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STOCK PURCHASE AGREEMENT
dated as of
October 31, 1997
by and among
THERMATRX, INC.,
BSD MEDICAL CORPORATION,
ORACLE STRATEGIC PARTNERS, L.P., and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (the "Agreement") dated as of October
31, 1997, by and among THERMATRX, INC., a Delaware corporation (the "Company"),
BSD MEDICAL CORPORATION, a Delaware corporation ("BSD"), ORACLE STRATEGIC
PARTNERS, L.P., a Delaware limited partnership and/or one or more of its
affiliates ("Oracle"), and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ("▇▇▇▇▇▇") (Oracle and ▇▇▇▇▇▇ are
sometimes collectively referred to as the "Purchasers").
W I T N E S S E T H :
--------------------
WHEREAS, at the Initial Closing (as hereinafter defined), BSD
is contributing certain prostate specific treatment assets, patents and
intellectual property as more particularly described on Exhibit A hereto (the
"BPH Business Assets") as a capital contribution to the Company and in exchange
for capital stock of the Company; and
WHEREAS, simultaneously with the exchange by BSD described
above, Oracle and ▇▇▇▇▇▇ are purchasing from the Company, and the Company is
selling to Oracle and ▇▇▇▇▇▇, the number of shares of the Company's Preferred
Stock (as hereinafter defined) as set forth on Exhibit B hereto.
NOW, THEREFORE, in consideration of the mutual promises and
representations, warranties, covenants and agreements set forth herein, the
parties hereto hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF PREFERRED SHARES
Section 1.1 Purchase and Sale. On the terms and subject to the
-------------------
conditions set forth in this Agreement, at the Initial Closing and on each
Milestone Closing (as such terms are hereinafter defined), the Company will sell
and each of Oracle and ▇▇▇▇▇▇, will purchase the number of shares of Preferred
Stock in the amounts and for the purchase price set forth opposite such
Purchaser's name on Exhibit B attached hereto, of the Company's Preferred Stock,
par value $.001 per share (the "Preferred Stock"). The terms and provisions of
the Preferred Stock are set forth in the Certificate of Designation of the
Company, a true and correct copy of which is attached hereto as Exhibit C (the
"Certificate of Designation"). The shares of Preferred Stock purchased pursuant
to this Agreement are referred to herein as the "Preferred Shares."
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ARTICLE II
CLOSINGS; CONTRIBUTION OF THE BPH BUSINESS ASSETS
Section 2.1 Transactions at the Initial Closing.
-----------------------------------
(a) Securities to be Purchased at the Initial Closing.
----------------------------------------------------
At the Intial Closing, the Company shall deliver to the Purchasers
certificates representing the Preferred Shares sufficient to convey to
Purchasers good and marketable title to the Preferred Shares free and clear of
any and all claims, liens, charges, security interests, pledges or encumbrances
of any nature whatsoever and together with all accrued benefits and rights
attaching thereto. The aggregate purchase price for the Preferred Shares shall
be payable by each of the Purchasers for their number of Preferred Shares at the
Initial Closing in cash by either wire transfer of immediately available funds
or certified or cashier's check.
(b) Capital Contribution
---------------------
On the terms and subject to the conditions set forth in this Agreement, at
the Initial Closing, BSD agrees to contribute the BPH Business Assets to the
Company as a capital contribution. At the Initial Closing, BSD shall deliver
assignment documents, sufficient to convey to the Company good and marketable
title to the BPH Business Assets free and clear of any and all claims, liens,
charges, security interests, pledges or encumbrances of any nature whatsoever
and together with all accrued benefits and rights attaching thereto. In
consideration for such capital contribution, the Company will issue to BSD
fifty-four thousand (54,000) shares of the Company's Common Stock, par value
$.001 per share (the "Common Stock") resulting in ownership set forth on Exhibit
B hereto. The shares of Common Stock issued pursuant to this Agreement are
referred to herein as the "Common Shares." At the Initial Closing, the Company
shall deliver to BSD certificates representing the Common Shares sufficient to
convey to BSD good and marketable title to the Common Shares free and clear of
any and all claims, liens, charges, security interests, pledges or encumbrances
of any nature whatsoever and together with all accrued benefits and rights
attaching thereto. The Preferred Shares and the Common Shares are collectively
referred to herein as the "Shares". Shares of Common Stock representing twelve
and one half (12.5%) percent of the Milestone Closing percentage ownership of
the Company shall be reserved for issuance pursuant to the Company's management
stock option plan and issued pursuant to Board approval.
(c)Intial Closing; Effective Date
------------------------------
Subject to the terms and conditions set forth herein, the closing of the
transactions contemplated by this Agreement (the "Initial Closing") shall take
place at the offices of ▇▇▇▇ ▇▇▇▇▇▇▇, P.C., ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, no later than ten (10) business days after the date
hereof, or on such other date and at such other place as may be agreed to by the
parties (the "Initial Closing Date"). All proceedings to be taken and all
documents to be executed at the Initial Closing shall be deemed to have been
taken, delivered and executed simultaneously, and no proceeding shall be deemed
taken nor documents deemed executed or delivered until all have been taken,
delivered and executed.
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Section 2.2 Future Funding.
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(a) Milestone Funding Obligation.
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Upon receipt by the Company of positive patient data over a six (6) month
period, as measured by the American Urology Association ("AUA") or other
standard symptom scores, indicating single treatment efficacy and durability in
the treatment of benign conditions or diseases (excluding cancer) of the
prostate gland (the "Milestone") the Purchasers shall purchase from the Company
the additional number of the Company's Preferred Shares at such prices as set
forth in Section 2.2(c) hereof. The Purchasers' obligations under this Section
2.2(a) shall be deemed satisfied if the Company obtains equivalent or additional
financing from third party sources on terms no less favorable to BSD than the
terms contemplated by this Agreement.
(b) Option.
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At any time, and from time to time in one or more transactions, prior to
the consummation of a Milestone Closing (as hereinafter defined), the Purchasers
shall have the option (the "Option") to purchase from the Company up to an
aggregate amount of the additional number of the Company's Preferred Shares at
such prices as set forth in Section 2.2(c). The Purchasers' exercise of its
Option and the consummation of the purchase of the total number of Preferred
Shares set forth in Section 2.2(c) shall satisfy Purchasers' obligation under
Section 2.2(a).
(c)Securities to be Purchased at Milestone or Option Closing.
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On the terms and subject to the conditions set forth in this Agreement, at
the Milestone or Option Closing, the Company will issue and sell and each of
Oracle and ▇▇▇▇▇▇ will purchase the number of shares of Preferred Stock as set
forth opposite such Purchaser's name on Exhibit B attached hereto (collectively,
the "Milestone or Option Preferred Shares"). At the Milestone or Option Closing,
the Company shall deliver to Purchasers certificates representing the Milestone
or Option Preferred Shares sufficient to convey to the Purchasers good and
marketable title to the Milestone or Option Preferred Shares free and clear of
any and all claims, liens, charges, security interests, pledges or encumbrances
of any nature whatsoever and together with all accrued benefits and rights
attaching thereto. The purchase price payable by each Purchaser for the
Milestone or Option Preferred Shares is set forth on Exhibit B hereto, and shall
be payable by such Purchaser at the Closing in cash by either wire transfer of
immediately available funds or certified or cashier's check.
(d)The Milestone or Option Closing.
-------------------------------
The Milestone or Option Closing of the transactions contemplated under this
Agreement (the "Milestone or Option Closing") shall take place at the offices of
▇▇▇▇ ▇▇▇▇▇▇▇, P.C., 1350 Avenue of the Americas, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
at 10:00 a.m., New York time, (i) with respect to a Milestone Closing, no later
than forty-five (45) days after the Purchasers' receipt of notice from the
Company regarding the achievement by the Company of the Milestone, (ii) with
respect to an Option Closing, no later than thirty (30) days after the
Purchasers have given notice to the Company and BSD of their desire to exercise
their option to purchase the Option Preferred Shares, (iii) or at such other
place, time or date as may be mutually agreed upon in writing by the parties
hereto (the "Milestone or Option Closing Date"). The Initial Closing, Milestone
Closing and the Option Closing are sometimes hereinafter referred to as the
"Closings". The Initial Closing Date and the Milestone or Option Closing Dates
are sometimes hereinafter referred to as the "Closing Dates".
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Section 2.3 Deliveries.
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(a) Deliveries.
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In addition to the provisions of Section 6.1, at each Closing, the Company
shall deliver or cause to be delivered to each Purchaser the following:
1. A stock certificate representing the
Preferred Shares purchased by such
Purchaser, with all necessary stock
issuance or transfer stamps affixed
thereto, duly completed and
registered in the name of each
Purchaser (as set forth on Exhibit B
hereto) on the stock transfer book
of the Company.
2. The Certificates and documents
contemplated by Article VI;
3. A wire transfer representing
the Purchasers' legal fees.
5. Such other documents as the
Purchasers shall reasonably request.
(b) Deliveries by Purchasers.
------------------------
In addition to the provisions of Section 6.2, at each Closing, each
Purchaser, severally and not jointly, will deliver or cause to be delivered to
the Company, payment of the purchase price in cash by either wire transfer of
immediately available funds or certified or cashier's check or in accordance
with the Company's instructions (which instructions shall be given to the
Purchasers in writing no later than 3 business days prior to each Closing Date).
(c) Legends and Transfer Restrictions.
---------------------------------
The Shares to be delivered by the Company at each Closing shall be subject
to certain restrictions on transfer and each certificate representing the Shares
shall contain the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 AND MAY NOT BE SOLD, ASSIGNED OR TRANSFERRED,
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER SAID ACT, AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT, IN THE CIRCUMSTANCES,
REQUIRED, OR EVIDENCE SATISFACTORY TO THE COMPANY
THAT THE SHARES HAVE BEEN SOLD IN COMPLIANCE WITH
RULE 144 PROMULGATED UNDER SAID ACT."
"THE SHARES OF STOCK REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO AND ARE TRANSFERABLE
ONLY AS PROVIDED IN A STOCK PURCHASE AGREEMENT
DATED AS OF OCTOBER __, 1997 AMONG THE
SHAREHOLDERS OF THE COMPANY AND THE COMPANY, A
COPY OF WHICH IS ON FILE AT THE COMPANY'S OFFICE."
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Section 2.4 Registration Rights.
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(a) Demand and "Piggyback" Registration Rights
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(i) Demand Registration Rights
--------------------------
If at any time after the date hereof during which there is no effective
registration statement relating to any of the Common Shares, the Company shall
be requested in writing by Purchasers holding at least a majority of the Common
Shares which would be issuable upon conversion of the Preferred Shares held by
such Purchasers to effect the registration under the Securities Act of 1933, as
amended (the "Securities Act") of Common Shares, the Company shall, as
expeditiously as possible, use its best efforts to effect the registration, on a
form of general use under the Securities Act, of all Common Shares which the
Company has been requested to register. The Company shall not be obligated to
cause to become effective more than two (2) registration statements pursuant to
which Common Shares are registered under this Section 2.4(a)(i). Notwithstanding
the foregoing, if the Company shall furnish to the Purchasers requesting a
registration under this Section 2.4(a)(i) a certificate signed by the Chief
Executive Officer of the Company stating that in the good faith judgment of the
Board of Directors of the Company it would be detrimental to the Company and its
shareholders for such registration statement to be filed and it is therefore
essential to defer the filing of such registration statement, the Company shall
have the right to defer taking action with respect to such filing for a period
of not more than 90 days after receipt of the request by the Purchasers;
provided, however, that the Company may not utilize this right more than once in
any 12-month period. In addition, the Company shall not be obligated to effect,
or to take any action to effect, any registration pursuant to this Section
2.4(a)(i) during the period starting with the date 30 days prior to the
Company's good faith estimate of the date of filing of, and ending on a date 120
days after the effective date of, a registration subject to Section 2.4(a)(ii)
hereto; provided that the Company is actively employing in good faith its best
efforts to cause such registration statement to be filed and thereafter to
become effective.
(ii) "Piggyback" Registration Rights.
-------------------------------
The Company shall, at least thirty (30) days prior to the filing of any
registration statement under the Securities Act (other than a registration
statement on Form S-8 or Form S-4 or any successor forms) relating to the public
offering of its Common Stock by the Company or any of its security holders, give
written notice of such proposed filing and of the proposed date thereof to the
Purchasers and BSD, and if, on or before the twentieth (20th) day following the
date on which such notice is given, the Company shall receive a written request
from a Purchaser or BSD requesting that the Company include among the securities
covered by such registration statement some or all of the Common Shares held by
or to be held after conversion by such Purchaser or BSD, the Company shall,
subject to Section 2.4(b) hereof, include such Common Shares in such
registration statement, if filed, so as to permit such Common Shares to be sold
or disposed of in the manner and on the terms of the offering thereof set forth
in such request.
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(b) Terms and Conditions of Registration.
------------------------------------
Except as otherwise provided herein, in connection with any registration
statement filed pursuant to Section 2.4(a) herein, the following provisions
shall apply:
(i) If such registration statement shall
be filed pursuant to Section 2.4(a)(ii) hereof and if the managing underwriter
advises the Company in writing that the inclusion in such registration of some
or all of the Common Shares sought to be registered by the Purchasers creates a
substantial risk that the proceeds or price per share that will be derived from
such registration will be reduced or that the number of shares to be registered
at the insistence of the Purchasers, plus the number of shares of Common Stock
sought to be registered by the Company and any other stockholders of the Company
is too large a number to be reasonably sold, then, in such event, the number of
shares sought to be registered for the Company and the other stockholders of the
Company having registration rights, as applicable, shall be reduced, pro rata in
proportion to the number of shares sought to be registered to the number of
shares recommended be sold by the managing underwriter.
(ii) If requested by the Purchasers in
connection with a registration statement filed pursuant to Section 2.4(a)(i),
the Company will enter into an underwriting agreement with the underwriters for
such offering, such agreement to be reasonably satisfactory in form and
substance to the Company, the Purchasers and the underwriters, and to contain
such representations, warranties and covenants by the Company and such other
terms as are customarily contained in such agreements used by the managing
underwriter, including, without limitation, restrictions of sales of Common
Stock or other securities by the Company as may be reasonably agreed to between
the Company and such underwriters, and indemnities and rights to contributions
to the effect and to the extent provided in Sections 2.4(c) and 2.4(d) hereof.
The Purchasers shall be a party to any underwriting agreement relating to an
underwritten sale of their Common Shares and may, at their option, require that
any or all of the representations, warranties and covenants of the Company to or
for the benefit of such underwriters, shall also be made to and for the benefit
of the Purchasers. All representations and warranties of the Purchasers shall be
made to or for the benefit of the Company.
(iii) The Company shall provide a transfer agent
and registrar (which may be the same entity) for the Common Shares, not later
than the effective date of such registration.
(iv) All expenses in connection with the
preparation and filing of a registration statement filed pursuant to Section
2.4(a) shall be borne solely by the Company, except for any transfer taxes
payable with respect to the disposition of such Common Shares, and any
underwriting discounts and selling commissions applicable solely to such sales
of Common Shares, which shall be paid by the Purchasers of the Shares being
registered.
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(v) The Company shall use its best efforts to
cause all of the shares covered by such registration statement to be listed on
NASDAQ or on such other securities exchange as such shares may then be listed,
on which similar shares are listed for trading, if the listing of such
registered shares is permitted by such exchange.
(vi) Following the effective date of such
registration statement, the Company shall, upon the request of the Purchasers,
forthwith supply such number of prospectuses (including exhibits thereto and
preliminary prospectuses and amendments and supplements thereto) meeting the
requirements of the Securities Act and such other documents as are referred to
in the prospectus as shall be reasonably requested by the Purchasers to permit
the Purchasers to make a public distribution of their Common Shares.
(vii) (A) Each Purchaser agrees that it will not
effect any sales of Common Shares pursuant to a registration described in
Section 2.4(a) after such Purchaser has received notice from the Company to
suspend sales as a result of the occurrence or existence of any Suspension Event
(as defined in Section 2.4(b)(vii)(B) below) until the Company provides notice
to such Purchaser that all Suspension Events have ceased to exist. In addition,
each Purchaser agrees that it will not effect any sales of Common Shares
pursuant to a registration described in Section 2.4(a) after such Purchaser has
received notice from the Company to suspend sales because the registration
statement pursuant to which such sale is to be effected, and the related
prospectus or any supplement thereto contains an untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, until the Company notifies such Purchaser that the misstatement or
omission has been corrected. The Company hereby covenants and agrees that it
will use its best efforts to correct any such misstatement or omission, or to
cure any Suspension Event, and that it will give immediate notice to the
Purchasers of such correction or cure.
(B) Notwithstanding anything to the contrary set
forth in this Agreement, the Company's obligation to file a registration
statement pursuant to Section 2.4(a) hereof and make any filings with any state
securities authority, to use its best efforts to cause a registration statement
or any state securities filings to become effective, or to amend or supplement
such a registration statement or any state securities filings shall be
temporarily suspended in the event of and during a Suspension Event. A
"Suspension Event" shall exist at such times that (i) the Company is conducting
an underwritten primary offering and is advised by the underwriters therein that
sale of Common Shares under the registration statement filed pursuant to Section
2.4(a) hereof would have a material adverse effect on the Company's offering, or
(ii) negotiations and/or consummation are pending relating to a transaction or
the occurrence of some other event (x) where any of the foregoing would require
disclosure under applicable securities laws of material information in a
registration statement (or any other document incorporated into a registration
statement by reference) or such state securities filings and (y) as to which the
Company has a bona fide business purpose, as determined in good faith by its
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Board of Directors, for preserving confidentiality or which renders the Company
unable to comply with the Securities and Exchange Commission's (the
"Commission") requirements. Suspension of the Company's obligations pursuant to
this Section 2.4(b)(vii)(B) shall continue only for so long as a Suspension
Event is continuing. The Company shall notify each Purchaser immediately after
any Suspension Event occurs or ceases to exist.
(viii) The Purchasers may select the underwriter
or underwriters, if any, who are to undertake any offering and distribution of
the Common Shares to be included in a registration statement filed under the
provisions of Section 2.4(a)(i) hereof, subject to the Company's prior approval
of the underwriter, which approval shall not be unreasonably withheld.
(ix) The Company shall use its best efforts to
register the Common Shares covered by any such registration statements filed
pursuant to Section 2.4(a) under such securities or Blue Sky laws in addition to
those in which the Company would otherwise sell shares, as the Purchasers shall
request, except that neither the Company nor the Purchasers shall for any such
purpose be required to execute a general consent to service of process or to
qualify to do business as a foreign corporation in any jurisdiction where it is
not so qualified. The fees and expenses incurred in connection with such
registration shall be borne by the Company.
(x) The Purchasers shall cooperate fully with
the Company and provide the Company with all information reasonably requested by
the Company for inclusion in the registration statement or as necessary to
comply with the Securities Act. The Company shall cooperate fully with any
underwriters selected by the Purchasers and counsel to such underwriters, and
shall provide reasonable and customary access to the Company's books and records
(upon receipt from such underwriters of customary confidentiality agreements) in
order to facilitate such underwriters' review and examination of the Company in
connection with such underwriting.
(xi) The Company shall notify the Purchasers, at
any time after effectiveness when a prospectus relating thereto is required to
be delivered under the Securities Act within the period mentioned in subdivision
(vii) of this Section 2.4(b), of the happening of any event as a result of which
the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading in light of circumstances then existing (and upon receipt of such
notice and until a supplemented or amended prospectus as set forth below is
available, the Purchasers shall not offer or sell any securities covered by such
registration statement and shall return all copies of such prospectus to the
Company if requested to do so by it), and at the request of the Purchasers
prepare and furnish the Purchasers as promptly as practicable, but in any event
within 90 days, a reasonable number of copies of a supplement to or an amendment
of such prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such shares, such prospectus shall not include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances then existing.
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(xii) The Company shall furnish to the Purchasers
at the time of the disposition of the Common Shares, a signed copy of an opinion
of the Company's regular in-house or outside general counsel, or other counsel
of the Company's selection reasonably acceptable to, and which opinion shall be
reasonably satisfactory in form and substance to, the Purchasers to the effect
that: (a) a registration statement covering such Common Shares has been filed
with the Commission under the Securities Act and has been declared effective by
order of the Commission, (b) said registration statement and prospectus
contained therein comply as to form in all material respects with the
requirements of the Securities Act, and nothing has come to such counsel's
attention (after due inquiry) which would cause such counsel to believe that
either said registration statement or such prospectus (other than the financial
statements contained therein, as to which such counsel need not express any
opinion) contains any untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein (in the case of such prospectus, in light of the circumstances under
which they were made) not misleading, (c) after due inquiry such counsel knows
of no legal or governmental proceedings required to be described in such
registration statement or prospectus which are not described as required, or of
any contracts or documents of a character required to be described in such
registration statement or such prospectus to be filed as an exhibit to such
registration statement or to be incorporated by reference therein which are not
described and filed as required and (d) to such counsel's knowledge, no stop
order has been issued by the Commission suspending the effectiveness of such
registration statement; it being understood that such opinion may contain such
qualifications and assumptions as are customary in the rendering of similar
opinions, and that such counsel may rely, as to all factual matters treated
therein, on certificates of the Company (copies of which shall be delivered to
the Purchasers).
(xiii) The Company will use its best efforts to
comply with the reporting requirements of Sections 13 and 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), to the extent
it shall be required to do so pursuant to such sections, and at all times while
so required shall use its best efforts to comply with all other public
information reporting requirements of the Commission (including reporting
requirements which serve as a condition to utilization of Rule 144 promulgated
by the Commission under the Securities Act) from time to time in effect and
relating to the availability of an exemption from the Securities Act for the
sale of any of the Company's Common Stock held by the Purchasers. The Company
will also cooperate with the Purchasers in supplying such information and
documentation as may be necessary for the Purchasers to complete and file any
information reporting forms presently or hereafter required by the Commission as
a condition to the availability of an exemption from the Securities Act for the
sale of any of the Company's Common Stock held by the Purchasers.
9
. (c) Indemnification
----------------
(i) In the event of the registration of any
Common Shares of the Company under the Securities Act pursuant to the provisions
of Sections 2.4(a), the Company agrees to indemnify and hold harmless the
Purchasers, each underwriter, broker or dealer, if any, and their respective
directors, officers and employees, of such Common Shares, and each other person,
if any, who controls the holders of the Shares or the Common Shares (or a
permitted assignee thereof), such underwriter, broker or dealer within the
meaning of the Securities Act, from and against any and all losses, claims,
damages or liabilities (or actions in respect thereof), joint or several, to
which the Purchasers (and as applicable) its directors, officers or employees,
or such underwriter, broker or dealer or controlling person may become subject
under the Securities Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact contained
in any registration statement under which such Common Shares were registered
under the Securities Act, any preliminary prospectus or final prospectus
relating to such Common Shares, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or any violation by the Company of any rule or
regulation under the Securities Act applicable to the Company or relating to any
action or inaction required by the Company in connection with any such
registration and will reimburse the Purchasers, each such underwriter, broker or
dealer and controlling person, and their respective directors, officers or
employees, for any legal or other expenses reasonably incurred by the Purchasers
or such underwriter, broker or dealer or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, such preliminary prospectus, such
final prospectus or such amendment or supplement thereto in reliance upon and in
conformity with written information furnished to the Company by the Purchasers
and as applicable, such Purchasers' directors, officers or employees, or such
underwriter, broker, dealer or controlling person for use in the preparation
thereof. Such indemnity shall remain in full effect irrespective of any
investigation by any person indemnified above.
(ii) In the event of the registration of any
Common Shares of the Purchasers under the Securities Act for sale pursuant to
the provisions of this Agreement, the Purchasers agree to indemnify and hold
harmless the Company, its directors, officers and employees, from and against
any losses, claims, damages or liabilities, joint or several, to which the
Company, its directors, officers or employees, may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any registration statement under which such Common Shares were registered under
the Securities Act, any preliminary prospectus or final prospectus relating to
such Common Shares, or any amendment or supplement thereto, or arise out of or
are based upon omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
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misleading, which untrue statement or alleged untrue statement or omission or
alleged omission was made therein in reliance upon and in conformity with
written information furnished to the Company by the Purchasers for use in the
preparation thereof. Such indemnity shall remain in full effect irrespective of
any investigation by any person indemnified above.
(iii) Promptly after receipt by a person entitled
to indemnification under this Section 2.4(c) (for purposes of this Section
2.4(c), an "Indemnified Party") of notice of the commencement of any action or
claim relating to any registration statement filed under Section 2.4(a) or as to
which indemnity may be sought hereunder, such Indemnified Party will, if a claim
for indemnification hereunder in respect thereof is to be made against any other
party hereto (for purposes of this Section 2.4(c), an "Indemnifying Party"),
give written notice to such Indemnifying Party of the commencement of such
action or claim, but the failure to so notify the Indemnifying Party will not
relieve it from any liability which it may have to any Indemnifying Party
otherwise than pursuant to the provisions of this Section 2.4(c) and shall also
not relieve the Indemnifying Party of its obligations under this Section 2.4(c),
except to the extent that the Indemnifying Party is damaged solely as a result
of the failure to give timely notice. In case any such action is brought against
an Indemnified Party, and it notifies an Indemnifying Party of the commencement
thereof, the Indemnifying Party will be entitled (at its own expense) to
participate in and, to the extent that it may wish, jointly with any other
Indemnifying Party similarly notified, to assume the defense with counsel
satisfactory to such Indemnified Party, of such action and/or to settle such
action and, after notice from the Indemnifying Party to such Indemnified Party
of its election so to assume the defense thereof, the Indemnifying Party will
not be liable to such Indemnified Party for any legal or other expenses
subsequently incurred by such Indemnified Party in connection with the defense
thereof, other than the reasonable cost of investigation; provided, however,
that no Indemnifying Party and no Indemnified Party shall enter into any
settlement agreement which would impose any liability on such other party or
parties without the prior written consent of such other party or parties.
(d) Contribution. If the indemnification provided for in
Section 2.4(c) hereof is unavailable to the Indemnified Party in respect of any
losses, claims, damages or liabilities referred to herein, then each such
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such losses, claims, damages or liabilities (i) as between the Company and
the Purchasers on the one hand and the underwriters on the other, in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Purchasers on the one hand and the underwriters on the other
from the offering of the Common Shares, or if such allocation is not permitted
by applicable law, in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company and the Purchasers
on the one hand and of the underwriters on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations and (ii) as
between the Company on the one hand and each Purchaser on the other, in such
proportion as is appropriate to reflect the relative fault of the Company and of
each Purchaser in connection with such statements or omissions, as well as any
other relevant equitable considerations.
11
In no event shall the obligation of any
Indemnifying Party to contribute under this Section 2.4(d) exceed the amount
that such Indemnifying Party would have been obligated to pay by way of
indemnification if the indemnification provided for under Section 2.4(c) hereof
had been available under the circumstances.
The amount paid or payable by an Indemnified
Party as a result of the losses, claims, damages and liabilities referred to in
the next preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses incurred by such
Indemnified Party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 2.4(d), no Purchaser or
underwriter shall be required to contribute any amount in excess of the amount
by which (i) in the case of a Purchaser, the net proceeds received by such
Purchaser from the sale of Common Shares or (ii) in the case of an underwriter,
the total price at which the Common Shares purchased by it and distributed to
the public were offered to the public exceeds, in any such case, the amount of
any damages that such Purchaser or underwriter has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
(e) Survival. The indemnity and contribution agreements
contained in this Section 2.4 shall remain operative and in full force and
effect regardless of (i) any termination of this Agreement or any underwriting
agreement, (ii) any investigation made by or on behalf of any Indemnified Party
or by or on behalf of the Company and (iii) the consummation of the sale or
successive resales of the Common Shares.
(f) Future Registration Rights. Until such time as a
registration has been declared effective by the Commission, the Company shall
not grant to any third party any registration rights equal to or more favorable
than those contained in this Section 2.4; provided, however, that the foregoing
prohibition shall not prevent the Company from granting to a third party
specific registration rights that are equal to those contained in this Section
2.4, as long as all of the registration rights granted to such third party,
taken as a whole, are less favorable to the third party that those granted to
the Purchasers herein. In the event that a registration shall fail to remain
effective (or a stop order shall be entered with respect thereto) while any of
the Common Shares remain unsold, the provisions of this Section 2.4(f) shall
become applicable once again.
(g) Remedies. The Purchasers and each holder of Common
Shares, in addition to being entitled to exercise all rights hereto and all
other rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. The Company agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of this Agreement and hereby agrees
to waive the defense in any action for specific performance that a remedy at law
would be adequate. In addition to the foregoing, if the Company fails to comply
with the registration obligations of this Article II or if the Company files a
registration statement to be in technical compliance with the requirements of
this Article II, but such filed registration statement lacks, in material
12
respects, the information required to be contained in the form of such
registration statement, the Company shall be fully liable for any and all losses
incurred or suffered by the Purchasers as a result of such failure together with
payment of liquidated damages to the Purchasers in the amount of Seventy Five
Thousand ($75,000) Dollars for every thirty (30) days that the Company is in
default of this Section.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND BSD
In order to induce the Purchasers to enter into this Agreement
and to consummate the transactions contemplated hereby, the Company with respect
to its status and BSD with respect to the BPH Business Assets, hereby represent
and warrant, severally, to the Purchasers as follows:
Section 3.1 Corporate Existence and Power. (a) BSD is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware, and has all corporate powers required to carry on
its business as now conducted. BSD is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the character of
the property owned or leased by it or the nature of its activities makes such
qualification necessary, except for those jurisdictions where the failure to be
so qualified would not, individually or in the aggregate, have a Material
Adverse Effect on BSD. For purposes of this Agreement, the term "Material
Adverse Effect" means, with respect to any person or entity, a material adverse
effect on the condition (financial or otherwise), business, properties, assets,
liabilities (including contingent liabilities), results of operations or current
prospects of such person or entity. Each jurisdiction in which BSD is so
qualified is listed on Schedule 3.1(a) hereto. BSD has the requisite power and
authority to (a) own or lease and operate its properties and (b) conduct its
business as presently conducted. True and complete copies of BSD's Certificate
of Incorporation, as amended, and Bylaws, as amended, have previously been
provided to the Purchasers.
(b) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. The
Company is duly qualified to transact business as a foreign corporation in all
jurisdictions where the ownership or leasing of its properties or the conduct of
its business requires such qualification and the failure to so qualify would not
have a Material Adverse Effect on the Company. Each jurisdiction in which the
Company is so qualified is listed on Schedule 3.1(b) hereto. Prior to the date
hereof, the Company has had no properties and has not conducted any business.
Section 3.2 Authorization. The execution, delivery and
performance by each of the Company and BSD of this Agreement, and the
consummation of the transactions contemplated hereby (including, but not limited
to, the sale, issuance and delivery of the Shares by the Company, the subsequent
issuance of any additional securities of the Company as payment of dividends on
the Shares, when, if and as declared by the Board of Directors of the Company,
13
and the subsequent issuance of the Common Shares upon conversion of the
Preferred Shares) have been duly authorized and no additional action is required
for the approval of this Agreement. This Agreement constitutes the legal, valid
and binding agreement of each of the Company and BSD enforceable against each of
them in accordance with its terms, except as may be limited by bankruptcy,
reorganization, insolvency, moratorium and similar laws of general application
relating to or affecting the enforcement of rights of creditors and except that
enforceability of its obligations hereunder are subject to general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law).
Section 3.3 Governmental Authorization. The execution,
delivery and performance by each of the Company and BSD of this Agreement, and
the consummation of the transactions contemplated hereby (including, but not
limited to, the sale, issuance and delivery of the Shares by the Company, the
subsequent issuance of additional Shares as payment of the dividends on the
Shares, when, if and as declared by the Board of Directors of the Company, and
the subsequent issuance of the Common Shares upon conversion of the Preferred
Shares) by the Company and BSD require no action by or in respect of, or filing
with, any governmental body, agency, official or authority.
Section 3.4 Non-Contravention. Except as set forth on Schedule
3.4, the execution, delivery and performance by each of the Company and BSD of
this Agreement, and the consummation by each of the Company and BSD of the
transactions contemplated hereby do not and will not (a) contravene or conflict
with the Certificate of Incorporation, Certificate of Designation and Bylaws of
the Company or the Certificate of Incorporation and Bylaws of BSD; (b)
contravene or conflict with or constitute a violation of any provision of any
law, regulation, judgment, injunction, order or decree binding upon or
applicable to the Company or to BSD relating to the BPH Business Assets, (c)
constitute a default under or give rise to a right of termination, cancellation
or acceleration or loss of any benefit under any material agreement, contract or
other instrument binding upon the Company or upon BSD with respect to the BPH
Business Assets or under any material license, franchise, permit or other
similar authorization held by the Company or by BSD with respect to the BPH
Business Assets; or (d) result in the creation or imposition of any Lien (as
defined below) on any material asset of the Company or the BPH Business Assets.
For purposes of this Agreement, the term "Lien" means, with respect to any
asset, any mortgage, lien, pledge, charge, security interest, claim or
encumbrance of any kind in respect of such asset.
Section 3.5 Compliance with Law. To the knowledge of the
Company and BSD, each of BSD, with respect to the BPH Business Assets, and the
Company is in compliance in all material respects with all laws, rules and
regulations, judgments, decrees or orders of any court, administrative agency,
commission, regulatory authority or other governmental authority or
instrumentality, domestic or foreign, applicable to its operations. There are no
judgments or orders, injunctions, decrees, stipulations or awards (whether
rendered by a court or administrative agency or by arbitration), including any
such actions relating to affirmative action claims or claims of discrimination,
against the Company or against any of its properties or businesses or against
BSD that will have a Material Adverse Effect on the Company or the BPH Business
Assets.
14
Section 3.6 No Defaults. Each of the Company and BSD is not,
nor has either received notice that it would be with the passage of time, giving
of notice, or both, (i) in violation of any provision of its Certificate of
Incorporation (including any Certificates of Designation) and Bylaws (ii) in
default or violation of any term, condition or provision of (A) any judgment,
decree, order, injunction or stipulation applicable to BSD (with respect to the
BPH Business Assets) or the Company or (B) any material agreement, note,
mortgage, indenture, contract, lease or instrument, permit, concession,
franchise or license to which the Company or BSD (with respect to the BPH
Business Assets) is a party or by which the Company or its properties or assets
may be bound or by which BSD (with respect to the BPH Business Assets) may be
bound.
Section 3.7 Litigation. There is no action, suit, proceeding,
judgment, claim or investigation pending or, to the best knowledge of the
Company or BSD, threatened against the Company or BSD, which could, individually
or in the aggregate, have an adverse effect on the Company or the BPH Business
Assets or which in any manner challenges or seeks to prevent, enjoin, alter or
materially delay any of the transactions contemplated hereby, or which is likely
to lead to a claim, damages payment, settlement, loss, liability, cost or
expense to the Company or to BSD with respect to the BPH Business Assets. To the
best knowledge of the Company and BSD, there is no basis for the assertion of
any of the foregoing.
Section 3.8 Absence of Certain Changes. Since May 8, 1997 (the
"Determination Date"), BSD has conducted its business, to the extent such
business utilizes or relates to or includes the BPH Business Assets in the
ordinary course and to its knowledge there has not occurred:
(a) Any event that would result in a Material
Adverse Effect on the BPH Business Assets;
(b) Any damage, destruction or loss, whether or
not covered by insurance, that would, individually or in the aggregate, have a
Material Adverse Effect on the BPH Business Assets;
(c) Any (i) incurrence, assumption or guarantee by
BSD of any debt for borrowed money involving the BPH Business Assets; (ii) sale,
assignment or transfer of any of its intangible assets that are part of the BPH
Business Assets except in the ordinary course of business, or cancellation of
any debt or claim relating to the BPH Business Assets; (iii) waiver of any right
(with respect to the BPH Business Assets) of substantial value whether or not in
the ordinary course of business; (iv) other commitment (contingent or
otherwise), with respect to the BPH Business Assets, to do any of the foregoing.
(d) Any creation or assumption by BSD of any Lien
on any of the BPH Business Assets;
15
(e) Any entry into, amendment of, relinquishment,
termination or non-renewal by BSD of any contract, license, lease, transaction,
commitment or other right or obligation relating to the BPH Business Assets,
other than in the ordinary course of business;
(g) Any transfer or grant of a right with respect
to the trademarks, trade names, service marks, trade secrets, copyrights or
other intellectual property rights owned or licensed by BSD relating to the BPH
Business Assets; or
(h) To the best knowledge of BSD, any agreement or
arrangement made by BSD to take any action which, if taken prior to the date
hereof, would have made any representation or warranty set forth in this Article
III untrue or incorrect as of the date when made.
Section 3.9 No Undisclosed Liabilities. Except for liabilities
and obligations incurred in the ordinary course of business since the
Determination Date, as of the date hereof, (i) BSD, with respect to the BPH
Business Assets, does not have any liabilities or obligations (absolute,
accrued, contingent or otherwise) and (ii) to BSD's knowledge, there has not
been any aspect of the prior or current conduct of the business of BSD, with
respect to the BPH Business Assets, which may form the basis for any claim by
any third party which if asserted could result in any such liabilities or
obligations, which are not fully reflected, reserved against or disclosed in the
consolidated balance sheet of the BSD. Schedule 3.9 lists all accounts payable
of BSD with respect to the BPH Business Assets as of the date hereof in excess
of $500.00 to any one payee. All indebtedness reflected in BSD's financial
statements, with respect to the BPH Business Assets or on Schedule 3.9 (for
indebtedness or which has arisen after the Determination Date) has arisen in the
ordinary course of business and represents valid indebtedness of BSD. As used
herein, the term "indebtedness" means all items which, in accordance with
generally accepted accounting principles, would be included in the consolidated
balance sheet of BSD as indebtedness or which has arisen after the Determination
Date in the ordinary course of business and represents valid indebtedness of
BSD.
Section 3.10 BSD Inventory. BSD is not transferring any
inventory to the Company, however, BSD represents and warrants that it owns
sufficient inventory to provide at least six (6) "BSD 50" systems to the
Company. BSD will not dispose of such inventory without giving the Company the
opportunity to purchase any such inventory.
16
Section 3.11 Taxes. Except where a breach of the provisions of
this Section 3.11 would not have a Material Adverse Effect on the BPH Business
Assets:
(a) All tax returns, statements, reports and
forms (including estimated tax returns and reports and information returns and
reports) required to be filed with any taxing authority with respect to any
taxable period ending on or before the subject Closing Date by or on behalf of
BSD have been or will be filed when due (including any permitted extensions of
such due date); provided, however, that BSD shall not be in breach of this
Section 3.11(a) in respect of tax liabilities which BSD is contesting in good
faith with the relevant tax authorities, subject to BSD having made sufficient
reserves of funds in order to satisfy such tax liabilities in full.
(b) BSD has timely paid, withheld or made
provision on its books for all taxes due and payable by BSD.
(c) There are no Liens for taxes upon any of the
BPH Business Assets and, to the best knowledge of BSD, there are no such Liens
threatened or anticipated to be placed upon any of the BPH Business Assets.
Section 3.12 Interest of Officers, Directors and Other
Affiliates. Schedule 3.12 sets forth a description of any interest held,
directly or indirectly, by any officer, director or other affiliate of the
Company or BSD in any property, real or personal, tangible or intangible, used
in or pertaining to the Company's business or the BPH Business Assets, including
any interest in the Intellectual Property (as defined in Section 3.13 hereof).
. Section 3.13 Intellectual Property
(a) To the knowledge of the Company, the business
as currently proposed to be conducted by the Company will not cause the Company
to infringe or violate any patents, trademarks, service marks, trade names,
copyrights, licenses, trade secrets or other intellectual property rights of any
other person or entity.
(b) To the knowledge of BSD, the business
conducted by BSD as it relates to the BPH Business Assets does not and will not,
when transferred to the Company, cause the Company to infringe or violate any
patents, trademarks, service marks, trade names, copyrights, licenses, trade
secrets or other intellectual property rights of any other person or entity.
(c) Schedule 3.13 sets forth a listing of all
patents, trademarks, trade names, service marks, trade secrets, formulae,
processes, copyrights, franchises or other intellectual property, and all
applications for any of the foregoing, owned or licensed by BSD or in which BSD
has any interest and which is part of the BPH Business Assets (the "Intellectual
Property"), as well as the owners thereof, the parties to all licenses and
applicable royalties and terms thereof. Except as set forth on Schedule 3.13,
the Intellectual Property is free of any unresolved ownership disputes or
threats with respect to any third party.
17
(d) Except as set forth on Schedule 3.13, the
Company or BSD, as the case may be, owns or possesses the exclusive right to use
all of the Intellectual Property and no claim is pending, or to the best
knowledge of the Company or BSD, as the case may be, threatened, to the effect
that the operations of the Company or BSD, as the case may be, infringe upon or
conflict with the asserted rights of any other person and there is no basis for
any such claim.
(e) The Company or BSD, as the case may be, has
taken all measures it deems reasonable to maintain the Intellectual Property in
full force and effect. To the best of BSD's knowledge, none of the processes and
formulae, research development results and other know-how relating to the
business or operations of the Company or of BSD with respect to the BPH Business
Assets, the value of which is contingent upon maintenance of the confidentiality
thereof, has been disclosed to any person or entity other than employees of BSD
or the Company.
(f) The Company currently possesses all licenses,
sublicenses and permits required to operate the business of the Company. Except
where such failure to possess would not have a Material Adverse Effect, BSD
currently possesses all licenses, sublicenses and permits required to operate or
use the BPH Business Assets.
(g) To the Company's and BSD's knowledge, except
as set forth on Schedule 3.13, there are no infringers of the Intellectual
Property and the Company or BSD has not learned of or communicated with any
third party considered by the Company or BSD to be actually or possibly
infringing on any of the Intellectual Property in any material respect. Except
as set forth on Schedule 3.13, no part of the Intellectual Property breaches,
violates, infringes or interferes with any rights of any third party or requires
payment for the use of any patent, trade name, trade secret, trade-▇▇▇▇,
copyright or other intellectual property right or technology of another.
(h) Attached hereto as Exhibit D is a Transfer of
Trade Secrets Agreement, by and between ▇▇▇▇▇, Incorporated and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
and Bio-Systems Design, Incorporated (now known as BSD), dated July 1, 1979,
whereby, among other things, BSD has acquired the exclusive rights to a
temperature probe (the "▇▇▇▇▇▇ Agreement"). BSD has delivered to Purchasers true
and complete copies of the ▇▇▇▇▇▇ Agreement and all amendments thereto. The
▇▇▇▇▇▇ Agreement is in full force and effect and BSD has the full right, power
and authority to sublicense its rights thereunder to the Company.
Section 3.14 Tangible Property. There is no tangible property
that is included as part of the BPH Business Assets. BSD (with respect to its
operation of the BPH Business) has not received any notice that it is in
violation of any existing law or any building, zoning, health, safety or other
ordinance, code or regulation. During the past five years there has not been any
significant interruption of BSD's BPH Business.
18
Section 3.15 Vendors and Customers. BSD, with respect to its
BPH Business, has satisfactory relations and has engaged in no actions to
jeopardize such satisfactory relations with its vendors, customers and the
corporations, partnerships, and individuals whose products are offered for sale
by BSD. No facts, circumstances or conditions exist which create a reasonable
basis for believing that the Company will be unable to continue the relationship
with such vendors and customers on substantially the same terms and conditions
as currently exist with BSD when the BPH Business Assets are transferred to the
Company.
Section 3.16 Preemptive Rights. The issuance of the Shares as
contemplated hereby will not be subject to any preemptive rights.
Section 3.17 Insurance. Schedule 3.17 sets forth a true and
complete list of all insurance policies providing insurance coverage of any
nature relating to the BPH Business Assets. Such policies are sufficient for
compliance by BSD with all requirements of law, such that the failure to comply
would not have a Material Adverse Effect on the BPH Business Assets, and all
material agreements to which BSD with respect to the BPH Business Assets is a
party or by which it is bound. All of such policies are in full force and effect
and are valid and enforceable in accordance with their terms, and BSD has
complied with all material terms and conditions of such policies, including
premium payments. None of the insurance carriers has indicated to BSD an
intention to cancel any such policy. BSD has no claim pending against any of the
insurance carriers under any of such policies and there has been no actual or
alleged occurrence of any kind which may give rise to any such claim.
Section 3.18 Subsidiaries. Except as set forth on Schedule
3.18 the Company and BSD have no subsidiaries.
Section 3.19 Capitalization. Immediately prior to the Initial
Closing the authorized capital stock of the Company consists of (i) One Million
(1,000,000) shares of Common Stock, par value $.001 per share, none of which are
issued and outstanding and (ii) One Million (1,000,000) shares of Preferred
Stock, par value $.01 per share, none of which are issued and outstanding.
Exhibit B includes a capitalization table setting forth the capitalization of
the Company on the Initial Closing Date and on the Milestone or Option Closing
Date. No other shares of capital stock have been authorized or issued. All
shares of the Company's outstanding capital stock have been duly authorized, are
validly issued and outstanding, and are fully paid and nonassessable and the
Shares, when issued and paid for at the Initial Closing, will be duly
authorized, validly issued, fully paid and nonassessable. The Company has
reserved (x) out of its authorized but unissued shares of Common Stock, solely
for issuance upon the conversion of the Shares (including shares of Preferred
Stock issued in respect of dividends on the Shares), such number of shares of
Common Stock as shall from time to time be issuable upon conversion of all
shares of Preferred Stock at the time outstanding, and (y) out of its authorized
but unissued shares of Preferred Stock, solely for issuance in respect of the
payment of dividends, a sufficient number of shares of Preferred Stock to pay
such dividends when, if and as declared by the Board of Directors of the
Company. Upon the issuance of shares of Common Stock upon conversion of the
Preferred Stock, and upon the issuance of shares of Preferred Stock in payment
of dividends on the Preferred Stock, when, if and as declared by the Board of
Directors of the Company, such shares of Common Stock and Preferred Stock, as
the case may be, shall be duly authorized, validly issued, fully paid and
19
nonassessable. The designations, powers, preferences, rights, qualifications,
limitations and restrictions in respect of each class and series of authorized
capital stock of the Company are as set forth in its Certificate of
Incorporation or the Certificate of Designation, and all such designations,
powers, preferences, rights, qualifications, limitations and restrictions are
valid, binding and enforceable.
Section 3.20 Rights, Warrants, Options. Except as set forth on
Schedule 3.20 there are no outstanding (a) securities or instruments convertible
into or exercisable for any of the capital stock or other equity interests of
the Company; (b) options, warrants, subscriptions or other rights to acquire
capital stock or other equity interests of the Company; or (c) commitments,
agreements or understandings of any kind, including employee benefit
arrangements, relating to the issuance or repurchase by the Company of any
capital stock or other equity interests of the Company, any such securities or
instruments convertible or exercisable for securities or any such options,
warrants or rights.
Section 3.21 Employees and Employment Agreements
(a) Employment Agreements. Except as set forth in
Schedule 3.21 there are no employment, consulting, severance or indemnification
arrangements, agreements, or understandings between BSD and any officer,
director, consultant or employee of BSD (the "Employment Agreements") that would
affect BSD's ability to perform its obligations under the Consulting Agreement
referred to in Section 6.1(j) hereof. Except as set forth in Schedule 3.21 the
terms of employment or engagement of all directors, officers, employees, agents,
consultants and professional advisors of the Company are such that their
employment or engagement may be terminated upon not more than two weeks notice
given at any time without liability for payment of compensation or damages and
the Company has not entered into any agreement or arrangement for the management
of its business or any part thereof other than with its directors or employees.
(b) Employees. (i) No employee, consultant or agent of
The Company or of BSD is, or to the Company's or BSD's knowledge, will be, based
upon the business and activities taken or proposed to be taken by the Company,
in violation of any term of any employment contract, confidentiality or
non-disclosure agreement or any other contract, agreement, commitment or
understanding relating to the relationship of such employee, consultant or agent
with the Company or any other party.
(ii) Each significant employee or consultant of
the Company or of BSD with access to confidential or proprietary information of
the Company or of the BPH Business Assets has executed an agreement obligating
such employee, consultant, contractor or agent to hold confidential such
proprietary information.
(iii) The Company is not aware that any officer or
key employee intends to terminate employment with the Company. Except for ▇▇▇▇▇
▇▇▇▇▇, BSD is not aware that any officer or key employee who works for BSD with
respect to the portion of BSD's business that includes the BPH Business Assets
intends to terminate employment with BSD.
20
Section 3.22 Agreements. Schedule 3.22 sets forth all of the
following contracts and other agreements to which the Company or to which BSD,
with respect to the BPH Business Assets, is a party or by or to which it or its
assets or properties are bound or subject: (i) contracts and other agreements
with any current or former officer, director, employee, consultant or
shareholder; (ii) agreements with any labor union or association representing
any employee: (iii) contracts and other agreements for the sale of publications
or other materials, supplies, equipment, merchandise or services; (iv) contracts
and other agreements for the purchase or acquisition of materials, supplies,
equipment, merchandise or services; (v) licenses or royalty agreements or
similar contracts, including the ▇▇▇▇▇▇ Agreement; (vi) warehousing,
distributorship, depository, representative, management, marketing, sales
agency, printing or advertising agreements; (vii) contracts and other agreements
for the sale of any of its assets or properties other than in the ordinary
course of business or for the grant to any person of any preferential rights to
purchase any of its assets or properties; (viii) joint venture agreements
relating to the assets, properties or business of the Company or BSD or by or to
which it or its assets or properties are bound or subject; (ix) contracts or
other agreements under which it agrees to indemnify any party, to share the tax
liability of any party or to refrain from competing with any party; or (x) any
other material contract or other agreement whether or not made in the ordinary
course of business. All of the contracts and other agreements set forth on
Schedule 3.22 and elsewhere referred to in this Agreement are in full force and
effect and the Company or BSD, as the case may be, has paid in full or accrued
all amounts due thereunder and has satisfied in full or provided for all of its
liabilities and obligations thereunder, and is not in default under any of them,
nor is any other party to any such contract or other agreement in default
thereunder, nor does any condition exist which with notice or lapse of time or
both would constitute a default thereunder. Except as separately identified on
Schedule 3.22 neither the Company nor BSD is a party to or bound by any contract
or other agreement which either individually or in the aggregate materially and
adversely affects its assets, properties, business, or condition, financial or
otherwise, or which was entered into other than in the ordinary course of its
business. Except as separately identified on Schedule 3.22 no approval or
consent of any person is needed in order that the contracts or other agreements
set forth on Schedule 3.22 and other Schedules and Exhibits hereto continue in
full force and effect following the consummation of the transactions
contemplated by this Agreement. Except as otherwise noted in Schedule 3.22 each
of the contracts or other agreements referred to in clause (i) of this Section
3.22 can be terminated upon not more than one year's notice without payment of
premium or penalty or any other kind of payment.
Section 3.23 Absence of Certain Business Practices. Neither
the Company nor BSD (with respect to the BPH Business Assets), nor, to the
Company's or BSD's best knowledge, any affiliate of the Company or BSD (with
respect to the BPH Business Assets), any agent of the Company or BSD (with
respect to the BPH Business Assets), any other person acting on behalf of or
associated with the Company or BSD (with respect to the BPH Business Assets), or
any individual related to any of the foregoing persons, acting alone or
together, has: (a) received, directly or indirectly, any rebates, payments,
commissions, promotional allowances or any other economic benefits, regardless
of their nature or type, from any customer, supplier, trading company, shipping
company, governmental employee or other person with whom the Company or BSD has
done business directly or indirectly; or (b) directly or indirectly, given or
agreed to give any gift or similar benefit to any customer, supplier, trading
company, shipping company, governmental employee or other person who is or may
be in a position to help or hinder the business of the Company or BSD (or assist
21
the Company or BSD in connection with any actual or proposed transaction) which
(i) may subject the Company or BSD to any damage or penalty in any civil,
criminal or governmental litigation or proceeding, (ii) if not given in the
past, may have had an adverse effect on the Company or BSD or (iii) if not
continued in the future, may adversely affect the assets, business, operations
or prospects of the Company or BSD or subject the Company or BSD to suit or
penalty in any private or governmental litigation or proceeding.
Section 3.24 Services or Products
(a) To the best knowledge of the Company and BSD (with
respect to the BPH Business Assets), there exists no set of facts (i) which
could furnish a basis for the recall, withdrawal, suspension or cancellation of
any registration, license, permit or other governmental approval or consent of
any governmental or regulatory agency with respect to any service or product
developed or provided by the Company or by BSD with respect to the BPH Business
Assets (a "Service or Product"), (ii) which could furnish a basis for the
withdrawal, suspension or cancellation by order of any state, federal or foreign
court of law of any Service or Product, or (iii) which could have an adverse
effect on the continued operation of any facility of the Company or of BSD, with
respect to the BPH Business Assets or which could otherwise cause the Company or
BSD, with respect to the BPH Business Assets, to withdraw, suspend or cancel any
such Service or Product from the market or to change the marketing
classification of any such Service or Product.
(b) Each Service or Product provided by Company or by
BSD (with respect to the BPH Business Assets) has been provided in accordance
with the specifications under which such Service or Product normally is and has
been provided and the provisions of all applicable laws or regulations
including, without limitation, those of the United States Food and Drug
Administration ("FDA").
(c) Copies of all material correspondence received or
sent by or on behalf of Company or BSD (relating to the BPH Business Assets)
from or to the FDA or any other governmental regulatory agency, including,
without limitation, any inspection reports or notices, have been previously
delivered to the Purchasers.
Section 3.25 Environmental Matters. None of the premises or
any other property used by the Company or BSD in the past has been used by the
Company or BSD (with respect to the BPH Business Assets) or, to the Company's
and BSD's knowledge after due inquiry, any other person to manufacture, treat,
store, or dispose of any hazardous substance or any other regulated material,
and, to the best of Company's and BSD's knowledge after due inquiry, such
property is free of all such substances and materials. The Company and BSD (with
respect to the BPH Business Assets), and any other person for whose conduct it
may be responsible, are in compliance with all laws, regulations and other
federal, state or local governmental requirements, and all applicable judgments,
22
orders, writs, notices, decrees, permits, licenses, approvals, consents or
injunctions relating to the generation, management, handling, transportation,
treatment, disposal, storage, delivery, discharge, release or emission of any
waste, pollutant or toxic, hazardous or other regulated substance (including,
without limitation, asbestos, radioactive material and pesticides) or to any
other actions, omissions or conditions affecting the environment (the
"Environmental Laws"). Neither the Company nor BSD (with respect to the BPH
Business Assets), nor any other person for whose conduct it may be responsible
has received any complaint, notice, order, or citation of any actual, threatened
or alleged noncompliance with any of the Environmental Laws, and there is no
proceeding, suit or investigation pending or, to the Company's and BSD's
knowledge, threatened against the Company or any such person with respect to any
violation or alleged violation of the Environmental Laws, and there is no basis
for the institution of any such proceeding, suit or investigation.
Section 3.26 Licenses; Compliance With Regulatory
Requirements. To the knowledge of the Company and BSD, BSD's transfer of the BPH
Business Assets will also include all licenses, franchises, ordinances,
authorizations, permits, certificates, variances, exemptions, orders and
approvals, domestic or foreign which are material to the operation of the
business of the Company and the operation and use of the BPH Business Assets
(collectively, the "Licenses"). To the best knowledge of the Company and BSD,
the Company and BSD (with respect to the BPH Business Assets) are in compliance
with, and have conducted their business so as to comply with, the terms of their
respective Licenses and with all material applicable laws, rules, regulations,
ordinances and codes, domestic or foreign, including laws, rules, regulations,
ordinances and codes relating to the protection of the environment. Neither the
Company nor BSD (with respect to the BSD Business Assets) has engaged in any
activity that would cause revocation or suspension of any material Licenses. No
action or proceeding looking to or contemplating the revocation or suspension of
any of such Licenses is pending, or, to the knowledge of the Company or BSD,
threatened.
Section 3.27. The copies of the Certificate of Incorporation,
Certificate of Designation and By-laws of the Company and copies of the
Certificate of Incorporation and By-laws of BSD, and all amendments to each,
which have been delivered to the Purchasers, are true, correct and complete. The
minute and stock books of the Company and BSD, which have been delivered to the
Purchasers, are true, correct and complete and contain true and complete records
of all meetings and consents in lieu of meetings of the Board of Directors (and
any committees thereof) since the time of its organization.
Section 3.28 Brokers. Except for payment directly by the
Company to Ambient Capital Group, Inc. of $125,000.00 at the Initial Closing and
$125,000.00 which will be payable directly by the Company to Ambient Capital
Group, Inc. at the Milestone Closing, the Company has not made any commitments
to pay any brokerage, finder's or other fees or commissions in connection with
the transactions contemplated by this Agreement. If any additional such fees or
commissions are payable to Ambient Capital Group, Inc. they will be the sole
obligation of BSD.
23
Section 3.29 Arm's Length Transactions. Each of the agreements
entered into by the Company and by BSD (with respect to the BPH Business Assets)
have been entered into in good faith and represent transactions that are no more
favorable to the parties thereto than would be available in an arm's length
transaction between such parties. Except as set forth on Schedule 3.29, there
are no Related Person Transactions (as defined in Section 5.2.2 hereof).
Section 3.30 Liens. BSD owns outright and upon the Initial
Closing will transfer to Company good and marketable title to all of the BPH
Business Assets free and clear of any Lien except for (i) properties disposed
of, or subject to purchase or sales orders, in the ordinary course of business
since the Determination Date; (ii) Liens securing taxes, assessments,
governmental charges or levies, or the claims of materialmen, carriers,
landlords and like persons, which are not yet due and payable; or (iii) minor
Liens of a character which do not substantially impair the BPH Business Assets
or materially detract from the business conducted thereby.
Section 3.31 Regulatory Matters. True and complete copies of
all letters and other written communications between BSD or the Company and the
FDA which relate to the BPH Business Assets ("Regulatory Matters") have been
delivered to the Purchasers. To the knowledge of the Company and BSD there is no
pending Regulatory Matter which has or may reasonably be expected to have, a
Material Adverse Effect upon BSD's ability to develop, test, manufacture or
distribute products or which could reasonably be expected to have a Material
Adverse Effect upon the Company or upon BSD, in each case with respect to the
BPH Business Assets. To the Company's and BSD's best knowledge, BSD and the
Company are in compliance with all requirements of the FDA and other regulatory
authorities applicable to the conduct of their respective businesses as
currently conducted, except where the failure so to comply would not reasonably
be expected to have a Material Adverse Effect as described in the preceding
sentence.
Section 3.32 Disclosure. No representation or warranty made by
the Company or BSD in this Agreement, including any exhibits or schedules
hereto, contains or will contain any untrue statement of a material fact, or
omits or will omit to state a material fact necessary to make the statements or
facts contained herein or therein not misleading in light of the circumstances
under which they were furnished. To the best of BSD's knowledge, except as
disclosed in Schedule 3.32, there is no material event, fact or condition (other
than general business or economic conditions which affect businesses generally
or adverse FDA rulings) that materially adversely affects the proposed business
of the Company or the BPH Business Assets, or that reasonably could be expected
to do so, that has not been set forth in this Agreement or in the Exhibits or
Schedules attached hereto.
24
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
THE PURCHASERS
Each Purchaser, as the case may be, severally and not jointly,
hereby represents and warrants to the Company and BSD as follows:
Section 4.1 Existence and Power. Oracle is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization. Oracle has all powers required to carry on its business as now
conducted.
Section 4.2 Authorization. The execution, delivery and
performance by each Purchaser of this Agreement, and the consummation by each
Purchaser of the transactions contemplated hereby has been duly authorized and
no additional action is required for the approval of this Agreement. This
Agreement constitutes a valid and binding agreement of each Purchaser,
enforceable against it in accordance with its terms, except as may be limited by
bankruptcy, reorganization, insolvency, moratorium and similar laws of general
application relating to or affecting the enforcement of rights of creditors and
except that enforceability of its obligations thereunder are subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
Section 4.3 Governmental Authorization. The execution,
delivery and performance by each Purchaser of this Agreement, and the
consummation of the transactions contemplated hereby by each Purchaser require
no action by or in respect of, or filing with, any governmental body, agency,
official or authority, which individually or in the aggregate, would have a
Material Adverse Effect on each such Purchaser.
Section 4.4 Non-Contravention. The execution, delivery and
performance by Oracle of this Agreement, and the consummation by Oracle of the
transactions contemplated hereby do not and will not: (a) contravene or conflict
with the Certificate of Limited Partnership or other organizational document of
Oracle; or (b) contravene or conflict with or constitute a material violation of
any material provision of any law, regulation, judgment, injunction, order or
decree binding upon or applicable to Oracle, which contravention, conflict or
violation would have a Material Adverse Effect on Oracle.
Section 4.5 Litigation. There is no action, suit, proceeding,
claim or investigation pending or to the best of each Purchaser's knowledge
threatened, which in any manner challenges or seeks to prevent, enjoin, alter or
materially delay any of the transactions contemplated hereby.
Section 4.6 Investment. Each Purchaser is acquiring the Shares
purchased by it hereunder for its own account for investment and until such
Shares are registered pursuant to the Registration, not with a view to, or for
sale in connection with, any distribution thereof, nor with the intention of
25
distribution or selling the same; provided, however, that each Purchaser may
transfer Shares among one or more of its affiliates, so long as such transfer
does not violate applicable securities laws. Each Purchaser is aware the Shares
have not been registered under the Securities Act or under applicable state
securities or blue sky laws and that until the Shares are registered pursuant to
the registration statement, the certificate representing the Shares will bear
the legend set forth in Section 2.3 hereof. Each Purchaser is an "accredited
investor" as such term is defined in Rule 501 of Regulation D, as promulgated
under the Securities Act.
Section 4.7 No Brokers. No broker, finder, agent or similar
intermediary has been retained by the Purchasers in connection with this
Agreement or the transactions contemplated hereby.
COVENANTS AND AGREEMENTS
Section 5.1 Actions Requiring Purchasers' Consent. The Company
with respect to its business and BSD only with respect to those actions that may
significantly or materially affect or relate to the BPH Business Assets covenant
and agree that none of the following actions will take place prior or subsequent
to the Initial Closing, without the prior written consent of the Purchasers
being first obtained:
5.1.1 the sale, transfer, assignment or encumbrance of any of
the BPH Business Assets or any asset related to or used in
connection with the BPH Business Assets;
5.1.2 the granting of any licenses or entering into any
similar arrangements relating to any of the BPH Business
Assets;
5.1.3 any filings or correspondence with the FDA;
5.1.4 an authorization or issuance by the Company (excluding
BSD) of any additional shares (with the exception of shares of
Common Stock issued at a price equal or greater than $13.33
per share), or classes of shares, or any warrants, options or
other rights to purchase any interest in the Company's shares
or adoption of any employee stock option plan for the benefit
of the Company's employees or any change, modification or
alteration of any of the terms of any warrant, option or
similar right to purchase any interest in the Company's
shares;
5.1.5 the entering into by the Company (excluding BSD) of any
bank or other non-trade indebtedness for borrowed money;
26
5.1.6 the liquidation, dissolution or winding-up of the
Company or any of its subsidiaries or any merger or
consolidation of the Company or any subsidiary with or into
another entity or the sale of all or substantially all the
assets of the Company or any subsidiary;
5.1.7 the payment of any dividend by the Company;
5.1.8 the repurchase by the Company of any shares of the
Company's capital stock;
5.1.9 any amendment to any of the Company's charter documents
which relates to the Company's capital structure;
5.1.10 any Related Person Transactions (as defined herein);
5.1.11 any material change in the compensation of the five (5)
highest compensated employees and/or officers of the Company;
and
5.1.12 otherwise take any action, directly or indirectly,
which would undermine the intent and purpose of this
Agreement.
Section 5.2 Additional Covenants.
5.2.1 To the extent that BSD maintains any of the BPH Business
Assets after the Closing, BSD shall maintain insurance and
cause each of its subsidiaries to maintain insurance as to the
BPH Business Assets and its related products and business,
with financially sound and reputable insurers, against such
casualties and contingencies and of such types and in such
amounts as is customary for companies similarly situated.
5.2.2 Except for transactions approved by a majority of the
disinterested directors of the Board of Directors, neither BSD
(with respect to the BPH Business Assets) nor the Company nor
any of their subsidiaries shall enter into any transaction
with any director, officer, employee or holder of more than 5%
of the outstanding capital stock of any class or series of
capital stock of the Company or BSD or any of its
subsidiaries, member of the family of any such person, or any
corporation, partnership, trust or other entity in which any
such person, or member of the family of any such person, is a
director, officer, trustee, partner or holder of more than 5%
of the outstanding capital stock thereof, with the exception
of transactions which are consummated upon terms that are no
less favorable than would be available if such transaction had
been effected at arms-length, in the reasonable judgment of
the Board of Directors ("Related Person Transactions").
27
5.2.3 The Company and BSD, with respect to the BPH Business
Assets, shall comply and cause any subsidiary to comply with
all applicable laws, rules, regulations and orders.
5.2.4 The Company and BSD, with respect to the BPH Business
Assets, shall keep, and cause any subsidiary to keep, adequate
records and books of account in which accurate and correct
entries will be made in accordance with generally accepted
accounting principles consistently applied.
5.2.5 The Company shall not make any change in the nature of
its business. BSD shall not make any change in the nature of
the BPH Business Assets without consultation with the
Purchasers. BSD shall comply with its obligations under the
▇▇▇▇▇▇ Agreement and cause such license to remain in full
force and effect and shall not agree to any modification of
the ▇▇▇▇▇▇ Agreement without the prior written consent of the
Company.
Section 5.3 Reporting Obligations.
BSD or the Company, as appropriate, shall furnish to the
Purchasers:
5.3.1 As soon as practicable after receipt thereof, copies of
any written communications, including, without limitation, any
communications with the FDA, relating to any of the BPH
Business Assets;
5.3.2 Promptly after the commencement thereof, notice of all
actions, suits, claims, proceedings, investigations and
inquiries that could materially adversely affect the Company
or the BPH Business Assets in any manner;
5.3.3 Promptly, from time to time, any infringement of,
challenge to the validity or ownership of, or use of the
Intellectual Property that may come to the Company's or BSD's
attention.
5.3.4 Promptly, from time to time, such other information
regarding the business, prospects, financial condition,
operations, property or affairs of the Company or the BPH
Business Assets as the Purchasers reasonably may request; and
5.3.5 Representatives of the Purchasers shall be entitled to
inspect the properties, books and records of the Company and
BSD and their subsidiaries and interview the officers,
directors and senior employees of the Company and BSD and
their subsidiaries, including the Company's or BSD's
accountants, attorneys and other advisors, regarding the
business of the Company and the BPH Business Assets during
regular business hours after reasonable notice to BSD.
28
Section 5.4 Confidentiality. Each party shall, and shall use
its reasonable efforts to cause its affiliates, directors, officers, agents,
advisors, employees and authorized representatives (collectively, "Agents") to,
(i) hold in confidence all confidential information obtained by it from the
disclosing party or such disclosing party's Agents pursuant to this Agreement
(unless such information (a) is or becomes generally available to the public or
the publishing industry other than as a result of wrongful acts of the
non-disclosing party, (b) is in the possession of the non-disclosing party or
its Agents prior to such disclosure (not by unlawful means), (c) is disclosed to
the non-disclosing party or its Agents on a non-confidential basis by a person
other than the disclosing party or its Agents that, to the non-disclosing
party's knowledge is not restricted from disclosing such information to the
non-disclosing party by any contractual, fiduciary or other legal obligation, or
(d) is developed by the non-disclosing party without the benefit of the
confidential information) and (ii) use all such data and information for the
purpose of consummating the transactions contemplated hereby, except, that the
parties may disclose such information (x) as required by law pursuant to court
order, or, if non-disclosure is likely to subject the party to some penalty or
liability as evidenced by opinion of independent counsel or (y) in connection
with legal proceedings relating to or arising out of the transactions
contemplated hereby. In the event a party is required by clauses (x) and (y) of
the preceding sentence to disclose any confidential information of the
disclosing party such non-disclosing party will (i) promptly notify the
disclosing party of the existence, terms and circumstances surrounding such
required disclosure, (ii) consult with the disclosing party on the advisability
of taking legally available steps to resist or narrow such request, and (iii) if
disclosure of such information is required, furnish only such portion of the
information as it is legally compelled to disclose and exercise its reasonable
best efforts to obtain, at the disclosing party's expense, an order or other
reliable assurance that confidential treatment will be accorded to such portion
of the disclosed information that the disclosing party may designate. In the
event this Agreement is terminated, each party shall within three business days
return or destroy (and certify to the other party the destruction of), if so
requested by the other party, all nonpublic documents obtained from such other
party in connection with the transactions contemplated hereby and any copies
thereof which may have been made by such first party and shall use its
reasonable efforts to cause its Agents to whom such documents were furnished
promptly to return or destroy (and certify to the other party the destruction
of) such documents and any copies thereof any of them may have had.
Section 5.5 Public Announcements. Neither the Purchaser, the
Company nor BSD shall (and each shall use its reasonable efforts to cause its
subsidiaries, affiliates, directors, officers, employees and authorized
representatives not to), issue any press release, make any public announcement
or furnish any written statement to its employees or stockholders generally
concerning the transactions contemplated by this Agreement without the consent
of the other parties, which consent shall not be unreasonably withheld or
delayed.
Section 5.6 Exclusivity. (a) Each of the Company and BSD agree
that unless this Agreement has been terminated by the mutual agreement of the
parties, neither the Company, BSD nor their respective affiliates,
representatives, employees or agents (collectively, "Agents") will, commencing
on the date of this Agreement and continuing through November 30, 1997 (the
29
"Exclusive Period"), directly or indirectly, (i) solicit, encourage or negotiate
any proposal (whether solicited or unsolicited) for, or execute any agreement
relating to, a sale of all or any part of the Shares or the Company's assets or
the BPH Business Assets or a sale of any equity or debt security of the Company
or BSD or any merger, consolidation, recapitalization or similar transaction
involving the Company or BSD with any other party, which, in any such case,
would include or relate to the BPH Business Assets (any of the foregoing is
referred to as an "Acquisition Proposal"), (ii) provide any information
regarding the Company, BSD or the Shares to any third party for the purpose of
soliciting, encouraging or negotiating an Acquisition Proposal (it being
understood that nothing contained in clauses (i) or (ii) above shall restrict
the Company, BSD or any of its Agents from providing information as required by
legal process), or (iii) operate the business of the Company or the BPH Business
Assets other than in the ordinary course of business in a manner that negatively
impacts BSD's ability to transfer the BPH Business Assets.
(b) In the event that BSD does not consummate the transaction
contemplated hereby as a result of BSD's breach of Section 5.6(a) hereof, BSD
shall be liable to the Purchasers for all costs and expenses actually incurred
by the Purchasers in pursuit of the transaction, together with the payment of
liquidated damages to the Purchaser in the agreed upon amount of $250,000.
Section 5.7 Board Representation; Advisory Fees. (a) Until a
future Financing Event, as such term is defined in the Certificate of
Designation, the Board of Directors of the Company shall consist of one (1)
representative of Oracle, one (1) representative of BSD, ▇▇▇▇▇▇ and at least two
(2) independent third-party directors elected by Oracle and BSD. The parties
hereto agree to vote their Shares to elect the Board of Directors as set forth
in this Section 5.7. The Company shall diligently attempt to obtain a
commercially reasonable directors and officers liability insurance policy that
is reasonably satisfactory to the Purchasers.
(b) The Company hereby grants to the Purchasers the first
option to provide and/or participate in any future financing that the Company
may require. The Purchasers shall be entitled to customary, appropriate and
reasonable advisory fees in the event that the Purchasers provide acquisition,
financing or other advisory services to the Company.
Section 5.8 Restriction on Transfer. (a) As long as any
Preferred Shares remain issued and outstanding, BSD shall not, directly or
indirectly, sell, assign or otherwise transfer, pledge as security, mortgage or
otherwise encumber any Shares until a date which is at least the earlier of
twenty four (24) months after the Initial Closing Date and six (6) months after
the Milestone or Option Closing Date.
(b) The parties recognize that there is no ready market for
the Shares and that the success of the Company is and will continue to be based
upon the effort of and relationship between the parties. Accordingly, BSD
acknowledges that the provisions of this Section 5.8 are reasonable and
necessary for the protection of the Company and that any breach or threatened
30
breach of this Section would, in all likelihood, cause irreparable injury. For
this reason, among others, if BSD breaches or threatens to breach any of the
provisions contained in this Section 5.8, the Company and the Purchasers shall
be entitled to obtain a temporary restraining order, an injunction or other
equitable relief from any court having jurisdiction. No bond or surety shall be
required. In addition, nothing contained herein shall be construed as
prohibiting or preventing the Company or the Purchasers from pursuing any other
available remedies for any actual or threatened breach.
Section 5.9 EDAP and Urologix Royalty Payments. Except as
otherwise provided herein, BSD shall retain the right to receive the royalty and
other payments that may become payable under the certain License Agreements with
EDAP Technomed, Inc. ("EDAP") and Urologix.
Section 5.10 Urologix Lawsuit. (a) During the ninety (90) day
period following the Initial Closing Date (the "Settlement Phase"), BSD shall
retain the right to settle the current litigation with Urologix (the "Urologix
Lawsuit"). During the Settlement Phase, the Company agrees to consult with BSD
concerning the settlement discussions.
(b) If after the expiration of the Settlement Phase the
Urologix Lawsuit has not been finally settled, the Company shall assume full
responsibility for the prosecution and/or defense of the Urologix Lawsuit,
including responsibility for the costs and expenses and all settlement
negotiations and decisions. BSD shall have the right to approve any settlement
that requires the payment of money by BSD and the Company agrees that it will
not assign any of the patents listed on Exhibit A to Urologix as part of such
settlement. Any damages or other awards obtained by the Company in settling the
Urologix Lawsuit shall be divided between the Company and BSD in proportion to
the amount of legal costs and expenses (including any expenses incurred during
the Settlement Phase) paid by each company. BSD and the Company shall provide
each other with appropriate invoices and other statements in order to determine
the amount of costs and expenses incurred in the Urologix Lawsuit. In the event
of such transfer, BSD shall deliver, or cause to be delivered, to the Company
(i) an assignment of such rights concerning the Urologix Lawsuit in form and
substance satisfactory to the Purchasers, and (ii) all documents and
correspondence relating to the Urologix Lawsuit.
ARTICLE VI
CONDITIONS TO THE CLOSING
Section 6.1 Conditions to Obligations of Purchasers to the
Initial Closing. The obligations of Purchasers hereunder are subject to the
fulfillment or satisfaction, on and as of the Initial Closing Date, of each of
the following conditions (any one or more of which may be waived by the
Purchasers in their sole discretion, but only in a writing signed by the
Purchasers):
(a) Opinion. The Purchasers shall have received the opinion of
▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel to BSD, in a form reasonably satisfactory to
the Purchasers.
31
(b) Secretary's Certificate. The Purchasers shall have
received a certificate of the Secretary of the Company and BSD (in form and
substance satisfactory to the Purchasers) certifying (i) that attached thereto
are true and complete copies of the Certificate of Incorporation, Certificate of
Designation and Bylaws of Company and the Certificate of Incorporation and
By-laws of BSD, (ii) that attached thereto are true and complete copies of the
resolutions of the Board of Directors of Company and BSD authorizing the
execution, delivery and performance of this Agreement and any other documents,
instruments and certificates required to be executed by it in connection
herewith and approving the consummation of the transactions in the manner
contemplated hereby including, but not limited to, the authorization and
issuance of the Shares, (iii) the names and true signatures of the officers of
the Company and of BSD signing this Agreement and all other documents to be
delivered in connection with this Agreement, and (iv) such other matters as the
Purchasers may reasonably request.
(c) Filing of Certificate of Designation. The Certificate of
Designation of Company substantially in the form attached hereto as Exhibit C,
shall have been filed with the Secretary of State of the State of Delaware.
(d) Performance; Representation and Warranties. Each of the
Company and BSD shall have performed and complied in all material respects with
all agreements and conditions contained in this Agreement which are required to
be performed or complied with by each of them prior to or at the Initial
Closing, the representation and warranties of the Company and BSD contained
herein shall be true and correct on and as of the Initial Closing Date as though
made on such date, and the Company and BSD shall have delivered to the
Purchasers a certificate of a duly authorized officer of each of the Company and
BSD to such effect.
(e) Approvals, Etc. Approval and consent of all appropriate
governmental regulatory agencies and the receipt of approval and/or consent from
all other appropriate parties, and all consents which may be required under any
of the Company's agreements (or otherwise), with respect to the transactions
contemplated hereby shall have been obtained, including all assignments or
consents required by the FDA.
(f) No Material Adverse Effect. There shall have occurred no
event which, in the Purchasers' reasonable discretion, could result in a
Material Adverse Effect on the Company or the BSD Business Assets between the
date hereof and the date of the Initial Closing and the Company and BSD (with
respect to the BPH Business Assets) shall have operated its business in the
ordinary course, consistent with its past practices during such period.
(g) No Litigation. Except for the Urologix Lawsuit, no
litigation, arbitration or other legal or administrative proceeding shall have
been commenced or be pending by or before any court, arbitration panel or
governmental authority or official, and no statute, rule or regulation of any
foreign or domestic, national or local government or agency thereof shall have
been enacted after the date of this Agreement, and no judicial or administrative
32
decision shall have been rendered which enjoins or prohibits, or seeks to enjoin
or prohibit, the consummation of all or any of the transactions contemplated by
this Agreement.
(h) Employment Agreement. ▇▇▇▇▇▇ shall have entered into an
employment agreement with the Company on terms that are reasonably satisfactory
to the Purchaser, to act as the President and Chief Executive Officer of the
Company.
(i) Non-Competition Agreement. BSD shall have entered into a
non competition agreement with the Company in substantially the form attached
hereto as Exhibit E.
(j) Consulting Agreement. BSD shall have entered into a
Consulting Agreement with the Company in substantially the form attached hereto
as Exhibit F.
(k) Supply Agreement. BSD shall have entered into a Supply
Agreement with the Company in substantially the form attached hereto as Exhibit
G.
(l) Oracle/▇▇▇▇▇▇. Oracle and ▇▇▇▇▇▇ shall have entered into
an agreement, in form and substance satisfactory to Oracle, governing the
control and disposition of the Shares owned by ▇▇▇▇▇▇.
(m) Transfer Documents. BSD shall have delivered to the
Company any and all agreements and other documents, including all patent or
trademark assignments and bills of sale, required to transfer the BPH Business
Assets to the Company in form and substance reasonably satisfactory to the
Purchasers.
(n) Assignment. BSD shall have delivered to the Company an
assignment of the Medizin-Technik Agreement in form and substance reasonably
satisfactory to the Purchasers.
(o) ▇▇▇▇▇▇ Sub-License. BSD shall have delivered to the
Company a sub-license of the ▇▇▇▇▇▇ Agreement in form and substance reasonably
satisfactory to the Purchasers.
(p) License Agreement for Other Technology. BSD shall have
delivered to the Company a perpetual royalty-free license for all other patents
and intellectual property relating to the treatment of any conditions or
diseases (excluding malignant cancers) of the prostate gland, including, but not
limited to, benign prostatic hyperplasia (BPH) and prostatitis (the "Business of
the Company") that is not part of the patents and intellectual property being
assigned to the Company, in form and substance reasonably satisfactory to the
Purchasers.
(q) Company License to BSD. BSD shall have received a
perpetual royalty free license from the Company for the use of the technology
being transferred by BSD to the Company relating to the treatment by
thermotherapy of malignant or benign diseases (the "Business of BSD"), in form
and substance reasonably satisfactory to BSD, the Company and the Purchasers.
33
(r) Delivery of Schedules. BSD shall use its diligent efforts
to deliver to the Purchasers within seven (7) days hereof Schedules 3.4, 3.9,
3.12, 3.13, 3.17, 3.21, 3.22, 3.29, 3.32 and 7.1 to this Agreement. If it fails
to do so, then each such Schedule shall be deemed to have been delivered and to
state "none," except for Schedule 3.13 which shall be deemed to set forth the
Intellectual Property listed on Exhibit A. In the event that such Schedules, if
delivered, shall not be satisfactory to the Purchasers in any respect, then, in
addition to any other rights or remedies that Purchasers may have hereunder, the
Purchasers shall have the right to terminate this Agreement.
(s) IDE Assignment. BSD shall have delivered to the Company an
assignment of its rights under all of its IDE's relating to the BPH Business
Assets, in form appropriate and suitable for filing with the US Food and Drug
Administration (FDA) and promptly upon the Initial Closing shall effect all
filings reasonably requested by the Company and permitted by applicable law
which are necessary for BSD to transfer such IDE's to the Company; provided,
however, that to the extent any such requested filings or transfer are not
permitted by applicable law BSD shall reasonably cooperate with the Company
prior to and after the Initial Closing to vest, to the fullest extent possible,
the Company with all rights to the IDE's.
Section 6.2 Conditions to Obligations of the Purchasers to
Milestone or Option Closing. The obligations of Purchasers hereunder are subject
to the fulfillment or satisfaction, on and as of the Milestone or Option Closing
Date, of each of the following conditions (any one or more of which may be
waived by the Purchasers in their sole discretion, but only in a writing signed
by the Purchasers):
(a) Secretary's Certificate. The Purchasers shall have
received a certificate of the Secretary of the Company (in form and substance
satisfactory to the Purchasers) certifying (i) that attached thereto are true
and complete copies of the Certificate of Incorporation, Certificate of
Designation and Bylaws of the Company, (ii) that attached thereto are true and
complete copies of the resolutions of the Board of Directors of the Company
authorizing the execution, delivery and performance of this Agreement and any
other documents, instruments and certificates required to be executed by it in
connection herewith and approving the consummation of the transactions in the
manner contemplated hereby including, but not limited to, the authorization and
issuance of the Shares, (iii) the names and true signatures of the officers of
the Company signing this Agreement and all other documents to be delivered in
connection with this Agreement, and (iv) such other matters as the Purchasers
may reasonably request.
(b) Performance; Representation and Warranties. Each of the
Company and BSD shall have performed and complied in all respects with all
agreements and conditions contained in this Agreement which are required to be
performed or complied with by Company or BSD prior to or at the Milestone or
34
Option Closing, the representations and warranties of the Company and BSD
contained herein shall be true and correct on and as of the Milestone or Option
Closing Date as though made on such date, and the Company and BSD shall have
delivered to the Purchasers a certificate of a duly authorized officer of each
of the Company and BSD to such effect.
(c) Approvals, Etc. Approval and consent of all appropriate
governmental regulatory agencies and the receipt of approval and/or consent from
all other appropriate parties, and all consents which may be required under any
of the Company's agreements (or otherwise), with respect to the transactions
contemplated hereby shall have been obtained.
(d) No Material Adverse Effect. There shall have occurred no
event which, in the Purchasers' reasonable discretion, could result in a
Material Adverse Effect on the Company between the date hereof and the date of
the Milestone or Option Closing and the Company shall have operated its business
in the ordinary course, consistent with its past practices during such period.
Section 6.3 Conditions to Obligations of the Company and BSD
to the Initial Closing. The obligations of the Company and BSD hereunder are
subject to the fulfillment or satisfaction, on and as of the Initial Closing
Date, of the following conditions (which may be waived by the Company or BSD, in
their sole discretion, but only in a writing signed by Company or BSD):
(a) Performance; Representations and Warranties. The
Purchasers shall have performed and complied in all respects with all agreements
and conditions contained in this Agreement which are required to be performed or
complied with by the Purchasers prior to or at the Closing, the representations
and warranties of each Purchaser, severally and not jointly, contained herein
shall be true and correct on and as of the Closing Date as though made on such
date, and the Purchasers shall have delivered to the Company a certificate to
such effect.
(b) Investment Capability. The Purchasers shall have provided
the Company and BSD with evidence reasonably satisfactory to the Company and BSD
of Purchasers' ability to satisfy its funding obligations pursuant to Article I
and Article II hereof.
(c) Company License to BSD. BSD shall have received a
perpetual royalty free license from the Company for the use of the technology
being transferred by BSD to the Company relating to the treatment by
thermotherapy of malignant or benign diseases (the "Business of BSD"), in form
and substance reasonably satisfactory to BSD, the Company and the Purchasers.
(d) Employment Agreement. ▇▇▇▇▇▇ shall have entered into an
employment agreement with the Company on terms that are reasonably satisfactory
to the Company, to act as the President and Chief Executive Officer of the
Company.
35
(e) Non-Competition Agreement; Consulting Agreement and Supply
Agreement. The Company shall have entered into a Non Competition Agreement,
Consulting Agreement and Supply Agreement with BSD in substantially the forms
attached hereto as Exhibits E, F and G, respectively.
ARTICLE VII
COVENANTS
Section 7.1 Interim Operations. During the period from the
date of this Agreement to the later of the Milestone or Option Closing Date,
except with the Purchasers' prior specific written consent or as expressly
contemplated by this Agreement, BSD, with respect to the BPH Business Assets,
and the Company shall operate its business only in the ordinary and usual course
consistent with past practices and to preserve intact its business organization
and good will in all material respects. Additionally, during the period from the
date of this Agreement to the later of the Milestone or Option Closing Date,
BSD, with respect to the BPH Business Assets for items (xi), (xiv) and (xv)
below and only with respect to those actions which materially affects the BPH
Business Assets for all other items below, and the Company, will not to do any
of the following (unless otherwise expressly contemplated by this Agreement or
permitted in writing by the Purchasers):
(i) amend its Certificate of Incorporation, any Certificate of
Designation or By-Laws, as the case may be;
(ii) issue, sell or authorize for issuance or sale, shares of
any class of its securities (including, but not limited to, by
way of stock split or dividend) or any subscriptions, options,
warrants, rights or covertible securities, or enter into any
agreements or commitments of any character obligating it to
issue or sell any such securities;
(iii) redeem, purchase or otherwise acquire, directly or
indirectly, any shares of its capital stock or any option,
warrant or other right to purchase or acquire any such shares;
(iv) declare or pay any dividend or other distribution
(whether in cash, stock or other property) with respect to its
capital stock;
(v) voluntarily sell, transfer, surrender, abandon or dispose
of any of its assets or property rights (tangible or
intangible), other than in the ordinary course of business
consistent with past practices;
(vi) grant or make any mortgage or pledge or subject itself or
36
any of its properties or assets to any lien, charge or
encumbrance of any kind, except liens for taxes not currently
due;
(vii) create, incur or assume any liability or indebtedness,
except in the ordinary course of business consistent with past
practices;
(viii) make or commit to make any capital expenditures
exceeding in the aggregate Ten Thousand Dollars ($10,000.00);
(ix) become subject to any guaranty;
(x) grant any increase (outside the ordinary course of
business consistent with past practices) in the compensation
payable or to become payable to directors, officers or
employees (including, without limitation, any such increase
pursuant to any bonus, pension, profit-sharing or other plan
or commitment);
(xi) except as listed on Schedule 7.1, enter into any
agreement which would be a Material Agreement, or amend or
terminate any existing Material Agreement, which is outside
the ordinary course of business consistent with past
practices. With respect to the foregoing, the Company or BSD
shall provide the Purchasers with a complete list of any such
Material Agreement not entered into in the ordinary course of
business between the date hereof and the Closing Date;
(xii) alter the manner of keeping its books, accounts or
records, or change in any manner the accounting practices
therein reflected;
(xiii) except as set forth on Schedule 7.1, enter into any
commitment or transaction other than in the ordinary course of
business consistent with past practices;
(xiv) do any act, or omit to do any act which would cause a
violation or breach of any of the representations, warranties
or covenants of the Company or BSD set forth in this
Agreement;
(xv) take any action which has a material adverse effect on
the condition (financial or otherwise), results of operations,
assets, liabilities, properties, business or prospects of the
Company or BPH Business Assets, or on employee, customer or
supplier relations;
(xvi) alter in any manner any existing working capital
facilities; or
37
(xvii) agree, whether in writing or otherwise, to do any of
the foregoing.
Section 7.2 Access. BSD shall afford to the Purchasers and
their agents and representatives, access throughout the period prior to the
Closing Date to the properties, books, records and contracts of BSD (with
respect to the BPH Business Assets), for the purpose of permitting the
Purchasers to fully investigate and perform a due diligence review of BSD as it
relates to the BPH Business Assets and properties, and financial condition,
provided that such access shall be granted during normal business hours in such
a manner as to not unreasoably interfere with BSD's normal business operations.
During such period, BSD shall furnish promptly to the Purchasers copies of (i)
all correspondence received or sent by or on behalf of BSD from or to any
governmental authority and (ii) all other information and documents, in each
case concerning the BPH Business Assets and personnel as the Purchasers may
reasonably request.
Section 7.3 Confidentiality (through Closing Date). Except as
otherwise required in the performance of obligations under this Agreement and
except as otherwise required by law, any non-public information received by a
party or its advisors from the other party pursuant to this Article VII shall be
kept confidential and shall not be used or disclosed for any purpose other than
in furtherance of the transactions contemplated by this Agreement. Such
confidential information includes, without limitation, audited and unaudited
financial statements that show BSD's current and projected costs, and detailed
financial information supporting such statements. The Purchasers shall not use
(or permit to be used) any confidential information in any manner to compete
against BSD, whether with respect to corporate acquisitions, sales, financing,
development, management, investment, or otherwise. The obligation of
confidentiality shall not extend to information (a) which is or shall become
generally available to the public other than as a result of an unauthorized
disclosure by a party to this Agreement or a person to whom a party has provided
such information, (b) which was available to a party to this Agreement on a
nonconfidential basis prior to its disclosure by one party to the other pursuant
to this Agreement or (c) which is disclosed by the Purchasers in any legal
proceeding requiring any such disclosure. Upon termination of this Agreement,
each party shall promptly return any Confidential Information received from the
other party and, upon request, shall destroy any copies of such information in
its possession. The covenants of the parties contained in this Section 7.3 shall
survive any termination of this Agreement until the earlier of (i) two (2) years
from the date hereof, or (ii) the date when such information becomes generally
available to the public, but shall terminate at the Closing, if it occurs, with
respect to information concerning the Company.
Section 7.4 Notification. Each party to this Agreement shall
promptly notify each other party in writing of the occurrence, or pending or
threatened occurrence, of any event that would consttute a breach or violation
of this Agreement by any party or that would cause any representation or
warranty made by the notifying party in this Agreement to be false or misleading
in any respect (including without limitation, any event or circumstance which
would have been required to be disclosed on any schedule to this Agreement had
such event or circumstance occurred or existed on or prior to the date of this
Agreement). Any such notification shall not limit or alter any of the
38
representations, warranties or covenants of the parties set forth in this
Agreement nor any rights or remedies a party may have with respect to a breach
of any representation, warranty or covenant.
Section 7.5 Information. The Company shall furnish to the
Purchasers and BSD:
(a) (i) as soon as practicable and in any event within 15 days
after the end of each month and (ii) as soon as practicable and in any event
within 30 days after the close of each fiscal quarter in each fiscal year of the
Company, an unaudited balance sheet of the Company, a statement of income of the
Company, and a statement of cash flows of the Company, as at the end of and for
the period commencing at the end of the previous fiscal year and ending with
such month and quarter, as the case may be, setting forth in comparative form
the corresponding figures for the appropriate periods of the preceding fiscal
year prepared by the Company, all in reasonable detail and certified by the
chief accounting officer of the Company to be true and correct, subject to
normal recurring year-end audit adjustments, and the Company shall use its best
efforts to ensure that all such financial statements comply with generally
accepted accounting principles;
(b) as soon as practicable and in any event within ninety (90)
days after the close of each fiscal year then ended, of the Company, a balance
sheet of the Company, a statement of income of the Company, and a statement of
cash flows of the Company, as at the end of and for the fiscal year then ended,
setting forth the corresponding figures of the previous fiscal year in
comparative form, all in reasonable detail and certified (without any
qualification or exception deemed material by the Purchaser) by the independent
certified public accountants of the Company;
(c) as soon as practicable and in any event within forty (45)
days after the close of each of the first three quarters of each fiscal year of
the Company and within ninety (90) days after the close of each such fiscal
year, a certificate signed by the chief executive officer and chief financial
officer of the Company, stating that a review of the activities of the Company
during such period has been made under their immediate supervision with a view
to determining whether the Company has observed, performed and fulfilled all of
its obligations under this Agreement and the results of such review;
(d) as soon as practicable and in any event within ninety (90)
days after the close of each fiscal year then ended, of the Company, an analysis
of the performance of the Company, certified by the Chief Executive Officer of
the Company, comparing the financial statements of the Company for the year then
ended with the projections;
(e) promptly upon receipt thereof, copies of all financial
reports (including, without limitation, management letters), if any, submitted
to the Company by its auditors, in connection with each annual, interim or
special audit of their respective books by such auditors;
39
(f) if requested, prior to January 31 in each year, a summary
of business plans and/or financial operating projections for the fiscal year of
the Company for such year in form and detail satisfactory to the Purchasers;
(g) promptly upon the commencement thereof, written notice of
any litigation, including arbitrations, and of any proceedings before any
governmental agency which would, if successful, materially and adversely affect
the Company or where the amount involved exceeds $25,000;
(h) promptly upon any occurrence thereof, written notice of
the termination or default under any contract, or aggregate number of contracts
within any one hundred and fifty (150) day period, pursuant to which more than
five percent (5%) of the gross revenues of the Company are generated;
(i) within 30 days after request by either Purchaser, reports
showing outstanding accounts receivables and aging schedules relating thereto
for the preceding month; and
(j) with reasonable promptness, such other information
respecting the business, operations and financial condition of the Company as
the Purchasers or BSD may from time to time reasonably request.
Section 7.6 Taxes and Claims. The Company shall duly pay and
discharge (a) all taxes, assessments and governmental charges upon or against
the Company or properties or assets prior to the date on which penalties attach
thereto, unless and to the extent that such taxes are being diligently contested
in good faith and by appropriate proceedings, and appropriate reserves therefor
have been established, and (b) all lawful claims, whether for labor, materials,
supplies, services or anything else which might or could, if unpaid, become a
lien or charge upon the properties or assets of the Company unless and to the
extent only that the same are being diligently contested in good faith and by
appropriate proceedings and appropriate reserves therefor have been established.
Section 7.7 Insurance.
(a) The Company shall (i) keep all of its properties
adequately insured at all times with responsible insurance carriers against loss
or damage by fire and other hazards, (ii) maintain adequate insurance at all
times with responsible insurance carriers against liability on account of damage
to persons and property and under all applicable workmen's compensation laws,
and (iii) maintain adequate insurance covering such other risks as the Purchaser
may reasonably request. The Company shall name Oracle and BSD as additional
insureds and as loss payees on all such policies, as well as on all key-man life
insurance policies of the Company, whether presently existing or hereafter
obtained. For the purposes of this Section 7.7(a), insurance shall be deemed
adequate if the same is not less extensive in coverage and amount than is
customarily maintained by other persons engaged in the same or a similar
business similarly situated.
40
(b) The Company shall, from time to time upon request of the
Purchasers, promptly furnish or cause to be furnished to the Purchasers and BSD
evidence, in form and substance satisfactory to them, of the maintenance of all
insurance required by this Section 7.7 to be maintained. From time to time
during the term hereof, the Purchasers and BSD shall have the right upon notice
to the Company, to require the Company to maintain additional insurance coverage
or insurance coverage in additional amounts if for any reason the Purchasers
reasonably determine that the existing insurance maintained by the Company is
insufficient.
Section 7.8 Books and Reserves. The Company shall:
(a) maintain, at all times, true and complete books, records
and accounts in which true and correct entries shall be made of its transactions
in accordance with generally accepted accounting principles consistently applied
and consistent with those applied in the preparation of its financial
statements, and
(b) by means of appropriate quarterly entries, reflect in its
accounts and in all financial statements furnished proper liabilities and
reserves for all taxes and proper reserves for depreciation, renewals and
replacements, obsolescence and amortization of its properties and bad debts, all
in accordance with generally accepted accounting principles consistently
applied, as above described.
Section 7.9 Condition of Property. The Company shall keep its
properties in good repair, working order and condition and, from time to time,
make all needful and proper repairs, renewals, replacements, additions and
improvements thereto, so that the business carried on may be properly and
advantageously conducted at all times in accordance with prudent business
management.
Section 7.10 Inspection. The Company shall allow any
representative of the Purchasers to visit and inspect any of the properties of
the Company, to examine the books of account and other records and files of the
Company, to make copies thereof and to discuss the affairs, business, finances
and accounts of the Company with its officers and employees, all during normal
business hours and as often as the Purchasers may request.
Section 7.11 Perform Covenants. The Company shall (a) make
full and timely payment of the principal of and interest and premium, if any, on
all indebtedness of the Company to the Purchasers, whether now existing or
hereafter arising, (b) duly comply with all the terms and covenants contained
herein and in each of the instruments and documents given to the Purchasers in
connection with or pursuant to this Agreement, all at the times and places and
in the manner set forth herein or therein, and (c) at all times maintain the
liens, if any, and security interests provided for under or pursuant to this
Agreement and any instrument or document delivered in connection herewith as
valid and perfected liens and security interests on the property covered
thereby.
Section 7.12 Further Assurances. Each party hereto shall, at
41
its cost and expense, upon reasonable request of any other party duly execute
and deliver, or cause to be duly executed and delivered, such further agreements
and instruments and do and cause to be done such further acts as may be
reasonably necessary or proper in the opinion of the other parties to carry out
more effectually the provisions and purposes of this Agreement including, but
not limited to, entering into those agreements as listed in Article VI.
Section 7.13 Officers' Certificate. The Company agrees that
for so long as any shares of Convertible Preferred Stock is outstanding, ▇▇▇▇▇▇▇
▇▇▇▇▇▇, or his successor as President and Chief Executive Officer of the Company
shall deliver to Oracle within five (5) days on the end of each fiscal quarter
an officers' certificate restating and reaffirming all of the representations
and warranties and the compliance with all covenants and continuing obligations
contained herein.
Section 7.14 Negative Covenants. For eighteen (18) months
after the Initial Closing, the Company will not, without the consent of Oracle,
take or effect any of the following transactions or acts:
(a) Any amendment, alteration or repeal of any of the
provisions of the Certificate of Incorporation, Certificate of Designation, or
the By-laws of the Company including, but not limited to (i) an increase in the
number of authorized shares of the Preferred Stock, (ii) any change that
adversely affects the rights, preferences or powers of the Preferred Stock or of
the holders thereof, or (iii) any decrease in the required time for the giving
of any notice to which the holders of Convertible Preferred Stock may be
entitled;
(b) The authorization or creation of, or the increase in the
number of authorized shares of any stock of any class, or any security
convertible into stock of any class, or the authorization or creation of any new
class of preferred stock (or any action which would result in another series of
preferred stock), ranking prior to or on a parity with the Convertible Preferred
Stock with respect to rights upon a liquidation or in any other respect;
(c) Adoption and implementation by the Company of strategic
and operating plans including but not limited to any plan that changes the
business of the Company or that involves the entry of the Company into a
business not currently conducted by the Company and the design and
implementation of any clinical trials;
(d) The employment of a new Chief Executive Officer, Chief
Financial Officer, Chief Operating Officer or President of the Company, and the
termination of such existing executives and the employment of any new employees;
(e) Make or commit any capital expenditures in excess of
$100,000;
(f) Reorganization, recapitalization, sale of stock, tender
offer or sale, conveyance, or otherwise dispose of or encumber all or
42
substantially all of its property or business or merge into or consolidate with
any other corporation (other than a wholly owned subsidiary corporation) or
effect any transaction or series of related transactions in which more than 50%
of the voting power of the corporation is disposed of;
(g) Approval of any legal settlement;
(h) Approval of any related party transaction;
(i) Any other transaction directly or indirectly, take any
action, or permit any action to be taken, solely or primarily for the purpose of
increasing the value of any class of stock of the Company if the effect of such
action is reasonably likely to reduce the value, security, rights or preferences
of the Preferred Stock.
(j) Redeem, purchase or otherwise acquire, directly or
indirectly, any shares of its capital stock or any option, warrant or other
right to purchase or acquire any such shares;
(k) Declare or pay any dividend or other distribution (whether
in cash, stock or other property) with respect to its capital stock;
(l) Voluntarily sell, transfer, surrender, abandon or dispose
of any of its assets or property rights (tangible or intangible), other than in
the ordinary course of business consistent with past practices;
(m) Grant or make any mortgage or pledge or subject itself or
any of its properties or assets to any material lien, charge or encumbrance of
any kind, except liens for taxes not currently due;
(n) Create, incur or assume any liability or indebtedness in
excess of $100,000;
(o) Become subject to any material guaranty;
(p) Grant any increase in the compensation payable or to
become payable to directors or officers (including, without limitation, any such
increase pursuant to any bonus, pension, profit-sharing, incentive option or
other plan or commitment);
(q) Alter the manner of keeping its books, accounts or
records, or change in any manner the accounting practices therein reflected;
(r) Enter into any commitment or transaction other than in the
ordinary course of business consistent with past practices or make any change in
the nature of its business;
43
(s) Do any act, or omit to do any act, or permit to the extent
within the Company's control, any act or omission to act which would cause a
violation or breach of any of its representations, warranties or covenants set
forth herein or the related documents thereto;
(t) Intentionally take any action which would have a material
adverse effect on the condition (financial or otherwise), results of operations,
assets, liabilities, properties, business or prospects of the Company, or on
employee, customer or supplier relations;
(u) Otherwise take any action, directly or indirectly, which
would undermine the intent and purpose of this Agreement; or
(v) Agree, whether in writing or otherwise, to do any of the
foregoing.
Section 7.15 Use of Proceeds. Set forth on Exhibit H attached
hereto is the Company's operating plan (the "Operating Plan") which contains,
among other things, the use of proceeds from the sale of the Preferred Shares.
The Company covenants and agrees that the proceeds of the sale of the Preferred
Shares shall be used by the Company only for working capital purposes and to
finance Company's development, engineering, manufacturing, clinical studies,
marketing, distribution and FDA approval of a patented/proprietary microwave
technology for the treatment of any conditions or diseases of the prostate
gland, including but not limited to Benign Prostatic Hyperplasia and Prostatitis
(excluding malignant cancers of the prostate), in accordance with the financial
projections and initial operating plan of the Company. Additionally, the Company
agrees to reserve $125,000 after each Closing for the payment of the investment
banking fees described in Section 3.28.
Section 7.16 Liquidation of Company. If within eighteen (18)
months after the Initial Closing Date the Company has failed to achieve at least
fifty (50%) percent of the financial projections and targets set forth on the
Operating Plan, then the Purchasers shall have the right to merge, sell (either
all of the stock or assets of the Company) consolidate or dissolve the Company.
Upon the Purchasers' election to dissolve the Company, the Company shall cease
to carry on its business and shall wind-up its affairs and liquidate. Any such
liquidation or dissolution of the Company shall be conducted by an independent
third party whose objective shall be to maximize shareholder value, consistent
with the respective rights of the shareholders of the Company as set forth
herein, in the Certificate of Incorporation of the Company, as amended from time
to time, and the Certificate of Designation of the Company.
ARTICLE VIII
INDEMNIFICATION
Section 8.1 Survival of Representations and Warranties;
Indemnity.
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(a) Survival of Representations. Except as otherwise provided
herein, the representations, warranties, covenants and agreements of Company and
BSD contained in or made pursuant to this Agreement shall survive the execution
and delivery of this Agreement and each Closing Date and shall in no way be
affected by any investigation of the subject matter thereof made by or on behalf
of the Purchasers.
(b) Indemnification. (A) Each of the Company, with respect to
its representations, warranties and covenants, and BSD, with respect to its
representations, warranties and covenants, agree, severally, to indemnify and
hold harmless each Purchaser, its affiliates, and its respective successors and
assigns, from and against any losses, damages, or expenses which are caused by
or arise out of (i) any breach or default in the performance by the Company or
BSD of any covenant or agreement made by the Company or BSD in this Agreement;
(ii) any breach of warranty or representation made by the Company or BSD in this
Agreement; and (iii) any and all actions, suits, proceedings, claims, demands,
judgments, costs and expenses (including reasonable legal fees and expenses)
incident to any of the foregoing. (B) Each Purchaser, severally and not jointly,
agrees to indemnify and hold harmless Company, its affiliates, and its
respective successors and assigns, from and against any losses, damages, or
expenses which are caused by or arise out of (i) any breach or default in the
performance by such Purchaser of any covenant or agreement made by such
Purchaser in this Agreement; (ii) any breach of warranty or representation made
by such Purchaser in this Agreement; and (iii) any and all actions, suits,
proceedings, claims, demands, judgments, costs and expenses (including
reasonable legal fees and expenses) incident to any of the foregoing.
(c) Indemnity Procedure. A party or parties hereto agreeing to
be responsible for or to indemnify against any matter pursuant to this Agreement
is referred to herein as the "Indemnifying Party" and the other party or parties
claiming indemnity is referred to as the "Indemnified Party".
An Indemnified Party under this Agreement shall, with
respect to claims asserted against such party by any third party, give written
notice to the Indemnifying party of any liability which might give rise to a
claim for indemnity under this Agreement within sixty (60) business days of the
receipt of any written claim from any such third party, but not later than
twenty (20) days prior to the date any answer or responsive pleading is due, and
with respect to other matters for which the Indemnified Party may seek
indemnification, give prompt written notice to the Indemnifying party of any
liability which might give rise to a claim for indemnity; provided, however,
that any failure to give such notice will not waive any rights of the
Indemnified Party except to the extent the rights of the Indemnifying Party are
materially prejudiced.
The Indemnifying Party shall have the right, at its
election, to take over the defense or settlement of such claim by giving written
notice to the Indemnified Party at least fifteen (15) days prior to the time
when an answer or other responsive pleading or notice with respect thereto is
required. If the Indemnifying Party makes such election, it may conduct the
45
defense of such claim through counsel of its choosing (subject to the
Indemnified Party's approval of such counsel, which approval shall not be
unreasonably withheld), shall be solely responsible for the expenses of such
defense and shall be bound by the results of its defense or settlement of the
claim. The Indemnifying Party shall not settle any such claim without prior
notice to and consultation with the Indemnified Party, and no such settlement
involving any equitable relief or which might have an adverse effect on the
Indemnified Party may be agreed to without the written consent of the
Indemnified Party (which consent shall not be unreasonably withheld). So long as
the Indemnifying Party is diligently contesting any such claim in good faith,
the Indemnified Party may pay or settle such claim only at its own expense and
the Indemnifying Party will not be responsible for the fees of separate legal
counsel to the Indemnified Party, unless the named parties to any proceeding
include both parties and representation of both parties by the same counsel
would be inappropriate. If the Indemnifying Party does not make such election,
or having made such election does not, in the reasonable opinion of the
Indemnified Party proceed diligently to defend such claim, then the Indemnified
Party may (after written notice to the Indemnifying Party), at the expense of
the Indemnifying Party, elect to take over the defense of and proceed to handle
such claim in its discretion and the Indemnifying Party shall be bound by any
defense or settlement that the Indemnified Party may make in good faith with
respect to such claim. In connection therewith, the Indemnifying Party will
fully cooperate with the Indemnified Party should the Indemnified Party elect to
take over the defense of any such claim.
The parties agree to cooperate in defending such third
party claims and the Indemnified Party shall provide such cooperation and such
access to its books, records and properties as the Indemnifying Party shall
reasonably request with respect to any matter for which indemnification is
sought hereunder; and the parties hereto agree to cooperate with each other in
order to ensure the proper and adequate defense thereof.
With regard to claims of third parties for which
indemnification is payable hereunder, such indemnification shall be paid by the
Indemnifying Party upon the earlier to occur of: (i) the entry of a judgment
against the Indemnified Party and the expiration of any applicable appeal
period, or if earlier, five (5) days prior to the date that the judgment
creditor has the right to execute the judgment; (ii) the entry of an
unappealable judgment or final appellate decision against the Indemnified Party;
or (iii) a settlement of the claim. Notwithstanding the foregoing, provided that
there is no dispute as to the applicability of indemnification, the reasonable
expenses of counsel to the Indemnified Party shall be reimbursed on a current
basis by the Indemnifying Party if such expenses are a liability of the
Indemnifying Party. With regard to other claims for which indemnification is
payable hereunder, such indemnification shall be paid promptly by the
Indemnifying Party upon demand by the Indemnified Party.
46
ARTICLE IX
MISCELLANEOUS
Section 9.1 Termination. This Agreement may be terminated at
any time prior to the Initial Closing by either the Company and BSD or
Purchasers, upon written notice to the other (i) if the Closing shall not have
been consummated on or before ten (10) business days after the date hereof, (ii)
if there shall be any law or regulation that makes the consummation of the
transactions contemplated hereby illegal or otherwise prohibited, or (iii) if
consummation of the transactions contemplated hereby would violate any
nonappealable final order, decree or judgment of any court or governmental body
having competent jurisdiction. If this Agreement is terminated as permitted by
this Section 9.1, such termination shall be without liability of either party
(or any shareholder, director, officer, employee, agent, consultant or
representative of such party) to the other party to this Agreement; provided
that if such termination shall result from the failure of BSD to act reasonably
in fulfilling a condition within BSD's control to the performance of the
obligations of the other party or to perform a covenant of this Agreement, BSD
shall be fully liable for any and all losses incurred or suffered by the
Purchasers as a result of such failure or breach together with payment of
liquidated damages to the Purchasers in the amount of $250,000. The provisions
of Sections 5.4, 5.5, 5.6, 9.1, 9.3 and 9.5 shall survive any termination hereof
pursuant to this Section 9.1.
Section 9.2 Further Assurances. Each party agrees to
cooperate fully with the other parties and to execute such further instruments,
documents and agreements and to give such further written assurances as may be
reasonably requested by any other party to better evidence and reflect the
transactions described herein and contemplated hereby and to carry into effect
the intents and purposes of this Agreement.
Section 9.3 Fees and Expenses. The Company shall be
responsible for the payment of the Purchaser's legal fees and costs relating to
the transactions contemplated by this Agreement. In the event this Agreement
terminates for any reason, BSD shall pay to the Purchasers $15,000 within thirty
(30) days of the date of any such termination. All such legal fees will be
payable by the Company at each Closing. Notwithstanding anything to the contrary
contained herein, the expenses of the Registration shall be borne entirely by
the Company and shall not be subject to the foregoing limitation. The terms of
this Section 9.3 shall survive any termination of this Agreement.
Section 9.4 Notices. Whenever any party hereto desires or is
required to give any notice, demand, or request with respect to this Agreement,
each such communication shall be in writing and shall be effective only if it is
delivered by personal service or mailed, United States registered or certified
mail, postage prepaid, return receipt requested (and shall be deemed to have
been received three(3) days after deposit into the United States mail), or sent
by prepaid overnight courier, facsimile or confirmed telecopier, addressed as
follows:
47
If to Oracle:
c/o Oracle Strategic Partners, L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇ ▇▇▇▇▇▇▇, P.C.
1350 Avenue of the ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company or ▇▇▇▇▇▇:
c/o ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇ ▇. ▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to BSD:
BSD Medical Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Mr. ▇▇▇▇ ▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
One Utah Center
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: J. ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Unless otherwise stated above, such communications shall be effective when they
are received by the addressee thereof in conformity with this Section. Any party
may change its address for such communications by giving notice thereof to the
other parties in conformity with this Section.
48
Section 9.5 Governing Law and Jurisdiction.
9.5.1 This Agreement shall be construed in all respects under
the laws of the State of Delaware, without reference to its
conflicts of law provisions.
9.5.2 The Company, BSD and the Purchasers hereby agree to
submit to the exclusive jurisdiction of the courts located in
the State of Delaware and hereby waive, to the fullest extent
permitted by law, any objection based on venue or forum non
conveniens with respect to any action instituted therein, and
agree that any dispute concerning the conduct of any party in
connection with this Agreement or otherwise shall be heard
only in the federal courts described above.
9.5.3 The Company and BSD and the Purchasers each hereby
waive personal service of any and all process upon it and
consent that all such service of process may be made by hand
delivery or mail to the Company and BSD and the Purchasers at
the addresses set forth in, and in accordance with, Section
9.4 of this Agreement. Each of the Company, BSD and the
Purchasers hereby consent to service of process as aforesaid.
Section 9.6 Binding upon Successors and Assigns. This
Agreement is personal to each of the parties and may not be assigned without the
written consent of the other parties; provided, however, that Oracle and ▇▇▇▇▇▇
shall be permitted to assign their rights under this Agreement to any entity in
which both are either partners, members or stockholders for the purpose of
holding the Shares owned by them, in which case all references to the
"Purchasers" shall be deemed references to such entity.
Section 9.7 Severability. If any provision of this Agreement,
or the application thereof, shall for any reason or to any extent be invalid or
unenforceable, the remainder of this Agreement and application of such provision
to other persons or circumstances shall continue in full force and effect and in
no way be affected, impaired or invalidated.
Section 9.8 Entire Agreement. This Agreement, including the
Schedules and Exhibits referenced herein, and the other agreements and
instruments referenced herein constitute the entire understanding and agreement
of the parties with respect to the subject matter hereof and supersedes all
prior agreements and understandings.
Section 9.9 Other Remedies. Except as otherwise provided
herein, any and all remedies herein expressly conferred upon a party shall be
deemed cumulative with and not exclusive of any other remedy conferred hereby or
by law, or in equity on such party, and the exercise of any one remedy shall not
preclude the exercise of any other.
Section 9.10 Amendment and Waivers. Any term or provision of
this Agreement may be amended, and the observance of any term of this Agreement
49
may be waived (either generally or in a particular instance and either
retroactively or prospectively) only by a writing signed by all parties hereto.
The waiver by a party of any breach hereof or default in the performance hereof
shall not be deemed to constitute a waiver of any other default or any
succeeding breach or default. This Agreement may not be amended or supplemented
by any party hereto except pursuant to a written amendment executed by all
parties.
Section 9.11 No Waiver. The failure of any party to enforce
any of the provisions hereof shall not be construed to be a waiver of the right
of such party thereafter to enforce such provisions.
Section 9.12 Construction of Agreement; Knowledge. For
purposes of this Agreement, the term "knowledge," when used in reference to a
corporation means the actual knowledge of the executive officers of such
corporation after such officers shall have made inquiry that is customary and
appropriate under the circumstances to which reference is made, and when used in
reference to an individual means the actual knowledge of such individual after
the individual shall have made inquiry that is customary and appropriate under
the circumstances to which reference is made.
Section 9.13 Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be an original as against any
party whose signature appears thereon and all of which together shall constitute
one and the same instrument. This Agreement shall become binding when one or
more counterparts hereof, individually or taken together, shall bear the
signatures of all of the parties reflected hereon as signatories.
Section 9.14 No Third Party Beneficiary. Nothing expressed or
implied in this Agreement is intended, or shall be construed, to confer upon or
give any person other than the parties hereto and their respective heirs,
personal representatives, legal representatives, successors and permitted
assigns, any rights or remedies under or by reason of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
ORACLE STRATEGIC PARTNERS, L.P.
By: ________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Managing General Partner
THERMATRX, INC.
By: ________________________
Name: ________________________
Title:________________________
50
BSD MEDICAL CORPORATION
By: ________________________
Name: ________________________
Title:________________________
______________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
51
INDEX OF EXHIBITS AND SCHEDULES
EXHIBITS
Exhibit A BPH Business Assets
Exhibit B List of Purchasers and Amounts
thereof
Exhibit C Certificate of Designation
Exhibit ▇ ▇▇▇▇▇▇ License
Exhibit E Non-Competition Agreement
Exhibit F Consulting Agreement
Exhibit G Supply Agreement
Exhibit H Company Operating Plan
Exhibit A
BSD shall transfer to the Company the business and all of its assets, excluding
any inventory and capital equipment, whether real or personal, tangible or
intangible, relating to the treatment of any conditions or diseases (excluding
malignant cancers) of the prostate gland, including, but not limited to, benign
prostatic hyperplasia (BPH) and prostatitis (the "BPH Business Assets"). Such
BPH Business Assets include, but are not limited to the following (with respect
to items 1 - 4 below, where there is an overlap with cancer therapy materials or
products, then each party shall have the right to use or duplicate for its own
use such materials, and such duplication and use shall be at the Company's
expense):
1. Sales and Marketing Assets
Although the following shall be the property of the Company, the
Company shall not, unless permitted by written agreement, use, distribute or
otherwise employ BSD's name or logo.
a) all advertising, sales and promotional materials including film
negatives, layout sheets, or other materials used to create
brochures or literature for the BSD 50 system or BPH related systems
b) documents, files, books and records, training manuals, instructions,
or other similar materials, in whatever form or storage medium.
c) all sales contacts, distribution lists, account manifests, sales or
accounting software or data, invoice copies and any and all other
information related to past or contemplated sales of the Product (as
hereinafter defined).
2. Manufacturing and Design Assets
Without limitation, BSD shall provide the Company with the complete
ability to manufacture, design, or redesign the Product, including at least the
following:
a) all drawings, circuit board layouts, mechanical and other
specification sheets
b) all production or design know-how related to any aspect of the
applicator, thermistors, or generator/control box; the Company shall
have the right to receive training from relevant BSD personnel in
any aspect of the manufacture or design of the Product, however, BSD
shall be reimbursed for all direct expenses related to such training
c) component source lists
d) all information necessary for the complete manufacture of the
Product including relevant FDA control procedure manuals or other
documentation necessary to meet relevant regulatory standards for
manufacture of the Product
e) all FDA filings related to the Product, including production
tracking materials or documentation
f) all FDA requirements manuals or information related to the Product
or its manufacture
g) all Product or BPH Business Asset related software including, EPROM
codes or EPROM programming capability and any assets required to
generate appropriately programmed Product related components
For purposes of this Agreement, the term "Product" shall collectively mean any
of the following items, together or individually (i) the microwave generator and
control box, including software, temperature control module thermistor (probe)
interfaces, or other "▇▇▇▇▇▇" related technology; (ii) the applicator, including
the antenna and probe sheaths; (iii) the "▇▇▇▇▇▇" thermistors (probes); and (iv)
any related hardware or software required to administer a BPH microwave
treatment including output related software or other data collection/input
means.
3. Regulatory Assets
a) all FDA filings and approvals related to the Product including
sub-components
b) all IDE materials and files
c) all other Product information related to FDA actions, approvals,
sanctions, either past or contemplated which exists as know-how or
files.
4. Other Assets
All Product related assets, including, but not limited to:
a) data and scientific materials
b) sub-component specifications or test sheets
c) inbound and outbound QC and testing procedures manuals and know-how
d) information concerning testing and manufacturing tools, devices,
jigs, or other equipment.
While all of the above assets shall be owned by the Company, the Company may, at
its discretion, leave such property at BSD so long as the Company desires. The
Company shall forego no rights as a result of such action.
5. Licenses and Intellectual Property
a) BSD grants to the Company an exclusive sublicense under the ▇▇▇▇▇▇
Agreement of all of its rights to the ▇▇▇▇▇▇ probe (thermistor)
technology, which sublicense may be terminated by the Company at any
time.
b) BSD grants to the Company a license which shall be exclusive except
for licenses existing on the date hereof, for the treatment of any
conditions or diseases (excluding malignant cancers) of the prostate
gland, including, but not limited to, benign prostatic hyperplasia
(BPH) and prostatitis only, under all United States and foreign
patents, patent rights, copyrights, registered and unregistered
trademarks, trade names, servicemarks, service names, designs,
technology, know-how, processes, trade secrets, inventions,
proprietary data, formulae, research and development data, and other
intangible property, and any and all applications for the foregoing,
relating to or used in or useful to the BPH Business Assets,
including, but not limited to U.S. Patents 4,448,198 and 4,658,836.
This exclusive license includes the right, but not the obligation,
to seek a remedy for the violation of any of the foregoing rights in
the licensed area by any third party. BSD shall not have the right
to seek a remedy for the violation of any of the foregoing rights in
the licensed area by any third party until such time that the
Company declines to exercise its rights to do so.
c) BSD assigns to the Company all of its right, title, and interest in
and to U.S. Patents 4,967,765; 5,220,927; 5,249,585; and 5,334,435.
Exhibit B
SECTION 1.1-Initial Closing
NAME PRICE NUMBER OF SHARES
Oracle $3,000,000 35,000 Preferred
▇▇▇▇▇▇ 250,000 11,000 Preferred
SECTION 2.2-Milestone or Option Closing
NAME PRICE NUMBER OF SHARES
Oracle $3,000,000 *
▇▇▇▇▇▇ 250,000 *
Capitalization Table
Initial Closing Milestone or Option Closing
Stockholder: Percentage Ownership* Percentage Ownership *
BSD 54% 30%
Oracle 35% 45%
▇▇▇▇▇▇ 11% 12.5%
Management Stock
Option Plan * 12.5%
------------------
* The Capitalization Table reflects the ownership of the Company on a fully
diluted basis, assuming conversion of the Preferred Stock into Common Stock and
the issuance and conversion of all management options. Such additional shares of
Preferred Stock will be issued at the Milestone or Option Closing, as the case
may be, in order to give effect to percentages reflected in the Capitalization
Table. Shares of Common Stock ("Option Shares") representing twelve and one half
(12.5%) percent of the Milestone Closing percentage ownership of the Company
will be reserved for issuance pursuant to the Company's management stock option
plan and issued pursuant to Board approval. The "Initial Closing Percentage
Ownership" column excludes Option Shares.
AMENDMENT TO STOCK PURCHASE AGREEMENT
AMENDMENT TO STOCK PURCHASE AGREEMENT by and among BSD Medical
Corporation ("BSD"), Thermatrx, Inc. (the "Company") and Thermatrx Investment
Holdings LLC (assignee of Oracle Strategic Partners, L.P.) dated October 31,
1997 (the "Stock Purchase Agreement"). Capitalized terms used herein defined in
the Stock Purchase Agreement shall have the meanings set forth therein unless
otherwise defined herein.
The parties hereby agree, effective as of the date hereof, to
amend the Stock Purchase Agreement as follows:
1. The Certificate of Designation set forth as Exhibit C to
the Stock Purchase Agreement is hereby replaced in its entirety with the
Restated Certificate of Incorporation attached hereto and all references to the
Certificate of Designation in the Stock Purchase Agreement shall be deemed
references to the Restated Certificate of Incorporation.
2. Section 6.1 (q) on page 33 of the Stock Purchase Agreement
shall be amended to read as follows: "(q) Company License to BSD. BSD shall have
received a perpetual royalty free license from the Company for the use of the
technology being transferred by BSD to the Company relating to the treatment,
excluding the Business of the Company, by heat therapy of malignant or benign
diseases (the "Business of BSD"), in form and substance reasonably satisfactory
to BSD, the Company and the Purchasers."
3. The following subparagraph (d) shall be added to Section 5
of Exhibit A of the Stock Purchase Agreement:
"(d) BSD assigns to the Company the invention identified by
BSD file #B6366 CIP1." Except as specifically set forth
herein, the Stock Purchase Agreement shall remain in full
force and effect without modification.
IN WITNESS WHEREOF, the parties have caused this Amendment to
be executed on the 13th day of November, 1997.
BSD Medical Corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------
▇▇▇▇ ▇▇▇▇▇▇
President and Chairman
Thermatrx, Inc.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
President
Thermatrx Investment Holdings LLC
By: Oracle Strategic
Partners L.P. as Manager
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Manager