Exhibit 4.8
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "Agreement") dated as of the 1st day of
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December, 1998, by and among OraPharma, Inc., a Delaware corporation (the
"Company"), and the entities listed on Schedule 1 attached hereto (the
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"Buyers").
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The Company and the Buyers are desirous of providing for the issuance of
shares of Series C Preferred Stock (as defined herein), as more specifically set
forth herein.
The parties, intending to be legally bound hereby, agree as follows:
1. Definitions.
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As used in this Agreement, the following terms have the meanings specified
or referred to in this Section 1.
"Applicable Environmental Law" shall mean CERCLA, RCRA, the Federal Waste
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Pollution Control Act, 33 U.S.C. (S)(S) 1261 et seq., the Clean Air Act, 42
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U.S.C. (S)(S) 7401 et seq., any similar provisions of state or local law in the
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jurisdictions where the properties of the Company are located and the
regulations thereunder and any other local, state and/or federal laws or
regulations, whether currently in existence or hereafter enacted, that govern:
(a) the existence, cleanup and/or remedy of contamination on property;
(b) the protection of the environment from spilled, deposited or
otherwise emplaced contamination;
(c) the control of hazardous wastes; or
(d) the use, generation, transport, treatment, storage, disposal,
removal or recovery of Hazardous Materials, including building materials.
"Budget" shall have the meaning set forth in Section 5.3(b).
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"Business" shall have the meaning set forth in Section 3.17.
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"Business and Condition" shall mean the business, operations, financial
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condition, operating results, liabilities, or assets of the Company.
"Business Day" shall mean any day that is not a Saturday or Sunday or a day
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on which banks located in the Commonwealth of Pennsylvania or New York, New York
are authorized or required to be closed.
"Buyers" shall have the meaning set forth in the first paragraph of this
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Agreement.
"By-Laws" shall mean the by-laws of the Company.
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"CERCLA" shall mean the Comprehensive Environmental Response, Compensation
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and Liability Act, 42 U.S.C. (S)(S) 6901 et seq.
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"Certificate of Incorporation" shall mean the Second Amended and Restated
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Certificate of Incorporation of the Company, as amended from time to time.
"Closing" shall have the meaning set forth in Section 2.4.
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"Closing Dates" shall mean the dates and times of the Closings.
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"Code" shall mean the Internal Revenue Code of 1986, as amended.
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"Commission" shall mean the Securities and Exchange Commission.
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"Commitment" shall mean all obligations of the Company and its
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Subsidiaries, contingent or otherwise, pursuant to long-term leases (other than
leases for real property) or similar agreements.
"Common Stock" shall mean the Common Stock, par value $.001 per share, of
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the Company.
"Company" shall have the meaning set forth in the first paragraph of this
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Agreement.
"Contemplated Transactions" shall have the meaning set forth in Section
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4.3.
"Encumbrance" shall mean any security interest, mortgage, lien, charge,
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adverse claim or restriction of any kind, including, but not limited to, any
restriction on the use, voting, transfer, receipt of income or other exercise of
any attributes of ownership.
"Equity Stock" shall have the meaning set forth in Rule 3a11-1 under the
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Securities Exchange Act of 1934.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
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amended.
"First Closing" shall have the meaning set forth in Section 2.4.
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"GAAP" shall mean generally accepted accounting principles applied within
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the United States.
"Governmental Body" shall mean any domestic or foreign national, state or
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municipal or
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other local governmental, regulatory or administrative agency or
multi-national body (including, but not limited to, the European Economic
Community), any subdivision, agency, commission or authority thereof, or any
quasi-governmental or private body exercising any regulatory or taxing authority
thereunder.
"Hazardous Materials" shall mean any substance which as of the date of this
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Agreement shall be identified as "hazardous" or "toxic" or otherwise regulated
under CERCLA or RCRA or which has been or shall be determined at any time by any
agency or court to be a hazardous or toxic substance under Applicable
Environmental Law. The term "Hazardous Material" shall also include, without
limitation, raw materials, building components, the products of any
manufacturing or other activities on the properties, wastes, petroleum, and
source, special nuclear or by-product material as defined by the Atomic Energy
Act of 1954, as amended (42 U.S.C. (S)(S) 3011 et seq., as amended).
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"Indebtedness" shall mean all liabilities for money borrowed by the Company
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and its Subsidiaries.
"Initial Public Offering" shall mean the Company's initial distribution of
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New Securities in an underwritten public offering to the general public pursuant
to a registration statement filed with and declared effective by the Commission
pursuant to the Securities Act at a price per New Security of not less than
$4.00 (as adjusted for stock splits, stock combinations or similar
recapitalizations) and resulting in gross proceeds (before underwriting
commissions and offering expenses) to the Company of not less than $15 million.
"Material Contracts" shall have the meaning set forth in Section 3.8.
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"Net Worth" shall have the meaning set forth in Section 6.8.
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"New Securities" shall mean any Equity Stock, including, but not limited
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to, shares of Common Stock of the Company, any security which is convertible
into or exercisable or exchangeable for Common Stock, or any right, option or
warrant to acquire any Common Stock of the Company.
"Permits" shall have the meaning set forth in Section 3.19.
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"Person" shall mean any individual, corporation, general or limited
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partnership, limited liability company, firm, joint venture, joint stock
company, enterprise, trust, association, unincorporated organization, other
entity, or Governmental Body.
"Preferred Shares" shall mean the Series C Preferred Stock of the Company
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to be issued to the Buyers hereunder.
"Proprietary Rights" shall mean all patents, patent applications, patent
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licenses, trademarks, trademark applications, trade names, service marks,
service ▇▇▇▇ applications, brand marks, brand names, copyrights, trade secrets,
inventions, technologies, know-how, formulae,
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processes, names and likeness.
"Public Offering" shall mean a distribution of New Securities in an
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underwritten public offering to the general public pursuant to a registration
statement filed with and declared effective by the Commission pursuant to the
Securities Act.
"RCRA" shall mean the Resource Conservation and Recovery Act, 42 U.S.C.
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(S)(S) 6901 et seq.
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"Registrable Securities" shall mean any shares of Common Stock issued or to
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be issued pursuant to conversion of the Preferred Shares (including any shares
issued as a dividend or distribution with respect to, or in exchange for, the
Preferred Shares).
"Related Party" shall mean (a) any individual who is an employee,
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stockholder, consultant, director or officer of the Company; (b) any person who
is an affiliate of the Company, as such term is defined in Rule 405 under the
Securities Act, (c) any Person that owns five percent or more of the outstanding
Equity Stock of any class of the Company; (d) any member of the family (as
defined in Section 267(c)(4) of the Code) of, or any individual who has the same
home as, any individual (or the spouse of any such individual) described in
clause (a), (b) or (c) of this Section; or (e) any trust, estate or partnership
of which an individual described in clause (a), (b), (c) or (d) of this Section
is a grantor, fiduciary, beneficiary or partner.
"SBIA" shall have the meaning set forth in Section 3.18.
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"Second Closing" shall have the meaning set forth in Section 2.4.
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"Securities Act" shall mean the Securities Act of 1933, as amended.
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"Series A Preferred Stock" shall mean the Series A Convertible Preferred
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Stock, par value $.001 per share, of the Company.
"Series B Preferred Stock" shall mean the Series B Preferred Stock, par
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value $.001 per share, of the Company.
"Series C Preferred Stock" shall mean the Series C Convertible Preferred
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Stock, par value $.001 per share, of the Company.
"Stockholders Agreement" shall mean the Amended and Restated Stockholders
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Agreement dated as of the date hereof between the Company and the stockholders
of the Company named therein.
"Subsidiary" shall mean with respect to any Person, any corporation of
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which securities having the power to elect a majority of that corporation's
Board of Directors (other than securities having that power only upon the
happening of a contingency that has not occurred) are held by such Person or one
or more of its Subsidiaries.
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"Taxes" shall mean all taxes, duties, charges, fees, levies, interest,
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penalties, additions to tax or other assessments, including, but not limited to,
income, excise, employment, property, sales, use, value added and franchise
taxes and customs duties, imposed by any Governmental Body and any payments with
respect thereto required under any tax-sharing agreement.
2. The Acquisition.
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2.1 Preferred Shares. The Preferred Shares shall have the voting powers,
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liquidation rights, designations, preferences and relative, participating,
optional or other special rights, and the qualifications, limitations and
restrictions thereof as set forth in the Certificate of Incorporation and the
Stockholders Agreement.
2.2 Purchase and Sale. Subject to the terms and conditions of this
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Agreement, at the Closings to be held as provided in Section 2.4 below, the
Company shall issue and sell to the Buyers an aggregate of 6,584,360 shares of
Series C Preferred Stock, which shall be issuable to each Buyer in the amount
set forth opposite the name of such Buyer listed on Schedule 2.2, free and clear
of all Encumbrances, and each of the Buyers agrees, severally and not jointly,
to purchase from the Company the shares of Series C Preferred Stock listed next
to such Buyer's name on Schedule 2.2.
2.3 Purchase Price. The aggregate purchase price for the shares of Series
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C Preferred Stock to be issued at the Closings shall be $15,999,994.80, and each
Buyer shall pay the amount of the purchase price set forth opposite the name of
such Buyer listed on Schedule 2.2. The purchase price shall be paid by each of
the Buyers to the Company at the applicable Closing in immediately available
funds by wire transfer.
2.4 Place and Time. The closing of the purchase of the Preferred Shares
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(the "First Closing") by all of the Buyers except Biotechnology Investments
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Limited shall take place at the offices of ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ Tischman ▇▇▇▇▇▇▇ &
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ on December 1, 1998
or at such other place, date and time as the parties may agree in writing. The
closing of the purchase of the Preferred Shares (the "Second Closing" and
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collectively with the First Closing, the "Closings") by Biotechnology
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Investments Limited shall take place at the offices of ▇▇▇▇▇ Cummis Radin
Tischman ▇▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ on
December 15, 1998 or at such other place, date and time as the parties may agree
in writing.
2.5 Deliveries by the Company. At the Closings, the Company shall deliver
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the following to each of the Buyers purchasing Preferred Shares on such date:
(a) Certificates representing the Preferred Shares, duly registered in
the names of the Buyers.
(b) The documents contemplated by Section 8.
(c) The executed Stockholders Agreement.
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(d) All other documents, instruments and writings required by this
Agreement to be delivered by the Company at the Closings.
2.6 Deliveries by the Buyers. At the Closings, each of the Buyers
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purchasing Preferred Shares on such date shall deliver the following to the
Company:
(a) A wire transfer in the amount of the purchase price determined in
accordance with Section 2.3.
(b) The executed Stockholders Agreement.
(c) All other documents, instruments and writings required by this
Agreement to be delivered by the Buyers at the Closing.
3. Representations and Warranties of the Company.
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The Company represents and warrants (both as of the date of this Agreement
and as of the Closing Dates) to each of the Buyers as follows:
3.1 Organization of the Company; Authorization.
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(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware, with full legal and
corporate power and authority to enter into this Agreement and the Stockholders
Agreement, to sell and issue the Preferred Shares, and to perform all of its
obligations hereunder and thereunder, and to own, lease and operate its assets,
properties and business and to engage in its business as presently conducted or
contemplated. The Company is duly qualified and in good standing as a foreign
corporation under the laws of the State of Pennsylvania and is not required to
qualify as a foreign corporation in any other jurisdiction except where the
failure to be so qualified would not have a material adverse affect on the
Business and Condition of the Company.
(b) The Company has never had, nor does it presently have, any direct
or indirect Subsidiaries, nor has it owned, nor does it presently own, any
capital stock or other proprietary interest, directly or indirectly, in any
corporation, association, trust, partnership, joint venture or other entity.
The Company is not a party to any joint venture or partnership agreement.
(c) The execution, delivery and performance of this Agreement and the
Stockholders Agreement by the Company have been authorized by all necessary
corporate action on the part of the Company and each constitutes a valid and
legally binding obligation of the Company, enforceable against it in accordance
with their terms, except as such enforceability may be limited by bankruptcy
laws, moratorium laws and other laws from time to time in effect affecting
creditors' rights generally.
3.2 Capitalization. (a) The authorized Equity Stock of the Company
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consist of
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(i) 17,500,000 shares of Common Stock, 1,913,675 of which are issued and
outstanding immediately prior to consummation of this Agreement, and (ii)
862,500 shares of Series A Preferred Stock, 6,623,658 shares of Series B
Preferred Stock, and 6,584,360 shares of Series C Preferred C Stock, of which
862,500, 6,623,658 and zero, respectively, are issued and outstanding
immediately prior to the consummation of the transactions contemplated by this
Agreement. Of the authorized shares of Common Stock, 862,500, 6,623,658 and
6,584,360 shares are currently reserved for issuance upon conversion of the
Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock,
respectively. All of the issued and outstanding shares of capital stock of the
Company are fully paid and non-assessable.
(b) A true and complete list of the holders of record of all issued
and outstanding Equity Stock of the Company, including all outstanding options,
warrants or other rights to purchase Equity Stock, as adjusted to reflect the
consummation of the transactions contemplated by this Agreement including the
number of securities owned by each such holder, is set forth on Schedule 3.2(b)
attached hereto.
(c) The issuance of the Preferred Shares hereunder and the shares of
Common Stock issuable upon conversion of the Preferred Shares have been duly and
validly authorized. No further approval or authorization of the stockholders or
the directors of the Company, of any Governmental Body or of any other Person is
required for the issuance and sale of the Preferred Shares, or the shares of
Common Stock issuable on conversion thereof. When paid for by, and issued to,
the Buyers, the Preferred Shares will be duly and validly issued, fully paid and
non-assessable and will be free and clear of any Encumbrances. The Preferred
Shares will have the designations, preferences and relative, participating,
optional and other special rights as set forth in the Certificate of
Incorporation, By-Laws and the Stockholders Agreement. Subject to the accuracy
of the Buyers' representations and warranties contained in Section 4, the offer,
sale and issuance of the Preferred Shares (and any shares of Common Stock
issuable upon conversion thereof) are exempt from the registration requirements
of the Securities Act and state securities laws.
(d) Except as set forth in Schedule 3.2(b) or with respect to the
preemptive rights and conversion privileges of the Preferred Shares, there are
no options, warrants, conversion privileges, or preemptive or other rights or
agreements presently outstanding to purchase or otherwise acquire any shares of
the capital stock or other securities of the Company. Except as set forth in
Schedule 3.2(b), the Company is not a party to or subject to any agreement or
understanding, that affects or relates to the voting or giving of written
consents with respect to any security, or the voting by a director, of the
Company. To the best knowledge of the Company, no stockholder has granted
options or other rights to purchase any shares of Common Stock or other equity
securities of the Company from such stockholder. The Company holds no shares of
its capital stock in its treasury. Except as contemplated by this Agreement or
as set forth in the Stockholders Agreement or Schedule 3.2(b), there are no
rights outstanding which permit or allow the holder thereof to cause the Company
to file a registration statement or which permit or allow the holder thereof to
include securities of the Company in a registration statement filed by the
Company. Except as contemplated by this Agreement, the Certificate of
Incorporation and the Stockholders Agreement and as set forth in Schedule
3.2(b), none of the
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outstanding Equity Stock of the Company was issued in violation of the
Securities Act or other federal or state or other jurisdictions' securities laws
except for the filing of certain notices that may be required under applicable
Federal or state securities laws which filings shall be timely made and the
filing of a Form M-11 with the New York Department of Law (the "NYDL"), which
filing has been accepted by the NYDL. The offer, sale and issuance of the
Preferred Shares and the shares of Common Stock issuable upon conversion of the
Preferred Shares in conformity with the terms of this Agreement constitute
transactions exempt from the registration requirements of Section 5 of the
Securities Act. The Company is not an "investment company" within the meaning of
the Investment Company Act of 1940. The Company has delivered to the Buyers
true, correct and complete copies of the Certificate of Incorporation and By-
Laws (or other governing instrument) of the Company, as currently in effect each
as amended, and all minutes, memoranda, actions, and resolutions of the Board of
Directors and of the Company relating to the transactions contemplated hereby,
each as certified by the Secretary of the Company as being true and correct
copies of the originals.
3.3 No Conflict as to the Company. Except as set forth in Schedule 3.3,
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the Company is not in violation or breach of any term of its Certificate of
Incorporation or By-laws (each as amended through the date hereof), or any
judgment or decree, nor has it received or delivered notice concerning a breach
of any Material Contract (as defined below), and, to the best knowledge of the
Company, it is not in violation of any order, statute, rule, or regulation
applicable to the Company or properties except for those the violation of which
would not have a material adverse effect on the Business and Condition of the
Company. Neither the execution, delivery or performance of this Agreement or
the Stockholders Agreement, the issuance of the Preferred Shares or the Common
Stock issuable upon conversion thereof, or the consummation of the transactions
contemplated hereby and thereby, will (a) violate nor conflict with any
provision of the Certificate of Incorporation or By-Laws of the Company, or (b)
violate, or be in conflict with, or constitute a default (or an event which,
with notice or lapse of time or both, would constitute a default) under, or
result in the termination of, or accelerate the performance required by, or
excuse performance by any Person of any of its obligations under, or cause the
acceleration of the maturity of any debt or obligation pursuant to, or result in
the creation or imposition of any Encumbrance upon any property or assets of the
Company under, any material agreement or commitment to which the Company is a
party or by which any of its property or assets is bound, or to which any of the
property or assets of the Company is subject, except where the foregoing would
not have a material adverse affect on the Business and Condition of the Company,
or (c) violate any statute or law or any judgment, decree, order, regulation or
rule of any court or other Governmental Body applicable to the Company, except
where the foregoing would not have a material adverse affect on the Business and
Condition or (d) result in the suspension, revocation, impairment, forfeiture,
or non-renewal of any Permit (as defined below) of the Company, except where the
foregoing would not have a material adverse affect on the Business and
Condition.
3.4 Title to Properties; Encumbrances; Condition. (a) The Company owns no
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interests in real properties. The Company has good, valid and legal title to
all other properties (personal and mixed, tangible and intangible) that it
purports to own and a valid leasehold interest in all properties that it has
leased. With respect to property it leases, the Company is in
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compliance with such leases in all material respects.
(b) Except as set forth on Schedule 3.4(b), all properties and assets
owned or leased by the Company are owned or leased free and clear of all
Encumbrances.
(c) The properties and assets of the Company include all rights,
properties and other assets necessary to permit the Company to conduct its
business in all material respects in the same manner as presently conducted or
contemplated and as it has been conducted prior to the date of this Agreement.
The equipment of the Company is in good operating condition and repair, normal
wear and tear excepted, and is adequate for its present and contemplated uses to
which it is being, or is contemplated to be, used.
3.5 Litigation. (a) There is no action, suit, inquiry, proceeding or
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investigation by or before any court or Governmental Body pending or, to the
best of the Company's knowledge, threatened against the Company or any of its
properties, and (b) to the best of the Company's knowledge, there is no valid
basis for any such action, suit, inquiry, proceeding or investigation. The
Company is not a party to, or to the best knowledge of the Company, named in any
order, writ, injunction, judgment, or decree of any court, Governmental Body or
instrumentality. There is no action, suit or proceeding by the Company
currently pending or that the Company currently intends to initiate.
3.6 Proprietary Rights. The Company owns, or is licensed or otherwise has
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the full and exclusive rights to use, sell and license, all Proprietary Rights
used in or necessary for the conduct of its business as heretofore conducted,
and as presently contemplated to be conducted, all of which are listed on
Schedule 3.6 hereto (the "Requisite Rights"). To the Company's knowledge, each
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of the patents comprising the owned or licensed Requisite Rights is valid and
enforceable. Except as set forth on Schedule 3.6, no royalties, honoraria, fees
or other amounts are payable by the Company to any third party by reason of the
ownership, use, sale or license of the Requisite Rights. Except as set forth on
Schedule 3.6 hereto, to the best of the Company's knowledge, no product, service
or process currently or proposed to be manufactured, marketed, sold or used by
the Company violates any license or infringes any Proprietary Rights of any
third party. There is no pending or, to the best of the Company's knowledge,
threatened claim or litigation against the Company contesting the validity or
right to use any of the Requisite Rights, nor does there exist any basis
therefor.
3.7 Contracts and Commitments. Except as set forth on Schedule 3.7, the
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Company does not have any contract, agreement, obligation, lease or commitment,
proposed or executed, written or oral, absolute or contingent, other than (i)
contracts for the purchase of supplies and services that were entered into in
the ordinary course of business and that do not involve more than $50,000, and
do not extend for more than one (1) year beyond the date hereof, (ii) sales
contracts entered into in the ordinary course of business, (iii) agreements that
are terminable at will by the Company on no more than thirty (30) days' notice
without cost or liability to the Company, and that are not material to the
Business and Condition of the Company. For the purpose of this paragraph,
employment and consulting contracts and contracts with labor unions, and license
agreements relating to the acquisition or disposition of the Company's
technology
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(other than standard end user license agreements) shall not be considered to be
contracts entered into in the ordinary course of business. Schedule 3.7 contains
a true, complete and accurate list of all such contracts, agreements, leases,
commitments, understandings or other obligations (whether written or oral)
(collectively the "Material Contracts"), true and correct copies of which have
been made available to the Buyers or their counsel.
3.8 Status of Agreements. All contracts, agreements, commitments,
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obligations, plans, leases, policies and licenses to which the Company is a
party are valid and binding agreements and are in full force and effect; there
are no existing defaults (or events which, with notice or lapse of time or both,
would constitute a default) by the Company or, to the best of the Company's
knowledge, any other party thereunder. The Company is not a party to any
contract, agreement, commitment or other obligation that has or may reasonably
be expected to have individually or in the aggregate with any other contracts,
agreements, commitments or other obligations a material adverse effect on the
Business and Condition of the Company.
3.9 Labor Relations. To the best knowledge of the Company, no officer,
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key employee of or consultant to the Company is or will be in violation of any
judgment, decree, or order, or any term of any employment contract, consulting
agreement, patent disclosure agreement, or other contract or agreement relating
to the relationship of any such officer or consultant with the Company, as the
case may be, or any other party because of the nature of the business conducted
or proposed to be conducted by the Company or the use by the officer, key
employee or consultant of his best efforts with respect to such business. To
the best knowledge of the Company, no officer, key employee or consultant to the
Company intends to terminate his or their employment or other arrangement with
the Company, nor does the Company have a present intention to terminate the
employment of or other arrangement with any of the foregoing, including, but not
limited to, the Chief Executive Officer of the Company. Subject to general
principles related to wrongful termination of employees and to the terms of the
agreements listed on Schedule 3.9, the employment of each officer and employee
of the Company is terminable at will of the Company. Except as set forth in
Schedule 3.9, the Company is not obligated under any employment contract, nor is
it a party to any union, collective bargaining or similar agreement, any profit-
sharing, deferred compensation, bonus, stock option, stock ownership, stock
purchase, pension, consulting, retirement, welfare or incentive plan or
agreement, or any plan providing for "fringe benefits" to its employees,
including, but not limited to, salary continuation, service awards, severance
pay, welfare, medical, hospitalization, disability, life insurance and other
insurance plans or related benefits with respect thereto. The Company is in
compliance in all material respects with all applicable laws respecting
employment and employment practices, terms and conditions of employment and
wages and hours, and the Company is not nor has it been engaged in any unfair
labor practice which is likely to have a material adverse affect on the Business
and Condition of the Company; there is no unfair labor practice complaint
against the Company pending before the National Labor Relations Board; there is
no labor strike, dispute, slowdown or stoppage pending or threatened against or
affecting the Company or any attempt to organize employees of the Company for
union representation; no representation question exists respecting the employees
of the Company; and the Company's relations with its employees are satisfactory.
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3.10 Employee Benefit Plans. Except as set forth in Schedule 3.9, the
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Company does not have, none of its current or former employees are covered by,
and the Company has no obligation with respect to, any employee benefit plan (as
defined in Section 3(3) of ERISA), whether formal or informal.
3.11 Compliance with Law. The operations of the Company have been
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conducted in all material respects in accordance with all applicable laws,
regulations and other requirements of all Governmental Bodies having
jurisdiction over the Company. The Company has not received any notification of
any asserted present or past failure to comply with any such laws, rules or
regulations. The Company has all material licenses, Permits, orders or
approvals from Governmental Bodies material to the Business and Condition of the
Company and, to the best of the Company's knowledge, it is not in violation of
any such license, Permit, order or approval which violation is likely to have a
material adverse affect on the Business and Condition of the Company.
3.12 Governmental Consent. No consent, approval, or authorization of, or
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designation, declaration, notification, or filing with any Governmental Body on
the part of the Company is required in connection with the valid execution,
delivery and performance of this Agreement or the Stockholders Agreement, the
offer, sale, or issuance of the Preferred Shares and the Common Stock to be
issued upon the conversion thereof or the consummation of any other transaction
contemplated hereby or by the Stockholders Agreement except the qualification
(or the taking of such action as may be necessary to secure an exemption from
qualification, if available) of the offer and sale of the Preferred Shares or
the Common Stock to be issued upon the conversion thereof under applicable
securities laws, which filings and qualifications, if required, will be
accomplished in a timely manner.
3.13 Environmental Protection. (a) The Company is in compliance with all
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limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in any Applicable Environmental
Laws, or in any plan, order, decree, judgment, notice or demand letter issued,
entered, promulgated or approved thereunder. The Company is not aware of, nor
has the Company received notice of, any past, present or future events,
conditions, circumstances, activities, practices, incidents, actions or plans
which may interfere with or prevent continued compliance, or which may give rise
to any common law or legal liability, or otherwise form the basis of any claim,
action, suit, proceeding, hearing or investigation, based on or related to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling, or the emission, discharge, release or threatened release
into the environment, of any pollutant, contaminant or hazardous or toxic
material or waste.
(b) To the best of the Company's knowledge, no Hazardous Material has
been incorporated in, used on, stored on or under, released from, treated on,
transported to or from, or disposed of on or from any real property leased by
the Company such that, under Applicable Environmental Laws, (i) any such
Hazardous Material would be required to be removed, cleaned-up or remediated
before the property could be altered, renovated, demolished or transferred, or
(ii) the lessee of the property could be subjected to liability for the removal,
clean-up or remediation of such Hazardous Material; and the Company has not
received any
11
notification from any Governmental Bodies or other third parties relating to
Hazardous Material on or affecting any property owned or leased by the Company
or relating to any potential or known liability under Applicable Environmental
Laws arising from the ownership or leasing of any property.
3.14 Related Party Transactions. (a) Except as set forth in Schedule 3.14
--------------------------
and except for the transactions contemplated to occur at the Closings, (i) there
have been no transactions between the Company and any Related Party or any
payment (however characterized) by the Company to any Related Party or by any
Related Party to the Company, and (ii) there is no lease, agreement or
commitment between the Company and any Related Party. As used in the preceding
sentence, the term "transaction" includes, but is not limited to, any sale or
other transfer of property of assets, the lease or other use of property or
assets, the provision of services and the furnishing of personnel, whether or
not for consideration.
(b) Except as set forth in Schedule 3.14, no Related Party has any
material direct or indirect interest (including financial or ownership) in any
Material Contract, or property of the Company, real or personal, tangible or
intangible, including, without limitation, any Proprietary Rights, used in or
pertaining to the business of the Company, and no Related Party is indebted to
the Company and the Company is not indebted to any Related Party whether
directly or indirectly (including commitments to make loans or extend or
guarantee credit).
3.15 No Brokers or Finders. Neither the Company, nor any of its officers,
---------------------
directors or employees, has employed or will employ any broker or finder or
incurred or will incur, directly or indirectly, any liability for any brokerage
or finder's fees or commissions or similar payments in connection with this
Agreement or the transactions contemplated hereby.
3.16 Insurance. The Company has obtained insurance for its benefit in such
---------
amounts and covering such risks as are customary for businesses comparable to
the business conducted by the Company under policies in effect and issued by
insurers of recognized responsibility.
3.17 Disclosure. No representations or warranties by the Company in this
----------
Agreement and no statement contained in any document (including, without
limitation, financial statements, certificates, projections, business plans or
other writings furnished or to be furnished to the Buyers or any of their
representatives pursuant to the provisions hereof or in connection with the
transactions contemplated hereby), contains any untrue statement of material
fact or omits to state any material fact necessary, in light of the
circumstances under which it was made, in order to make the statements herein or
therein not misleading. Documents delivered to the Buyers pursuant to this
Agreement are true and complete copies of what they purport to be.
3.18 Small Business Matters. (a) The Company, together with its
----------------------
"affiliates" (as that term is defined in Title 13, Code of Federal Regulations,
(S)121.103), is a "small business concern" within the meaning of the Small
Business Investment Act of 1958, as amended (the "SBIA"), and the regulations
----
thereunder, including Title 13, Code of Federal Regulations, (S)121.301(c). The
Company is a "qualified small business," as defined in Section 1202(d) of the
Code. The Company covenants and agrees to execute and deliver to the Buyers,
from time to
12
time, such forms, documents, schedules and other instruments as may be
reasonably requested thereby to cause the Series C Preferred Stock to qualify as
"qualified small business stock," as defined in Section 1202(c) of the Code.
(b) The proceeds from the sale of the Preferred Shares will be used by
the Company to (i) finance working capital, research and development and other
general corporate needs, and (ii) pay expenses related to the transactions
contemplated by this Agreement, the Stockholders Agreement, and the other
transactions and documents related hereto and thereto. The Company will not
engage in any act or use the proceeds from the sale of the Shares hereunder,
directly or indirectly for any purpose in contravention of the SBIA and the
regulations thereunder. No portion of such proceeds (i) will be used to provide
capital to a corporation licensed under the SBIA, (ii) will be used to acquire
farm land, (iii) will be used to fund production of a single item or defined
limited number of items, generally over a defined production period, that
constitute the majority of the activities of the Company (examples include
motion pictures and electric generating plants), or (iv) will be used for any
purpose contrary to the public interest (including, but not limited to,
activities which are in violation of law or inconsistent with free competitive
enterprise), in each case, within the meaning of 13 C.F.R. (S)107.720.
(c) The primary business activity of the Company does not involve,
directly or indirectly, providing funds to others, purchasing or discounting
debt obligations or factoring or long-term leasing of equipment with no
provision for maintenance or repair. The Company is not classified under Major
Group 65 (Real Estate) of the SIC Manual. The assets of the business of the
Company (the "Business") will not be reduced or consumed, generally without
--------
replacement, as the life of the Business progresses, and the nature of the
Business does not require that a stream of cash payments be made to the
Company's financing sources on a basis associated with the continuing sale of
assets (examples include real estate development projects and oil and gas
▇▇▇▇▇). (See 13 C.F.R. (S)107.720.)
---
(d) The proceeds from the sale of the Preferred Shares will not be
used substantially for a foreign operation and at the Closings or within one
year thereafter no more than 49% of the employees or tangible assets of the
Company and its subsidiaries will be located outside the United States. This
subsection (d) does not prohibit such proceeds from being used to acquire
foreign materials and equipment or foreign property rights for use or sale in
the United States (unless such use or sale is for a specific domestic purpose).
3.1 Licenses; Authorizations; Permits. The Company owns, possesses, or
---------------------------------
will own, possess, and maintain throughout the term of this Agreement all
franchises, grants, licenses, permits, consents, approvals or authorizations
(the "Permits") of every kind and nature necessary in the conduct of its
business as currently operated except for those Permits the failure of which to
so own, possess and maintain is not reasonably likely to have a material adverse
effect on the Business and Condition of the Company. The Company is not in
violation of, or in default under, any Permits, except where such violation or
default is not reasonably likely to have a material adverse effect on the
Business and condition of the Company.
13
3.20 Liabilities; Indebtedness. Except as and to the extent disclosed or
-------------------------
reserved against the balance sheet of the Company as of October 31, 1998, a copy
of which has been previously delivered to the Buyers, to the best of the
Company's knowledge, it has no liabilities, absolute or contingent (other than
those incurred after the date thereof in the ordinary course of business), which
are, individually or in the aggregate, material to the Business and Condition of
the Company. Except as set forth in Schedule 6.3, the Company has no
indebtedness for borrowed money that the Company has directly or indirectly
created, incurred, assumed, or guaranteed, or with respect to which the Company
has otherwise become directly or indirectly liable.
3.21 Absence of Certain Changes or Events; Operations. Since October 31,
------------------------------------------------
1998 to the best knowledge of the Company there has not been any event,
occurrence or development or any change in the business, financial condition or
results of operations of the Company which, individually or in the aggregate,
has had, or is reasonably likely to have, a material adverse effect on the
Business and Condition of the Company or a material adverse effect on the
Company's ability to consummate the transactions contemplated hereby and by the
Stockholders Agreement.
4. Representations and Warranties of the Buyers.
--------------------------------------------
Each Buyer, severally and not jointly, represents and warrants (both as of
the date of this Agreement and as of the Closing Date on which such Buyer is
purchasing Preferred Shares) to the Company as follows:
4.1 Authorization. Such Buyer has the full power and authority to enter
-------------
into this Agreement and the Stockholders Agreement and to perform all of its
obligations hereunder and thereunder. The execution, delivery and performance
of this Agreement and the Stockholders Agreement by it have been duly authorized
by all necessary action, and this Agreement and the Stockholders Agreement
constitute valid and binding obligations of such Buyer enforceable against such
Buyer in accordance with their respective terms, except, as such enforceability
may be limited by bankruptcy laws, moratorium laws and other laws from time to
time in effect affecting creditors' rights generally. The execution, delivery
and performance of this Agreement and the Stockholders Agreement by such Buyer
does not violate any provision of the governing instrument of Buyer, conflict
with or constitute a default under any material agreement, indenture or
instrument to which such Buyer is a party or by which it is bound or violate any
statute or order of any court or Governmental Body applicable to such Buyer,
except where the foregoing would not have a material adverse affect on the
business and condition of the Buyer.
4.2 Investment Representations. Such Buyer has knowledge and experience
--------------------------
in financial and business matters sufficient to enable it to evaluate the merits
and risks of an investment in the Company. Such Buyer has assets sufficient to
enable it to bear the economic risk of its investment in the Preferred Shares
and is an "accredited investor" as defined in Rule 501 under the Securities Act.
Such Buyer is acquiring the Preferred Shares for its own account, and not with a
present view to, or for sale in connection with, any distribution thereof. Such
Buyer understands that the Preferred Shares and the Common Stock issuable upon
conversion thereof have not been registered under the Securities Act by reason
of their issuance in a
14
transaction exempt from the registration requirements of the Securities Act
pursuant to the exemption provided in Section 4(2) thereof, that the Preferred
Shares and the Common Stock issuable upon conversion thereof have not been
registered under applicable state securities laws by reason of their issuance in
a transaction exempt from such registration requirements, and that the Preferred
Shares and the Common Stock issuable upon conversion thereof may not be sold or
otherwise disposed of unless registered under the Securities Act and applicable
state securities laws (the Company being under no obligation so to register such
Preferred Shares or the Common Stock issuable on conversion thereof, except as
set forth in Section 8 of the Stockholders Agreement) or exempted from
registration. Such Buyer further understands that the exemption from
registration afforded by Rule 144 promulgated under the Securities Act is not
presently available with respect to the Preferred Shares or the Common Stock
issuable on conversion thereof.
4.3 Buyers' Acknowledgment as to Information. Such Buyer or officers and
----------------------------------------
representatives of such Buyer have received from the Company such information
(including the Schedules and Exhibits to this Agreement and of such documents
referred to herein and therein as they have requested) with respect to the
Company as such Buyer has deemed necessary and relevant in connection with the
transactions contemplated by this Agreement (the "Contemplated Transactions"),
-------------------------
and such Buyer has had the opportunity, directly or through such officers and
representatives, to ask questions of and receive answers from persons acting on
behalf of the Company necessary to verify the information so obtained; provided,
--------
however, that such receipt of information and such opportunity shall not affect
-------
or otherwise diminish or obviate the representations and warranties of the
Company set forth in this Agreement or such Buyer's reliance thereon.
4.4 No Brokers or Finders. No Buyer nor any of its officers, directors or
---------------------
employees has employed or will employ any broker or finder or incurred or will
incur, directly or indirectly, any liability for any brokerage or finder's fees
or commissions or similar payments in connection with any of the Contemplated
Transactions.
5. Affirmative Covenants of the Company.
------------------------------------
Subject to Section 12, the Company agrees that so long as any shares of
Series C Preferred Stock are outstanding:
5.1 Use of Proceeds. The proceeds of the sale of the Preferred Shares
---------------
shall be used by the Company for working capital, research and development and
other general corporate purposes.
5.2 Consent as to Issuance of Common Stock. The Company will obtain any
--------------------------------------
authorization, consent, approval or other action by or make any filing with any
court or Governmental Body that may be required under applicable federal or
state securities laws in connection with the issuance of any shares of Common
Stock upon conversion of the Preferred Shares.
15
5.3 Financial Information. Until the consummation of an Initial Public
---------------------
Offering, the Company will deliver to each Buyer: (a) as soon as practicable
and in any event within 90 days after the close of each fiscal year of the
Company, copies of (i) the audited balance sheet of the Company as of the end of
such fiscal year, (ii) audited statements of operations of the Company for such
fiscal year, (iii) audited statements of stockholders' equity for such fiscal
year, and (iv) audited statements of cash flow of the Company for such fiscal
year, setting forth in each case in comparative form the corresponding figures
of the previous annual period, all in reasonable detail, prepared in accordance
with GAAP consistently applied throughout the periods involved and together with
the report of a firm of independent certified public accountants of recognized
national standing;
(b) as soon as practicable, and in any event within 45 days after the
end of each of the first three fiscal quarters of the Company and within 90 days
after the end of the fourth fiscal quarter, a financial reporting package
including (i) an unaudited balance sheet of the Company as at the end of each
such fiscal quarter, and (ii) unaudited statements of operations, stockholders'
equity and cash flow for such fiscal quarter, setting forth in each case in
comparative form corresponding figures for the preceding year's respective
fiscal quarter and the most recent quarterly budget data included in the annual
operating budget for the Company. Each quarterly reporting package will also
contain an analysis of the current business and marketing plans of the Company
and its Subsidiaries, if any, for the period covered by such budget (the
"Budget"), all in reasonable detail, prepared in accordance with GAAP
------
consistently applied throughout the periods involved and certified as being
correct and complete and fairly presenting the results of operations of the
Company for the quarter indicated (subject to normal year-end audit adjustments
and the absence of footnotes), by the principal financial officer of the
Company;
(c) for each calendar month, as soon as practicable and in any event
within 25 days after the close of such month, copies of (i) the balance sheet of
the Company as of the end of such month, (ii) statements of operations of the
Company for such month, and (iii) statements of cash flow of the Company for
such month, all in reasonable detail, prepared in accordance with GAAP
consistently applied throughout the periods involved and certified as being
correct and complete and fairly presenting the results of operations of the
Company for the month indicated (subject to normal recurring year-end audit
adjustments and the absence of footnotes), by the principal financial officer of
the Company;
(d) as soon as practicable and in any event not less than 30 days
prior to the end of each fiscal year of the Company, a Budget, including an
analysis of the current business and marketing plans of the Company and its
Subsidiaries, if any, for the twelve month period covered by such budget,
including but not limited to, a cash flow budget, profit and loss budget and
budgeted balance sheet; and
(e) such other reports and financial and other information, including
but not limited to any letters furnished to the Company by its independent
public accountants which comment on the accounting practices of the Company, as
any Buyer shall reasonably request; and
16
(f) concurrently with the furnishing of the report pursuant to Section
5.3(a) and (b) hereof, an officer's certificate stating that the Company is not
in default under, and has not breached, any material agreements or obligations,
including, without limitation, this Agreement, or if any such default or breach
exists, specifying the nature thereof and what actions the Company has taken and
proposes to take with respect thereto. If for any period the Company shall have
any Subsidiary or Subsidiaries whose accounts are consolidated with those of the
Company, then the financial statements delivered for such period pursuant to the
foregoing clauses (a), (b) and (c) of this Section 5.3 shall be the consolidated
and consolidating financial statements of the Company and all such consolidated
Subsidiaries and, if such Subsidiary or Subsidiaries are not consolidated with
those of the Company, separate financial statements for such Subsidiary or
Subsidiaries shall be provided.
5.4 Other Reports and Inspection. (a) The Company will, upon reasonable
----------------------------
prior notice, make available to each Buyer or its representatives or designees
during normal business hours (a) all assets, properties and business records of
the Company for inspection and copying, and (b) the directors, officers,
employees and public accountants (and by this provision the Company hereby
authorizes and instructs said accountants to discuss with such holder and such
representatives and designees its affairs, finances and accounts and the
responses of attorneys representing the Company to inquiries made by the Company
on behalf of said accountants in connection with their audit of the financial
affairs of the Company), of the Company for interviews concerning the business,
affairs and finances of the Company.
(b) Promptly (but in any event within ten (10) days) after the
discovery of any material adverse event or circumstance affecting the Company
which event or circumstance has, or with the passage of time is reasonably
likely to, have a material adverse effect on the Business and Condition of the
Company or result in the Company's breach of any material provision of this
Agreement, the Company shall deliver a notice to each Buyer specifying the
nature and period of existence thereof, and the actions of the Company has taken
and/or proposes to take with respect thereto. The Company shall furnish each
Buyer receiving such letter with monthly reports updating and describing any
developments relating to matters described under this Subsection 5.4(b) and will
promptly notify each Buyer of any material developments or changes relating
thereto.
(c) Promptly (but in any event within five days) after transmission
thereof, the Company shall deliver to each Buyer copies of any material
communication from the Company to its shareholders, directors or the financial
community at large, and any reports filed by the Company with any securities
exchange, the National Association of Securities Dealers, Inc., any state
official or agency charged with securities regulation, the Commission, any other
Governmental Body and any material correspondence between the Company and any of
the foregoing (including, without limitation, any correspondence from any of the
foregoing which contains information materially adverse to the Business and
Condition of the Company).
(d) Promptly following the preparation thereof, the Company shall
deliver to each Buyer copies of the minutes of proceedings (or consents) of the
Company's Board of Directors and/or its stockholders.
17
(e) With reasonable promptness, the Company shall deliver to each
Buyer such other information and data with respect to the Company and its
Subsidiaries (if any) as any Buyer may from time to time reasonably request.
(f) Each of Sentron and Healthcap shall have the right to send one
representative to attend, in a non-voting observer capacity, all meetings of the
Company's Board of Directors, and in this respect, the Company shall give such
representative copies of all notices, minutes, consents and other materials that
it provides to its Directors. Such representative shall have the right to
participate in discussions of matters brought before the Board of Directors.
The provisions of Section 5.3 hereof and this Section 5.4 shall not
be in limitation of any rights which any Buyers may have with respect to the
books and records of the Company and any Subsidiary of the Company, or to
inspect their properties or discuss their affairs, finances and accounts, under
the laws of the jurisdictions in which they are incorporated.
Each Buyer agrees that the information to be provided by the Company
pursuant to Section 5.3 and 5.4 is Confidential Material (as defined in Section
7(a) below).
5.5 Corporate Existence; Properties. The Company will, and will cause
-------------------------------
each of its Subsidiaries to, maintain, preserve and renew its corporate
existence in good standing and to comply with all applicable laws and
regulations of the United States or of any state or states thereof or of any
political subdivision thereof and of any Governmental Body where, in any such
case, the failure to so comply is reasonably likely to have a material adverse
effect on the Business and Condition of the Company. The Company will, and will
cause each of its Subsidiaries to, maintain, preserve and renew all of its
Permits and take all action reasonably necessary or material to obtain,
preserve, defend, renew and extend all Permits and Proprietary Rights
(including, without limitation, the Requisite Rights) which are necessary or
material to the conduct of the business.
5.6 Insurance. The Company will maintain policies of insurance,
---------
including, but not limited to, fire, casualty liability in full force and effect
and workmen's compensation, in such amounts and covering such risks as are
customarily carried by businesses comparable to the business conducted by the
Company, subject to availability at commercially reasonable cost.
5.7 Maintenance of Properties. The Company will, and will cause each of
-------------------------
its Subsidiaries to, maintain and keep its properties, real and personal, in
good repair, working order and condition, normal wear and tear excepted, and
from time to time make all necessary or desirable repairs, renewals and
replacements, so that its businesses may be properly and advantageously
conducted at all times.
5.8 Compliance with Obligations. The Company will, and will cause each
---------------------------
of its Subsidiaries to, comply with the terms and conditions of all Material
Contracts, the Certificate of Incorporation, By-laws, and the Stockholders
Agreement, and all documents and agreements executed or delivered in connection
with the Closings to the extent to which the failure to so comply could
reasonably be expected to have a material adverse effect upon the Business and
18
Condition of the Company and its Subsidiaries taken as a whole, unless and to
the extent that the same are being contested in good faith and by appropriate
proceedings and adequate reserves (as determined in accordance with GAAP
consistently applied) have been established on its books with respect thereto.
5.9 Taxes. The Company will, and will cause each of its Subsidiaries to,
-----
pay when due (a) all Taxes imposed upon it or any of its properties or income,
other than Taxes which are being contested in good faith and which Taxes in the
aggregate have been reserved against on the books of the Company, and (b) all
claims or demands of materialmen, mechanics, carriers, warehousemen, landlords
and other like persons which, if unpaid, might result in the creation of a lien
upon any of its properties, other than claims or demands which are being
contested in good faith.
5.10 Compliance with Law. The Company will, and will cause each of its
-------------------
Subsidiaries to, comply, with all applicable statutes, rules, regulations and
orders of all Governmental Bodies with respect to the conduct of its business
and the ownership of its properties; provided, that the Company shall not be
--------
deemed to be in violation of this Section 5.10 as a result of any failure to
comply with any provisions of such statutes, rules, regulations and orders, the
noncompliance with which would not result in fines, penalties, injunctive relief
or other civil or criminal liabilities which, in the aggregate, would materially
and adversely affect the Business and Condition of the Company and its
Subsidiaries taken as a whole.
5.11 Environmental Matters. The Company shall promptly advise each Buyer
---------------------
in writing of any pending or threatened claim, demand or action by any
Governmental Body or third party relating to any Hazardous Materials materially
affecting any properties owned or leased by the Company of which it has
knowledge. The Company shall not discharge, place, release, spill or dispose of
any Hazardous Materials or any other pollutants or effluents upon any properties
owned or leased by the Company or elsewhere (including, but not limited to,
underground injection of such substances) other than in compliance with
Applicable Environmental Laws and the Company shall not discharge into the air
any emission which would require a permit under the Clean Air Act or its state
counterparts or any other Environmental Laws without obtaining such permit. The
stockholders of the Company shall have no control over, or authority with
respect to, the waste disposal operations of the Company.
5.12 Accounting System. The Company will maintain a system of accounting
-----------------
and proper books of record and account, in accordance with GAAP, and will set
aside on its books reserves for depreciation, depletion, obsolescence,
amortization, pending and threatened litigation and otherwise as may be
appropriate in conformance with procedures and recommendations of the Company's
independent public accountants.
5.13 Reservation of Common Stock. The Company shall reserve and keep
---------------------------
available out of its authorized but unissued Common Stock the number of shares
of Common Stock required for issuance upon the conversion of all of the Series C
Preferred Stock.
5.14 Proprietary Information and Confidentiality Agreements with Employees
---------------------------------------------------------------------
and
---
19
Consultants. The Company will enter into proprietary information and
-----------
confidentiality agreements in a form approved by its Board of Directors with all
key employees and consultants of the Company. The Company will avail itself of
all rights and remedies under all existing and future proprietary information
and confidentiality agreements.
5.15 Board of Directors Meetings. The Company shall call, and use its
---------------------------
best efforts to have, regular meetings of the Board of Directors on at least a
quarterly basis. The Company shall pay all reasonable travel expenses and other
out-of-pocket expenses incurred by Directors in connection with attending
meetings of the Board or any committee thereof.
5.16 Material Changes and Litigation. The Company shall promptly notify
-------------------------------
the Buyers of any material adverse change in the Business and Condition of the
Company and its Subsidiaries, if any, taken as a whole, and of any litigation or
governmental proceeding or investigation brought or, to the best of the
Company's knowledge, threatened against the Company, or against any officer,
director, key employee, or principal stockholder of the Company materially
adversely affecting or which, if adversely determined, would materially
adversely effect the Business and Condition of the Company and its Subsidiaries,
if any, taken as a whole.
5.17 Patents, Trademarks and Copyrights. Except where the Company has
----------------------------------
affirmatively determined to the contrary in its reasonable business judgment:
(a) Patent Maintenance. The Company shall take such actions
------------------
(including the payment of all maintenance and other fees related thereto) as are
necessary to cause all Company patents to remain current and will not do any act
or omit to do any act whereby any Company patent will expire prematurely.
(b) Trademark Maintenance. The Company will not do any act or omit
---------------------
to do any act whereby any Company trademark or any trademark licensed by the
Company may become abandoned or rendered invalid and shall take all such actions
necessary to maintain the validity of all such trademarks. The Company will
maintain its trademarks in full force and effect and free from any claim of
abandonment for non-use.
(c) Copyright Maintenance. The Company will place appropriate notice
---------------------
of copyright on all copies embodying Company copyrighted works, if any, which
are publicly distributed and the Company will not do any act or omit to do any
act whereby any Company copyright may become invalidated or dedicated to the
public domain.
(d) Application and Registration Maintenance. The Company will take
----------------------------------------
all steps necessary in the reasonable business judgment of the Company in any
proceeding before the United States Patent and Trademark Office, United States
Register of Copyrights or similar office or agency of the United States or any
office of the Secretary of State (or equivalent) of any state thereof, to
maintain and prosecute each application and registration of Company's patents,
trademarks and copyrights, including, without limitation, filing of renewals,
extensions, affidavits of use and incontestability, and opposition, interference
and cancellation proceedings,
20
which are material to the business of the Company.
(e) Infringement. In the event that any Company patent, trademark,
------------
or copyright is infringed, misappropriated or diluted by a third party, the
Company shall, unless the Company shall determine in its reasonable business
judgment that such trademark, patent or copyright is of negligible economic
value to the business of the Company, promptly ▇▇▇ for infringement,
misappropriation and/or dilution and to obtain injunctive relief and recover
damages therefore, and shall take such other actions to protect such patent,
trademark, or copyright, all as the Company shall deem appropriate in its
reasonable business judgment under the circumstances.
5.18 Director & Officer Insurance; Indemnification Agreements. The
--------------------------------------------------------
Company shall use its best efforts to obtain, as soon as reasonably practicable,
but in any event within 4 months of the First Closing, obtain a directors &
officers insurance policy in an amount not less than $1 million. The Company
shall maintain such policy in full force and effect, subject to availability at
commercially reasonable cost. The Company shall, as soon as reasonably
practicable, enter into indemnification agreements with each of its directors,
which shall provide that the Company shall indemnify each of its directors to
the fullest extent permitted by the Delaware General Corporation Law.
6. Negative Covenants of the Company.
---------------------------------
Subject to Section 12, the Company covenants and agrees with each of the
Buyers and its transferees that, without the affirmative approval of the holders
of at least a majority of the holders of the then outstanding Series A Preferred
Stock, Series B Preferred Stock and Series C Preferred Stock, voting together as
a single class:
6.1 Related Party Transactions. Other than in the ordinary course of
--------------------------
business of the Company on an arms-length basis or in connection with
transactions involving obtaining additional financing for the Company, neither
the Company nor any Subsidiary will engage in any transaction with, nor enter
into any contract, agreement or other arrangement providing for the employment
of, furnishing of services by, rental of real or personal property from, or
otherwise requiring payments to, any Related Party without the affirmative vote
of a majority of the directors who are not affiliated (as defined by Rule 405
promulgated under the Securities Act) with such persons or entities.
6.2 Business. The Company will only engage in the business of the
--------
research, development, manufacturing, marketing and sale of medical products and
the performance of services related or incidental thereto, and any and all
activities related or incidental thereto.
6.3 Indebtedness; Commitments. Except as set forth on Schedule 6.3, the
-------------------------
Company will not, without the approval of the Board of Directors, incur, assume,
guarantee or otherwise become liable for (a) Indebtedness, or (b) commitments in
excess of $100,000 in the aggregate.
6.4 Guarantees. The Company will not incur any guarantee or similar
----------
contingent
21
obligation in respect of the indebtedness of others, whether or not classified
on the Company's balance sheet as a liability (a "Guarantee"), except for
---------
Guarantees in respect of indebtedness of any wholly-owned Subsidiary of the
Company.
6.5 Liens. Except with respect to the items set forth on Schedule 6.3,
-----
the Company will not create, incur, assume or suffer to exist any Lien upon any
of its property, assets or revenues, whether now owned or hereafter acquired,
except for:
(a) Liens for taxes not yet due or which are being contested in good
faith by appropriate proceedings, provided that adequate reserves with respect
--------
thereto are maintained on the books of the Company in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's, landlord's or other like Liens arising in the ordinary course of
business which are not overdue for a period of more than sixty (60) days or
which are being contested in good faith by appropriate proceedings;
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation and deposits
securing liability to insurance carriers under insurance or self-insurance
arrangements;
(d) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature incurred
in the ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not in any case materially
detract from the value of the property subject thereto or materially interfere
with the ordinary conduct of the business of the Company;
(f) Liens securing indebtedness of the Company incurred to finance
the acquisition of fixed or capital assets, provided that (i) such Liens shall
--------
be created substantially simultaneously with the acquisition of such fixed or
capital assets, (ii) such Liens do not at any time encumber any property other
than the property financed by such indebtedness, (iii) the amount of
indebtedness secured thereby is not increased and (iv) the principal amount of
indebtedness secured by any such Lien shall at no time exceed 75% of the
original purchase price of such property at the time it was acquired; and
(g) Liens existing as of the date of this Agreement.
6.6 Capital Expenditures. The Company will not make or commit to make
--------------------
(by way of the acquisition of securities of a Person or otherwise) any
expenditure in respect of the purchase or other acquisition of fixed or capital
assets (excluding any such asset acquired in connection with normal replacement
and maintenance programs properly charged to current operations) except for
expenditures in the ordinary course of business not exceeding $100,000 in the
22
aggregate during any fiscal year of the Company other than those capital
expenditures included in the annual Budget approved by the Board of Directors.
6.7 Conflicting Agreements. The Company will not enter into any
----------------------
agreement or make any amendment to any agreement or take any other action which
by its terms might restrict or materially adversely affect the performance of
the Company's obligations pursuant to the terms of this Agreement, the
Stockholders Agreement or the provisions relating to the Preferred Shares
included in the Certificate of Incorporation, including, but not limited to, the
redemption, voting or conversion of the Series C Preferred Stock.
6.8 No Acquisitions. The Company shall not, nor shall it permit any of
---------------
its Subsidiaries to, acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial equity interest in or a substantial portion
of the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof or
otherwise acquire or agree to acquire, or permit any of its Subsidiaries to
acquire or agree to acquire, any assets for a purchase price which is in excess
of 10% of the Company's net worth in accordance with GAAP, based on the
Company's most recent regularly prepared quarterly or annual financial
statements ("Net Worth").
---------
6.9 No Dispositions. Other than in the ordinary course of business and
---------------
other than dispositions of obsolete assets, the Company will not, nor shall it
permit any of its Subsidiaries to, sell, lease, encumber or otherwise dispose of
or liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution) or agree to sell, lease, encumber or otherwise dispose of, or
liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution)
in any transaction or series or related transactions, assets having an aggregate
book value in excess of 5% of the Company's Net Worth.
6.10 Subsidiaries. The Company shall not create, own or otherwise acquire
------------
or hold any Subsidiary other than in the ordinary course of the Company's
business.
6.11 Subsequent Offerings. The Company shall not hereafter sell, offer
--------------------
for sale or solicit offers to buy any securities of the Company so as to
jeopardize compliance by the Company under the Securities Act or other
securities laws in respect of future offerings of securities. In connection with
future offerings of securities of the Company, the Company shall comply with all
federal and state securities laws.
7. Confidentiality.
---------------
(a) The Buyers agree to keep the information heretofore or hereafter
furnished to the Buyers by the Company or on the Company's behalf (the
"Confidential Material") confidential. Notwithstanding the foregoing, the term
---------------------
Confidential Material does not include information that (i) is or becomes
publicly available other than through breach of this Agreement by the Buyers;
(ii) is already known to the Buyers at the time of disclosure; (iii) is received
by the Buyers from a third party not under an obligation of confidentiality to
the Company; or (iv) is independently developed by the Buyers without reference
to the Confidential Material. The
23
Buyers agree to take reasonable precautions to safeguard the Confidential
Material from disclosure to anyone other than appropriate employees, officers,
directors, partners and representatives, including auditors and attorneys, of
the Buyers, which persons shall agree to treat such information as confidential.
Any holder of Series C Preferred Stock who is entitled to receive information
concerning the Company pursuant to Sections 5.3 and 5.4 shall, as a condition to
receipt of such confidential information, agree to be bound by this Section 7.
(b) A Buyer may provide to any member of its Group (as defined in the
Stockholders Agreement), and each of the Buyers which is acting as a general
partner of a venture capital limited partnership, a trustee, an investment
manager, an investment advisor or in any other similar fiduciary capacity may
furnish to any limited partner, plan sponsor, investment committee or investment
advisory board of or associated with such Buyer, only (i) information about the
Company which falls within the exceptions described in Section 7(a) above, and
(ii) information relating to summary, year-to-date, or annual financial and
other information necessary to describe the general condition of the Company if
concurrently therewith such Buyer informs such member of its Group, limited
partner, plan sponsor, investment committee or investment advisory board in
writing of the confidential nature of such information.
8. Conditions to the Buyers' Obligations.
-------------------------------------
The obligations of the Buyers to effect the applicable Closing shall be
subject to the satisfaction at or prior to the applicable Closing of the
conditions contained in Sections 8.1 through 8.13 below, inclusive, any one or
more of which may be waived by the Buyers.
8.1 No Injunction. There shall not be in effect any injunction, order or
-------------
decree of a court of competent jurisdiction that prohibits or delays
consummation of any or all of the Contemplated Transactions, and the Buyers
shall have received a certificate to that effect signed by the President of the
Company.
8.2 Representations, Warranties and Agreements. (a) The representations
------------------------------------------
and warranties of the Company set forth in this Agreement shall be true and
correct in all material respects as of the date of this Agreement and as of the
applicable Closing Date, with the same force and effect as though made at such
time (such representations and warranties not being affected by any updating
information furnished pursuant to any provision of this Agreement), (b) the
Company shall have performed and complied in all material respects with the
agreements contained in this Agreement required to be performed and complied
with by it at or prior to the applicable Closing Date, and (c) the Buyers shall
have received a certificate to that effect signed by the President of the
Company.
8.3 Legal Opinion. The Buyers shall have received an opinion from ▇▇▇▇▇
-------------
Cummis ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Tischman ▇▇▇▇▇▇▇ & ▇▇▇▇▇, P.A., counsel to the Company,
dated the Closing Date and in substantially the form of Exhibit 8.3.
8.4 Litigation. No action, suit or proceeding shall be pending or
----------
threatened by or before any Person, court or other Governmental Body seeking or
threatening to retrain or
24
prohibit or to recover damages in respect of the consummation of any or all of
the Contemplated Transactions, nor shall there be any other action or proceeding
pending or threatened which action, or other proceeding may, in the opinion of
the Buyers, result in a decision, ruling or finding that individually or in the
aggregate has or may reasonably be expected to have a material adverse effect on
the validity or enforceability of this Agreement, on the ability of the Company
to perform its obligations under this Agreement or on the Business and Condition
of the Company.
8.5 Regulatory Approvals. All licenses, authorizations, consents, orders
--------------------
and regulatory approvals of Governmental Bodies necessary in the good faith
judgment of the Buyers for the consummation of any or all of the Contemplated
Transactions shall have been obtained on terms reasonably satisfactory to the
Buyers and shall be in full force and effect.
8.6 Other Consents. Consents or waivers from parties other than
--------------
Governmental Bodies that are required in connection with the consummation of any
or all of the Contemplated Transactions shall have been obtained on terms
satisfactory to the Buyers and shall be in full force and effect and signed
copies thereof shall have been delivered to the Buyers.
8.7 Secretary of State Certificates. The Buyers shall have received
-------------------------------
Certificates of the Secretaries of State of the States of Delaware and
Pennsylvania with respect to the Company, as of a recent date, showing the
company to be validly existing or qualified as a foreign corporation, as the
case may be, and in good standing, and with respect to the Certificate of the
Secretary of State of the State of Delaware, listing all documents filed.
8.8 Secretary's Certificate of the Company. The Buyers shall have
--------------------------------------
received a Certificate of the Secretary of the Company stating that (i) no
document has been filed relating to or affecting the Certificate of
Incorporation of the Company after the date of the Certificate of the Secretary
of State of the State of Delaware furnished pursuant to Section 8.7, and (ii)
attached to the Certificate is a true and complete copy of the Certificate of
Incorporation and By-Laws of the Company, as in full force and effect at the
Closing Date, and an incumbency certificate identifying and showing the
signature of each officer of the Company executing the documents contemplated
hereby.
8.9 Resolutions. The Buyers shall have received certified copies of
-----------
resolutions duly adopted by the Company's Board of Directors (and stockholders,
if necessary) authorizing the execution and delivery of this Agreement and the
Stockholders Agreement, the issuance and sale of the Preferred Shares and the
reservation, issuance and sale of the Common Stock issuable upon conversion
thereof, and the performance of the transactions contemplated hereby and
certifying that such resolutions were duly adopted and have not been rescinded
or amended as of the Closing Date.
8.10 Stockholders Agreement. The Company, the Buyers and the holders of
----------------------
Shares (as defined therein) shall have executed the Stockholders Agreement.
8.11 Compliance Evidence. The Buyers shall have received such
-------------------
certificates, opinions,
25
documents and information as it may reasonably request in order to establish
satisfaction of the conditions set forth in this Section 8.
8.12 Proceedings Satisfactory. All certificates, opinions and other
------------------------
documents to be delivered by the Company and all other matters to be
accomplished prior to or at the Closing Date, shall be satisfactory in the
reasonable judgment of the Buyers and their counsel.
8.13 No Material Adverse Change. There shall not have occurred after the
--------------------------
date of the execution of this Agreement any event or circumstance reasonably
likely to have a material adverse effect on the Business and Condition of the
Company.
9. Conditions to the Company's Obligations.
---------------------------------------
The obligations of the Company to effect each of the closings shall be
subject to the satisfaction at or prior to the applicable Closing Date of the
conditions contained in Sections 9.1 through 9.5 below, inclusive, any one or
more of which may be waived by the Company.
9.1 No Iniunction. There shall not be in effect any injunction, order or
-------------
decree of a court of competent jurisdiction that prohibits or delays the sale of
the Preferred Shares to the Buyers.
9.2 Representations, Warranties and Agreements. (a) The representations
------------------------------------------
and warranties of the Buyers set forth in this Agreement shall be true and
correct in all material respects as of the date of this Agreement and as of the
Closing Date, as though made at such time, and (b) the Buyers shall have
performed and complied in all material respects with the agreements contained in
this Agreement required to be performed and complied with by them prior to the
Closing Date.
9.3 Stockholders Agreement. The Company, the Buyers and the holders of
----------------------
Shares (as defined therein) shall have executed the Stockholders Agreement.
9.4 Compliance Evidence. The Company shall have received such
-------------------
certificates, opinions, documents and information as it may reasonably request
in order to establish satisfaction of the conditions set forth in this Section
9.
9.5 Proceedings Satisfactory. All certificates, opinions and other
------------------------
documents to be delivered by the Buyers and all other matters to be accomplished
prior to or at the applicable Closing shall be satisfactory in the reasonable
judgment of the Company and its counsel.
10. Expenses. The Company agrees, in the event the transactions
--------
contemplated hereby are consummated, to pay, and save the Buyers harmless
against liability for the payment of up to $25,000 of legal fees incurred by and
payable to Reboul, MacMurray, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & Kristol, and up to $2,000 of
legal fees payable to ▇'▇▇▇▇▇▇▇▇, Graev & Karabell, both firms serving as
counsel for the Buyers, arising in connection with the negotiation, execution
and consummation of this Agreement and the transactions contemplated hereby,
including, without
26
limitation, the Buyers' due diligence investigation with respect to the
transactions contemplated hereby. The Company shall not be responsible for any
additional legal fees or expenses of Buyers' counsel arising in connection with
the negotiation, execution and consummation of this Agreement and the
transactions contemplated hereby.
11. Survival of Representations. Except for the warranty contained in
---------------------------
Section 5.16 of this Agreement, all representations and warranties contained in
this Agreement or in any exhibit, schedule or certificate delivered in
connection herewith shall survive the execution, delivery and closings of this
Agreement and any investigation at any time made by the Buyers or on their
behalf for a period of five years from the date hereof.
12. Duration of Covenants. The Company's obligation to perform the
---------------------
covenants and agreements contained in Section 5 and Section 6 shall terminate
upon the consummation of an Initial Public Offering.
13. Miscellaneous.
-------------
13.1 Notices. All notices, consents and other communications under this
-------
Agreement shall be in writing and shall be deemed to have been duly given when
(a) delivered by hand, (b) sent by telex or telecopier (with receipt confirmed),
provided that a copy is mailed by registered mail, return receipt requested, or
(c) one (1) day after sent by the sender, if sent by Express Mail, Federal
Express or other express delivery service (receipt requested), in each case to
the appropriate addresses, telex numbers and telecopier numbers set forth below
(or to such other addresses, telex numbers and telecopier numbers as a party may
designate as to itself by notice to the other parties):
(a) If to Oak Investment Partners VI, Limited Partnership and/or Oak
VI Affiliates Fund, Limited Partnership:
Oak Investment Partners
One ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. More
with a copy to:
▇'▇▇▇▇▇▇▇▇ Graev & Karabell, LLP
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
(b) If to Canaan Equity, L.P.:
27
Canaan Equity Partners LLC
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Member/Manager
with a copy to:
▇'▇▇▇▇▇▇▇▇ Graev & Karabell, LLP
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇)▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
(c) If to ▇▇▇▇▇▇▇ Healthcare II, ▇.▇.
▇▇▇▇▇▇▇ & Company
▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇
with a copy to:
▇'▇▇▇▇▇▇▇▇ Graev & Karabell, LLP
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
(d) If to TL Ventures III L.P., TL Ventures III Offshore L.P. and/or
TL Ventures III Interfund L.P.:
TL Ventures
800 The Safeguard Building
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Ph.D.
with a copy to:
TL Ventures
800 The Safeguard Building
28
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
And a copy to:
▇'▇▇▇▇▇▇▇▇ Graev & Karabell, LLP
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
(e) If to Domain Partners IV, L.P., ▇▇ ▇▇ Associates, L.P. or
Biotechnology Investments Limited:
Domain Associates
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, General Partner
with a copy to:
Reboul, MacMurray, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & Kristol
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
(f) If to HealthCap KB or HealthCap Coinvest & KB:
HealthCap
▇▇▇▇▇▇▇▇▇▇ ▇▇
▇-▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
29
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
(g) If to Sentron Medical, Inc.:
Sentron Medical, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Ms. ▇▇▇▇▇ ▇▇▇▇▇▇
(h) If to the Company:
OraPharma, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇)▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇ Cummis Radin Tischman
▇▇▇▇▇▇▇ & ▇▇▇▇▇, P.A.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
13.2 Service of Process. Process in any action or proceeding seeking to
------------------
enforce any provision of, or based on any right arising out of, this Agreement
against any of the parties, may be served on any party anywhere in the world,
whether within or without the State of Pennsylvania, and may also be served upon
any party in the manner provided for giving of notices to it in Section 13.1.
13.3 Expenses. Except as set forth in Section 10, each party shall bear
--------
its own expenses incident to the preparation, negotiation, execution and
delivery of this Agreement and the performance of its obligations hereunder.
13.4 Payment. A wire transfer of other than immediately available funds
-------
or delivery of a check shall not operate to discharge any obligation of payment
under this Agreement and is accepted subject to collection.
13.5 Captions. The captions in this Agreement are for convenience of
--------
reference only
30
and shall not be given any effect in the interpretation of this Agreement.
13.6 Attorneys' Fees. In any action or proceeding brought by a party to
---------------
enforce any provision of this Agreement, the prevailing party shall be entitled
to recover the reasonable costs and expenses incurred by it in connection with
that action or proceeding (including, but not limited to, attorneys' fees).
13.7 No Waiver. The failure of a party to insist upon strict adherence
---------
to any term of this Agreement on any occasion shall not be considered a waiver
or deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement. Any waiver must be in writing.
The holders of a majority of the then outstanding Series A Preferred Stock,
Series B Preferred Stock and Series C Preferred Stock, voting together as a
single class, may waive in writing any right of all such holders.
13.8 Exclusive Agreement; Amendment. This Agreement supersedes all prior
------------------------------
agreements among the parties with respect to its subject matter, is intended
(with the documents referred to herein) as a complete and exclusive statement of
the terms of the agreement among the parties with respect thereto and cannot be
changed, terminated or any of the provisions hereof waived, except by a written
instrument executed by a duly authorized representative of the Company and
holders in interest of not less than a majority of the aggregate of the
Preferred Shares (treated as if converted into Common Stock and including any
Common Stock then held by such holders into which the Preferred Shares have been
converted).
13.9 Parties in Interest; Limitation on Assignment. The terms,
---------------------------------------------
representations, warranties and covenants contained in Sections 5 and 6 hereof
shall be binding upon and shall inure to the benefit of and be enforceable by,
the Buyers and their respective successors, transferees and assignees; provided,
--------
that the rights granted to the Buyers by Sections 5.3 and 5.4 may not be
transferred or assigned to, and shall not inure to the benefit of, any such
successor, transferee or assignee of the Buyers that is engaged in any business
which directly competes with the Company in any line of business engaged in, or
planned to be engaged in, by the Company. It is understood and agreed among the
parties hereto that this Agreement and the representations, warranties, and
covenants made herein are made expressly and solely for the benefit of the other
party or parties hereto (or their respective successors or permitted assigns),
and that no other person shall be entitled or be deemed to be a third-party
beneficiary of any party's rights under this Agreement. Notwithstanding
anything contained herein to the contrary, the parties hereto hereby acknowledge
and agree that any of the Buyers may assign any or all of their right to
purchase Series C Preferred Stock hereunder to any of its members, partners or
stockholders, provided that such assignee agrees to purchase such Series C
Preferred Stock having an aggregate purchase price of at least $50,000 and
further agrees to be bound by the provisions of this Agreement and the
Stockholders Agreement
13.10 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be considered an original, but all of which
together shall constitute the same instrument.
31
13.11 Governing Law. This Agreement and (unless otherwise provided) all
-------------
amendments hereof and waivers and consents hereunder shall be governed by the
internal law of the State of New Jersey, without regard to the conflicts of law
principles thereof.
32
IN WITNESS WHEREOF, the undersigned have signed this Stock Purchase
Agreement as of the day and year first written above.
ORAPHARMA, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, President
OAK INVESTMENT PARTNERS VI, LIMITED
PARTNERSHIP
By: Oak Associates VI, L.L.C.
By:_____________________________________________
▇▇▇▇▇▇ ▇. More,
Managing Member
OAK VI AFFILIATES FUND, LIMITED
PARTNERSHIP
By: Oak VI Affiliates, L.L.C.
By:_____________________________________________
▇▇▇▇▇▇ ▇. More,
Managing Member
CANAAN EQUITY, L.P.
By: Canaan Equity Partners L.L.C.,
Member/Manager
By:_____________________________________________
Member/Manager
33
▇▇▇▇▇▇▇ HEALTHCARE II, L.P.
By: FHM, L.L.C., General Partner
By: ▇▇▇▇▇▇▇ Management, L.L.C., Member
By:_____________________________________________
▇▇▇▇ ▇▇▇▇▇▇▇, Member
TL VENTURES III L.P.
By: TL Ventures III Management L.P., General
Partner
By: TL Ventures III LLC, General Partner
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------------
Managing Director
TL VENTURES III OFFSHORE L.P.
By: TL Ventures III Offshore Partners, L.P.,
General Partner
By: TL Ventures III Offshore Ltd., General
Partner
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------------
Name:
Title:
TL VENTURES III INTERFUND L.P.
By: TL Ventures III LLC, General Partner
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------------
Managing Partner
34
DOMAIN PARTNERS IV, L.P.
By: One ▇▇▇▇▇▇ Square Associates IV, L.L.C.,
General Partner
By:____________________________________________
Managing Member
▇▇ ▇▇ ASSOCIATES, L.P.
By: One ▇▇▇▇▇▇ Square Associates IV, L.L.C.,
General Partner
By:____________________________________________
Managing Member
35
