EXHIBIT 4(h)
SECURITIES PURCHASE AGREEMENT
between
ORGANOGENESIS INC.
and
PURCHASERS
March 30, 1999
______________________________
SECURITIES PURCHASE AGREEMENT, dated as of March 30, 1999 (this "Agreement"),
---------
between Organogenesis Inc., a corporation organized and existing under the laws
of the State of Delaware (the "COMPANY"), and those Purchasers listed on Exhibit
-------
I annexed hereto, each sometimes referred to herein as a "PURCHASER" and
---------
collectively as the "PURCHASERS."
----------
WHEREAS, subject to the terms and conditions set forth in this Agreement,
the Company desires to issue and sell to the Purchasers, and the Purchasers
desire to purchase from the Company, (i) up to an aggregate principal amount of
$20,000,000 of the Company's 7% Convertible Subordinated Notes due March 29,
2004 (the "CONVERTIBLE NOTES"), which are convertible into shares of the
-----------------
Company's common stock, $.01 par value per share (the "COMMON STOCK"), and (ii)
------------
warrants to purchase up to an aggregate of 400,000 shares of the Company's
Common Stock (the "WARRANTS").
--------
IN CONSIDERATION of the mutual covenants and agreements set forth herein
and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties agree as follows:
ARTICLE I
PURCHASE AND SALE OF SECURITIES
1.1 Purchase and Sale of Securities. Subject to the terms and conditions
-------------------------------
set forth herein, the Company shall issue and sell to the Purchasers, and the
Purchasers shall purchase from the Company the Convertible Notes and the
Warrants at the Closing described below. At the Closing the Company shall issue
and deliver to the Purchasers the Convertible Notes substantially in the form of
Exhibit A hereto and the Warrants substantially in the form of Exhibit B hereto.
--------- ---------
The Warrants shall grant to the Purchasers the right to purchase one share of
the Company's Common Stock for each $50.00 in face value of the Convertible
Notes sold to each Purchaser at the Closing at the Exercise Price as set forth
in the Warrants. All references herein to "dollars" or "$" shall be to U.S.
dollars (U.S.$) unless otherwise specified.
1.2 The Closing. The closing of the purchase and sale of the Convertible
-----------
Notes (the "Closing") shall take place at the offices of Mintz, Levin, Xxxx,
-------
Xxxxxx, Glovsky and Popeo, P.C., Xxx Xxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx
00000 ("XXXXX XXXXX") immediately following the execution hereof or such later
-----------
date as the parties shall agree. The date of the Closing is hereinafter
referred to as the "CLOSING DATE." At the Closing, (a) the Company shall
------------
deliver to the Purchasers (i) the Convertible Notes and the Warrants, each in
the amounts and registered in the name of the Purchasers as specified on Exhibit
-------
I hereto, and (ii) all other documents, instruments and writings required to
-
have been delivered at or prior to the Closing by the Company to the Purchasers
pursuant to this Agreement; and (b) the Purchasers shall deliver to the Company
(i) the purchase price for the Convertible Notes and Warrants being purchased by
them at the Closing, determined in accordance with Section 1.2(a)(i), in
immediately available funds by wire transfer to an account designated in writing
by the Company for such purpose on
or prior to the Closing Date, and (ii) all documents, instruments and writings
required to have been delivered at or prior to the Closing by the Purchasers
pursuant to this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations, Warranties and Agreements of the Company. The
---------------------------------------------------------
Company hereby makes the following representations and warranties to each of the
Purchasers:
(a) Organization and Qualification. The Company is a corporation,
------------------------------
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware with the requisite corporate power and authority to own and
use its properties and assets and to carry on its business as currently
conducted. The Company has no subsidiaries other than as set forth in Schedule
--------
2.1(a) (collectively, the "SUBSIDIARIES"). Each of the Subsidiaries is a
------ ------------
corporation, duly incorporated, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization (as applicable),
with the full corporate power and authority to own and use its properties and
assets and to carry on its business as currently conducted. Each of the Company
and the Subsidiaries is duly qualified to do business and is in good standing as
a foreign corporation in each jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary, except
where the failure to be so qualified or in good standing, as the case may be,
could not, individually or in the aggregate be reasonably be expected to (x)
adversely affect the legality, validity or enforceability of this Agreement, the
Convertible Notes, the Warrants, and the Registration Rights Agreement (in
substantially the form set forth in Exhibit C attached hereto (the "Registration
---------
Rights Agreement") (this Agreement, the Convertible Notes, the Warrants and the
Registration Rights Agreement are hereinafter collectively referred to as the
"TRANSACTION DOCUMENTS"), (y) have or result in a material adverse effect on the
---------------------
results of operations, business, properties, assets, prospects, or financial
condition of the Company and the Subsidiaries, taken as a whole, or (z)
adversely impair the Company's ability to perform fully on a timely basis its
obligations under the Transaction Documents (a "MATERIAL ADVERSE EFFECT").
-----------------------
(b) Authorization; Enforcement. The Company has the requisite
--------------------------
corporate power and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents and otherwise to carry out its
obligations thereunder. The execution and delivery of each of the Transaction
Documents by the Company and the consummation by it of the transactions
contemplated thereby have been duly authorized by all requisite corporate action
on the part of the Company. Each of the Transaction Documents has been duly
executed by the Company and when delivered in accordance with the terms hereof
shall constitute the valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally the enforcement
of, creditors' rights and remedies or by other equitable principles of general
application.
2
(c) Capitalization. The authorized, issued and outstanding capital
--------------
stock of the Company is set forth in Schedule 2.1(c). No holder of the Common
---------------
Stock is entitled to preemptive or similar rights arising by or out of any
charter document or bylaws of the Company or by any agreement or understanding
with the Company. Except as disclosed in Schedule 2.1(c), there are no
---------------
outstanding options, warrants, rights to subscribe to, calls or commitments
relating to, or, except as a result of the purchase and sale of the Convertible
Notes and the Warrants hereunder, securities, rights or obligations convertible
into or exchangeable for, or giving any person any right to subscribe for or
acquire, any shares of Common Stock, or contracts, commitments, understandings,
or arrangements by which the Company or any Subsidiary is or may become bound to
issue additional shares of Common Stock, or securities or rights convertible or
exchangeable into shares of Common Stock. To the knowledge of the Company,
except as specifically disclosed in the SEC Documents (as defined below) or
Schedule 2.1(c), no Person (as defined below) beneficially owns (as determined
---------------
pursuant to Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT")) or has the right to acquire by agreement with or
------------
by obligation binding upon the Company beneficial ownership of in excess of 5%
of the Common Stock. For purposes of this Agreement, a "PERSON" shall mean an
------
individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any kind.
There are no agreements or arrangements under which the Company or any
Subsidiary is obligated to register the sale of any of their securities under
the Securities Act of 1933, as amended (the "Securities Act"). Except as
disclosed in Schedule 2.1(c), there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
the Securities (as defined below) pursuant to this Agreement, the Convertible
Notes or the Warrants.
(d) Issuance of Convertible Note and Warrant. The Convertible Notes
----------------------------------------
and the Warrants are duly authorized for issuance and sale to the Purchasers by
the Company pursuant hereto, and, when issued and paid for in accordance with
the terms hereof, shall be validly issued, fully paid and nonassessable. Such
number of shares of Common Stock (subject to adjustment pursuant to the
Company's covenant set forth in the following sentence) as to which the Company
shall file a listing application in accordance with Section 3.7 hereof have been
duly authorized and reserved for issuance upon conversion of the Convertible
Notes and the exercise of the Warrants. The Company, as at the respective dates
the outstanding Convertible Notes (and all interest accrued thereon) and the
Warrants first become convertible or exercisable, as the case may be, in
accordance with their respective terms, has authorized at least 300,000 shares
of Common Stock for issuance upon payment of interest due under the Convertible
Notes and will maintain an adequate reserve of duly authorized shares of Common
Stock to enable it to perform the exercise of the Warrants, the conversion of
the Convertible Notes and the payment of interest on such Convertible Notes in
accordance with the respective terms of such Warrants and Convertible Notes. The
shares of Common Stock issuable upon conversion of the Convertible Notes, the
payment of interest due on such Convertible Notes, and upon exercise of the
Warrants are collectively referred to herein as the "UNDERLYING SHARES." When
-----------------
issued in accordance with the terms of the Convertible Notes and the Warrants,
as the case may be, the Underlying Shares
3
will be validly issued, fully paid and nonassessable. The Convertible Notes, the
Warrants and the Underlying Shares are collectively referred to herein as the
"SECURITIES."
----------
(e) No Conflicts. The execution, delivery and performance of the
------------
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated thereby do not and will not (i) conflict with or
violate any provision of its Certificate of Incorporation or By-laws (each as
amended through the date hereof) or (ii) subject to obtaining the Required
Approvals (as defined below), conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company is
a party, or (iii) to the knowledge of the Company, result in a violation of any
law, rule, regulation, order, judgment, injunction, decree or other restriction
of any court or governmental authority to which the Company is subject
(including Federal, state and foreign securities laws and regulations), or by
which any material property or asset of the Company is bound or affected, except
in the case of each of clauses (ii) and (iii), such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations as could
not, individually or in the aggregate, reasonably be expected to have or result
in a Material Adverse Effect. Neither the Company nor any Subsidiary is in
violation of any of the provisions of its respective certificate of
incorporation (or other similar charter documents) or bylaws. Neither the
Company nor any Subsidiary is conducting its business in violation of any
applicable law, ordinance or regulation of any governmental authority which
could, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(f) Consents and Approvals. Neither the Company nor any Subsidiary is
----------------------
required to obtain any consent, waiver, authorization or order of, or make any
filing or registration with, any court or other Federal, state, local, foreign
or other governmental authority or other Person in connection with the
execution, delivery and performance by the Company of the Transaction Documents
(the "REQUIRED APPROVALS") other than the following post-closing requirements
------------------
(which do not constitute Required Approvals) (i) the filing of the Registration
Statement (as defined in the Registration Rights Agreement) for the Underlying
Shares with the Securities and Exchange Commission (the "COMMISSION") pursuant
----------
to the Registration Rights Agreement, and (ii) the applications for the listing
of the Underlying Shares with the American Stock Exchange (and with any other
national securities exchange or market on which the Common Stock is then
listed), which listing will not require any stockholder approval.
(g) Litigation; Proceedings. Except as specifically disclosed in the
-----------------------
Disclosure Materials (as defined below), there is no action, suit, notice of
violation, proceeding or investigation pending or, to the best knowledge of the
Company, threatened against, or affecting the Company or any of its Subsidiaries
or any of their respective properties before or by any court, governmental or
administrative agency or regulatory authority (Federal, state, local or foreign)
which (i) adversely affects or challenges the legality, validity or
enforceability of any of the Transaction Documents or the Securities or (ii)
could, individually or in the aggregate, reasonably be expected to have or
result in a Material Adverse Effect.
4
(h) No Default or Violation. Except in each case as could not
-----------------------
reasonably be expected to have or result in, individually or in the aggregate, a
Material Adverse Effect, neither the Company nor any Subsidiary (i) is in
default under or in violation of any indenture, loan or credit agreement or any
other material contract, agreement or instrument to which it is a party or by
which it or any of its properties is bound, (ii) is in violation of any order of
any court, arbitrator or governmental body (Federal, state, local or foreign),
or (iii) is in violation of any statute, rule or regulation.
(i) Private Offering. Neither the Company nor any Person acting on
----------------
its behalf has taken or will take any action which might subject the offering,
issuance or sale of the Securities to the registration requirements of the
Securities Act of 1933, as amended (the "SECURITIES ACT").
--------------
(j) SEC Documents. The Company has filed all reports required to be
-------------
filed by it under the Exchange Act, including pursuant to Section 13(a) or 15(d)
thereof, for the two years preceding the date hereof (or such shorter period as
the Company was required by law to file such material) (the foregoing materials
being collectively referred to herein as the "SEC DOCUMENTS" and, together with
-------------
the Schedules to this Agreement the "DISCLOSURE MATERIALS") on a timely basis,
--------------------
or has received a valid extension of such time of filing. As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of the Securities Act and the Exchange Act and the rules and
regulations of the Commission promulgated thereunder, and none of the SEC
Documents, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The financial statements of the Company
included in the SEC Documents comply in all material respects with applicable
accounting requirements and the rules and regulations of the Commission with
respect thereto. Such financial statements have been prepared in accordance
with United States generally accepted accounting principles applied on a
consistent basis during the periods involved, except as may be otherwise
specified in such financial statements or the notes thereto, and fairly present
in all material respects the consolidated financial position of the Company and
the Subsidiaries as of and for the dates thereof and the results of operations
and cash flows for the periods shown, subject, in the case of unaudited
statements, to normal year-end audit adjustments. Except as set forth in the
Risk Factors Memorandum attached hereto as Exhibit "D" (the RISK FACTORS
----------- ------------
MEMORANDUM"), since the date of the financial statements included in the
-----------
Company's last filed Quarterly Report on Form 10-Q, there has been no event,
occurrence or development that has had or that would reasonably expected to have
or result in a Material Adverse Effect which has not been specifically disclosed
in writing to the Purchasers by the Company.
(k) Investment Company. The Company is not, and is not an Affiliate
------------------
of an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
(l) Certain Fees. No fees or commissions will be payable by the
------------
Company to any broker, financial or investment advisor, placement agent finder,
investment banker, bank or any other Person acting in a similar capacity with
respect to the transactions contemplated by this
5
Agreement as a result of the actions of the Company. The Purchaser shall have no
obligation with respect to such fees or with respect to any claims made by or on
behalf of other Persons for fees of a type contemplated in this Section that may
be due in connection with the transactions contemplated by this Agreement. The
Company shall indemnify and hold harmless the Purchaser, its respective
employees, officers, directors, agents, and their respective Affiliates (as such
term is defined under Rule 405 promulgated under the Securities Act), from and
against all claims, losses, damages, costs (including the costs of preparation
and reasonable attorney's fees) and expenses suffered in respect of any such
claimed or existing fees.
(m) Solicitation Materials. The Company has not (i) distributed any
----------------------
offering materials in connection with the offering and sale of the Securities
other than the Disclosure Materials or (ii) solicited any offer to buy or sell
the Securities by means of any form of general solicitation or advertising.
(n) Form S-3 Eligibility. The Company is, as of the Closing Date,
--------------------
eligible to register securities for resale with the Commission under Form S-3
promulgated under the Securities Act.
(o) Listing and Maintenance Requirements Compliance. The Company has
-----------------------------------------------
not in the two years preceding the date hereof received written notice from any
stock exchange or market on which the Common Stock is or has been listed (or on
which it has been quoted) to the effect that the Company is not in compliance
with the listing or maintenance requirements of such exchange or market.
2.2 Representations and Warranties of the Purchaser. Each of the
-----------------------------------------------
Purchasers, severally and not jointly, hereby represents and warrants to the
Company as follows:
(a) Organization; Authority. If such Purchaser is a corporation or a
-----------------------
partnership, such Purchaser (if a corporation) is duly incorporated, or (if a
partnership) is duly formed, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or formation, as the case may be,
with the requisite power and authority to enter into and to consummate the
transactions contemplated hereby and by the Registration Rights Agreement and
otherwise to carry out its obligations hereunder and thereunder. The purchase
by such Purchaser of the Securities to be purchased by it hereunder has been
duly authorized by all necessary action on the part of such Purchaser. Each of
this Agreement and the Registration Rights Agreement has been duly executed by
such Purchaser and when delivered in accordance with the terms hereof shall
constitute the valid and legally binding obligations of such Purchaser,
enforceable against such Purchaser in accordance with their terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium liquidation and similar laws
relating to or affecting generally the enforcement of creditors' rights and
remedies or by other general principles of equity.
(b) Investment Intent. Such Purchaser is acquiring the Securities
-----------------
hereunder for its own account for investment purposes only and not with a view
to, or for resale in connection with, the public sale or distribution thereof,
except pursuant to sales registered or
6
exempted under the Securities Act; provided, however, that such Purchaser
reserves the right to dispose of the Securities at any time in accordance with
or pursuant to a registration statement or an exemption under the Securities
Act.
(c) Purchaser Status. At the time such Purchaser was offered the
----------------
Convertible Note and the Warrant to be purchased by it hereunder, it was, and at
the date hereof, it is, and at the Closing Date it will be, an "accredited
investor" as defined in Rule 501(a) under the Securities Act.
(d) Experience of Purchaser. Such Purchaser either alone or together
-----------------------
with its representatives, has such knowledge, sophistication and experience in
business and financial matters so as to be capable of evaluating the merits and
risks of the prospective investment in the Securities, and has so evaluated the
merits and risks of such investment including, but not limited to, the risks set
forth in the Risk Factors Memorandum.
(e) Ability of Purchaser to Bear Risk of Investment. Such Purchaser
-----------------------------------------------
is able to bear the economic risk of an investment in the Securities, and, at
the present time, is able to afford a complete loss of such investment.
(f) Access to Information. Such Purchaser acknowledges receipt of the
---------------------
Disclosure Materials and the Risk Factors Memorandum and further acknowledges
that it has been afforded (i) the opportunity to ask such questions as it has
deemed necessary of, and to receive answers from, representatives of the Company
concerning the terms and conditions of the offering of the Securities, and the
risks of investing in the Securities; (ii) access to information about the
Company and the Company's financial condition, results of operations, business,
properties, management and prospects sufficient to enable it to evaluate its
investment; and (iii) the opportunity to obtain such additional information
which the Company possesses or can acquire without unreasonable effort or
expense that the Purchaser believes is necessary to make an informed investment
decision with respect to the investment and to verify the accuracy and
completeness of the information contained in the Disclosure Materials and the
Risk Factors Memorandum.
(g) Reliance. Such Purchaser understands and acknowledges that (i)
--------
the Convertible Note and the Warrant to be sold to it hereunder are being
offered and sold to it in a private placement that is exempt from the
registration requirements of the Securities Act and (ii) the availability of
such exemption depends in part on and the Company will rely upon the accuracy
and truthfulness of the foregoing representations, and the Purchaser hereby
consents to such reliance.
ARTICLE III
OTHER AGREEMENTS OF THE PARTIES
3.1 Transfer Restrictions. (a) If any Purchaser should decide to dispose
---------------------
of any portion of the Securities held by it, each such Purchaser understands and
agrees that it may do so
7
only pursuant to an effective registration statement under the Securities Act,
to the Company or pursuant to an available exemption from the registration
requirements thereof. In connection with any transfer of any portion of the
Securities other than pursuant to an effective registration statement or to the
Company such Purchaser shall deliver to the Company an opinion of counsel, in a
form reasonably acceptable to the Company and the Company's legal counsel, to
the effect that such Securities to be sold, assigned or transferred may be sold,
assigned or transferred pursuant to an exemption from such registration, or such
Purchaser shall provide the Company with reasonable assurance that such
Securities can be sold, assigned or transferred pursuant to Rule 144 promulgated
under the Securities Act (or a successor rule thereto) ("Rule 144").
(b) The Purchaser agrees to the imprinting, so long as is required by
this Section 3.1(b), of the following legend on the Securities, as applicable:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), ANY STATE SECURITIES LAW OR ANY
OTHER SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT
TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS.
The Underlying Shares shall not contain the legends set forth above
(or any other legend other than legends relating to the existence of any
shareholder rights or similar plan then in effect) if (i) such Underlying Shares
are registered for sale under the Securities Act and all necessary state and
foreign approvals are obtained or (ii) in connection with a sale transaction,
such holder provides the Company with an opinion of counsel, in form and
substance reasonably acceptable to the Company, to the effect that a public sale
or transfer of such Security may be made without registration under the
Securities Act. The Company agrees that it will provide each Purchaser, upon
request, with a certificate or certificates representing Underlying Shares, free
from any legend at such time as such legends are no longer required pursuant to
this Section.
3.2 Stop Transfer Instruction. The Company may not make any notation on
-------------------------
its records or give instructions to any transfer agent of the Company other than
as provided for in the Transaction Documents.
3.3 Furnishing of Information. As long as any Purchaser owns Underlying
-------------------------
Shares, the Company covenants to timely file (or obtain extensions in respect
thereof) all reports required to be filed by the Company after the date hereof
pursuant to Section 13(a) or 15(d) of the Exchange Act. If the Company is not
at the time required to file reports pursuant to such sections, it will prepare
and furnish to the Purchaser and make publicly available in accordance with Rule
144(c) promulgated under the Securities Act annual and quarterly financial
statements, together with a discussion and analysis of such financial statements
in form and substance substantially similar to those that would otherwise be
required to be included in reports required by Section 13(a) or 15(d) of the
Exchange Act, as well as any other information required thereby,
8
in the time period that such filings would have been required to have been made
under the Exchange Act.
3.4 Copies and Use of Disclosure Materials. The Company consents to the
--------------------------------------
use of the Disclosure Materials and the Risk Factors Memorandum, and any
amendments and supplements thereto, by the Purchasers in connection with resales
of Securities other than pursuant to an effective Underlying Shares Registration
Statement.
3.5 Blue Sky Laws. In accordance with the Registration Rights Agreement,
-------------
the Company shall qualify the Underlying Shares under the securities or Blue Sky
laws of such jurisdictions as any Purchaser may reasonably request and shall
continue such qualification at all times through the second anniversary of the
Closing Date; provided, however, that neither the Company nor its Subsidiaries
-------- -------
shall be required in connection therewith to qualify as a foreign corporation
where they are not now so qualified or to take any action that would subject the
Company to general service of process in any such jurisdiction where it is not
then so subject.
3.6 Integration. The Company shall not and shall use its best efforts to
-----------
ensure that no Affiliate of the Company shall sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of the Securities in a manner that would require the registration under the
Securities Act of the issue or sale of any of the Securities to the Purchaser.
3.7 Listing and Reservation of Underlying Shares. (a) The Company shall
--------------------------------------------
(i) not later than the fifth Business Day following the Closing Date prepare and
file with the American Stock Exchange (as well as any other national securities
exchange or market on which the Common Stock is then listed or traded) an
additional shares listing application covering at least the sum of 2,046,333
---------
Underlying Shares (comprised of 1,346,333 shares reserved for issuance upon
---------
conversion of the Convertible Notes, 300,000 shares which may be issued as
-------
payment for interest which may be payable on the Convertible Notes, and 400,000
-------
shares reserved for issuance upon exercise of the Warrants) (ii) take all steps
after the Closing necessary to cause such shares to be approved for listing on
the American Stock Exchange (as well as on any other national securities
exchange or market on which the Common Stock is then listed) as soon as possible
thereafter; and (iii) provide to the Purchaser evidence of such listing. The
Company shall maintain the listing of its Common Stock on such exchange.
(b) The Company shall take all action necessary to at all times have
authorized and reserved for the purpose of issuance, upon conversion of the
Convertible Notes, for payment of interest thereupon in shares of Common Stock
pursuant to the terms thereof, and upon exercise of the Warrants in accordance
with their terms the number of shares to be listed on the American Stock
Exchange (and such other national securities exchange or market on which the
Common Stock is then listed or traded) as set forth in Section 3.7(a).
3.8 Use of Proceeds. The Company shall use all of the net proceeds from
---------------
the placement of the Securities for general working capital purposes and capital
equipment requirements. Pending application of the proceeds of this placement
in the manner permitted
9
hereby, the Company will invest such proceeds in accordance with its written
investment guidelines.
3.9 Conversion Obligations of the Company. The Company covenants to honor
-------------------------------------
conversions of the Convertible Notes and exercise of the Warrants and to deliver
Underlying Shares in accordance with the terms and conditions and time period
set forth in the respective Convertible Notes and the Warrants.
ARTICLE IV
CONDITIONS
4.1 Conditions Precedent to the Obligation of the Purchasers to Purchase
--------------------------------------------------------------------
the Convertible Note. The obligation of the Purchasers hereunder to acquire and
--------------------
pay for the Convertible Notes is subject to the satisfaction (or waiver by the
Purchasers) at or before the Closing of each of the following conditions:
(a) Accuracy of the Company's Representations and Warranties. The
--------------------------------------------------------
representations and warranties of the Company contained herein shall be true and
correct in all material respects (except to the extent that any of such
representations and warranties is already qualified as to materiality in Section
2.1, in which case such representations and warranties shall be true and correct
without further qualification) as of the date when made and as of the Closing
Date as though made on and as of such date;
(b) Performance by the Company. The Company shall have performed,
--------------------------
satisfied and complied in all material respects with all covenants, agreements
and conditions required by the Transaction Documents to be performed, satisfied
or complied with by the Company at or prior to the Closing Date;
(c) No Injunction. No suit, action or other proceeding shall have
-------------
been commenced (and be pending) which seeks to restrain or prohibit or questions
the validity or legality of the transactions contemplated by the Transaction
Documents, nor shall any such suit, action or proceeding be threatened.
(d) No Suspensions of Trading in Common Stock. The trading in the
-----------------------------------------
Common Stock shall not have been suspended by the Commission or on the American
Stock Exchange (except for any suspension of trading of limited duration solely
to permit dissemination of material information regarding the Company;
(e) Legal Opinion. The Company shall have delivered to the Purchaser
-------------
an opinion of Xxxxx Xxxxx in substantially the form attached hereto as Exhibit E
---------
and dated the Closing Date;
(f) Required Approvals. All Required Approvals shall have been
------------------
obtained;
10
(g) Shares of Common Stock. On the Closing Date the Company shall
----------------------
have reserved for issuance to the Purchaser the number of shares of Common Stock
specified in Section 2.1 (d); and
(h) Delivery of Securities. The Company shall have delivered to Xxxxx
----------------------
Xxxxx in escrow pending the Closing the Convertible Notes and the Warrants by
the Purchasers, registered in the name of the Purchaser, each in form
satisfactory to counsel for the Purchasers;
(i) Registration Rights Agreement. The Company and the Purchaser
-----------------------------
shall have executed the Registration Rights Agreement.
ARTICLE V
INDEMNIFICATION
5.1 In consideration of each Purchaser's execution and delivery of the
Transaction Documents and acquiring the Securities thereunder and in addition to
all of the Company's other obligations under the Transaction Documents, the
Company shall defend, protect, indemnify and hold harmless each purchaser and
each other holder of the Securities and all of their officers, directors,
employees and agents (including, without limitation, those retained in
connection with the transactions contemplated by this Agreement) (collectively,
the "PURCHASER INDEMNITEES") from and against any and all actions, causes of
action, suits, claims, losses, costs, penalties, fees, liabilities and damages,
and reasonable expenses in connection therewith (irrespective of whether any
such Purchaser Indemnitee is a party to the action for which indemnification
hereunder is sought), and including reasonable attorneys' fees and disbursements
(the "PURCHASER INDEMNIFIED LIABILITIES"), incurred by any Purchaser Indemnitee
as a result of, or arising out of, or relating to (a) any misrepresentation or
breach of any representation or warranty made by the Company in the Transaction
Documents or any certificate, instrument or document delivered pursuant thereto,
(b) any breach of any covenant, agreement or obligation of the Company contained
in the Transaction Documents or any certificate, instrument or document
delivered pursuant thereto, or (c) any cause of action, suit or claim brought or
made against such Purchaser Indemnitee and arising out of or resulting from any
transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Securities or the status of
such Purchaser or holder of the Securities as an investor in the Company.
5.2 In consideration of the Company's execution and delivery of the
Transaction Documents and in addition to the other obligations of the Purchasers
under the Transaction Documents, each of the Purchasers severally, and not
jointly (the "RESPONSIBLE PURCHASER"), shall defend, protect, indemnify and hold
harmless the Company and all of its officers, directors, employees and agents
(including, with out limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the "COMPANY
INDEMNITEES") from and against any and all actions, causes of action, suits,
claims, losses, costs, penalties, fees, liabilities and damages, and reasonable
expenses in connection therewith (irrespective of whether any such Company
Indemnitee is a party to the action for which indemnification hereunder is
11
sought), and including reasonable attorneys' fees and disbursements (the
"COMPANY INDEMNIFIED LIABILITIES"), incurred by any Company Indemnitee as a
result of, or arising out of, or relating to (a) any misrepresentation or breach
of any representation or warranty made by the Responsible Purchaser(s) contained
in the Transaction Documents or any certificate, instrument or document
delivered pursuant thereto, or (c) any cause of action, suit or claim brought or
made against such Company Indemnitee and arising out of or resulting from the
status of such Responsible Purchaser(s) or holder of the Securities as an
investor in the company. To the extent that the foregoing undertaking by the
Purchasers may be unenforceable for any reason, the Responsible Purchaser(s)
shall make the maximum contribution to the payment and satisfaction of each of
the Company Indemnified Liabilities which is permissible under applicable law;
provided however, that in no event shall the Responsible Purchaser be liable or
responsible for any amounts in excess of the principal amounts of Convertible
Notes set forth opposite such Purchaser's name on Exhibit I. To the extent
that the foregoing undertaking by the Company may be unenforceable for any
reason, the Company shall make the maximum contribution to the payment and
satisfaction of each of the Purchaser Indemnified Liabilities which is
permissible under applicable law; provided however, that in no event shall the
Responsible Purchaser be liable or responsible for any amounts in excess of the
principal amounts of Convertible Notes set forth opposite such Purchaser's name
on Exhibit I.
ARTICLE VI
MISCELLANEOUS
6.1 Fees and Expenses. Each party shall pay the fees and expenses of its
-----------------
advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of this Agreement and the Transaction Documents, except
that the Company shall pay Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP, counsel to the
Purchasers, an amount not to exceed Seventy-Five Thousand Dollars ($75,000.00)
in connection with the transactions contemplated by this Agreement and except as
set forth in the Registration Rights Agreement. The Company shall pay all stamp
and other U.S. taxes and duties levied in connection with the issuance of the
Securities pursuant hereto.
6.2 Entire Agreement; Amendments. This Agreement, together with the
----------------------------
Exhibits and Schedules hereto, the Registration Rights Agreement, the
Convertible Notes and the Warrants contain the entire understanding of the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, oral or written, with respect to such matters.
6.3 Notices. Any and all notices or other communications or deliveries
-------
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (i) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Section prior to 4:30 p.m. (Eastern Standard
time) on a Business Day, (ii) the Business Day after the date of transmission,
if such notice or communication is delivered via facsimile at the facsimile
telephone number specified in the Purchase Agreement later than 4:30 p.m.
(Eastern Standard time) on any date and earlier than
12
11:59 p.m. (Eastern Standard time) on such date, (iii) the Business Day
following the date of mailing, if sent by nationally recognized overnight
courier service, or (iv) upon actual receipt by the party to whom such notice is
required to be given. The address for such notices and communications shall be
as follows:
If to the Company: Organogenesis Inc.
000 Xxx Xxxx
Xxxxxx, XX 00000
Attn: Xx. Xxxxxxx X. Xxxxx, Chairman
Facsimile No.: (000) 000-0000
and Organogenesis Inc.
000 Xxx Xxxx
Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx, Chief Financial Officer
Facsimile No.: (000) 000-0000
With copies to: Mintz, Levin, Cohn, Ferris, Glovsky
and Popeo, P.C.
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxx, Esquire
Xxxx X. Xxxxxx, Esquire
Facsimile No.: (000) 000-0000
If to the Purchasers: At the Addresses Set Forth
in Schedule I Attached hereto
With copies to: Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxxx, Esquire
Facsimile No.: (000) 000-0000
or such other address as may be designated in writing hereafter, in the same
manner, by such person.
6.4 Amendments; Waivers. No provision of this Agreement may be waived or
-------------------
amended except in a written instrument signed, in the case of an amendment, by
both the Company and the Purchasers holding at least sixty percent (60%) of the
then principal balance of Convertible Notes; or, in the case of a waiver, by the
party against whom enforcement of any such waiver is sought. No waiver of any
default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any other provision, condition or requirement hereof, nor shall any delay or
omission of either party to exercise any right hereunder in any manner impair
the exercise of any such
13
right accruing to it thereafter. Notwithstanding the foregoing, no Convertible
Note or Warrant may be modified without the consent of the holder of such
security.
6.5 Headings. The headings herein are for convenience only, do not
--------
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
6.6 Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of the parties and their successors and permitted assigns.
No Purchaser shall assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Company, except that a Purchaser may
assign some or all of its rights hereunder to (i) an "affiliate" of such
Purchaser (as such term is defined in the 1934 Act (subject to such affiliate
demonstrating to the reasonable satisfaction of the Company its satisfaction of
the representations and warranties of the Purchaser set forth in Section 2.2
hereof)) or (ii) any other Purchaser without the consent of the Company.
6.7 Governing Law. This Agreement shall be governed by and construed and
-------------
enforced in accordance with the internal laws of the Commonwealth of
Massachusetts without regard to the principles of conflicts of law thereof.
6.8 Survival. The agreements and covenants contained in Article III, IV
-------- ----------- --
and this Article VI shall survive the delivery and conversion of the Convertible
----------
Notes pursuant to this Agreement and the representations and warranties of the
Company and the Purchaser contained in Article II shall survive until a date
----------
that is two years after the Closing Date.
6.9 Execution. This Agreement may be executed in two or more
---------
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
6.10 Severability. In case any one or more of the provisions of this
------------
Agreement shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Agreement shall not
in any way be affected or impaired thereby and the parties will attempt to agree
upon a valid and enforceable provision which shall be a reasonable substitute
therefor, and upon so agreeing, shall incorporate such substitute provision in
this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOLLOWS]
14
IN WITNESS WHEREOF, the parties hereto have caused this PURCHASE AGREEMENT
to be duly executed as of the date first indicated above.
Company:
ORGANOGENESIS INC.
By: ___________________________________
Xxxxxxx X. Xxxxx, Chairman
and Chief Executive Officer
Purchasers:
Purchaser Name:
______________________________________
By:___________________________________
Name:_________________________________
Title:________________________________
Amount: ______________________________
15
EXHIBIT I
---------
1. Xxxxx Xxxx
2. Alblert Xxxxx
3. Xxxxxx Xxxxx
4. Xxxxx Xxxxxxx
5. Xxxxxxx Xxxxxx
6. North American Management Corp.
7. New England Aquarium
8. Deerwood Corporation
9. Xxxxx Xxxxxxx Strategic Growth Fund, Ltd.
10. Xxxxx Xxxxxxx Strategic Growth Fund, L.P.
16
COMPANY DISCLOSURE SCHEDULES
----------------------------
NOTES TO SCHEDULES
1. Capitalized terms used in these Company Disclosure Schedules but not
defined herein shall have the meanings ascribed to such terms in the
Securities Purchase Agreement (the "Agreement").
2. Headings and captions in these Company Disclosure Schedules are for
convenience of reference only and shall in no way modify or affect, or be
considered in construing or interpreting any information provided herein.
17
SCHEDULE 2.1(A)
SUBSIDIARIES
------------
1. Xxx Capital Corp. (a Delaware Corporation)
2. ECM Pharma(TM), Inc. (a Delaware Corporation)
18
SCHEDULE 2.1(C)
CAPITALIZATION
--------------
As of March 19, 1999
1. Common Stock The authorized capital stock of the Corporation consists of
40,000,000 shares of Common Stock, of which:
(A) 30,454,300 shares are duly authorized, validly issued and
outstanding, fully paid and nonassessable (exclusive of 40,000
treasury shares);
(B) 6,682,997 shares are duly authorized and reserved for issuance to
officers, employees or directors of, or consultants to, the
Corporation pursuant to options or other rights to acquire such shares
approved or to be approved by the Board of Directors or a committee
thereof pursuant to the Corporation's stock option and employee stock
purchase plans;
(C) 663,712 shares are duly authorized and reserved for issuance for the
conversion of Series C Convertible Preferred Stock and upon exercise
of warrants related to this stock;
2. Preferred Stock The Company has authorized 1,000,000 shares of Preferred
Stock, of which:
(A) 250,000 shares have been designated as Series A Convertible
Preferred Stock, all of which shares of Series A Convertible Preferred
stock have been issued and converted into Common Stock; and
(B) 50,000 shares have been designated as Series B Junior Participating
Preferred Stock, all of which are duly authorized and unissued.
(C) 200 shares have been designated as Series C Convertible Preferred
Stock, 62 of which are authorized, validly issued and outstanding,
fully paid and nonassessable and 138 of which have been issued and
converted into Common Stock.
(D) Additional shares of authorized Preferred Stock may be issued
without stockholder approval, subject to the rights of any holders of
outstanding Series C Preferred Stock. The Board of Directors is
authorized to issue such shares in one or more series and to fix the
rights, preferences, privileges, qualifications, limitations and
restrictions thereof, including dividend rights and rates, conversion
rights, voting rights, terms of redemption, redemption prices,
liquidation preferences and the number of shares constituting any
series or the designation of such series, without any vote or action
by the holders of Common Stock.
19
3. Shareholder Rights Plan. The Company has adopted a Shareholder Rights Plan
as disclosed in SEC Disclosure Documents.
4. Description of the Rights of the Holders of Series C Preferred Stock and
Placement Agent Warrants. Pursuant to a Securities Purchase Agreement dated
March 26, 1998, the Company sold an aggregate amount of $20 million of
Convertible Preferred Stock and warrants in a private placement with two
institutional investors. The Company sold 200 shares of Series C Convertible
Preferred Stock ("Series C Preferred Stock") which pay no dividends. The
number of shares of Common Stock issuable upon conversion of the shares of
Series C Preferred Stock (the "Conversion Shares") will be determined by
dividing the stated value by the conversion price then in effect. The
conversion price per share is to be the lower of (i) $28.80 and (ii) the
average of the Closing Bid Prices of the Common Stock for any three trading
days selected by the investors during the 20 consecutive trading days
immediately preceding the date of conversion, in each case, subject to
adjustment for subsequent dilutive financings or if the Company declares a
dividend or makes a distribution in shares of Common Stock, subdivides or
reclassifies the outstanding shares of Common Stock into a greater number of
shares, or combines or reclassifies the outstanding Common Stock into a
smaller number of shares. The number of shares of Common Stock into which
the investors, in the aggregate, may convert the Preferred Stock is subject
to certain limits. However, no limits exist for conversions or redemption or
upon a major transaction, such as a consolidation or merger, the sale or
transfer of substantially all of the Company's assets, or a purchase, tender
or exchange offer for more than 50% of the outstanding shares of Common
Stock that is accepted by the holders thereof. Additionally, the investors
are not entitled to convert Series C Preferred Stock in excess of that
number of Series C Preferred Stock Shares which, upon giving effect to such
conversion, would cause the aggregate number of shares of Common Stock
beneficially owned by such investor and its affiliates to exceed 4.9% of the
outstanding shares of the Common Stock following such conversion. Each
investor was entitled to convert 25% of the Series C Preferred Stock owned
by that investor at any time on or after the earlier of the date of
effectiveness of a registration statement covering the resales of the
Conversion Shares and a date that was 60 days from the date of issuance of
the Preferred Stock (the "Initial Conversion Date"). An additional 25% of
the Series C Preferred Stock owned by each investor became convertible on
each of the dates 60, 120 and 180 days, respectively, following the Initial
Conversion Date. The Company may call for conversion under certain
conditions based on continued improvement in the price of the Company's
Common Stock. Upon the Mandatory Conversion Date of March 26, 2000, the
Company has the option of redeeming any outstanding Preferred Stock by
paying the investors cash or by converting such Series C Preferred Stock to
Common Stock at the then applicable conversion price. In addition, the
investors received 200,000 three year warrants to purchase Common Stock at
$31.20 per share. The warrants may be exercised at any time prior to April
2001. In July 1998, the investors exercised their right to receive
additional warrants to purchase 150,000 shares of common stock at $17.45 per
share with an expiration date of March 26, 2001. We also issued a warrant to
purchase an aggregate of 50,000 shares of common stock at $28.80 per share
to the Placement Agent that expires March 25, 2001. No further warrants may
be issued under the Series C preferred stock placement. A registration
statement
20
covering 1,800,000 shares of Common Stock pursuant to the foregoing was
filed by the Company in April 1998 and declared effective on May 5, 1998.
In May, September and November 1998, an aggregate of $13,800,000 face
amount of the Series C Preferred Stock was converted into Common Stock
resulting in the issuance of approximately 1,136,000 shares of Common Stock.
In the event of any liquidation, dissolution or winding up of the Company,
the holders of the Series C Preferred Stock will be entitled to receive an
amount per Series C Preferred Stock share equal to the stated value, before
any amount shall be paid to the holders of any of the capital stock of the
Company of any class junior in rank to the Series C Preferred Shares. As
long as the initially issued shares of Series C Preferred Stock remain
outstanding, then without the prior express written consent of the holders
of not less than two-thirds (2/3) of the then outstanding Series C Preferred
Stock, the Company may not authorize or issue additional or other capital
stock that is of senior rank to the Series C Preferred Stock in respect of
the preferences as to distributions and payments upon the liquidation,
dissolution and winding up of the Company. Until all of the Series C
Preferred Stock has been converted or redeemed, the Company may not redeem
or declare or pay any cash dividend or distribution on its Common Stock or
any other series of preferred stock of the Company without the prior express
written consent of the holders of not less than two-thirds (2/3) of the then
outstanding Series C Preferred Stock.
5. Stock Issuance and Registration Rights of Novartis Pharma. Shares of Common
Stock that have been or will be issued to Novartis Pharma A.G. (formerly
"Sandoz") pursuant to a Stock Purchase Agreement dated January 17, 1996 are
subject to registration rights. We received $6,000,000 from Novartis in 1998
relating to milestone equity investments for approximately 212,000 shares of
Common Stock. As a result of these equity investments and a prior equity
investment of $5,000,000 made in January 1996, Novartis held approximately
2.2% of the Company's outstanding shares as of December 31, 1998.
6. We are currently negotiating an asset purchase transaction that may involve
the issuance of up to 50,000 shares of the Company's Common Stock subject to
registration rights.
21
SCHEDULE 2.1(E)
CONFLICTS
---------
Neither the Company nor its subsidiaries is in violation of any term of or in
default under its Certificate of Incorporation, any Certificate of Designation,
Preferences and Rights of any outstanding series of Preferred Stock of the
Company or By-laws or their organizational charter or by-laws, respectively, or
any material contract, agreement, mortgage, indebtedness, indenture, instrument,
judgment, decree or order or any statute, rule or regulation applicable to the
Company or its subsidiaries.
22
SCHEDULE 2.1(G)
LITIGATION; PROCEEDINGS
-----------------------
1. No material litigation.
23
