COMMON STOCK PURCHASE AGREEMENT
THIS COMMON STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of April
8, 1999, is by and between the individual investors set forth on Schedule I
attached hereto (the "Investors"), and CHESAPEAKE BIOLOGICAL LABORATORIES, INC.,
a Maryland corporation (the "Company").
RECITALS
WHEREAS, the Company desires to issue and sell to the Investors and the
Investors have agreed to purchase from the Company 225,000 shares of the
Company's Common Stock, par value $0.01 per share (the "Common Shares").
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained in this Agreement, the parties hereto, intending to be legally bound,
agree as follows:
ARTICLE I
THE SECURITIES
SECTION 1.01. Issuance, Sale and Delivery of the Common Shares.
Subject to the terms and conditions contained herein, on the Closing Date,
the Company shall issue and sell to the Investors, and the Investors shall
purchase from the Company, the Common Shares, in the amounts set forth on
Schedule I hereto, for an aggregate purchase price of $450,000 (the "Purchase
Price").
SECTION 1.02. Closing.
(a) The purchase and sale of the Common Shares shall take place at the
offices of Piper & Marbury L.L.P., Baltimore, Maryland, as soon as practicable
after execution of this Agreement, upon at least 24 hours notice to the
Investors from the Company (such event being called, the "Closing", and such
date and time being called, the "Closing Date"). At the Closing, the Company
shall deliver to Investors one or more certificates in each Investor's name
representing the number of Common Shares purchased by such Investor against his
payment of his pro rata portion of the Purchase Price to the Company by the
Investors.
(b) At the Closing, each Investor shall deliver to the Company an executed
copy of this Agreement and the Registration Rights Agreement (as hereinafter
defined), together with his
payment of his pro rata portion of the Purchase Price by wire transfer (in
accordance with written wire transfer instructions provided by the Company) or
certified check payable to the Company.
(c) The obligation of each of the Investors to purchase the Common Shares
is contingent upon the fulfillment of each of the conditions set forth in
Section 4.01.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Investors, intending
that the Investors rely upon such representations and warranties, as follows:
SECTION 2.01. Organization, Good Standing, Qualifications and Corporate Power.
(a) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Maryland, and is duly licensed or
qualified to transact business as a foreign corporation and is in good standing
in each jurisdiction in which the nature of the business transacted by it or the
character of the properties owned or leased by it requires such licensing or
qualification. At all times since its formation, the Company has been engaged
exclusively in the business of scientific research, development, manufacturing,
marketing and distributing chemicals and biologics used in human and animal
therapeutics or having applications in the human and veterinary health care
products field generally (the "Business"). The Company has the requisite
corporate power and authority to (i) own and hold its properties and to carry on
the Business as currently conducted and as proposed to be conducted, (ii)
execute and deliver this Agreement and the Registration Rights Agreement of even
date herewith by and among the Company and the Investors (the "Registration
Rights Agreement"), (iii) issue, sell and deliver the Common Shares and (iv)
carry out and perform the provisions of this Agreement and the Registration
Rights Agreement.
(b) Except for CBL Development Corporation (which is inactive) the Company
does not (i) own of record or beneficially, directly or indirectly, (A) any
shares of capital stock or securities convertible into capital stock of any
other corporation or (B) any participating or equity interest in any
partnership, joint venture or other non-corporate business enterprise or (ii)
control, directly or indirectly, any other entity.
SECTION 2.02. Authorization of Agreements, Etc.
(a) The (i) execution and delivery by the Company of this Agreement and
the Registration Rights Agreement, (ii) performance of all obligations of the
Company hereunder and thereunder, (iii) issuance, sale and delivery of the
Common Shares have been duly authorized by all requisite corporate action on the
part of the Company, its officers, directors and stockholders, and have not and
will not violate any provision of applicable law, any order of any court or
other agency of government, the Charter or the By-Laws, or any provision of any
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indenture, agreement or other instrument to which the Company or any of its
properties or assets is bound, or conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any such
indenture, agreement or other instrument, which conflict, breach or default
could reasonably be expected to have a material adverse effect on the Business
or the assets, results of operations, condition (financial or otherwise) or
prospects of the Company (a "Material Adverse Effect") or result in the creation
or imposition of any lien, charge, restriction, claim or encumbrance of any
nature whatsoever (a "Lien") upon any of the tangible or intangible assets of
the Company.
(b) The Common Shares, when issued, sold and delivered in accordance with
the terms of this Agreement for the Purchase Price, will be duly and validly
issued, fully paid and nonassessable, with no personal liability attaching to
the ownership thereof, and will be free and clear of all Liens imposed by or
through the Company, except as set forth in the Registration Rights Agreement.
The issuance, sale and delivery of the Common Shares is not subject to any
preemptive right of any stockholder of the Company or to any right of first
refusal or other right in favor of any person, except as herein provided or as
provided in the Charter or in the Registration Rights Agreement.
SECTION 2.03. Validity.
This Agreement and the Registration Rights Agreement have been duly
executed and delivered by the Company and, assuming the execution and delivery
of them by the other parties thereto, constitute the legal, valid and binding
obligations of the Company, enforceable in accordance with their respective
terms, except as limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors' rights generally, and (ii) laws relating to the
availability of specific performance, injunctive relief or other equitable
remedies.
SECTION 2.04. Authorized Capital Stock.
(a) At closing: (i) the authorized capital stock of the Company will
consist of 10,000,000 shares of Common Stock, of which 8,000,000 shares are
classified as Class A Common Stock, par value $0.01 per share, of which
5,365,101 shares are issued and outstanding as of the date hereof, and
2,000,0000 shares of which are classified as Class B Common Stock, par value
$0.01 per share, none of which are issued and outstanding as of the date hereof
and (ii) the designations, powers, preferences, rights, qualifications,
limitations and restrictions in respect of each class and series of authorized
capital stock of the Company as set forth in the Charter will be valid, binding
and enforceable and in accordance with all applicable laws. Except for this
Agreement, the Registration Rights Agreement or the Preferred Stock Purchase
Agreement and associated Registration Rights Agreement relative to the issuance
15,510 shares of the Company's newly classified Series A Convertible Preferred
Stock (together, the "Preferred Stock Agreement"), (i) there is no commitment by
the Company to issue any shares of capital stock, subscriptions, warrants,
options, convertible securities or other similar rights to purchase or
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receive Company securities or to distribute to the holders of any of its equity
securities any evidence of indebtedness, cash or other assets, (ii) the Company
is under no obligation (contingent or otherwise) to purchase, redeem or
otherwise acquire any of its equity or debt securities or any interest therein
or to pay any dividend or make any other distribution in respect thereof, and
(iii) there are no voting trusts or similar agreements, stockholders'
agreements, pledge agreements, buy-sell agreements, rights of first refusal,
preemptive rights or proxies relating to any securities of the Company.
(b) All outstanding securities of the Company were issued in compliance
with applicable Federal and state securities laws.
SECTION 2.05. Financial Information.
(a) The Common Stock of the Company is registered pursuant to Section
12(g) of the Securities Exchange Act of 1934 (the "Exchange Act") and the
Company has filed all 34 Act Filings required to be filed by it with the SEC
pursuant to the reporting requirement of the Exchange Act. The Company has not
provided the Purchaser with any information that, according to applicable law,
rule, or regulation, should have been disclosed publicly by the Company but has
not been so disclosed. As of their respective dates, the 34 Act Filings complied
in all material respects with the requirements of the Exchange Act and the rules
and regulations of the SEC and other federal, state, and local laws applicable
to such 34 Act Filings, and none of the 34 Act Filings 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.
(b) The Company has filed with the Securities Exchange Commission (the
"SEC") audited financial statements as at March 31, 1997 and 1998 and for the
three years ended March 31, 1998 and unaudited financial statements as at and
for the nine months ended December 31, 1998, (collectively, the "Financial
Statements").
(c) Except as set forth on Schedule 2.05(b), the Company has no material
liabilities, contingent or otherwise, that have not been disclosed in the
Financial Statements, subsequent filings with the SEC or that arose after the
date of the Financial Statements or other such filings.
(d) The financial statements of the Company included in the 34 Act Filings
comply as to form in all respects with the applicable accounting requirements
and rules and regulations of the SEC or other applicable rules and regulations
with respect thereto. Such financial statements have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
during the periods involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto or (ii) in the case of interim
unaudited financial statements) and fairly present in all material respects the
financial position of the Company as of the dates thereof and the results of
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments).
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SECTION 2.06. Certain Events.
Other than (i) as disclosed in this Agreement (including the Schedules
hereto), the Registration Rights Agreement or the filings made by the Company
with the SEC under the Securities Exchange Act of 1934 (the "34 Act Filings"),
(ii) Executive Employment Agreements and Stock Option Agreements with Xxxxxx X.
Xxxx and Xxxx X. Xxxxx (collectively, the "Executive Agreements"), and (iii) in
the ordinary course of business, since December 31, 1998. the Company has not
(a) issued any equity or debt securities, (b) borrowed any amount or incurred or
become subject to any liability (absolute, accrued or contingent), (c)
discharged or satisfied any Lien or incurred or paid any obligation or liability
(absolute, accrued or contingent), (d) declared or made any payment or
distribution to stockholders or purchased or redeemed any shares of its capital
stock or other security, (e) mortgaged, pledged or subjected to Lien any of its
assets, tangible or intangible, (f) entered into any commitment (contingent or
otherwise) to do any of the foregoing or (g) engaged in any transaction not in
the ordinary course of business with any Company director, officer, employee,
stockholder or any of their respective affiliates or relatives.
SECTION 2.07. Litigation; Compliance with Laws; Licenses.
Except as disclosed in the 34 Act Filings, there is no pending or, to the
knowledge of the Company, threatened (a) action, suit, claim, proceeding or
investigation against or affecting the Company, at law or in equity, or before
or by any Federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign (each,
a "Governmental Body"), (b) arbitration proceeding against or affecting the
Company, (c) governmental inquiry against or affecting the Company, or (d) any
action or suit by or on behalf of the Company pending or threatened against
others. The Company is not in default with respect to any order, writ,
injunction or decree known to the Company issued by any court or Governmental
Body. The Company has complied in all material respects with all laws, rules,
regulations and orders applicable to the Business and the Company's operations,
properties, assets, products and services, and the Company has all necessary
permits, licenses and other authorization, required to conduct the Business as
currently conducted or as proposed to be conducted. There is no existing or, to
the knowledge of the Company, any proposed law, rule, regulation or order,
whether Federal, state, or local, which reasonably could be expected to (a)
prohibit or restrict the Company from, (b) require the Company to obtain one or
more permits, licenses or other authorizations, or (c) otherwise materially
adversely affect the Company in, conducting the Business in any jurisdiction in
which it is now conducting business or in which it proposes to conduct business.
The Company has not received any legal opinion, memorandum or advice from
counsel to the effect that it is exposed, from a legal standpoint, to any
liability or disadvantage which may be material to the Business or the Company's
assets, properties, liabilities, results of operations, financial condition or
prospects or that the Company is, or may be, required to obtain one or more
permits, licenses or other authorizations in order to conduct the Business as
currently conducted or as proposed to be conducted.
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SECTION 2.08. Intellectual Property.
(a) Except as set forth on Schedule 2.08, (a) the Company has good, valid,
subsisting, unexpired and enforceable title to, or otherwise possesses adequate
rights to use, all the patents, trademarks, trade names, service marks,
copyrights and similar intangible assets or rights material to the Business
(collectively, the "Intellectual Property"); (b) the Company has no knowledge of
any adverse claim or facts which could give rise to a claim, which creates a
reasonable doubt as to the ownership or validity of the Intellectual Property;
(c) no Governmental Body has rendered any opinion, decision or judgment that
could limit, cancel, or question the validity of any of the Intellectual
Property; (d) to the Company's knowledge, no other intellectual property is
necessary to enable the Company to conduct the Business substantially as
currently conducted or as proposed to be conducted; (e) the Company is not
obligated or under any liability whatsoever to make any material payments in the
nature of royalties, license fees or otherwise to any owner of, licensee of or
other claimant to, any Intellectual Property; and (f) the Company has no
knowledge of intellectual property owned by others which is used by the Company
in the conduct of the Business as currently conducted or as proposed to be
conducted.
(b) To the knowledge of the Company, no assets, properties or rights used
in the Business infringe or, in the past have infringed, upon any patent,
trademark, trade name, copyright or other intellectual property, and the Company
has not misappropriated or misused any invention, trade secret or other
proprietary information entitled to legal protection. The continued use of the
Intellectual Property by the Company will not constitute an infringement,
misappropriation or misuse of any patent, trademark, trade name, copyright,
invention, trade secret, proprietary information, nondisclosure or other rights
of any third party. No person has asserted, or, to the knowledge of the Company,
threatened, any claim regarding the use of, or challenging or questioning the
Company's right or title in, any Intellectual Property, or challenging or
questioning the validity or effectiveness of the Intellectual Property or any
license, contract or commitment relating thereto, and the Company knows of no
valid basis for any such claim. To the Company's knowledge, all trade secrets,
know how and other proprietary information developed by or belonging to the
Company which has not been patented, trademarked or copyrighted has at all times
been kept confidential by the Company, its employees and agents so as to be
protectable under common law principles.
SECTION 2.09. Loans and Advances.
Except as set forth in the 34 Act Filings, the Company has no outstanding
loans or advances to any person and is not obligated to make any loans or
advances, except for routine advances to employees in respect of reimbursable
business expenses incurred by them in connection with their performance of
services for the Company.
SECTION 2.10. Assumptions, Guaranties, Etc., of Indebtedness of Other Persons.
Except as set forth in the 34 Act Filings, the Company has not assumed,
guaranteed, endorsed or otherwise become directly or contingently liable on any
indebtedness of any other
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person nor become obligated to purchase, provide funds for payment, supply funds
to or otherwise invest in a debtor or obligor or otherwise to assure a creditor
against loss.
SECTION 2.11. Governmental Approvals.
Assuming the accuracy of the representations and warranties of the
Investors set forth in Article III hereof, no registration or filing with, or
consent or approval of or other action by, any Governmental Body is or will be
necessary for (a) the valid execution, delivery and performance by the Company
of this Agreement or the Registration Rights Agreement or (b) the issuance, sale
and delivery of the Common Shares, other than (i) filings pursuant to Federal
and state securities laws (all of which filings have been, or with respect to
those filings which may be duly made after the Closing will be, made by or on
behalf of the Company) in connection with the offer, issuance and sale of the
Common Shares, (ii) with respect to the Agreement, the registration of the
shares covered thereby with the SEC and (iii) the filing of the Articles
Supplementary.
SECTION 2.12. Taxes.
The Company has filed, or caused to be filed, on a timely basis, all tax
returns (including payroll, unemployment and other taxes related to its
employees and independent contractors) required to be filed with any
Governmental Body and has paid or caused to be paid all taxes, levies,
assessments, tariffs, duties or other fees imposed, assessed or collected by any
Governmental Body that may have become due and payable pursuant to those tax
returns or otherwise. No deficiency assessment with respect to or proposed
adjustment of any of the Company's Federal, state, municipal or local tax
returns has occurred or, to the Company's knowledge, is threatened. There has
been no tax lien imposed by any Governmental Body outstanding against the
Company's assets or properties, except the lien for current taxes not yet due.
SECTION 2.13. Bankruptcy or Convictions.
None of the Company's directors or officers has ever been arrested,
charged with or convicted of any crime (other than minor traffic violations) nor
have any of them ever filed for bankruptcy or had a bankruptcy petition filed
against them, and none of them has ever been a director or officer of an entity
that filed for bankruptcy or had a bankruptcy petition filed against it.
SECTION 2.14. Brokers or Finders.
The Company is not liable, contingently or otherwise, for the payment of
any brokerage or finders' fees or agents' commissions or other similar payments
in connection with this Agreement or the transactions contemplated hereby.
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SECTION 2.15. Assets.
(a) Personal Property. The Company has good and valid title to all of its
assets. All of the Company's tangible personal property has been maintained in
accordance with generally accepted industry practice and is, in all material
respects, in good operating condition and repair, ordinary wear and tear
excepted. All leased personal property is, in all material respects, in the
condition required of such property by the terms of the lease applicable
thereto, and all such leases are in full force and effect and have not been
modified or amended, and no party thereto is in default in any material respect
thereunder.
(b) Title to Real Property.
The Company owns no real property or any interest in real property, other
than as described in the 34 Act Filings and leasehold interests granted pursuant
to written leases; (ii) the Company has neither granted nor is subject to any
options to purchase or rights of first refusal with respect to any real
property; and (iii) all of the Company's leases of real property are in full
force and effect and have not been modified or amended, and no party thereto is
in default in any material respect thereunder.
SECTION 2.16. Absence of Certain Changes.
Except (i) for certain covenant defaults under the Company's Loan
Agreement with First Union National Bank, (ii) a non-recurring charge estimated
at $1,400,000 for executive severance and a write-down on the Seton facility,
(iii) the Executive Agreements, (iv) the Preferred Stock Agreement, or (v) as
disclosed in the 34 Act Filings, since December 31, 1998, the Business has been
conducted only in the ordinary course consistent with past practice, and there
has been no Material Adverse Effect on the Company.
SECTION 2.17. Absence of Defaults, Etc.
The Company is not in default or alleged to be in default under any
material contract, agreement, lease or document to which it or any of its
properties or assets is bound. The Company and its properties and assets are in
compliance in all material respects with all applicable statutes, laws,
ordinances, rules and regulations of all Governmental Bodies, and all filing
requirements relating thereto.
SECTION 2.18. Material Agreements.
Except for the Executive Agreements or as described in the 34 Act Filings
and as contemplated by this Agreement, the Registration Rights Agreement or the
Preferred Stock Agreement, the Company is not a party to or bound by any written
or oral (a) contract not made in the ordinary course of business; (b) collective
bargaining agreement or other contract with any labor union or other employee
bargaining unit; (c) bonus, deferred compensation, profit sharing, pension,
retirement, stock option, stock purchase, hospitalization, insurance or other
plan or
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arrangement providing for employee benefits to present or former officers,
directors or employees; (d) contract with any manufacturer, producer,
warehouser, distributor, agent, broker or seller, or any agreement whereby the
Company is entitled to manufacture, distribute, warehouse, deal in or sell any
products; (e) contract requiring capital expenditures in excess of $100,000 in
any one year; (f) contract for the purchase of supplies, materials or services
for delivery over a period of more than 30 days from the date of this Agreement;
(g) contract with any of its officers, directors or employees, or (h) any other
agreement, contract, lease, license, commitment or instrument to which the
Company is a party or by or to which it or any of its assets or the Business is
bound or subject, which individually has an expected aggregate future liability
or obligation of $500,000 or more.
SECTION 2.19. Environmental Matters.
The Company has not released, emitted, buried or otherwise disposed of any
Regulated Substances (as hereinafter defined) on any of the Company's Properties
(as hereinafter defined) in violation of any Environmental Law (as hereinafter
defined). To the knowledge of the Company, no other person or entity has
released, emitted, buried or otherwise disposed of Regulated Substances on any
of the Company's Properties. To the knowledge of the Company, no storage tanks,
underground or otherwise, are or have been located on any of the Company's
Properties. The Company has in all material respects complied with all
Environmental Laws relating to the Business or the Company's Properties. The
Company has not received any notice, demand, suit or information request
pursuant to the Comprehensive Environmental Response, Compensation and Liability
Act ("CERCLA") or any comparable state or local law, nor does it have knowledge
of any other party's receipt of same relating to any of the Company's
Properties. The Company has not received written notice that any of the
Company's Properties is listed on any regulatory list of contaminated
properties, including the National Priorities List promulgated pursuant to
CERCLA, or any state or local counterpart. To the knowledge of the Company, the
Company has no existing or potential liability under any Environmental Law. No
environmental approvals, clearances or consents are required under applicable
law from any governmental entity or authority in order for the Investors to
purchase the Common Shares hereunder or for the Company to continue the Business
after the Closing Date.
As used in this Section 2.19, (i) "Environmental Law" means any statute,
regulation, rule, code, common law, order or judgment of any applicable Federal,
state, local or foreign jurisdiction relating to pollution, hazardous
substances, hazardous wastes, petroleum or otherwise relating to protection of
the environment, natural resources or human health, including the Clean Air Act,
the Clean Water Act, the Resource Conservation Recovery Act ("RCRA"), CERCLA,
the Toxic Substances Control Act ("TSCA"), and the Emergency Planning and
Community Right-to-Know Act, all as currently amended; (ii) "Regulated
Substances" means any substance regulated under any Environmental Law, including
hazardous waste, as defined in RCRA, hazardous substances, as defined in CERCLA,
toxic substances as defined in TSCA, hazardous materials, as defined under the
Hazardous Materials Transportation Act, petroleum and its fractions, ACM's and
PCB's; (iii) the "Company" includes any predecessors or affiliates;
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and (iv) the "Company's Properties" means any real property or facility
currently owned, leased, operated or used by the Company or previously owned,
leased, operated or used by the Company or any predecessor of the Company.
SECTION 2.20 Certain Payments.
Neither the Company nor any of its directors, officers, agents or
employees or any other person or entity associated with or acting for or on
behalf of the Company, has directly or indirectly (a) made any contribution,
gift, bribe, rebate, payoff, influence payment, kickback or other payment to any
person or entity, private or public, regardless of form, in money, property or
services (i) to obtain favorable treatment in securing business, (ii) to pay for
favorable treatment for business secured, or (iii) to obtain special concessions
or for special concessions already obtained, for or in respect of the Company,
or (b) established or maintained any fund or asset that has not been recorded on
the books and records of the Company.
SECTION 2.21. Insurance.
The Company maintains policies of fire and casualty, extended coverage,
business interruption, public and product liability and other forms of insurance
in such amounts, with such deductibles and against such risks and losses as are
reasonable to protect the Business and the assets of the Company.
SECTION 2.22. Disclosure.
The representations and warranties contained in this Article II and the
information set forth in the Schedules hereto, are true, complete and correct in
all material respects, and none of the same contains any untrue statement of
material fact or omits to state any material fact necessary to make the
statements made therein not misleading. To the Company's knowledge, there is no
fact which the Company has not disclosed to the Investors which has had or could
reasonably be expected to have a Material Adverse Effect.
SECTION 2.23. Agreements.
Except as set forth in this Agreement (including the Schedules) or the 34
Act Filings, the Company is not a party to or otherwise bound by any written or
oral contract or instrument or, to the knowledge of the Company, other
restriction which individually or in the aggregate could reasonably be expected
to have a Material Adverse Effect. The Company and each other party to such
contracts or instruments have performed all obligations required to be performed
by them to date, have received no notice of default or alleged default and are
not in default, in any material respect (with due notice or lapse of time or
both) under any of the same. The Company is not in violation of any provision of
its Charter or Bylaws. The Company has no present expectation or intention of
not fully performing all its obligations under each such contract or instrument
in all material respects.
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SECTION 2.24. "Company"
When used in this Article II, "Company" shall mean, with respect to the
receipt of notice or knowledge, its directors, executive officers, counsel and
advisors.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
Each of the Investors, severally and not jointly, represents and warrants
to the Company as of the Closing Date that he:
(a) is an "accredited investor" within the meaning of Rule 501 of
Regulation D under the Securities Act of 1933, as amended (the "Securities Act")
and the rules and regulations promulgated thereunder;
(b) has sufficient knowledge and experience in investing in companies
similar to the Company so as to be able to evaluate the risks and merits of its
investment in the Company and is able financially to bear the risks of such
investment;
(c) has had an opportunity to discuss the Business and the Company's
management, prospects and financial affairs with the Company's management;
(d) is acquiring the Common Shares for his own account for the purpose of
investment and not with a view to or for resale in connection with any
distribution thereof;
(e) understands that (i) the Common Shares have not been registered under
the Securities Act by reason of their issuance in a transaction exempt from the
registration requirements of the Securities Act, (ii) the Common Shares must be
held indefinitely unless a subsequent disposition thereof is registered under
the Securities Act or is exempt from such registration, (iii) the Common Shares
will bear a legend to such effect, (iv) the Common Shares are subject to the
restrictions set forth in the Registration Rights Agreement, and (v) the Company
will make a notation on its transfer books to such effect; and
(f) has the full right, power and authority to enter into and perform this
Agreement and the Registration Rights Agreement, and each of this Agreement and
the Registration Rights Agreement, constitutes his legal, valid and binding
obligation, enforceable in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
or other laws affecting the enforcement of creditors' rights generally, or by
general equitable principles.
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ARTICLE IV
CONDITIONS TO THE CLOSING
SECTION 4.01. Conditions to the Obligations of the Investors.
The obligations of each of the Investors to consummate the transactions
contemplated by this Agreement are subject to the fulfillment or the written
waiver of such Investor, at his sole discretion, on or before the Closing Date,
of each of the following conditions:
(a) Performance. The Company shall have performed and complied, in all
material respects, with all agreements, obligations and conditions contained
herein that are required by it to be performed or complied with on or before the
Closing Date, and such Investor shall have received a certificate to such effect
from the President of the Company.
(b) All Proceedings to be Satisfactory. All corporate proceedings required
to be taken by the Company in connection with the transactions contemplated
hereby and all documents incident thereto shall be reasonably satisfactory in
form and substance to the Investors and its counsel, and such Investor shall
have received all such evidence of such proceedings and counterpart originals or
certified or other copies of such documents as they have reasonably requested.
(c) Supporting Documents. Such Investor shall have received copies of the
following documents:
(i) a certificate of the Maryland State Department of
Assessments & Taxation, dated as of a recent date, as to the due incorporation
and good standing of the Company;
(ii) a certificate of the Secretary of the Company, dated the
Closing Date and certifying: (A) that attached thereto is a true and complete
copy of the By-Laws of the Company as in effect on the date of such
certification; (B) that attached thereto is a true and complete copy of all
resolutions adopted by the Board of Directors (the "Board") and the stockholders
of the Company authorizing the execution, delivery and performance of this
Agreement and the Registration Rights Agreement, the issuance and delivery of
the Common Shares and that all such resolutions are in full force and effect and
that the same are all resolutions adopted in connection with the transactions
contemplated by this Agreement and the Registration Rights Agreement; and (C) to
the incumbency and specimen signature of each officer of the Company executing
this Agreement, the Registration Rights Agreement, the certificates representing
the Common Shares and any certificate or instrument furnished pursuant hereto,
and a certification by another officer of the Company as to the incumbency of
the officer signing the certificate referred to in this clause (c); and
(iii) such additional supporting documents and other
information with respect to the operations and affairs of the Company as such
Investor reasonably may request.
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(d) The Registration Rights Agreement. The Company and each of the
Investors shall have executed and delivered the Registration Rights Agreement.
(e) The Common Shares. The Company shall have delivered to each Investor
stock certificates representing the Common Shares.
(f) Due Diligence. No fact shall have been discovered by such Investor
during his due diligence investigation of the Company, the Business, its
prospects and the Company's management that causes him to conclude, in his sole
discretion, that an investment in the Company is not appropriate.
(g) Governmental and Other Authorization. All authorizations, approvals or
permits, if any, of any Governmental Body or any other person or entity that are
required in connection with the lawful issuance and sale of the Common Shares
pursuant to this Agreement shall have been duly obtained, except for filings
pursuant to Federal or state securities laws which are legally permitted to be
made on or after the Closing Date.
(h) Additional Agreements. The Company shall have delivered such other
agreements and instruments as such Investor shall have reasonably requested.
(i) Opinions of Counsel. Piper & Marbury L.L.P., counsel to the Company,
shall have delivered to each of the Investors an opinion, dated the Closing
Date, in form and substance reasonably acceptable to the Investors.
(j) Absence of Legal Proceedings. No action or proceedings shall have been
instituted or threatened before a court or Governmental Body to restrict or
prohibit the transactions contemplated hereby or the operation by the Company of
the Business.
SECTION 4.02. Conditions to the Obligations of the Company.
The obligations of the Company under this Agreement are subject to the
fulfillment or its written waiver, at its sole discretion, on or before the
Closing Date, of each of the following conditions:
(a) Registration Rights Agreement. Each of the Investors shall have
executed and delivered the Registration Rights Agreement.
(b) Purchase by Investors. Each of the Investors shall have paid his pro
rata portion of the Purchase Price.
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ARTICLE V
COVENANTS OF THE COMPANY
The Company covenants and agrees with each of the Investors that so long
as any Common Shares are outstanding:
SECTION 5.01. Inspection and Information Rights.
The Company shall permit the Investors, or any authorized representative
thereof, upon reasonable prior notice, to visit and inspect the properties of
the Company and its corporate and financial books and records and to discuss the
Business and its finances with its officers, all at such reasonable times during
normal business hours as may be requested by the Investors. The Investors or
their representatives shall maintain the confidentiality of all information
acquired by them in exercising such rights and shall execute a written
non-disclosure agreement if requested by the Company in form reasonably
acceptable to the Company and the Investors;
SECTION 5.02. Corporate Existence; Business.
Except as contemplated hereunder, the Company shall maintain its corporate
existence, rights and franchises in full force and effect. The Company will not
engage in any business other than the Business.
SECTION 5.03. Properties, Business, Insurance.
The Company shall maintain, as to its properties and the Business, with
financially sound and reputable insurers, insurance against such casualties and
contingencies and of such types and in such amounts as is customary for
companies similarly situated.
SECTION 5.04. Compliance with Laws.
The Company shall comply with all applicable laws, rules, regulations and
orders, noncompliance with which could reasonably be expected to have a Material
Adverse Effect.
SECTION 5.05. Maintain Records and Books of Account.
The Company shall maintain complete and accurate records and books of
account, in which entries will be made in accordance with GAAP, reflecting all
financial transactions of the Company and which will include, for each fiscal
year, all proper reserves for depreciation, depletion, obsolescence,
amortization, taxes, bad debts and other items in connection with the Business.
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SECTION 5.06. Subsidiaries.
If at any time the Company has any subsidiaries, it will not permit any
such subsidiary to take any action which would violate any of the covenants
contained herein. The Company shall not sell or otherwise transfer any shares of
capital stock of any of its subsidiaries, except to the Company or another
subsidiary, or permit any of its subsidiaries to issue, sell or otherwise
transfer any shares of its capital stock or the capital stock of any of its
subsidiaries, except to the Company or another Company subsidiary.
SECTION 5.07. Restrictive Agreements Prohibited.
The Company shall not become a party to, or bound by, any agreement which
by its terms restricts the Company's performance of this Agreement, its Charter
or the Registration Rights Agreement.
SECTION 5.08. Use of Proceeds.
The Company shall use the proceeds from the sale of the Common Shares to
fund capital expenditures and for working capital.
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. Fees and Expenses.
Each of the Company and the Investors shall pay their own expenses
associated with the transactions contemplated by this Agreement and the
Registration Rights Agreement.
SECTION 6.02. Survival of Agreements.
The representations and warranties, covenants and other agreements made
herein and in the Registration Rights Agreement, as well as in each certificate
delivered to the Investors pursuant hereto, shall survive the Closing and remain
in effect so long as any of the Common Shares remain outstanding. The Company
agrees to indemnify and hold the Investors harmless from and against and will
pay to the Investors the full amount of any loss, damage, liability, cost or
expense (including amounts paid in settlement and reasonable attorneys' fees and
expenses) to the Investors resulting either directly or indirectly from any
breach of the representations and warranties, covenants or agreements of the
Company contained in this Agreement or the Registration Rights Agreement or in
any certificate delivered to the Investors pursuant hereto or thereto or in
connection herewith or therewith. The Investors agrees to indemnify and hold the
Company harmless from and against and will pay to the Company the full amount of
any loss, damage, liability, cost or expense (including amounts paid in
settlement and reasonable attorneys' fees and expenses) to the Company or such
person resulting either directly or
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indirectly from any breach of the representations, warranties, covenants or
agreements of the Investors contained in this Agreement or the Registration
Rights Agreement or in any certificate delivered to the Company pursuant hereto
or thereto in connection herewith or therewith.
SECTION 6.03. Parties in Interest.
All representations, warranties, covenants and agreements contained in
this Agreement, and the Registration Rights Agreement, by or on behalf of any of
the parties hereto shall bind and inure to the benefit of the respective
successors and assigns of the parties hereto whether so expressed or not;
provided, however, that the foregoing shall not in and of itself permit the
assignment by the Company and its successors of the Company's obligations
hereunder.
SECTION 6.04. Notices.
All notices, requests, consents and other communications hereunder shall
be in writing and shall be delivered in person, by overnight express mail, or
mailed by certified or registered mail, return receipt requested, addressed as
follows:
(a) If to the Company:
Chesapeake Biological Laboratories, Inc.
0000 Xxxxx Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: President
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxx X. Xxxxxxxx, Xx., Esquire
Piper & Marbury L.L.P.
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
(b) If to the Investors, to their respective addresses set forth on
Schedule I hereto
or, in any such case, at such other address or addresses as shall have been
furnished in writing by such party to the others.
SECTION 6.05. Governing Law.
This Agreement shall be governed by and construed in accordance with the
internal laws of the State of Maryland, without giving effect to its conflicts
of laws provisions.
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SECTION 6.06. Entire Agreement.
This Agreement, including the Schedules and Exhibits hereto, together with
the Charter and the Registration Rights Agreement, constitute the sole and
entire agreements of the parties hereto and supersede all prior agreements and
understandings, oral and written, among the parties hereto with respect to the
subject matter hereof. All Schedules and Exhibits hereto are incorporated herein
by reference. To the extent an item is disclosed or set forth in a Schedule or
exhibit, its inclusion anywhere in the Schedules or Exhibits shall be deemed to
be an automatic cross-reference to, and inclusion in, all Schedules and Exhibits
as may be appropriate throughout the Agreement and any and all applicable
sections or paragraphs thereof, whether or not a specific cross-reference is
noted.
SECTION 6.07. Counterparts.
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, and all of which together shall constitute one and
the same instrument.
SECTION 6.08. Amendments.
This Agreement may not be amended or modified, and no provisions hereof
may be waived, without the written consent of the Company and a majority of the
Investors.
SECTION 6.09. Severability.
Each provision of this Agreement shall be treated as a separate and
independent clause, and the unenforceability of any one clause shall in no way
impair the enforceability of any of the other clauses herein. If one or more of
the provisions contained in this Agreement shall for any reason be held to be
unenforceable, such provision or provisions shall be construed by the
appropriate judicial body by limiting or reducing it or them, so as to be
enforceable to the maximum extent compatible with applicable law, and no other
provision hereof shall be affected by such holding, limitation or reduction.
SECTION 6.10. Titles and Subtitles.
The titles and subtitles used in this Agreement are for convenience only
and are not to be considered in construing or interpreting any term or provision
of this Agreement.
SECTION 6.11. Recitals.
The Recitals hereto are specifically made a part of this Agreement.
SECTION 6.12. Pronouns.
All pronouns used herein shall be deemed to refer to the masculine,
feminine or neuter gender as the context requires.
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