such term or
condition. No waiver by any party of any term or condition of this Agreement,
in any one or more instances, shall be deemed to be or construed as a waiver of
the same or any other term or condition of this Agreement on any future
occasion. All remedies, either under this Agreement or by law or otherwise
afforded, will be cumulative and not alternative.
8.5. Governing Law and Submission to Jurisdiction. This Agreement shall
--------------------------------------------
be governed by and construed in accordance with the laws of the State of New
York applicable to contracts made and to be performed entirely within such
State. Each of the Investor and the Company hereby submits to the nonexclusive
jurisdiction of the United States District Court for the Southern District of
New York and of any New York State court sitting in the City of New York,
Borough of Manhattan, for purposes of all legal proceedings arising out of or
relating to this Agreement and the transactions contemplated hereby. Each of
the Investor and the Company irrevocably waives, to the fullest extent permitted
by law, any objection which it may now or hereafter have to the laying of the
venue of
11
any such proceeding brought in such a court and any claim that any such
proceeding brought in such a court has been brought in an inconvenient forum.
8.6. Waiver of Jury Trial. Each party hereto hereby waives its rights to
--------------------
a jury trial of any claim or cause of action based upon or arising out of this
Agreement. The scope of this waiver is intended to be all-encompassing of any
and all disputes that may be filed in any court and that relate to the subject
matter of this transaction, including, without limitation, contract claims, tort
claims, breach of duty claims and all other common law and statutory claims.
Each party hereto hereby further warrants and represents that such party has had
the opportunity to review this waiver with its legal counsel, and that such
party knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. This waiver is irrevocable, meaning that it
may not be modified either orally or in writing, and this waiver shall apply to
any subsequent amendments, supplements or modifications to (or assignments of)
this Agreement. In the event of litigation, this Agreement may be filed as a
written consent to a trial (without a jury) by the court.
8.7. Definitions; Section and Other Headings. Any capitalized term used
--------------------------
herein and not otherwise defined herein shall have the meaning ascribed to it in
the Assignment Agreement. The section and other headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
8.8. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which together shall be deemed to be one and the same
agreement.
8.9. Notices. All notices, consents, waivers and communications hereunder
-------
given by any party to the other shall be in writing (including facsimile
transmission) and delivered personally, by telecopy, telex or facsimile, by a
recognized overnight courier, or by dispatching the same by certified or
registered mail, return receipt requested, with postage prepaid, in each case
addressed:
If to the Company: Orthovita, Inc.
00 Xxxxx Xxxxxx Xxxxxxx
Xxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx, President and CEO
Phone: (000) 000-0000
Fax: (000) 000-0000
with a copy to: Xxxxxx, Xxxxx & Bockius LLP
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX
Attn: Xxxxxxx X. Xxxxxxxx, Esq.
Phone: (000) 000-0000
Fax: (000) 000-0000
If to the Investor: Xxxx Capital Royalty Acquisition Fund, L.P.
00 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxxxxxx, M.D.
Phone: (000) 000-0000
Fax: (000) 000-0000
with a copy to: Xxxxxxxx & Xxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxx, Esq.
Phone: (000) 000-0000
Fax: (000) 000-0000
12
or to such other address or addresses as the Company or the Investor may
from time to time designate by notice as provided herein, except that notices of
changes of address shall be effective only upon receipt. All such notices
consents, waivers and communications shall: (a) when posted by certified or
registered mail, postage prepaid, return receipt requested, be effective three
(3) business days after dispatch, unless such communication is sent trans-
Atlantic, in which case shall be deemed effective five (5) Business Days after
dispatch, (b) when telecopied, telexed or facsimiled, be effective (i) the date
of transmission, if such notice or communication is delivered via facsimile at
the facsimile number specified in this Section prior to 6:30 p.m. (New York City
time) on a Business Day (provided the sender receives confirmation of
transmission), or (ii) 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 6:30
p.m. (New York City time) on any Business Day (provided the sender receives
confirmation of transmission), (c) when delivered by a recognized overnight
courier, be effective on the next Business Day after deposit with such courier;
or (d) when delivered in person, be effective upon hand delivery.
8.10. Entire Agreement. This Agreement, including any exhibits or
----------------
attachments hereto, supersedes all prior discussions and agreements among the
parties hereto with respect to the subject matter hereof and thereof and
contains the sole and entire agreement among the parties hereto with respect to
the subject matter hereof and thereof.
8.11. Expenses. Except as otherwise expressly set forth in this Agreement
--------
or the Assignment Agreement, each party shall pay all expenses incurred by it or
on its behalf in connection with this Agreement or any transaction contemplated
hereby.
8.12. Further Assurances. Each party hereto shall execute and deliver
------------------
such additional documents as may reasonably be necessary or desirable to
consummate the transactions contemplated by this Agreement.
8.13. Severability. Whenever possible, each provision of this Agreement
------------
shall be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
13
IN WITNESS WHEREOF, the undersigned has executed this Agreement this
16th day of October, 2001.
XXXX CAPITAL ROYALTY
ACQUISITION FUND, L.P.
By: /s/ Xxxxxx Xxxxxxxxxx
-------------------------
Name: Xxxxxx Xxxxxxxxxx
Title: Managing Member
ORTHOVITA, INC.
By: /s/ Xxxxxx Xxxxx
----------------
Name: Xxxxxx Xxxxx
Title: Chief Financial Officer and Vice President
SCHEDULE 3.1(b)
CAPITALIZATION
Outstanding Warrants
Common Shares Expiry MM/YY Exercise Price per Share
250,000 (1) $4.00
375,000 (2) $4.00
500,000 (3) $4.00
547,010 04/02 $4.25
566,894 01/03 $4.41
59,250 03/03 $4.00
22,500 04/03 $4.00
5,061 04/03 $4.20
24,426 06/03 $8.60
10,000 11/04 $6.00
63,559 08/05 $5.90
Total: 2,423,700
(1) - two business days after an effective registration statement
(2) - 60 trading days after an effective registration statement
(3) - later of 03/31/02 or 60 trading days after an effective
registration statement
Progress Capital, Inc. holds warrants to purchase 5,061 shares of Common Stock
at an exercise price of $4.20 per share. Under Section 6(a) of these warrants,
the holder is entitled to certain adjustments to the numbers of shares of Common
Stock purchasable under the warrants, as well as the exercise price per share,
if the Company issues or sells stock at a price below the per share exercise
price of the warrants in effective immediately prior to such issuance or sale.
Ben Franklin/Progress Capital Fund, L.P. holds warrants to purchase 24,426
shares of Common Stock at an exercise price of $8.60 per share. Under Section
6(a) of these warrants, the holder is entitled to certain adjustments to the
numbers of shares of Common Stock purchasable under the warrants, as well as the
exercise price per share, if the Company issues or sells stock at a price below
the per share exercise price of the warrants in effective immediately prior to
such issuance or sale.
SCHEDULE 3.1(c)
SUBSIDIARIES
Ortho, Inc. (wholly-owned subsidiary of Orthovita,
Inc.)
Partisyn Corp. (wholly-owned subsidiary of Orthovita,
Inc.)
Vita Licensing, Inc. (wholly-owned subsidiary of
Orthovita, Inc.)
Vita Special Purpose Corp. (wholly-owned subsidiary of
Vita Licensing, Inc.)
SCHEDULE 3.1(t)
DILUTION
On March 19, 2001, the Company issued to Xxxxx Xxxxxxx Partners I,
Ltd. a Second Amended and Restated Common Stock Purchase Warrant to purchase
1,125,00 shares of the Company's common stock at an exercise price of $4.00 per
share (the "Warrants"). Xxxxx Xxxxxxx subsequently transferred the Warrants to
S.A.C. Capital Associates, LLC and SDS Merchant Fund, L.P. In September 2001,
the Company renegotiated the terms of the Warrants with S.A.C. and SDS. The new
terms of the renegotiated Warrants are set forth below:
. Warrants to purchase 625,000 shares of the Company's common stock have
an exercise price of $4.00 per share and expire on December 31, 2001;
provided, however, that if the warrant holder has not been able to
freely sell the shares underlying the warrants for at least 60 trading
days prior to December 31, 2001 under an effective registration
statement registering the resale of the shares underlying the
warrants, then the expiration date of the warrants shall automatically
extend to the date that is the 60th trading day on which the warrant
holder has been able to freely sell the underlying shares under the
registration statement. The holders of these warrants must exercise
warrants to purchase an aggregate of 250,000 shares of the Company's
common stock within two trading days after the date on which the
Commission declares the registration statement effective.
. Warrants to purchase 500,000 shares of the Company's common stock have
an exercise price of $4.00 per shares and expire on March 31, 2002;
provided, however, that if the warrant holder has not been able to
freely sell the shares underlying the warrants for at least 60 trading
days prior to March 31, 2002 under an effective registration statement
registering the resale of the shares underlying the warrants, then the
expiration date of the warrants shall automatically extend to the date
that is the 60th trading day on which the warrant holder has been able
to freely sell the underlying shares under the registration statement.
