Exhibit 10.7
STOCK PURCHASE AGREEMENT
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THIS STOCK PURCHASE AGREEMENT is made as of the 6th day of September,
1996, by and among BIONIX, INC., a Delaware corporation (the "Company"),
BIOSCIENCE, LTD., a Finnish corporation ("Bioscience"), BIOCON, OY, a Finnish
corporation ("Biocon"), BIOSTENT, Inc., a New Jersey corporation ("Biostent"),
ORTHOSORB, INC., a New Jersey corporation ("Orthosorb", and, collectively with
Bioscience, Biocon and Biostent, the "Subsidiaries"), and the parties identified
as "Investors" on the signature pages hereof, each of which is herein referred
to as an "Investor". For purposes of this Agreement, the term "Corporation"
shall refer to the Company and the Subsidiaries collectively.
The parties hereto hereby agree as follows:
1. PURCHASE AND SALE OF STOCK AND WARRANTS.
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1.1 SALE AND ISSUANCE OF SERIES A PREFERRED STOCK AND WARRANTS.
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1.1.1 The Company shall adopt and file with the Secretary of
State of Delaware on or before the Closing (as defined below) a Certificate of
Designation, Number, Powers, Preferences and Relative, Participating, Optional,
and Other Special Rights and the Qualifications, Limitations, Restrictions and
Other Distinguishing Characteristics (the "Certificate of Designation") setting
forth the terms and conditions of the Company's Series A Convertible
Participating Preferred Stock (the "Series A Preferred Stock"), such Certificate
of Designation to be in the form and substance of the Certificate of Designation
annexed hereto as Exhibit A. Such Certificate of Designation will further amend
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the Company's amended Certificate of Incorporation. Excluding such Certificate
of Designation, the Company's amended Certificate of Incorporation (the
"Certificate of Incorporation") and the Company's By-laws are set forth in
Exhibit B annexed hereto.
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1.1.2 The Company shall issue common stock purchase warrants (the
"Warrants") reflecting the terms set forth in the form of the warrant annexed
hereto as Exhibit C. Each Warrant provides for the purchase of one share of the
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Company's Common Stock, par value $.001 per share (the "Common Stock"), at an
exercise price of $3.00 per share.
1.1.3 Subject to the terms and conditions of this Agreement,
each Investor agrees, severally, to purchase at the Closing, and the Company
agrees to sell and issue to each Investor at the Closing, that number of shares
of the Company's Series A Preferred Stock set forth opposite each Investor's
name on Exhibit D annexed hereto, at a price of $2.49 per share and (b) Warrants
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to that number of shares of the Company's Common Stock set
forth opposite each Investor's name on such Exhibit D, at a price of $.025 per
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Warrant. At the the Company shall deliver to each Investor
certificates representing the number of shares of Series A Preferred Stock that
such Investor is purchasing and the Warrants that such Investor is purchasing
against payment of the purchase price therefor by certified check, wire
transfer, or any combination thereof. Any Investor purchasing Series A Preferred
Stock and Warrants pursuant to this Agreement shall become a party to this
Agreement and a party to the Investors' Rights Agreement and Co-Sale Agreement
referred to herein, all dated as
of the date hereof. This Agreement, the Warrants, such Investors' Rights
Agreement and such Co-Sale Agreement are collectively referred to herein as the
"Transaction Agreements".
1.2 CLOSING.
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(a) The purchase and sale of the Series A Preferred Stock and Warrants
shall take place at the offices of Xxxxxxxxxx, Sandler, Kohl, Xxxxxx & Xxxxxx,
P.A., 00 Xxxxxxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxxxx at 10:00 A.M., on [__________,
1996,] or at such other time and place as the Company and Investors acquiring in
the aggregate more than one half of the shares of Series A Preferred Stock and
Warrants sold pursuant hereto mutually agree upon orally or in writing (the
"Closing").
2. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION. The Corporation
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hereby represents and warrants to each Investor as follows:
2.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION; REORGANIZATION.
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2.1.1 The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
all requisite corporate power and authority to carry on its business as now
conducted. The Company is duly qualified to do business as a foreign corporation
in Pennsylvania and is not required to be qualified to transact business in any
other jurisdiction, excepting only jurisdictions in which the failure to so
qualify would not have a material adverse effect on its business or properties.
2.1.2 The Company was reorganized in the manner described in Exhibit
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E annexed hereto (the "Reorganization"). All corporate action with respect to
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the Reorganization, including authorization, execution, delivery and
governmental filings required in connection therewith, has been taken and the
Reorganization is complete and effective.
2.2 CAPITALIZATION AND VOTING RIGHTS. The authorized capital of the
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Company consists of the following:
2.2.1 PREFERRED STOCK. 10,000,000 shares of Preferred Stock, of which
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2,000,000 shares have been reserved for sale at the Closing as Series A
Preferred Stock and none of which are presently issued and outstanding. The
rights, privileges and preferences of the Series A Preferred Stock will be as
stated in the Certificate of Designation.
2.2.2 COMMON STOCK. 60,000,000 shares of common stock ("Common
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Stock"), of which 10,105,000 shares are issued and outstanding. The existing
shareholders of the Company and their current holdings of the Company's capital
stock are summarized in Exhibit F annexed hereto.
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2.2.3 OUTSTANDING SHARES. The outstanding shares of Common Stock are
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all duly and validly authorized and issued, fully paid and nonassessable, and
were issued in accordance
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with the registration or qualification provisions of the Securities Act of 1933,
as amended (the "Act"), and any relevant state securities laws or pursuant to
valid exemptions therefrom.
2.2.4 RIGHTS TO PURCHASE. Except for (A) the conversion privileges
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of the Series A Preferred Stock, (B) Warrants to purchase up to 800,000 shares
of Common Stock to be issued pursuant to this Agreement, (C) the rights provided
under the Transaction Agreements, (D) options to purchase 637,816 shares of
Common Stock which have been granted to Xxxxx X. Xxxxxxxx and other employees
pursuant to the Stock Option Agreements annexed hereto as Exhibit G and (E)
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309,816 additional shares of Common Stock reserved for issuance pursuant to the
Company's Stock Option/Stock Issuance Plan, a copy of which is annexed hereto as
Exhibit H, there are not, and will not be as of the Closing Date, outstanding
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any options, warrants, rights (including conversion or pre-emptive rights) or
agreements for the purchase or acquisition from the Company of any shares of its
capital stock. Except with respect to the Company's Certificate of
Incorporation and By-laws, the Transaction Agreements, the Company's
Reorganization Agreement (a copy of which has previously been furnished to
counsel for the Investors) and the Shareholders' Agreement among Bionix, B.V.
and its shareholders (a copy of which has previously been furnished to counsel
for the Investors), the Company is not a party or subject to any agreement or
understanding, and, to the best of the Company's knowledge, there is no
agreement or understanding among any persons and/or entities, which affects or
relates to the voting or giving of written consents by a director of the Company
or the voting or giving of written consents by a director or stockholder with
respect to any security of the Company.
2.3 SUBSIDIARIES. The Company does not presently own or control,
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directly or indirectly, any interest in any other corporation, association, or
other business entity other than (i) Bioscience and Biocon, both of which are
Finnish corporations and wholly-owned subsidiaries of the Company, and (ii)
Biostent and Orthosorb, both of which are New Jersey corporations and wholly-
owned subsidiaries of the Company. The Company plans to merge Biocon with and
into Bioscience and to merge Biostent and Orthosorb with and into the Company.
The Company is not a participant in any joint venture, partnership, or similar
arrangement.
2.4 AUTHORIZATION. All corporate action on the part of the Company
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and its officers, directors and stockholders necessary for the authorization,
execution and delivery of the Transaction Agreements, the performance of all
obligations of the Company hereunder and thereunder, and the authorization,
issuance (or reservation for issuance), sale and delivery of the Series A
Preferred Stock and Warrants being sold hereunder and any Common Stock issuable
upon conversion or exercise thereof, has been taken or will be taken prior to
the Closing. The Transaction Agreements constitute valid and legally binding
obligations of the Company, enforceable in accordance with their respective
terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, and other laws of general application affecting
enforcement of creditors' rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief, or other equitable
remedies, and (iii) to the extent that indemnification provisions contained in
the Investors' Rights Agreement may be limited by applicable federal or state
securities laws.
2.5 VALID ISSUANCE OF PREFERRED AND COMMON STOCK. The Series A
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Preferred Stock that is being purchased by the Investors hereunder, when issued,
sold and delivered in
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accordance with the terms of this Agreement for the consideration expressed
herein, will be duly and validly issued, fully paid, and nonassessable. Such
Series A Preferred Stock and the Warrants being purchased by the Investors
hereunder will be free of restrictions on transfer other than restrictions on
transfer under the Transaction Agreements and under applicable state and federal
securities laws. The shares of Common Stock issuable upon conversion of the
Series A Preferred Stock purchased under this Agreement and upon exercise of the
Warrants purchased under this Agreement have been duly and validly reserved for
issuance and, upon issuance in accordance with the terms of the Certificate of
Designation or the Warrants, whichever is applicable, will be duly and validly
issued, fully paid, and nonassessable and will be free of restrictions on
transfer other than restrictions on transfer under the Transaction Agreements
and under applicable state and federal securities laws.
2.6 GOVERNMENTAL CONSENTS. No consent, approval, order or
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authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part of
the Company is required in connection with the consummation of the transactions
contemplated by this Agreement, except for such filings as may be required by
applicable state securities laws.
2.7 OFFERING. Subject in part to the truth and accuracy of each
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Investor's representations set forth in Section 3 hereof of this Agreement, the
offer, sale and issuance of the Series A Preferred Stock and Warrants as
contemplated by this Agreement are exempt from the registration requirements of
the Act.
2.8 LITIGATION. There is no action, suit, proceeding or
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investigation pending or currently threatened against the Corporation that
questions the validity of the Transaction Agreements or the right of the
Corporation to enter into the Transaction Agreements, or to consummate the
transactions contemplated hereby or thereby, or that may reasonably be expected
to result, either individually or in the aggregate, in any material adverse
change in the consolidated assets, financial condition or results of operations
of the Corporation. The Corporation is not a party or subject to the provisions
of any order, writ, injunction, judgment or decree of any court or government
agency or instrumentality.
2.9 PATENTS AND TRADEMARKS.
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(a) Exhibit I annexed hereto includes a true and complete list of all
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patents, patent applications, trademarks, service marks, trademark and service
xxxx applications, trade names, copyrights and licenses presently owned or held
by the Corporation. To the best of the Corporation's knowledge, the Corporation
owns or possesses, or can obtain by payment of royalties in amounts which, in
the aggregate, do not and will not materially adversely affect the business and
the prospects of the Corporation, all of the patents, trademarks, service marks,
trade names, copyrights, proprietary rights and processes, trade secrets, and
licenses or rights to the foregoing necessary for the conduct of the
Corporation's business as now conducted (including any applications therefor)
(collectively, the "Proprietary Rights"). To the best of the Corporation's
knowledge, the business of the Corporation as now conducted does not infringe or
violate any of the patents, trademarks, service marks, trade names, copyrights,
licenses or other proprietary rights of any person or entity.
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(b) The Corporation has taken commercially reasonable actions and made
such applicable applications and filings as it deemed commercially reasonable
pursuant to applicable laws to perfect or protect its interests in the
Proprietary Rights, except where the failure to take such actions or make such
applications or filings would not have a material adverse effect on the
Corporation's business as currently conducted or as proposed to be conducted or
materially interfere with the use or enforcement of such Proprietary Rights in
the ordinary course of its business. To the best of the Corporation's
knowledge, each consultant to the Corporation has validly assigned all of such
consultant's rights in and to the Proprietary Rights to the Company or one of
the Subsidiaries.
(c) The Reorganization, the execution, delivery and performance of the
Transaction Agreements and the performance of the Company's obligations as set
forth in the Certificate of Incorporation and the consummation of the
transactions contemplated hereby and thereby will not (A) cause the forfeiture
or termination or give rise to a right of forfeiture or termination of any
Proprietary Right, or (B) in any way impair or adversely affect the right of the
Corporation to develop, make, use, sell, license, market or dispose of or to
bring any action for the infringement of, any Proprietary Right or any products,
services or technology designed, developed, manufactured, licensed, sold,
marketed or serviced by the business of the Corporation (collectively,
"Products").
(d) Except for any written obligations of the Corporation as set forth
in the agreements listed on Exhibits J or K annexed hereto, the development,
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manufacture, marketing, license, sale, use or disposal of any Products does not
or would not violate any license or agreement between the Company or any of its
Subsidiaries and any third party. To the best knowledge of the Company, neither
the Corporation nor any of its consultants has misappropriated any third party
trade secrets. There is no claim or litigation pending or, to the best of the
Company's knowledge, threatened, contesting the validity, ownership or right to
develop, make, use, sell, license, market or dispose of any Proprietary Right.
(e) To the best of the knowledge of the Corporation, no third party is
infringing on any Proprietary Right where such infringement could materially
adversely limit the protection afforded by the Proprietary Rights to the
development, manufacture, use, sale, license, sublicense, marketing or
disposition of the Products.
(f) The Corporation has taken all commercially reasonable steps
necessary or appropriate (including, without limitation, entering into
appropriate confidentiality and nondisclosure agreements with consultants to the
Corporation, in the form attached as Exhibit L annexed hereto (the
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"Nondisclosure Agreement")), to safeguard and maintain the secrecy and
confidentiality of, and the proprietary rights in, the Proprietary Rights.
(g) Neither the Corporation nor, to the best of the Company's
knowledge, any of its employees, consultants or independent contractors are
making any unauthorized use of any confidential information of third parties or
any confidential information in which any of their present or past consultants
or independent contractors has claimed a proprietary interest and the
Corporation is not aware of any facts that would give rise to any such claim.
The Corporation is not aware that any consultant is obligated under any contract
(including any license, covenant or commitment of any nature), or subject to any
judgment, decree or order of any court or administrative agency, that would
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interfere with the use of such consultant's best efforts to promote the
interests of the Corporation or would conflict with the Corporation's business
as now conducted. To the best of the Corporation's knowledge, no prior employer
of any consultant of the Corporation has any right to or interest in any
inventions, improvements, discoveries or other information assigned to the
Corporation by a consultant pursuant to a Nondisclosure Agreement executed by
such consultant, or otherwise so assigned.
(h) All of the Corporation's consultants or independent contractors
whose employment responsibility requires access or who have actual access to
confidential or proprietary information of the Company have executed and
delivered a Nondisclosure Agreement, and all such agreements are in full force
and effect.
2.10 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in
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violation or default of any provision of its Certificate of Incorporation or By-
Laws, and the Corporation is not in material violation or material default of
any material instrument, judgment, order, writ, decree or contract to which it
is a party or by which it is bound, or, to the best of the Company's knowledge,
of any provision of any statute, rule or regulation applicable to the
Corporation. The execution, delivery and performance of the Transaction
Agreements, and the consummation of the transactions contemplated hereby and
thereby, will not result in any such violation or be in material conflict with
or constitute, with or without the passage of time and giving of notice, either
a material default under any such provision, instrument, judgment, order, writ,
decree or contract or an event that results in the creation of any material
lien, charge or encumbrance upon any assets of the Corporation or the
suspension, revocation, impairment, forfeiture or nonrenewal of any material
permit, license, authorization, or approval applicable to the Corporation, its
business or operations or any of its assets or properties.
2.11 AGREEMENTS; ACTION.
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2.11.1 Except for the Articles of Association as amended from time to
time of Bionix, B.V. and agreements explicitly referred to herein or
contemplated hereby or by any of the other Transaction Agreements or by the
Shareholders' Agreement among Bionix, B.V. and its shareholders, there are no
material agreements of any nature between the Corporation and any of its
officers, directors or other affiliates, including without limitation any
agreement or other arrangement providing for payments to any such person or
entity or regarding voting rights or control over the Corporation.
2.11.2 Except as disclosed in any exhibit or agreement disclosed
hereunder, there are no material agreements to which the Corporation is a party
or by which it is bound that may involve (i) obligations (contingent or
otherwise) of the Corporation in excess of $100,000, or (ii) provisions
restricting the development, manufacture or distribution of the Corporation's
products or services, or (iii) indemnification by the Corporation with respect
to infringements of proprietary rights.
2.11.3 Exhibit J annexed hereto contains the form of the Corporation's
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material distribution, sales representative and sales agency agreements.
Exhibit K annexed hereto contains a description of any material agreement
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pursuant to which the Corporation has received an existing license from a third-
party or granted an existing license to a third-party.
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2.11.4 Exhibit M annexed hereto contains a description of all
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indebtedness of the Corporation to banks or other lenders (other than lessors
under operating leases) and a description of any security interests, pledges or
other encumbrances on the Corporation's property which have been given to secure
such indebtedness. Except as otherwise set forth in Exhibit E annexed hereto,
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since January 1, 1996, the Corporation has not declared or paid any dividends or
authorized or made any distribution upon or with respect to any class or series
of its capital stock and the Corporation has not (i) made any loans or advances
to any officer or director of the Corporation, other than ordinary advances for
travel expenses, or (ii) entered into any transaction outside of the ordinary
course of business.
2.11.5 Except for the sale of the Corporation's products by a
subsidiary of Xxxxx Xxxxx, Inc. (which sales effort terminated with the
commencement of sales managed by the Corporation) and agreements described in
exhibits annexed hereto, (A) the Corporation has not entered into any business
transaction with any entity controlled by an officer or director of the
Corporation, (B) to the best of the Company's knowledge, no officer, or director
of the Company or any of its Subsidiaries or member of his or her immediate
family is affiliated with any firm or corporation that competes with the
Corporation, except that this representation shall not apply with respect to
officers and directors of the Company or any of its Subsidiaries and members of
their immediate families that own stock in publicly traded companies (equal to
no more than 2% of the outstanding shares of such public companies) that may
compete with the Corporation and (C) to the best of the Company's knowledge, no
officer or director of the Company and no member of the immediate family of any
officer or director of the Company is directly or indirectly interested in any
material contract between the Company or any of its Subsidiaries and any of its
customers, suppliers, distributors, sales representatives or sales agents.
2.12 BUSINESS PLAN. The Business Plan dated February 1996 previously
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delivered to each Investor was prepared in good faith by the Company and, to the
best of the Company's knowledge, does not, with respect to any historical
matters, contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made therein not misleading. It
is understood that (A) with respect to projections contained in the Business
Plan, the Company represents only that such projections were prepared in good
faith and that the Company reasonably believes that there is a reasonable basis
for such projections, it being understood that no assurances can be given that
actual results of operations will in fact be the same as or even approximate the
projected results and (B) all representations regarding such Business Plan are
qualified by the disclaimers set forth in Exhibit N annexed hereto.
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2.13 PERMITS. The Corporation has all franchises, permits, licenses,
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and any similar authority necessary for the conduct of its business as now being
conducted by it, the lack of which would materially and adversely affect the
business, consolidated results of operations or consolidated financial condition
of the Corporation. To the best of the Corporation's knowledge, the Corporation
is not in default in any material respect under any of such franchises, permits,
licenses or other similar authority. The Corporation has not received any
notices from the U.S. Food and Drug Administration regarding its non-compliance
with Good Manufacturing Practices ("GMP") and, to the best of the Corporation's
knowledge, is in compliance in all material respects with GMP and has
implemented appropriate policies and procedures under GMP.
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2.14 ENVIRONMENTAL AND SAFETY LAWS. To the best of the Corporation's
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knowledge, the Corporation is not in violation of any applicable statute, law or
regulation relating to the environment or occupational health and safety, the
violation of which would materially and adversely affect the business,
consolidated results of operations or consolidated financial condition of the
Corporation.
2.15 MANUFACTURING AND MARKETING RIGHTS. Except as set forth in
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Exhibits J and K annexed hereto, the Corporation has not granted rights to
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manufacture, produce, assemble, license, market or sell its products to any
other person and is not bound by any agreement that affects the Corporation's
exclusive right to develop, manufacture, assemble, distribute, market or sell
its products.
2.16 REGISTRATION RIGHTS. Except as provided in the Investors'
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Rights Agreement, the Corporation has not granted or agreed to grant any
registration rights, including piggyback registration rights, to any person or
entity.
2.17 TITLE TO PROPERTY AND ASSETS. The Corporation owns its property
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and assets free and clear of all mortgages, liens and encumbrances, except such
encumbrances and liens that arise in the ordinary course of business and do not
materially impair the Corporation's ownership or use of such property or assets.
2.18 FINANCIAL STATEMENTS. The Company has annexed hereto as Exhibit
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O its audited financial statements as of December 31, 1995, and for the fiscal
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year then ended and unaudited financial statements for the six months ended June
30, 1996 (the "Financial Statements"). The Financial Statements fairly present
the consolidated financial condition and operating results of the Corporation as
of the dates, and for the periods, indicated therein. The Financial Statements
have been prepared in accordance with generally accepted accounting principles
("GAAP") applied on a consistent basis throughout the periods indicated and with
each other, except that no footnotes have been prepared with respect to the 1996
financial statements. Except as set forth in the Financial Statements, the
Corporation has no material liabilities that would be required to be disclosed
on the face of a balance sheet prepared in accordance with GAAP other than (i)
liabilities incurred in connection with the Reorganization and the offering of
the Series A Preferred Stock and Warrants or in the ordinary course of business
subsequent to the date of the most recent balance sheet included within the
Financial Statements (the "Balance Sheet Date"), and (ii) obligations under
contracts and commitments incurred in the ordinary course of business. The
Corporation is not a guarantor of any indebtedness of any person, firm or
corporation other than an entity affiliated with the Company.
2.19 CHANGES. Since the Balance Sheet Date, there has not been:
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2.19.1 any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the consolidated financial
condition, results of operations or business of the Corporation;
2.19.2 any material change or amendment to a material contract or
arrangement by which the Corporation or any of its assets or properties is bound
or subject;
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2.19.3 any resignation or termination of employment of any key
officer of the Corporation other than Xxxxxxx X'Xxxxxxx; or
2.19.4 to the best of the Company's knowledge, any other event or
condition of any character that may reasonably be expected to materially and
adversely affect the consolidated financial condition, results of operations or
business of the Corporation.
2.20 EMPLOYEE MATTERS. Except as described in Exhibit P annexed
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hereto, the Corporation does not maintain any "employee benefit plan" as such
term is defined in the Employee Retirement Income Security Act of 1974. The
Corporation has not entered into any written employment agreements other than
those described in Exhibit P annexed hereto. None of the Corporation's
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employees are represented by any labor union, and there has been no labor strike
or other action taken by organized labor with respect to the Corporation
(including, without limitation, any organizational drive) or, to the best of the
Company's knowledge, threatened.
2.21 TAX RETURNS, PAYMENTS AND ELECTIONS. The Corporation has filed
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(when due) all tax returns and reports as required by law. These returns and
reports are true and correct in all material respects. The Corporation has paid
all taxes and other assessments when due.
2.22 NON-COMPETITION AGREEMENTS. Xxxxx X. Xxxxxxxx'x and Pertti
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Xxxxxxx'x employment agreements referenced in Exhibit P annexed hereto contain a
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non-competition agreement.
2.23 NON-DISCLOSURE AND DEVELOPMENT AGREEMENT. Non-Disclosure and
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Development Agreements in the form of the agreement annexed hereto as Exhibit R
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have been executed by each of the officers of the Company and by each other
employee of the Corporation determined by management to be a key employee of the
Corporation.
2.24 BASE SALARY OF CEO. The base salary of Xxxxx X. Xxxxxxxx, the
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Company's Chief Executive Officer, is not more than $150,000.
3. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS. Each Investor hereby
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represents and warrants that:
3.1 AUTHORIZATION. Such Investor has full power and authority to
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enter into the Transaction Agreements, and each such Agreement constitutes its
valid and legally binding obligation, enforceable in accordance with its terms,
except (i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium, and other laws of general application affecting enforcement of
creditors' rights generally, (ii) as limited by laws relating to the
availability of specific performance, injunctive relief, or other equitable
remedies, and (iii) to the extent the indemnification provisions contained in
the Investors' Rights Agreement may be limited by applicable federal or state
securities laws.
3.2 PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made with
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such Investor in reliance upon such Investor's representation to the Company,
which by such Investor's execution of this Agreement such Investor hereby
confirms, that the Series A Preferred Stock and Warrants to be received by such
Investor and the capital stock issuable upon conversion or exercise
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thereof (collectively, the "Securities") will be acquired for investment for
such Investor's own account, not as a nominee or agent, and not with a view to
the resale or distribution of any part thereof, and that such Investor has no
present intention of selling, granting any participation in, or otherwise
distributing the same. By executing this Agreement, such Investor further
represents that such Investor does not have any contract, undertaking, agreement
or arrangement with any person to sell, transfer or grant participations to such
person or to any third person, with respect to any of the Securities.
3.3 DISCLOSURE OF INFORMATION. Such Investor believes it has
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received all the information it considers necessary or appropriate for deciding
whether to purchase the Series A Preferred Stock and Warrants. Such Investor
further represents that it has had an opportunity to ask questions and receive
answers from the Company regarding the terms and conditions of the offering of
the Series A Preferred Stock and Warrants and the business, properties,
prospects and financial condition of the Company.
3.4 INVESTMENT EXPERIENCE. Such Investor is an investor in
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securities of private companies and acknowledges that it is able to fend for
itself, can bear the economic risk of its investment and has such knowledge and
experience in financial or business matters that it is capable of evaluating the
merits and risks of the investment in the Series A Preferred Stock and Warrants,
as well as the underlying Common Stock. If other than an individual, such
Investor also represents that it has not been organized for the purpose of
acquiring the Series A Preferred Stock or the Warrants.
3.5 ACCREDITED INVESTOR. Such Investor is an "accredited investor"
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within the meaning of Securities and Exchange Commission ("SEC") Rule 501 of
Regulation D, as presently in effect.
3.6 RESTRICTED SECURITIES. Such Investor understands that the
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Securities it is purchasing are characterized as "restricted securities" under
the federal securities laws inasmuch as they are being acquired from the Company
in a transaction not involving a public offering and that under such laws and
applicable regulations, such securities may not be resold without registration
under the Act except in certain limited circumstances. In this connection, such
Investor represents that it is aware that it may be required to hold the
Securities indefinitely and is familiar with SEC Rule 144, as presently in
effect, and understands the resale limitations imposed thereby and by the Act.
3.7 FURTHER LIMITATIONS ON DISPOSITION. Without in any way limiting
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the representations set forth above, such Investor further agrees not to make
any disposition of all or any portion of the Securities unless and until the
transferee has agreed in writing for the benefit of the Company to be bound by
this Section 3 hereof and the Investors' Rights Agreement and Co-Sale Agreement
provided and to the extent that this Section and such Agreements are then
applicable, and:
3.7.1 There is then in effect a registration statement under the Act
covering such proposed disposition and such disposition is made in accordance
with such Registration Statement; or
3.7.2 (i) Such Investor shall have notified the Company of the
proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (ii) if
requested by the Company, such Investor shall have furnished the
-10-
Company with an opinion of counsel, satisfactory to the Company, that such
disposition will not require registration of such shares under the Act.
3.7.3 Notwithstanding the provisions of paragraphs 3.7.1 and 3.7.2
above, no such registration statement or opinion of counsel shall be necessary
for a transfer by an Investor that is a partnership to a direct successor (by
law or otherwise) to such partnership, a partner of such partnership or a
retired partner of such partnership who retires after the date hereof, or to the
estate of any such partner or retired partner or the transfer by gift, will or
intestate succession of any partner to his or her spouse or to the siblings,
lineal descendants or ancestors of such partner or his or her spouse, if the
transferee agrees in writing to be subject to the terms hereof to the same
extent as if he or she were an original Investor hereunder.
3.8 LEGENDS. It is understood that the certificates evidencing the
-------
Securities may bear one or all of the following legends:
3.8.1 "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT
WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED."
3.8.2 Any legend required by the laws of any State.
3.8.3 The legend set forth under Section 3.8.1 shall be removed from
such certificates, at the request of the holder thereof, at such time as the
shares represented by such certificate become eligible for resale pursuant to
Rule 144(k) under the Act.
3.9 DISCLAIMERS. Each Investor understands and acknowledges that
-----------
such Investor has been advised with respect to the following:
3.9.1 The disclaimers set forth in Exhibit N annexed hereto; and
---------
3.9.2 The statement of risk factors set forth in Exhibit S
---------
annexed hereto.
4. CONDITIONS OF INVESTOR'S OBLIGATIONS AT CLOSING. The obligations of
-----------------------------------------------
each Investor under subsection 1.1.3 of this Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions, the
waiver of which shall not be effective against any Investor who does not consent
in writing thereto:
4.1 REPRESENTATIONS AND WARRANTIES. The representations and
------------------------------
warranties of the Company contained in Section 2 hereof shall be true on and as
of the Closing with the same effect as though such representations and
warranties had been made on and as of the date of the Closing.
-11-
4.2 PERFORMANCE. The Company shall have performed and complied with
-----------
all agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing.
4.3 COMPLIANCE CERTIFICATE. The Company shall deliver to each
----------------------
Investor at the Closing a certificate stating that, to the best of its
knowledge, the conditions specified in Sections 4.1 and 4.2 have been fulfilled.
4.4 QUALIFICATIONS. All authorizations, approvals, or permits, if
--------------
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Securities pursuant to this Agreement shall be duly obtained and effective
as of the Closing.
4.5 INVESTORS' RIGHTS AGREEMENT. The Company and each Investor shall
---------------------------
have entered into the Investors' Rights Agreement in the form annexed hereto as
Exhibit T.
---------
4.6 CO-SALE AGREEMENT. The Company, the Investors, and each of the
-----------------
Founding Stockholders (as defined in the Co-Sale Agreement) shall have entered
into the Co-Sale Agreement in the form annexed hereto as Exhibit U.
---------
4.7 OPINION OF COUNSEL. Counsel to the Company shall have delivered
------------------
to the Investors an opinion letter in the form annexed hereto as Exhibit V.
---------
4.8 CHARTER AND BYLAWS. The Certificate of Incorporation and
------------------
Certificate of Designation shall have been filed with the office of the
Secretary of State of the State of Delaware. The By-laws as set forth in
Exhibit B annexed hereto shall remain (as of the Closing) effective without
---------
change.
4.9 COMMITTEES. The Board of Directors of the Company shall have
----------
established an Audit Committee and a Compensation Committee consisting of one or
more members. Xxxxxx Xxxxxx has been named as a member of each such committee.
4.10 OTHER MATTERS. All corporate and other proceedings in
-------------
connection with the Reorganization and the transactions contemplated by the
Transaction Agreements and all documents and instruments incident to such
transactions shall be reasonably satisfactory in substance and form to the
Investors and their counsel, and the Investors and their counsel shall have
received all such counterpart originals or certified or other copies of such
documents as they may reasonably request.
5. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING. The obligations of
--------------------------------------------------
the Company to the Investors under this Agreement are subject to the fulfillment
on or before the Closing of each of the following conditions:
-12-
5.1 REPRESENTATIONS AND WARRANTIES. The representations and
------------------------------
warranties of the Investors contained in Section 3 hereof shall be true on and
as of the Closing with the same effect as though such representations and
warranties had been made on and as of the Closing.
5.2 PAYMENT OF PURCHASE PRICE. The Investors shall have delivered
-------------------------
the purchase price specified in Section 1.1.3 hereof. A minimum of 800,000
shares of Series A Preferred Stock and 320,000 Warrants shall have been
purchased by all Investors at the Closing.
5.3 QUALIFICATIONS. All authorizations, approvals, or permits, if
--------------
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Securities pursuant to this Agreement shall be duly obtained and effective
as of the Closing.
5.4 INVESTORS' RIGHTS AGREEMENT. The Company and the Investors shall
---------------------------
have entered into the Investors' Rights Agreement described in Section 4.5
hereof.
5.5 CO-SALE AGREEMENT. The Company, the Investors, and each of the
-----------------
Founding Stockholders shall have entered into the Co-Sale Agreement described
in Section 4.6 hereof.
5.6 OTHER MATTERS. All corporate and other proceedings in connection
-------------
with the Reorganization and the transactions contemplated by the Transaction
Agreements and all documents and instruments incident to such transactions shall
be reasonably satisfactory in substance and form to the Company and its counsel,
and the Company and its counsel shall have received all such counterpart
originals or certified or other copies of such documents as they may reasonably
request.
6. KEY MAN INSURANCE; NEW OFFICERS. As soon as practicable after the
-------------------------------
Closing, the Company shall purchase and, while shares of Series A Preferred
Stock are outstanding, thereafter shall maintain key man insurance in the amount
of $1.0 million on the lives of each of Xxxxx X. Xxxxxxxx and Xxxxxx Xxxxxxx,
subject to the following conditions: (i) the purchase of such insurance shall be
subject to the approval of the Compensation Committee of the Board, which shall
have the discretion to reduce the amount of such insurance if $1.0 million of
insurance cannot be obtained by the Company from a reputable insurance company
at a premium that is reasonable to, and affordable by, the Company and (ii) the
obligation set forth in this Section 6 shall apply with respect to Xxxxx X.
Xxxxxxxx and Xxxxxx Xxxxxxx only while such person is providing services to the
Company or one or more of its Subsidiaries. Subsequent to the Closing, the
Company shall use reasonable efforts to hire and employ a suitable chief
financial officer and a suitable European operating officer.
7. MISCELLANEOUS.
-------------
7.1 SURVIVAL OF WARRANTIES. The warranties, representations and
----------------------
covenants of the Company and the Investors contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement and the
Closing and shall in no way be affected by any investigation of the subject
matter thereof made by or on behalf of the Investors or the Company.
-13-
7.2 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the
----------------------
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of any Securities). Nothing in this Agreement, express or implied,
is intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
7.3 GOVERNING LAW. This Agreement shall be governed by and construed
-------------
under the laws of the State of Delaware (without application of principles of
conflicts of laws).
7.4 COUNTERPARTS; FACSIMILE. This Agreement may be executed in two
-----------------------
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. Signatures hereon
may be evidenced by facsimile transmissions.
7.5 CAPTIONS. The captions used in this Agreement are used for
--------
convenience only and are not to be considered in construing or interpreting this
Agreement.
7.6 NOTICES. Unless otherwise provided, any notice required or
-------
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified, by
facsimile transmission upon delivery thereof or upon deposit with the United
States Post Office, by registered or certified mail, postage prepaid and
addressed to the party to be notified at the address indicated for such party on
the signature page hereof or in Exhibit D annexed hereto, or at such other
---------
address as such party may designate by ten (10) days' advance written notice to
the other parties.
7.7 FINDER'S FEE. Each party represents that it neither is nor will
------------
be obligated for any finders' fee or commission in connection with this
transaction. Each Investor agrees to indemnify and to hold harmless the Company
from any liability for any commission or compensation in the nature of a
finders' fee (and the costs and expenses of defending against such liability or
asserted liability) for which such Investor or any of its officers, partners,
employees, or representatives is responsible. The Company agrees to indemnify
and hold harmless each Investor from any liability for any commission or
compensation in the nature of a finders' fee (and the costs and expenses of
defending against such liability or asserted liability) for which the Company or
any of its officers, employees or representatives is responsible.
7.8 EXPENSES. Irrespective of whether the Closing is effected, the
--------
Company shall pay all costs and expenses that it incurs and each Investor shall
pay all costs and expenses that it incurs with respect to the negotiation,
execution, delivery and performance of this Agreement, except that the Company
shall pay the reasonable fees up to a maximum of $20,000 and expenses of Xxxxx,
Xxxxxxx & Xxxxxxxxx, LLP (counsel to the Investors). If any action at law or in
equity is necessary to enforce or interpret the terms of this Agreement or the
Transaction Agreements, the prevailing party shall be entitled to reasonable
attorneys' fees, costs and necessary disbursements in addition to any other
relief to which such party may be entitled.
-14-
7.9 AMENDMENTS AND WAIVERS. Any term of this Agreement may be
----------------------
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
a majority of the Common Stock issued or issuable upon conversion of the Series
A Preferred Stock acquired pursuant to this Agreement. Any amendment or waiver
effected in accordance with this paragraph shall be binding upon each holder of
any securities purchased under this Agreement at the time outstanding (including
securities into which such securities are convertible), each future holder of
all such securities, and the Company.
7.10 SEVERABILITY. If one or more provisions of this Agreement are
------------
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and such balance shall be enforceable in
accordance with its terms.
7.11 ENTIRE AGREEMENT. This Agreement and the documents referred to
----------------
herein constitute the entire agreement with respect to the subject matter hereof
among the parties and no party shall be liable or bound to any other party in
any manner by any warranties, representations, or covenants except as
specifically set forth herein or therein.
7.12 RULE OF CONSTRUCTION. The parties do not intend that this
--------------------
Agreement shall be construed against the party that drafted this Agreement or
any portion of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Stock Purchase
Agreement as of the date first above written.
BIONIX, INC.
By: /s/ Xxxxx X. Xxxxxxxx
---------------------------------
Xxxxx X. Xxxxxxxx, President
Address: 000 X Xxxxx Xxxxxx Xxxxxxx
Xxxxxxx, XX 00000
Telephone: 000-000-0000
Telecopy: 000-000-0000
INVESTORS:
/s/ Xxxxx X. Xxxxxxx
------------------------------------
Xxxxx X. Xxxxxxx
-15-
BTAR ASSOCIATES, L.P.
By: STRATEGIC CONCEPTS, INC.,
General Partner
By: /s/ Xxxxxxx X. Xxxxx
---------------------------
Xxxxxxx X. Xxxxx
President
TDW ASSOCIATES, L.P.
By: TDW III, INC.,
General Partner
By: /s/ Xxxxxxx X. Xxxx
--------------------------------
Xxxxxxx X. Xxxx,
President
DELAWARE CHARTER GUARANTEE &
TRUST/Custodian FBO Xxxxx X. XxxXxxxxx
By: /s/ Xxxxx X. XxxXxxxxx
--------------------------------
Xxxxx X. XxxXxxxxx
X. XXXX PRICE THRESHOLD FUND III, L.P.,
By: X. Xxxx Price Threshold Fund Associates,
Inc., General Partner of X. Xxxx Price
Threshold Fund III, L.P.
By: /s/ Xxxxxxxx X. Xxxxxxx
--------------------------------
Xxxxxxxx X. Xxxxxxx
H & Q BIONIX INVESTORS, L.P.
By: /s/ H & Q BIONIX INVESTORS, L.P.
--------------------------------
-16-
LANDMARK FINANCIAL ASSOCIATES II, L.P.
By: /s/ Xxxx X. Xxxxxxx
----------------------------------
Xxxx X. Xxxxxxx, General Partner
/s/ Xxxxxxx Xxxxxxxx
-------------------------------------
Xxxxxxx Xxxxxxxx
STAGE RIGHT LTD. DEFINED JMS F/B/O XXXXXXX XXXXXX PROFIT
BENEFITS PENSION PLAN SHARING XXXXX PLAN
By: /s/ Xxxxxxx Xxxxxx By: /s/ Xxxxxxx Xxxxxx
---------------------- ----------------------------------
By: /s/ Xxxx X. Xxxxx, Esq.
----------------------------------
DESERT ORTHOPEDICS AND
REHABILITATION LTD.
PROFIT SHARING PLAN
By: /s/ Xxxx Xxxxxxxxx
----------------------------------
XXXX X. and XXXXXX X. XXXXXXXXX
FAMILY TRUST
By: /s/ Xxxx Xxxxxxxxx
----------------------------------
/s/ Xxxxxx X. Xxxxxxx
-------------------------------------
Xxxxxx X. Xxxxxxx
/s/ Xxxxx Xxxxxx /s/ Xxxx Xxxxx
------------------------- -------------------------------------
Xxxxx Xxxxxx Xxxx Xxxxx
-17-
BIOSCIENCE, LTD.
By: /s/ Xxxxxx Xxxxxxxx
----------------------------------
BIOCON, OY
By: /s/ Xxxxxx Xxxxxxxx
----------------------------------
BIOSTENT, INC.
By: /s/ Xxxxx X. Xxxxxxxx
----------------------------------
ORTHOSORB, INC.
By: /s/ Xxxxx X. Xxxxxxxx
----------------------------------
-18-
EXHIBITS
Exhibit Description
------- -----------
A Certificate of Designation of the Series A Preferred Stock
B Certificate of Incorporation (as amended, but without the
Certificate of Designation) and By-Laws
C Common Stock Purchase Warrant
D List of Investors
E Description of the Reorganization
F Existing Shareholders
G Stock Option Agreements
H Stock Option/Stock Issuance Plan
I Patents Agreements
J Distribution and Sales Representative Agreements
K License Agreements
L Nondisclosure Agreement
M Indebtedness
N Disclaimers
O Financial Statements
P Employment Agreements and Employee Benefit Plans
Q Omitted
R Nondisclosure and Development Agreement
S Statement of Risk Factors
T Investors' Rights Agreement
U Co-Sale Agreement
V Opinion Letter
D-1