STOCK PURCHASE AGREEMENT
Dated as of July 14, 2000
By and Among
QVESTOR, LLC
(the "Purchaser")
and
IXION BIOTECHNOLOGY, INC.
(the "Company")
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TABLE OF CONTENTS
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ARTICLE I PURCHASE OF THE STOCK.............................................1
1.1 Purchase of the Stock.............................................1
1.2 Purchase Price and Method of Payment..............................1
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY....................2
2.1 Valid Corporate Existence; Qualification..........................2
2.2 Capitalization....................................................2
2.3 No Subsidiaries...................................................3
2.4 Consents..........................................................3
2.5 Corporate Authority; Binding Nature of Agreement; Title
to the Stock, etc. ...3
2.6 Financial Statements..............................................3
2.7 Liabilities.......................................................4
2.8 Actions Since Balance Sheet Date..................................4
2.9 Absence of Material Changes.......................................5
2.10 Taxes.............................................................5
2.11 Ownership of Assets; Intellectual Property, etc...................5
2.12 Insurance.........................................................6
2.13 Litigation, Compliance with Laws..................................6
2.14 Real Property.....................................................7
2.15 Agreements and Obligations, Performance...........................7
2.16 Condition of Assets...............................................8
2.17 Accounts and Notes Receivable.....................................8
2.18 Permits and Licenses..............................................8
2.19 Banking Arrangements..............................................8
2.20 Interest in Assets................................................8
2.21 Salary Information................................................9
2.22 Employee Benefit Plans............................................9
2.23 Brokers...........................................................9
2.24 Labor Discussions.................................................9
2.25 Change of Name....................................................9
2.26 Untrue or Omitted Facts..........................................10
2.27 Accountant Letters...............................................10
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASER....................10
3.1 Valid Corporate Existence; Qualification; Consents...............10
3.2 Corporate Authority; Binding Nature of Agreement.................10
3.3 No Breach........................................................11
3.4 Brokers..........................................................11
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3.5 Litigation; Compliance with Laws.................................11
3.6 Untrue or Omitted Facts..........................................12
3.7 Private Placement................................................12
ARTICLE IV COVENANTS.......................................................13
4.1 Pre-Closing Covenants of the Company.............................13
ARTICLE V CONDITIONS PRECEDENT TO THE OBLIGATION OF THE PURCHASER
TO CLOSE...................................................................14
5.1 Representations and Warranties...................................15
5.2 Covenants........................................................15
5.3 No Actions.......................................................15
5.4 Consents; Licenses and Permits...................................15
5.5 No Material Change...............................................15
5.6 Certificate.......................................................15
5.7 Opinion...........................................................15
5.8 Employment and Director's Agreement...............................16
5.9 Lease Agreements..................................................16
5.10 Deferred Compensation.............................................16
5.11 Additional Documents..............................................17
ARTICLE VI CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY TO CLOSE.17
6.1 Representations and Warranties...................................17
6.2 Covenants........................................................17
6.3 No Actions.......................................................17
6.4 Consents.........................................................17
6.5 Certificate......................................................18
6.6 Side Letter......................................................18
6.7 Additional Documents..............................................18
ARTICLE VII CLOSING........................................................18
7.1 The Closing......................................................18
7.2 Location, Time and Date..........................................18
7.3 Conditions of Closing............................................18
7.4 Items to be Delivered by the Company.............................19
7.5 Items to be Delivered by Purchaser...............................19
7.6 Transfer of Possession...........................................19
ARTICLE VIII SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION..................20
8.1 Survival.........................................................20
8.2 Indemnification by the Company...................................20
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8.3 Indemnification by the Purchaser.................................20
8.4 Limitations of Liability.........................................21
8.5 Defense of Claims................................................22
ARTICLE IX TERMINATION AND WAIVER..........................................22
9.1 Termination......................................................22
9.2 Waivers..........................................................23
ARTICLE X MISCELLANEOUS PROVISIONS.........................................23
10.1 Expenses.........................................................23
10.2 Confidential Information.........................................23
10.3 Modification, Termination or Waiver..............................24
10.4 Publicity........................................................24
10.5 Notices..........................................................24
10.6 Binding Effect and Assignment....................................25
10.7 Entire Agreement.................................................25
10.8 Exhibits.........................................................26
10.9 Governing Law; CPR; Arbitration..................................26
10.10 Section Headings..............................................26
10.11 Gender........................................................26
10.12 Severability..................................................26
10.13 Attorneys'Fees................................................26
10.14 Counterparts..................................................27
10.15 Recitals......................................................27
10.16 Definition of Knowledge.......................................27
10.17 Benefits to Others............................................27
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STOCK PURCHASE AGREEMENT
------------------------
THIS STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of July 14,
2000, by and among Ixion Biotechnology, Inc., a Delaware corporation (the
"Company") and QVESTOR LLC, a Delaware limited liability company, ("Purchaser").
W I T N E S S E T H:
--------------------
WHEREAS, the Purchaser desires to acquire from the Company, and the Company
desires to issue and to sell or to cause to be transferred to the Purchaser
3,337,500 shares of the Company's $.01 par value common stock (the "Company
Common Stock") pursuant to the terms of this Agreement;
NOW, THEREFORE, in consideration of the mutual benefits to be derived
hereby, the representations, warranties, covenants, and agreements herein
contained, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Purchaser and the Company do
hereby agree as follows:
ARTICLE I
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PURCHASE OF THE STOCK
---------------------
1.1 Purchase of the Stock. Upon the terms and subject to the conditions set
forth in this Agreement and in the Shareholders' Agreement dated as of July 14,
2000 attached hereto as Exhibit 1.1 hereto ("Shareholders' Agreement"), the
Purchaser hereby agrees to acquire from the Company, and the Company hereby
agrees to issue and to sell to the Purchaser at the Closing 3,337,500 shares of
the Company Common Stock (the "Purchased Stock.")
1.2 Purchase Price and Method of Payment. The cash component of the
purchase price shall be two dollars per share of Purchased Stock, for a total
purchase price of $6,675,000 to be paid for the Purchased Stock (the "Purchase
Price"), and the method payment of the same shall be as set forth in this
Section 1.2.
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(a) Initial Disbursement. At the Closing, the Purchaser shall a portion of
the Purchase Price to the Company in the amount of $3,321,697 dollars by wire
transfer to a bank account to be designated in writing by the Company prior to
Closing.
(b) Disbursement of Balance of the Purchase Price. The Purchaser shall pay
the balance of the cash Purchase Price not later than July 14, 2001 by wire
transfer to such bank account.
ARTICLE II
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REPRESENTATIONS AND WARRANTIES
------------------------------
OF THE COMPANY
--------------
The Company makes the following representations and warranties to the
Purchaser, each of which shall be deemed material (and the Purchaser, in
executing, delivering, and consummating this Agreement, has relied and will rely
upon the correctness and completeness of each of such representations and
warranties):
2.1 Valid Corporate Existence; Qualification. The Company is duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Company has the corporate power to carry on its businesses as now
conducted and to own its assets. The Company is duly qualified to conduct
business and is in good standing as a foreign corporation in those jurisdictions
set forth on Schedule 2.1 and in those jurisdictions in which the Company is
required to qualify in order to own its assets or properties or to carry on its
businesses as now conducted, except where the failure to qualify would not have
a material adverse effect on the business of the Company taken as a whole, and
there has not been any claim by any other jurisdiction to the effect that the
Company is required to qualify or otherwise be authorized to do business as a
foreign corporation therein. The copies of the Company's good standing
certificates or certificates of existence (issued by the appropriate authority),
Certificate of Incorporation (certified by the appropriate authority) and
By-Laws (certified by the Secretary), as amended to date, which constitute a
part of Schedule 2.1 are true and complete copies of those documents as now in
effect. The minute books of the Company contain accurate records of all meetings
of its Boards of Directors and stockholders since the date of incorporation, and
accurately reflect all material transactions referred to therein. At Closing,
all such minute books and records will be in the possession of the Company.
2.2 Capitalization. As of the Closing, after the issuance of the Purchased
Stock and the shares of Company Common Stock referred to Section 5.11 below: (i)
the authorized capital stock of the Company consists of 20,000,000 shares of
Common Stock ("Authorized Common Stock"), of which 6,773,653 shares will be
issued and outstanding ("Issued Common Stock") and one million shares of
Preferred Stock, none of which has been issued or is outstanding ("Preferred
Stock"); (ii ) all of such Issued Common Stock will have been duly authorized,
validly issued, fully paid, and nonassessable; (iii) except as set forth on
Schedule 2.2, there are no subscriptions, options, warrants, rights, or calls or
other commitments or agreements to which
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the Company is a party, calling for the issuance, transfer, sale, or other
disposition of any class of securities of the Company; and (iv) except as set
forth on Schedule 2.2, the Company has no class of securities other than the
Company Common Stock and the Preferred Stock and the Company has never issued
any securities convertible or exchangeable, actually or contingently, into
shares of the Company Common Stock, or any other securities of the Company.
2.3 No Subsidiaries. Except as set forth on Schedule 2.3, there are no
corporations, partnerships, or other business entities controlled by the Company
(collectively, "Subsidiaries"). As used herein, "controlled by" means (a) the
ownership of not less than fifty percent (50%) of the voting securities or other
interests of a corporation, partnership, or other business entity, or (b) the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a corporation, partnership, or other
business entity, whether through the ownership of voting shares, by contract or
otherwise. The Company has not made any investment in, and does not own, any
capital stock of, or any other proprietary interest in, any other corporation,
partnership or other business entity that is not reflected on its books and
records.
2.4 Consents.
Except as set forth on Schedule 2.4, there are no consents of
governmental or other regulatory agencies, foreign or domestic or of other
parties required to be received by or on the part of Company to enable the
Company to enter into and carry out this Agreement in all material respects.
2.5 Corporate Authority; Binding Nature of Agreement; Title to the Stock,
etc. The Company has the power to enter into this Agreement and to carry out its
obligations hereunder. At the Closing, the Company's execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby will
have been duly authorized by the Company's Board of Directors, and no other
corporate proceeding on the part of the Company is necessary to authorize the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby. This Agreement constitutes the valid and
binding agreement of the Company and, assuming that this Agreement constitutes
the legal, valid, and binding agreement of the Purchaser, is enforceable in
accordance with its terms subject to applicable bankruptcy, reorganization,
insolvency and similar laws affecting the rights of creditors and subject to
general principles of equity.
2.6 Financial Statements. The financial statements of the Company for the
last three (3) fiscal years ended December 31, 1997, 1998, and 1999,
respectively, and the interim financial statements of the Company for the five
month fiscal period ended May 31, 2000 (collectively "Financial Statements"),
copies of which are attached hereto as Schedule 2.6, taken as a whole, fairly
present the financial position of the Company as of such dates and the results
of its operations for such fiscal years and fiscal periods (subject, in the case
of unaudited interim statements, to normal year-end audit adjustments which will
not be material in amount or effect to the Company taken as a whole), and;
except as set forth therein or in Schedule 2.6, and except for the interim
financial statements, were prepared in conformity with generally accepted
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accounting principles ("GAAP") consistently applied throughout the fiscal years
and fiscal period covered thereby.
2.7 Liabilities. As at May 31, 2000 (the "Balance Sheet Date"), the Company
had no material debts, liabilities or obligations, contingent or absolute, that
would be required by GAAP to be reflected on the books of the Company
(including, without limitation, any contingent tax liabilities), other than
those debts, liabilities and obligations reflected or reserved against in the
Company's unaudited balance sheet dated May 31, 2000 ("Balance Sheet") at the
Balance Sheet Date or as set forth on Schedule 2.7.
2.8 Actions Since Balance Sheet Date. Except as otherwise expressly
provided or set forth in the Financial Statements or Balance Sheet, or as
required by this Agreement, or as set forth in Schedule 2.8, since the Balance
Sheet Date, the Company has not: (a) issued or sold, or agreed to issue or sell
any of its capital stock, options, warrants, rights or calls to purchase such
stock, any securities convertible or exchangeable into such capital stock or
other corporate securities, or effected any subdivision or other
recapitalization affecting its capital stock; (b) incurred any material
obligations or liabilities, except those arising in the ordinary and usual
course of its business, that would normally be reflected on the books of the
Company; (c) incurred any material contingent obligation or liability, except
those arising in the ordinary and usual course of its business; (d) discharged
or satisfied any lien or encumbrance, except in the ordinary and usual course of
business, or paid or satisfied any liability, absolute or contingent, other than
liabilities as at the Balance Sheet Date in the ordinary and usual course of
business; (e) made any wage or salary increases or granted any bonuses other
than wage and salary increases and bonuses granted in accordance with its normal
salary increase and bonus policies; (f) mortgaged, pledged or subjected to any
lien or other encumbrance any of its properties or assets, or permitted any of
its property or assets to be subjected to any lien or other encumbrance, except
in the ordinary and usual course of business; (g) sold, assigned or transferred
any of its properties or assets, except in the ordinary and usual course of
business or as approved by Purchaser in writing; (h) entered into any material
transaction not in the ordinary and usual course of business; (i) waived any
rights of material value, or canceled, modified or waived any indebtedness for
borrowed money held by it, except in the ordinary and usual course of business;
(j) except in the ordinary and usual course of business made any loans or
advances to any person, or assumed, guaranteed, or otherwise become responsible
for the obligations of any person; or (k) incurred any indebtedness for borrowed
money (except for endorsement, for collection or deposit of negotiable
instruments received in the ordinary and usual course of business). To the
extent that any moneys are outstanding under any line of credit of the Company,
all such funds were utilized in the ordinary and usual course of business. Since
the Balance Sheet Date the Company has not declared, paid, or set aside any
dividends (other than normal recurring dividends paid in the ordinary course of
business and in the same proportions as the prior year) or other distributions
or payments on its capital stock, or redeemed or repurchased, or agreed to
redeem or repurchase, any shares of its capital stock.
2.9 Absence of Material Changes. Except as otherwise expressly provided or
set forth in the Financial Statements or Balance Sheet, or as required by this
Agreement, or as set forth in Schedule 2.9, there has not been any material
change, whether or not adverse, in the assets,
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properties, operations, or financial condition of the Company. Since the
Balance Sheet Date, no event has occurred, other than in the ordinary and usual
course of business and as set forth in such Schedule 2.9, that reasonably could
be expected to have a material effect upon the business of the Company, and the
Company does not know of any development or threatened development of a nature
that will have, or which could be reasonably expected to have, a material effect
upon the business of the Company or upon any of its assets, properties,
operations or financial condition.
2.10 Taxes. Each of the Company's federal income tax returns for each of
the fiscal years ending December 31, 1997 and 1998 was prepared in conformity
with the Financial Statements and/or Balance Sheet. Except as set forth in
Schedule 2.10, all taxes, including, without limitation, income, property,
sales, use, franchise, capital stock, excise, added value, employees' income
withholding, social security and unemployment taxes imposed by the United
States, any state, or any foreign country, or by any other taxing authority,
which have become due or payable by the Company, and all interest and penalties
thereon, whether disputed or not, have been paid in full or adequately provided
for by reserves, including deferred taxes computed in accordance with GAAP,
shown in its books of account; all deposits required by law to be made by the
Company with respect to estimated income, franchise, sales, use, and employees'
withholding taxes have been duly made; and all tax returns, including estimated
tax returns, required to be filed have been duly filed. Except as set forth in
Schedule 2.10, the federal and state income tax returns of the Company have not
been audited within the three years preceding the Closing Date.
2.11 Ownership of Assets; Intellectual Property, etc.
(a) Except as set forth in Schedule 2.11, the Company owns and has
exclusive, good, and, marketable title to all of its assets, properties,
Intellectual Property (as defined below), and businesses (including all assets
reflected in the Balance Sheet, except as the same may have been disposed of in
the ordinary course of business since the Balance Sheet Date), free and clear of
all liens, mortgages, pledges, conditional sales agreements, restrictions on
transfer, or other encumbrances or changes. Such assets, together with such
additional assets as the Company leases or licenses from others, are, in the
reasonable business judgment of the Company, sufficient to permit the Company to
conduct its business as now conducted.
(b) Schedule 2.11 sets forth a true and complete list of all patents,
copyrights, trademarks, and trade names that are either owned by the Company or
in which it has an interest as owner or licensee ("Intellectual Property").
Except as set forth in said Schedule 2.11: (i) no other person or entity has any
proprietary or other interest in any such Intellectual Property and such
Intellectual Property so owned or licensed is, in the reasonable business
judgment of the Company, sufficient to permit the Company to conduct its
business as now conducted; (ii) the Company is not a party to or bound by any
license or agreement requiring the payment to any person or entity of any
royalty; (iii) the Company does not know, or have reasonable grounds to
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know, of any infringement by others of the Intellectual Property of the
Company; and (iv) to the knowledge of the Company, the Company is not infringing
upon any patent, copyright, trade name or trademark, or otherwise violating the
rights of any third party with respect thereto, and no proceedings have been
instituted or are threatened and no claim has been received by the Company
alleging any such violation.
(c) To the best of the Company's knowledge, based on preliminary patent
searches conducted by the Company and its counsel prior to filing applications
for any of the Company's patents, and further based on such patent searches
and other disclosure of prior art that the Company discovered, or which were
called to its attention or to the attention of its counsel during the
prosecution of any of the Company's patent applications, there is no generic
patent that would prevent the development of the Company's diabetes-related
technology and Intellectual Property.
2.12 Insurance. All of the Company's policies of fire, liability and other
forms of insurance, except as set forth in Schedule 2.12: (i) are presently in
effect, and all premiums have been timely paid; and (ii) are carried on an
"occurrence basis." Except as set forth in said Schedule 2.12, the Company does
not know of any state of facts, or of the occurrence of any event which might
reasonably (i) form the basis for a valid claim for any material damages against
the Company not fully covered by insurance; or (ii) result in a material
increase in insurance premiums of the Company on a retroactive or prospective
basis; or (iii) give rise to any claim which an employee may have against the
Company that is not fully covered by insurance (including any medically related
illness).
2.13 Litigation, Compliance with Laws.
(a) Except as set forth in Schedule 2.13, there are no actions,
suits, proceedings, or governmental investigations relating to the Company or
to any of its properties, assets, Intellectual Property, or business, filed or
commenced and pending or, to the knowledge of the Company, threatened, or any
order, injunction, award, or decree outstanding, against the Company or against
or relating to any of its properties, assets, Intellectual Property, or
business; and the Company does not know of any basis for any such action, suits,
or proceedings within the past two years which could reasonably be expected to
have a material adverse effect on the business, financial condition, or
operations of the Company.
(b) Except as set forth in Schedule 2.13, there are no pending
claims, investigations, charges, citations, hearings, consents, decrees, or
litigation pending, or to the knowledge of the Company, threatened against the
Company with respect to wages, compensation, bonuses, commissions, or awards or
payroll deductions; equal employment or human rights violations regarding race,
color, religion, sex, national origin, age, veteran's status, marital status,
disability, or any other recognized attribute under any applicable equal
employment law of any federal, state, or municipal government entity prohibiting
discrimination.
2.14 Real Property. Schedule 2.14 sets forth a brief description of all
real properties which are leased to, owned, or utilized by the Company including
all material structures located
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thereon (the "Structures") and are subject to the transactions contemplated by
this Agreement (collectively, the "Property"). To the knowledge of the Company:
(a) All uses of all of such Property by the Company
conform, in all material respects, to all applicable building, fire,
environmental, and zoning ordinances, laws, codes, and regulations (including,
without limitation, the Americans' with Disabilities Act) and, to the knowledge
of the Company and the Company, to all terms of the leases relating thereto;
(b) Except as otherwise described in Schedule 2.14, all of
the Property is in usable and operating condition without the necessity of any
major repairs, and all such real properties can be used for their intended
purposes;
2.15 Agreements and Obligations, Performance. Except as listed and briefly
described in Schedule 2.15 (the "Listed Agreements"), as of the Closing Date,
the Company is not a party to, nor is bound by any: (a) written or oral
contract, arrangement, commitment, or understanding (collectively, "Contract")
which Contract involves aggregate payments in excess of Ten Thousand Dollars
($10,000) and which Contract cannot be canceled on thirty (30) days or less
notice without penalty or premium or any continuing obligation or liability; (b)
contractual obligation or contractual liability of any kind to the officers or
directors of the Company; (c) deferred compensation bonus or incentive plan or
agreement not cancelable at will without penalty or premium or any continuing
obligation or liability; (d) contract containing covenants limiting the freedom
of the Company to engage or compete in any line of business or with any person
in any geographical area, except for manufacturer's representatives or
distribution agreements; (e) contract or option relating to the acquisition or
sale of any business; (f) voting trust agreement or similar stockholders'
agreement; or (g) other Contract which materially and adversely affects any of
its properties, assets, or business, whether directly or indirectly, or which
was entered into other than in the ordinary course of business. The Company has
in all material respects performed all obligations required to be performed by
it to date under all of the Listed Agreements, is not in default in any material
respect under any of the Listed Agreements or under any other contract,
commitment, or understanding, and has received no notice of any default or
alleged default hereunder which has not heretofore been cured or which notice
has not heretofore been withdrawn. The Company does not know of any material
default under any of the Listed Agreements by any other party thereto or by any
other person, firm or corporation bound thereunder.
2.16 Condition of Assets. Except as set forth on Schedule 2.16, and except
for normal breakdowns and servicing requirements, all machinery and equipment
and laboratories (collectively "Assets") regularly used by the Company in the
conduct of its business has been maintained and repaired in accordance with the
Company's maintenance standards for such Assets and all such are in good
operating condition.
2.17 Accounts and Notes Receivable.
Except as set forth on Schedule 2.17, all of the accounts and notes receivable
reflected in the Financial Statements of the Company were or will have been
created in the ordinary course of its business, from the sale of services or
goods, and the Company does not know of any valid
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defense or right of set-off to the rights of the Company to collect such
accounts receivable in the full amounts shown.
2.18 Permits and Licenses. Except as set forth in Schedule 2.18, the
Company has all permits, licenses, orders, franchises, and approvals of all
federal, state, local, and foreign governmental or regulatory bodies, whose
failure to be held would materially and adversely affect the Company's ability
to carry on its business as presently conducted and such permits, licenses,
orders, franchises and approvals are in full force and effect, and no suspension
or cancellation of any of such other permits, licenses, etc., is pending or to
the knowledge of the Company threatened; and the Company is in compliance in all
material respects with all requirements, standards, and procedures of the
federal, state, local, and foreign governmental bodies which have issued such
permits, licenses, orders, franchises, and approvals.
2.19 Banking Arrangements. Schedule 2.19 sets forth the name of each bank
in or with which the Company has an account, credit line or safety deposit box.
2.20 Interest in Assets. Except as set forth in Schedule 2.20, none of the
officers, directors, or shareholders, or any affiliate thereof, own any
Intellectual Property or other proprietary rights, tangible or intangible, used
in or related, directly or indirectly, to the business of the Company. As used
herein, "affiliate" means any person, corporation, or other entity (other than
the Company) which directly or indirectly controls, is controlled by or is under
common control with any officer, director or shareholder.
2.21 Salary Information. Schedule 2.21 contains a list of the names and
current salary rates of and bonus commitments to all present officers and
directors of the Company.
2.22 Employee Benefit Plans. Other than as set forth on Schedule 2.22, (i)
there are no "employee pension benefit plans" (within the meaning of Section
3(2)(A) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) maintained by the Company, and (ii) the Company does not have any
policies or plans, whether written or not, that provide for vacation benefits,
severance benefits, leave rights, or other benefits to its employees. .
Except as otherwise set forth in Schedule 2.22 hereto, the Company does not
have a Company Employees' (401(k)) Profit Sharing Plan .
2.23 Brokers. Except as described in Schedule 2.23, all negotiations
relative to this Agreement and the transactions contemplated hereby have been
carried on directly with the Purchaser or an affiliate thereof by the Company
without the intervention of any broker, finder, investment banker, or other
third party. Except as described in Schedule 2.23, the Company has not engaged,
consented to, or authorized any broker, finder, investment banker, or other
third party to act on its behalf, directly or indirectly, as a broker or finder
in connection with the transactions contemplated by this Agreement, and the
Company agrees to indemnify the Purchaser against, and to hold it harmless from
any claim for brokerage or similar commission or other compensation which may be
made against the Purchaser by any third party in connection with any
transactions contemplated hereby which claim is based upon any action by the
Company.
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2.24 Labor Discussions. Except with respect to the agreements listed in
Schedule 2.24, the Company is not, nor has it ever been, a party to any
agreement, collective bargaining or otherwise, with any party regarding the
rates of pay or working conditions of any of the Company's employees, nor
obligated under any agreement to recognize or bargain with any labor
organization or union, nor involved in any labor discussions with any unit or
group seeking to become the bargaining unit for any of its employees.
2.25 Change of Name. The Company has not conducted business under any name
during the past five years except those set forth on Schedule 2.25.
2.26 Untrue or Omitted Facts. No representation, warranty, covenant, or
statement by the Company in this Agreement contains any untrue statement of a
material fact, or fails to state a fact necessary in order to make such
representation, warranty, covenant, or statements not materially misleading.
Without limitation of the foregoing, there is no fact known to the Company or to
the Company's officers, managers, or directors that has had, or which may be
reasonably expected to have, a material adverse effect on the Company or any of
its assets, properties, operations, or businesses and that has not been
disclosed in writing to the Purchaser.
2.27 Accountant Letters. Within the past five fiscal years of the Company,
the Company has not received any correspondence with its accountants, including
without limitation, management letters, which have indicated or disclosed that
there is a "material weakness" in or "reportable condition" with respect to (as
those terms are defined under GAAP) the Company's financial condition.
ARTICLE III
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REPRESENTATIONS AND WARRANTIES OF PURCHASER
-------------------------------------------
The Purchaser makes the following representations and warranties to the
Company, each of which shall be deemed material (and the Company, in executing,
delivering, and consummating this Agreement, have relied and will rely upon the
correctness and completeness of each of such representations and warranties):
3.1 Valid Corporate Existence; Qualification; Consents. The Purchaser is a
limited liability company duly organized, validly existing and in good standing
under the laws of the State of Delaware. The Purchaser has the power to carry on
its business as now conducted and to own its assets. Except as set forth in
Schedule 3.1, there are no consents of governmental or other regulatory
agencies, foreign or domestic, or of other parties required to be received by or
on the part of the Purchaser to enable the Purchaser to enter into and carry out
this Agreement in all material respects.
3.2 Corporate Authority; Binding Nature of Agreement. The Purchaser has the
power to enter into this Agreement and to carry out its obligations thereunder.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly
9
<PAGE>
authorized by the Purchaser's Members and no other proceeding on the part of the
Purchaser or any affiliate will be necessary to authorize the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby. This Agreement constitutes the valid and binding agreement of the
Purchaser and, assuming that this Agreement constitutes the legal, valid and
binding agreement of the other parties, is enforceable in accordance with its
terms subject to applicable bankruptcy, insolvency, and similar laws affecting
the rights of creditors and subject to general principles of equity.
3.3 No Breach. Neither the execution and delivery of this Agreement nor
compliance by the Purchaser with any of the provisions hereof nor the
consummation of the transactions contemplated hereby, will:
(a) violate or conflict with any provisions of the Articles of
Organization or Operating Agreement of the Purchaser;
(b) violate or, alone or with the passage of time, result in the
material breach or termination of, or otherwise give any contracting party the
right to terminate, or declare a default under, the terms of any agreement or
other document or undertaking, oral or written to which the Purchaser is a party
or by which it or any of its properties or assets may be bound (except for such
violations, conflicts, breaches or defaults as to which required waivers or
consents by other parties have been, or will, prior to Closing, be, obtained);
(c) result in the creation of any lien, security interest, charge
or encumbrance upon any of the properties or assets of the Purchaser or pursuant
to the terms of any such agreement or, instrument;
(d) violate any judgment, order, injunction, decree or award
against, or binding upon the Purchaser or upon its properties or assets; or
(e) violate any law or regulation of any jurisdiction relating to
the Purchaser or any of its securities, assets or properties.
3.4 Brokers. Neither the Purchaser nor any affiliate has engaged, consented
to, or authorized any broker, finder, investment banker, or other third party to
act on its behalf, directly or indirectly, as a broker or finder in connection
with the transactions contemplated by this Agreement, and the Purchaser agrees
to indemnify the Company against, and to hold it harmless from, any claim for
brokerage or similar commission or other compensation which may be made against
the Company or the Company by any third party in connection with the
transactions contemplated hereby, which claim is based upon any action by the
Purchaser or any affiliate.
3.5 Litigation; Compliance with Laws. There are no actions, suits,
proceedings or governmental investigations relating to the Purchaser or any of
its subsidiaries or affiliates filed or commenced and pending or, to the
knowledge of the Purchaser, threatened, or any order, injunction, award or
decree outstanding against the Purchaser or any of its subsidiaries or
affiliates; the Purchaser is not in material violation of any law, regulation,
ordinance, order, injunction, decree, award, or other requirement of any
governmental body, court, or arbitrator
10
<PAGE>
relating to its securities, businesses, properties, or assets which could have a
materially adverse effect on the business, financial condition or operation of
the Purchaser.
3.6 Untrue or Omitted Facts. No representation, warranty, or statement by
the Purchaser in this Agreement contains any untrue statement of a material
fact, or omits or will omit to state a fact necessary in order to make such
representations, warranties, or statements not materially misleading.
3.7 Private Placement.
(a) The Purchased Shares are being acquired by Purchaser for its own
account for investment and not with a view of the resale or distribution there
of, and Purchaser has no present intention of making any distribution or
disposition of any of such Purchased Shares. Purchaser understands that the
Purchased Shares are being sold in a transaction which is exempt from the
registration requirements of the Securities Act of 1933 (the "Act"), and that
such Purchased Shares must be held and not resold unless they are subsequently
registered under the Act or an exemption from such registration is available and
the certificates issued to evidence such Purchased Shares shall contain a legend
to the foregoing effect.
(b) Purchaser has had access to the documents referred to in the
response dated May 5, 2000 to the Preliminary Due Diligence Request List,
including, without limitation, the annual report on Form 10-KSB for the year
ended December 31, 1999, the quarterly report on Form 10-QSB for the quarter
ended March 31, 2000, filed by the Company with the Securities and Exchange
Commission, and has been furnished additional documents by the Company's patent
counsel.
(c) Purchaser has had a reasonable opportunity to ask questions of and
receive answers from the Company concerning the Company and the Purchased
Shares, and any such questions have been answered satisfactorily. In addition,
Purchaser has had the opportunity to request additional information from the
Company. Any such requested additional information has been provided.
(d) Except as set forth in this Agreement, no representations or
warranties have been made to the Purchaser by the Company, and in entering into
this transaction, the Purchaser is not relying upon any information other than
that referred to herein. Neither the Company, nor any other person acting on its
behalf has offered or sold the Purchased Shares to Purchaser by any form of
general solicitation or general advertising.
(e) Purchaser understands that the Purchased Shares are being offered
and sold in reliance on specific exemptions from the registration requirements
of federal and state securities laws and that the Company is relying upon the
truth and accuracy of the representations, warranties, agreements,
acknowledgments, and understandings of the Purchaser set forth herein in order
to determine the applicability of such exemptions and the suitability of
Purchaser to acquire the Purchased Shares.
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<PAGE>
(f) Purchaser acknowledges that the certificate for the Purchased
Shares will bear the following legend to the effect that the Purchased Shares
have been acquired for investment, have not been registered under the Securities
Act of 1933, and may not be sold, transferred, pledged, or hypothecated in the
absence of such registration or an exemption therefrom under said Act, and
appropriate stop transfer instructions will be noted in the Company's stock
records.
ARTICLE IV
----------
COVENANTS
---------
[Pre-Closing Covenants Will Not Apply
If the Agreement Is Executed Simultaneously With the Closing.]
4.1 Pre-Closing Covenants of the Company. The Company hereby covenants
that, from and after the date hereof and until the Closing or earlier
termination of this Agreement:
(a) Access. Between the date hereof and Closing, the Company shall give
to authorized representatives of the Purchaser (including, without limitation,
attorneys, accountants, appraisers, environmental experts, and equipment
experts) (collectively, the "Representatives"), access to and the right to make
complete and thorough inspections of the Company and all its business and
assets, Intellectual Property, and business records, during normal business
hours, in such manner as not to unduly disrupt normal business activities.
(b) Preservation of Business. The Company shall preserve the preserve
the business of the Company. Without limiting the generality of the foregoing,
the Company shall take no action, or omit to take any action, that may adversely
affect the business and goodwill of the Company. The Company shall conduct its
business only in the ordinary and usual course and make no material change in
any of its policies without the prior written consent of the Purchaser. Between
the execution date of the Agreement and the Closing Date, the stockholder's
equity of the Company shall not change other than through normal operating
profits or losses, and normal distributions (including tax distributions), all
of which are paid in the normal and ordinary course of business, without
Purchaser's prior written permission.
(c) Insurance. The Company shall maintain in force the insurance
policies referenced in Section 2.12, except to the extent that they may be
replaced with equivalent policies.
(d) Liabilities. The Company shall not incur any obligation or
liability, absolute or contingent, except for those incurred in the ordinary and
usual course of its business; nor shall it pay any obligation or liability other
than: (a) debts, liabilities, and obligations set forth in the Balance Sheet;
(b) debts, liabilities and obligations arising after the Balance Sheet Date in
the ordinary and usual course of its business; and (c) debts, liabilities and
obligations under the contracts, agreements, past practices, arrangements,
relationships, documents and instruments
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<PAGE>
listed, described or contained in this Agreement or in the Exhibits attached to
this Agreement, or related to the performance of this Agreement by the Company.
(e) No Breach. The Company will use its best efforts to assure that all of
the representations and warranties of the Company contained herein are true in
all material respects on the Closing Date as if repeated at and as of such
time, and that no material breach or default shall occur with respect to any of
its or their covenants, representations or warranties contained herein that has
not been cured by the Closing. The Company will not take any action or do
anything that will cause a breach of or default respecting such covenants,
representations or warranties, and the Company shall promptly notify the
Purchaser of any event or fact that represents or is likely to cause such a
breach or default.
(f) No Agreements. Neither the Company nor any of its officers or
directors shall enter into any agreement or understanding, for the sale or
possible sale of any securities of the Company or the business or the assets of
the Company with anyone other than the Purchaser.
(g) No Breach. The Purchaser will use its best efforts to assure that
all of its representations and warranties contained herein are true in all
material respects as of the Closing Date as if repeated at and as of such time,
and that no material breach or default shall occur with respect to any of its
covenants, representations or warranties contained herein that has not been
cured by the Closing. The Purchaser will not voluntarily take any action or do
anything which will cause a breach of or default respecting such covenants,
representations and warranties and shall promptly notify the Company of any
event or fact which represents or is likely to cause such breach or default.
ARTICLE V
---------
CONDITIONS PRECEDENT TO THE
---------------------------
OBLIGATION OF THE PURCHASER TO CLOSE
------------------------------------
The obligation of the Purchaser to enter into and complete the Closing
is subject to the fulfillment, prior to or on the Closing Date, of each of the
following conditions, any one or more of which may be waived by the Purchaser
(except when the fulfillment of such condition is a requirement of law).
5.1 Representations and Warranties. All representations and warranties of
the Company contained in this Agreement and in any written statement,
certificate, or schedule delivered pursuant hereto or in connection with the
transactions contemplated hereby shall be true and correct in all material
respects as at the Closing Date, as if made at the Closing and as of the Closing
Date.
5.2 Covenants. The Company shall have performed and complied in all
material respects with all covenants and agreements required by this Agreement
to be performed or complied with by each of them prior to or at the Closing.
13
<PAGE>
5.3 No Actions. No action, suit, proceeding or investigation shall have
been instituted, and be continuing before a court or before or by a governmental
body or agency, or shall have been threatened and be unresolved, to restrain or
to prevent or to obtain damages in respect of, the carrying out of the
transactions contemplated hereby, or which, if successful, would materially
affect the right of the Purchaser to own the Purchased Stock or which, if
successful, would have a material adverse effect on the operation of the
Company's business.
5.4 Consents; Licenses and Permits. The Company shall have each obtained
all consents, licenses, and permits of third parties necessary for the
performance by it of its obligations under this Agreement and such other
consents, if any, which are necessary to prevent (a) agreements of the Company
from terminating, the termination of which, in the aggregate, would have a
material adverse effect on the business, financial condition, or assets of the
Company, or (b) except for indebtedness for borrowed money, any material
indebtedness of the Company from becoming due or being subject to becoming due
with the passage of time or on notice as a result of the performance of this
Agreement; any other provision of this Agreement to the contrary
notwithstanding.
5.5 No Material Change. There shall have been no material change, whether
or not adverse at the Closing Date in the business, assets, properties,
operations, financial status or prospects of the Company since the Balance Sheet
Date.
5.6 Certificate. The Purchaser shall have received a certificate in the
form annexed hereto as Exhibit 5.6 dated the Closing Date, signed by the
Chairman and Chief Executive Officer and Secretary or Assistant Secretary of the
Company as to the satisfaction of the conditions contained in Sections 5.1
through 5.5.
5.7 Opinion. The Purchaser shall have received the written opinion of
Brashear & Associates, P.L., dated the Closing Date, in form and substance
reasonably satisfactory to the Purchaser and its counsel substantially to the
effect set forth on Exhibit 5.7 hereto.
5.8 Employment and Director's Agreement.
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<PAGE>
(a) At the Closing. Weaver H. Gaines ("Gaines") shall have executed the
Employment Agreement with the Company annexed hereto as Exhibit 5.8 (a), and
such Employment Agreement for Gaines shall supersede in all respects the
Employment Agreement for Gaines heretofore in effect dated August 31, 1994, and
all amendments, renewals, and modifications thereto.
(b) At or Prior to the Closing. David C. Peck and the Company shall
terminate in all respects the Employment Agreement dated August 31, 1994 and the
Consulting Agreement dated July 1, 1996, and all amendments, modifications and
extensions thereto, (collectively "Peck Agreements") and pursuant to such
termination, David C. Peck shall release the Company and the Purchaser and any
affiliate from all liability and obligations whatsoever arising under said Peck
Agreements or the termination thereof and shall have executed the Director's
Agreement with the Company annexed hereto as Exhibit 5.8(b) and such Director's
Agreement shall supersede in all respects the Employment Agreement and the
Consulting Agreement for Peck.
5.9 Lease Agreements. At the Closing any landlord's consents that may be
required under the Real Property leases with respect to the properties leased by
the Company to permit such leases to remain in effect on their current terms and
conditions following the Closing shall have been obtained by the Company.
5.10 Deferred Compensation.
(a) Prior to the Closing, the Company shall have terminated
the following deferred compensation plans and all modification amendments and
renewals thereof: (i) the Deferred Compensation Plan Agreement with David C.
Peck ("Peck") dated April 1, 1994; (ii) the Deferred Compensation Plan Agreement
with Ammon B. Peck dated June 1, 1994 ("A. Peck"); (iii) the Deferred
Compensation Plan Agreement with Weaver H. Gaines ("Gaines") dated January 1,
1994, and the Deferred Compensation Plan Agreement with Theodore L. Snow dated
January 3, 1994 (collectively, the "Plans").
(b) The Company shall have obtained releases in favor of the
Company, the Purchaser and any affiliate from each of Peck, A. Peck, Gaines, and
Snow releasing the Company, the Purchaser, and any affiliate from all
obligations and liabilities whatsoever arising under said Plans or the
termination thereof.
(c) All deferred compensation amounts arising pursuant to such
Plans shall have been converted into restricted shares of the Company Common
Stock at the rate of $4.00 per share; provided that $84,000 of the deferred
compensation amount owed to Peck shall not be so converted but instead, will be
paid in cash to Peck by the Company at the closing.
5.11 Additional Documents. The Company and the shall have delivered all
such other certificates and documents as the Purchaser or its counsel may have
reasonably requested.
ARTICLE VI
----------
15
<PAGE>
CONDITIONS PRECEDENT TO THE
---------------------------
OBLIGATION OF THE COMPANY TO CLOSE
----------------------------------
The obligation of the Company to enter into and complete the Closing is
subject to the fulfillment, prior to or on the Closing Date, of each of the
following conditions, any one or more of which may be waived by the Company
(except when the fulfillment of such condition is a requirement of law).
6.1 Representations and Warranties. All representations and warranties of
the Purchaser contained in this Agreement and in any, Exhibit, certificate, or
schedule delivered pursuant hereto or in connection with the transactions
contemplated hereby shall be true and correct in all material respects as at the
Closing Date, as if made at the Closing and as of the Closing Date.
6.2 Covenants. The Purchaser shall have performed and complied in all
material respects with all covenants and agreements required by this Agreement
to be performed or complied by it prior to or at the Closing.
6.3 No Actions. No action, suit, proceeding, or investigation shall have
been instituted, and be continuing, before a court or before or by a
governmental body or agency, or have been threatened, and be unresolved, by any
governmental body or agency to restrain or prevent, or obtain damages in respect
of, the carrying out of the transactions contemplated hereby, or which, if
successful, would have a material adverse effect on the assets, properties and
business of the Purchaser.
6.4 Consents. The Purchaser shall have obtained all consents, licenses and
permits of third parties necessary for the performance of all its respective
obligations under this Agreement.
6.5 Certificate. The Company shall have received a certificate in the form
annexed hereto as Exhibit 6.5 dated the Closing Date, signed by Per-Olof.
Wallstrom, the authorized representative of Purchaser's sole Member, Q-Med, AB
(publ), a corporation organized under the laws of the Kingdom of Sweden
("Q-Med") as to the satisfaction of the conditions contained in Sections 6.1
through 6.5.
6.6 Side Letter. Purchaser shall have delivered a side letter agreement
setting forth certain agreements of Q-Med in the form annexed hereto as Exhibit
6.6, dated the Closing Date, signed by authorized representatives of Q-Med.
6.7 Additional Documents. The Purchaser shall have delivered all such
certified resolutions, certificates and documents with respect to the Purchaser
as the Company or their counsel reasonably may have requested.
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<PAGE>
ARTICLE VII
-----------
CLOSING
-------
7.1 The Closing. The closing of the purchase of the Purchased Stock
contemplated by this Agreement (the "Closing") shall be deemed to occur
simultaneously with the satisfaction of all of the conditions precedent to the
obligations of the parties to close as set forth in Articles V and VI and upon
the delivery by the parties of all of the items to be delivered by them pursuant
to Sections 7.4 and 7.5 of this Article VII. The date on which the Closing shall
be deemed to have occurred is referred to in this Agreement as the "Closing
Date."
7.2 Location, Time and Date. The location for the delivery of the items to
be delivered by the parties under the conditions of Closing set forth in Section
7.3 hereof shall be at the New York Athletic Club, 180 Central Park South, New
York, NY 10019 at 2:00 p.m., or at such other time and place as may be actually
agreed to by the parties hereto, but in any event not later than July 14, 2000.
7.3 Conditions of Closing. The delivery of the items to be delivered by the
Company as provided in Section 7.4 hereof and the delivery of the items to be
delivered by the Purchaser as provided in Section 7.5 hereof shall constitute
the conditions of Closing.
7.4 Items to be Delivered by the Company. At the Closing, the Company will
deliver or cause to be delivered to the Purchaser:
(a) The certificates for the Purchased Stock which, when
combined with the shares of the Company Common Stock previously issued to Q-Med
prior to the Closing will represent approximately fifty-nine percent (59%) of
the Issued Common Stock;
(b) The certificate required by Section 5.6;
(c) The opinion of Brashear & Associates, P.L., as required
by Section 5.7;
(d) The Employment Agreement required by Section 5.8(a);
(e) The Director's Agreement required by Section 5.8 (b);
(f) The Shareholders' Agreement;
(g) The Landlord's Consents required by Section 5.10;
(h) Resignation of Karl-E Arfors as a director of the Company;
(i) Such other certified resolutions, documents, and
certificates as are required to be delivered by the Company pursuant
to the provisions of this Agreement.
17
<PAGE>
7.5 Items to be Delivered by Purchaser. At the Closing, the Purchaser will
deliver or cause to be delivered to the Company:
(a) One half of the Purchase Price in the amount of $3,321 697;
(b) The certificate required by Section 6.5;
(c) Such other certified resolutions, documents and certificates
as are required to be delivered by the Purchaser pursuant to the provisions of
this Agreement.
7.6 Transfer of Possession. As of the Closing, the Company shall give the
Purchaser full possession and enjoyment of the Purchased Stock.
ARTICLE VIII
------------
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
--------------------------------------------
8.1 Survival. The parties hereto agree that their respective
representations, warranties, covenants, and agreements contained in this
Agreement shall survive the Closing for a period (the "Indemnification Period"),
as follows:
(a) with respect to claims for indemnification hereunder
regarding taxes or tax liabilities (including any penalties or interest
applicable thereto), for a period equal to the fullest extent of any applicable
statutes of limitations governing such tax liabilities, including waivers and
extensions with respect to all tax liabilities, plus sixty (60) days; and
(b) with respect to claims for indemnification hereunder
regarding liabilities other than tax liabilities, for a period of two (2) years
following the Closing Date.
To the extent that an Indemnified Party (as hereinafter defined) asserts in
writing a claim for Damages (as hereinafter defined) against an Indemnifying
Party (as hereinafter defined) prior to the expiration of the Indemnification
Period, which claim reasonably identifies the basis for the claims and the
amounts of any reasonably ascertainable damages, the Indemnification Period
shall be extended for such claim until such claim is resolved, subject to the
limitations hereinafter provided.
8.2 Indemnification by the Company. The Company agrees to save, defend and
indemnify the Purchaser and any affiliate, their officers, directors, employees,
and agents against and hold them harmless from any and all liabilities, of every
kind, nature and description, fixed or contingent (including, without
limitation, reasonable counsel fees and expenses in connection with any action,
claim or proceeding relating to such liabilities) ("Damages") arising from the
breach of the Company's representations, warranties, covenants, or agreements
contained herein or in the several Exhibits hereto, and the representations,
warranties, covenants or agreements of
18
<PAGE>
the Company contained herein, or the documents executed by the Company in
connection herewith, which arise during and the basis for which is made during
the Indemnification Period, including, without limitation, any tax liabilities
to the extent not so reflected or reserved against in the Balance Sheet.
8.3 Indemnification by the Purchaser. The Purchaser agrees to save, defend,
and indemnify the Company, its officers, directors, employees, and agents
against and hold it harmless from any and all Damages arising from the breach of
any of the Purchaser's representations, warranties, covenants, or agreements
contained herein or the documents executed by Purchaser in connection herewith,
which arise during the Indemnification Period.
8.4 Limitations of Liability.
(a) Claims. All claims for Damages arising out of breaches of
representations or warranties regarding tax deficiency assessments relating to
federal and state income tax returns filed prior to closing, shall be computed
net of the present value of all readily ascertainable future tax benefits
associated therewith. No claim shall be made for matters adequately covered by
insurance. The parties waive subrogation rights against each other with respect
to all matters as to which an insurance recovery shall have been actually
received after the Closing so long as the terms of any insurance policy are not
violated by such waiver.
(b) Liability of the Company. Upon a final determination (as provided in
Section 8(d)) of the amount of any claim for Damages made against the Company by
the Purchaser and /or any affiliate, the Purchaser and/or such affiliate
shall be entitled to recover the amount of such Damages as finally determined.
Notwithstanding the foregoing:
(i) The Company shall not be required to indemnify the Purchaser and
/or any affiliate for any claim unless and until the aggregate amount
of such Damages otherwise payable by the Company hereunder individually
or in the aggregate shall equal or exceed Fifty Thousand Dollars
($50,000). Once the aggregate amount of all such Damages shall exceed
Fifty Thousand Dollars ($50,000), the Purchaser and/or any affiliate
shall be entitled to recover from the Company the entire amount of the
excess Damages (including such $50,000).
(ii) The aggregate liability of the Company for indemnity hereunder
shall never exceed the Purchase Price.
(c) Liability of the Purchaser. Subject to the immediately following
paragraph, upon a Final Determination (as provided in Section 8(d)) of the
amount of any claim for Damages made against the Purchaser or any affiliate by
the Company, the Company shall be entitled to recover the amount of such Damages
as finally determined, provided that such Damages shall not exceed so much of
the Purchase Price as shall have been paid.
The Purchaser shall not be required to indemnify the Company and /or any
affiliate for any claim unless and until the aggregate amount of such
damages otherwise payable by the Purchaser hereunder individually or in the
aggregate shall equal or exceed Fifty Thousand
19
<PAGE>
Dollars ($50,000). Once the aggregate amount of all such Damages shall exceed
Fifty Thousand Dollars ($50,000), the Company shall be entitled to recover from
the Purchaser the entire amount of the excess Damages (including such $50,000).
(d) Final Determination. For the purposes of Section 8.4, a Final
Determination shall exist when (i) the parties agree upon the amount, or (ii) an
arbitrator shall have made a Final Determination with respect thereto and appeal
therefrom shall not have been taken within thirty (30) days from the date of
such determination, or such greater or lesser time as any court of competent
jurisdiction shall require. The asserting party will assign to the other party
any claims against which the asserting party has been indemnified and has been
paid as provided herein, as to which there may be claims against others, and the
other party in all respects shall be subrogated to the rights of the asserting
party in connection therewith.
8.5 Defense of Claims. Each party entitled to indemnification under this
Article VIII (the "Indemnified Party") agrees to notify the party required to
provide indemnification (the "Indemnifying Party") with reasonable promptness of
any claim asserted against it in respect of which the Indemnifying Party may be
liable under this Agreement, which notification shall be accompanied by a
written statement setting forth the basis of such claim and the manner of
calculation thereof. The failure of the Indemnified Party to promptly give
notice shall not preclude such Indemnified Party from obtaining indemnification
under this Article 8, except to the extent, and only to the extent, that the
Indemnifying Party's failure actually prejudices the rights or increases the
liabilities and obligations of the Indemnifying Party. The Indemnifying Party
shall have the right, at its election, to defend or compromise any such claim at
their own expense with counsel of their choice; provided, however, that (a) such
counsel shall have been approved by the Indemnified Party prior to engagement,
which approval shall not be unreasonably withheld or delayed; (b) the
Indemnified Party may participate in such defense, if it so chooses with its own
counsel and at its own expense; and (c) any such defense or compromise shall be
conducted in a manner which is reasonable and not contrary to the Indemnified
Party's interest. In the event the Indemnifying Party does not undertake to
defend or compromise, the Indemnifying Party shall promptly notify the
Indemnified Party of its intention not to undertake to defend or compromise the
claim.
ARTICLE IX
----------
TERMINATION AND WAIVER
----------------------
9.1 Termination. Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated and the transactions provided
for herein abandoned at any time prior to the Closing:
(a) By mutual consent of the Purchaser and the Company;
20
<PAGE>
(b) By the Purchaser if any of the conditions set forth in
Article V hereof shall not have been fulfilled on or prior to September 1, 2000
(subject to extension by agreement), or shall become incapable of fulfillment,
and shall not have been waived;
(c) By the Company if any of the conditions set forth in Article
VI hereof shall not have been fulfilled on or prior to September 1, 2000
(subject to extension by agreement), or shall have become incapable of
fulfillment, and shall not have been waived; or
(d) By the Purchaser or the Company, if any legal action or
proceeding shall have been instituted or threatened seeking to restrain,
prohibit, invalidate, or otherwise affect the consummation of the transactions
contemplated by this Agreement which makes it inadvisable, in the judgment of
the Purchaser or the Company, to consummate same.
In the event that this Agreement is terminated as described above, this
Agreement shall be void and of no force and effect, without any liability or
obligation on the part of any of the parties hereto except for any liability
which may arise pursuant to Section 10.1, 10.2, and 10.4.
9.2 Waivers. Any condition to the performance of the Company or the
Purchaser that legally may be waived on or prior to the Closing Date may be
waived at any time by the party entitled to the benefit thereof by action taken
or authorized by an instrument in writing executed by the relevant party or
parties. The failure of any party at any time or times to require performance of
any provision hereof shall in no manner affect the right of such party at a
later time to enforce the same. No waiver by any party of the breach of any
term, covenant, representation, or warranty contained in this Agreement as a
condition to such party's obligations hereunder shall release or affect any
liability resulting from such breach, and no waiver of any nature, whether by
conduct or otherwise, in any one or more instances, shall be deemed to be or
construed as a further or continuing waiver of any such condition or of any
breach of any other term, covenant, representation or warranty of this
Agreement.
ARTICLE X
---------
MISCELLANEOUS PROVISIONS
------------------------
10.1 Expenses. Except as otherwise expressly provided or set forth in, or
required by, this Agreement, the Purchaser and any affiliate and the Company
shall each bear their own expenses in connection herewith.
10.2 Confidential Information. Each party agrees that such party and its
representatives will hold in strict confidence and not divulge or disclose any
information and documents received from the other parties and, if the
transactions herein contemplated shall not be consummated, each party will
continue to hold such information and documents in strict confidence and will
return to such other parties all such documents (including the exhibits attached
to this Agreement) then in such receiving party's possession without retaining
copies thereof; provided, however, that each party's obligations under this
Section 10.2 to maintain such
21
<PAGE>
confidentiality shall not apply to any information or documents that are in the
public domain at the time furnished by the others or that come in the public
domain thereafter through any means other than as a result of any act or
omission of the receiving party or of its agents, officers, directors or
stockholders which constitutes a breach of this Agreement, or that are required
by applicable law to be disclosed. In the event of a breach or threatened breach
under this Section 10.2, the parties to this Agreement acknowledge that the
person or persons harmed or threatened to be harmed thereby will not have an
adequate remedy at law, and shall be entitled to such equitable and injunctive
relief as may be available to restrain the violation of this Section 10.2;
provided, however, that nothing herein shall be construed as prohibiting such
persons from pursuing any other remedies available for such breach or threatened
breach, including the recovery of damages.
10.3 Modification, Termination or Waiver. This Agreement may be amended,
modified, superseded or terminated, and any of the terms, covenants,
representations, warranties or conditions hereof may be waived, but only by a
written instrument executed by the party waiving compliance. The failure of any
party at any time or times to require performance of any provision hereof shall
in no manner affect the right of such party at a later time to enforce the same.
10.4 Publicity. The parties agree that no publicity, release or other
public announcement concerning the transactions contemplated by this Agreement
shall be issued by either party without the advance approval of both the form
and substance of the same by the other party and its counsel, which approval, in
the case of any publicity, release or other public announcement required by
applicable law, shall not be unreasonably withheld or delayed.
10.5 Notices. Any notice or other communication required or which may be
given hereunder shall be in writing and either be delivered (a) personally, (b)
be mailed, certified or registered mail, postage prepaid, (c) sent by overnight
courier delivery service, receipt acknowledged, fees prepaid, or (d) transmitted
by facsimile transmission to a telephone number as to which one party notifies
the other. Notice shall be deemed given when so delivered personally, or if
mailed or sent by courier service, five (5) days after the date of mailing or
deposited with the courier service, addressed as follows:
If to the Purchaser, to: QVESTOR LLC
C/O
The Corporation Trust Company
1209 Orange Street
Wilmington, Delaware 19801
With a copy to: Terence F. Brennan
Holland & Knight LLP
200 South Orange Avenue
Suite 2600
Orlando, Florida 32801
Fax: 407- 244-5288
22
<PAGE>
If to the Company: Ixion Biotechnology, Inc.
13704 Progress Boulevard, Box 13
Alachua, Florida 32615
Fax: 904-418-1583
Attn: Weaver H. Gaines
Chairman & Chief Executive Officer
With a copy to: Bruce Brashear, Esq.
Brashear & Associates, P.L.
926 NW 13th Street,
Gainesville, FL 32601
Fax: 352-336-0505
If notice is provided by facsimile it shall be deemed given upon confirmation of
transmission. The parties may change the persons and addresses to which the
notices or other communications are to be sent by giving written notice of any
such change in the manner provided herein for giving notice.
10.6 Binding Effect and Assignment. This Agreement shall be binding upon
and inure to the benefit of the successors and assigns of the parties hereto;
provided, however, that no assignment of any rights or delegation of any
obligations provided for herein may be made by any party without the express
written consent of the other parties.
10.7 Entire Agreement. This Agreement represents the entire understanding
and agreement between the parties with respect to the subject matter hereof, and
supersedes all of the negotiations, understandings, and representations (if any)
made by and between such parties.
10.8 Exhibits. All exhibits or schedules annexed hereto (the "Exhibits")
are expressly made a part of this Agreement as fully as though completely set
forth herein, and all references to this Agreement herein or in any of such
Exhibits shall be deemed to refer to and include all such Exhibits.
10.9 Governing Law; CPR; Arbitration. This Agreement shall be construed and
enforced in accordance with the local laws of the State of Delaware applicable
to agreements to be executed and performed wholly within said state without
giving effect to its conflicts of laws provisions.
The parties agree that in the case of any dispute between them, they will
attempt in good faith to resolve any controversy or claim arising out of or
relating to this Agreement by mediation in accordance with the Center for Public
Resources Model Procedure for Mediation of Business Disputes.
23
<PAGE>
If the matter has not been resolved pursuant to the aforesaid mediation
procedure within sixty days of the commencement of such procedure (which period
may be extend by mutual agreement), the controversy shall be settled by
arbitration in accordance with the Center for Public Resources Rules for
Non-Administered Arbitration of Business Disputes, by three arbitrators, of whom
each party shall appoint one. The arbitration shall be governed by the United
States Arbitration Act, 9 U.S.C. ss. 1-16, and judgment upon the award rendered
by the Arbitrator(s) may be entered by any court having jurisdiction thereof.
The place of arbitration shall be Orlando , Florida.
10.10 Section Headings. The section headings contained in this Agreement
are inserted for convenience of reference only and shall not affect the meaning
or interpretation of this Agreement.
10.11 Gender. Words of the masculine gender in this Agreement shall be
deemed and construed to include correlative words of the feminine and neuter
genders and words of the neuter gender shall be deemed and construed to include
correlative words of the masculine and feminine genders.
10.12 Severability. The invalidity or unenforceability of any term or
provision of this Agreement shall in no way impair or affect the balance
thereof, which shall remain in full force and effect.
10.13 Attorneys' Fees. In the event any arbitration arises out of or in
connection with this Agreement between the parties hereto, the prevailing party
in such arbitration shall be entitled to recover from the other party or parties
all reasonable attorneys' fees, expenses, and suit costs, including those
associated with any appellate or post-judgment collection proceeding.
10.14 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but which together shall constitute one
and the same instrument.
10.15 Recitals. The recitals set forth at the beginning of this Agreement
are true and correct and incorporated by reference into the body of this
Agreement.
10.16 Definition of Knowledge. Whenever a statement of any party to this
Agreement is qualified by that party's "knowledge", "knowledge" means the actual
knowledge of the person making such statement at the time or times that such
statement is made. If the statement is made by a corporation, the actual
knowledge of the corporation's officers, directors and employees is imputed to
the corporation; otherwise, the actual knowledge of a person shall not be
imputed to any other person.
10.17 Benefits to Others. Except with respect to any affiliate of Purchaser
as set forth in various sections herein, the representations, warranties and
covenants contained in this Agreement are for the sole benefit of the parties
hereto and their successors and permitted assigns, and they shall not confer and
are not intended to confer any rights on any other persons.
24
<PAGE>
END OF TEXT, SIGNATURE PAGES FOLLOW
25
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
"PURCHASER"
QVESTOR LLC
/S/
By:__________________________________
Per-Olof Wallstrom
Authorized Representative of
Purchaser's Sole Member
26
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
"COMPANY"
IXION BIOTECHNOLOGY, INC.
/S/
By:________________________________
Weaver H. Gaines
Chairman & Chief Executive Officer
27
<PAGE>
List of Schedules
-----------------
Schedule Description
-------- -----------
Schedule 2.1 Qualification
Schedule 2.2 List of subscriptions, options, etc.
Schedule 2.3 Subsidiaries
Schedule 2.4 Consents
Schedule 2.6 Financial Statements
Schedule 2.7 Liabilities
Schedule 2.8 Actions Since Balance Sheet Date
Schedule 2.9 Absence of Material Changes
Schedule 2.10 Taxes
Schedule 2.11 Ownership of Assets; Trademarks; etc.
Schedule 2.12 Insurance
Schedule 2.13 Litigation, Compliance with Laws
Schedule 2.14 Real Property
Schedule 2.15 Agreements and Obligations, Performance
Schedule 2.16 Condition of Assets
Schedule 2.17 Accounts and Notes Receivable
Schedule 2.18 Permits and Licenses
Schedule 2.19 Banking Arrangements
Schedule 2.20 Interest in Assets
Schedule 2.21 Salary Information
Schedule 2.22 Employee Benefit Plans
Schedule 2.23 Brokers
Schedule 2.24 Labor Discussions
Schedule 2.25 Change of Name
Schedule 3.1 Consents
28
<PAGE>
List of Exhibits
----------------
Exhibit Description
------- -----------
Exhibit 1.1 Shareholders' Agreement
Exhibit 5.6 Certificate of Company
Exhibit 5.7 Opinion of Brashear & Associates, P.L.
Exhibit 5.8(a) Employment Agreement of Weaver H. Gaines
Exhibit 5.8(b) Director's Agreement of David C. Peck
Exhibit 6.5 Certificate of Purchaser
Exhibit 6.6 Side Letter (Q-Med)
29
<PAGE>
SCHEDULE 2.1
------------
Jurisdictions where Company is authorized to do Business
Jurisdictions where Company is authorized to do Business:
---------------------------------------------------------
o Delaware
o Florida
<PAGE>
SCHEDULE 2.1 (continued)
------------------------
Certificate(s) of Good Standing, Certificate of Incorporation and Bylaws of the
Company
Certificate of Incorporation and Amendments thereto certified by the Secretary
--------------------------------------------------------------------------------
of State of Delaware:
---------------------
See attached
Bylaws certified by the Secretary of the Company:
-------------------------------------------------
See attached.
<PAGE>
SCHEDULE 2.2
------------
List of Subscriptions, Options, Warrants, Rights, Calls or other Commitments and
Agreements concerning Company's Common Stock
Options, warrants, rights, or calls:
------------------------------------
o Qualified and nonqualified options to purchase 268,400 shares of
Company Common Stock under the 1994 Stock Option Plan
o Warrants to purchase 17,630 shares of Company Common Stock at an
exercise price of $2 per share, expiring August 31, 2000
o The University of Florida Research Foundation, Inc., holder of 15,630
of the 17,630 warrants referred to above, has asserted a claim to an
additional 3,042 warrants to purchase shares at $2 per share, also
expiring August 31, 2000, pursuant to the Incubator License Agreement
dated June 26, 1995, as amended. The Company disputes this claim and
the matter is under discussion.
o Warrant to purchase 6,000 shares of Company Common Stock at an
exercise price of $5 per share, expiring as to 3,000 warrants February
2002 and as to the balance, expiring October 2002.
o Charitable Benefit Warrants to purchase 21, 523 shares of Company
Common Stock at an exercise price of $8 per share, expiring December
9, 2007.
Convertible securities:
-----------------------
o $787,270 in convertible unsecured notes due 2001, convertible into a
maximum of 323,557 shares of Company Common Stock
o Convertible promissory note with Weaver H. Gaines, dated March 31,
1993 (outstanding principal convertible to stock; there is no
outstanding principal under this note at the date of this schedule.)
o Convertible promissory note with David C. Peck, dated October 15,
1993(outstanding principal convertible to stock; there is no
outstanding principal under this note at the date of this schedule.)
<PAGE>
SCHEDULE 2.3
------------
Company's Subsidiaries
None.
<PAGE>
SCHEDULE 2.4
------------
Consents required for Company
None.
<PAGE>
SCHEDULE 2.6
------------
Financial Statements
See the following attached documents:
o Audited Financial Statements for the year ended 1997
o Audited Financial Statements for the year ended 1998
o Audited Financial Statements for the year ended 1999
o Interim, Unaudited Statements of Operations for five months ended
May 31, 2000
o Interim, Unaudited Balance Sheet as at May 31, 2000
<PAGE>
SCHEDULE 2.7
------------
Other Debts, Obligations and Liabilities
On June 23, 2000, the Company borrowed $48,000 through the issuance of a
commercial fixed rate promissory note due December 23, 2000 to SunTrust Bank.
The terms of the note require five monthly interest payments at an annual
interest rate of 7.83%, and a balloon payment of principal and last month's
interest on the maturity date. There is no pre-payment penalty. The note is
secured by a certificate of deposit of even amount purchased from SunTrust Bank,
bearing interest at the annual rate of 5.83%. This note was issued for the
purchase of an AKTAexplorer liquid chromatography system from Amersham Pharmacia
Biotech, Inc., for a purchase price of $48,850.
<PAGE>
SCHEDULE 2.8
------------
Actions taken by Company since Balance Sheet Date
o During June, 2000, the Company issued 37,500 shares of Company Common
Stock to purchasers of shares in the Company's registered stock
offering and 600 shares to an employee pursuant to its Board Retainer
Plan. These shares are included in the reconciliation of outstanding
shares as of June 30, 2000 on a fully-diluted basis.
o On June 23, 2000, the Company borrowed $48,000 through the issuance of
a commercial fixed rate promissory note due December 23, 2000 to
SunTrust Bank. The terms of the note require five monthly interest
payments at an annual interest rate of 7.83%, and a balloon payment of
principal and last month's interest on the maturity date. There is no
pre-payment penalty. The note is secured by the assignment of a
certificate of deposit of even amount purchased from SunTrust Bank on
June 23, 2000, bearing interest at the annual rate of 5.83%. This
promissory note was issued for the purchase of an AKTAexplorer liquid
chromatography system from Amersham Pharmacia Biotech, Inc., for a
purchase price of $48,850.
o The Company has orally agreed, subject to board approval, to lease
2,661 square feet of increased laboratory and office space and to
exercise its option to extend the lease term by one year to October
31, 2002, under the Lease Agreement dated as of September 18, 1998,
between the Company and Innovations Partners, Ltd. (successor in
interest to Echelon International Corporation). In addition, the Lease
Agreement will be amended to convert the calculation of rent from a
base rent plus operating stop to a gross rent. The effect of the
proposed amendments to the Lease Agreement will be to increase the
annual rent during 2000 from $80,230 per year to $112,682 per year.
<PAGE>
SCHEDULE 2.9
------------
Material Changes to Company
See description of purchase of AKTAexplorer described in attached Schedules 2.7
and 2.8 to this Agreement.
<PAGE>
SCHEDULE 2.10
-------------
Unpaid Taxes of Company
None.
<PAGE>
SCHEDULE 2.11
-------------
Assets, Properties and Intellectual Property in which Company does not have Good
and Marketable Title
None.
<PAGE>
SCHEDULE 2.11 continued
-----------------------
(dated as of July 12, 2000)
List of Persons or Entities which have an Interest in Company's Intellectual
Property and
List of Agreements Requiring Payment of Royalties re: such
Intellectual Property
Persons or Entities which have an Interest in Company's Intellectual Property:
------------------------------------------------------------------------------
See attached Schedules 2.7 and 2.8 to this Agreement for description of
assignment of CD for $48,000 to secure loan from SunTrust Bank for purchase of
equipment.
Licensed Patents and Patent Applications:
-----------------------------------------
(a) Islet Patents (UF-141 Cases-Accounts 18302 et. seq.
(i) United States Patents and Patent Applications:
o US 5,834,308 (UF-141, Peck1), "In Vitro
Growth of Functional Islets of Langerhans,"
was issued on November 10, 1998. Licensed
from University of Florida Research
Foundation, Inc. (UFRFI).
o US 6,001,647 (UF-141.C2, Peck), "In Vitro
Growth of Functional Islets of Langerhans and
In Vivo Uses Thereof," was issued on
December 14, 1999. Licensed from UFRFI
o US Application No.09/406,253 (UF-141.C3,
Peck and Ramiya), "Reversal of Insulin
Dependent Diabetes by IPSC, IPCs and
Islet-like Structures," filed 27
September 1999. Licensed from UFRFI;
Ramiya rights assigned to the Company.
(ii) Foreign Patents and Patent Applications:
o Australian Letters Patent No. 709165
(UF 141.C1/PCT-AU), "In vitro growth of
functional islets of Langerhans and in vivo
uses thereof," issued 9 December 1999.
Licensed from UFRFI.
o The Company also has foreign patent
applications, not separately listed,
filed in Australia, Canada, Europe,
Japan, Korea, and Mexico where it is
seeking protection of similar scope to
that claimed in the above U.S. patents.
These foreign licenses are licensed under
the same license agreement covering the
U.S. patents and patent application.
<PAGE>
(b) Oxalate Patents (UF- 145 Series-Accounts 18301 et. seq.)
(i) United States Patents and Patent Applications:
o U.S. Patent No. 5,604,111 (UF-145, Peck),
"Method and Kit for Detection of Oxalate in a
Fluid Sample," issued on 18 February 1997.
Licensed from UFRFI.
o U.S. Patent No. 5,837,833 (UF-145.C1, Peck),
"Materials and Methods for Detection of
Oxalate" issued 17 November 1998. Licensed
from UFRFI.
o U.S. Patent No. 5,912,125 (UF-145.C2, Peck),
"Materials and Methods for Detecting
Oxalobacter formigenes," issued on
15 June 1999. Licensed from UFRFI.
o U.S. Application No. 08/888,610
(UF-145.C3, Peck and Sidhu), "Materials and
Methods for Detection of
Oxalobacter," filed 26 June 1997, renamed
"Process for Preparation of Recombinant
Formyl-CoA Transferase of Oxalobacter
Formigenes." Licensed from UFRFI; Sidhu
rights assigned to the Company.
o U.S. Application No. 08/936,094 (UF-145.C4,
Peck and Sidhu), "Materials and Methods for
Detection of Oxalobacter," filed 23 September
1997. Licensed from UFRFI; Sidhu rights
assigned to the Company.
o U.S. Application No. 08/841,174 (UF-145DF,
Peck), "Materials and Methods for Detection of
Oxalate," filed 29 April 1997. Licensed from
UFRFI.
(ii) Foreign Patents and Patent Applications:
o Australian Letters Patent No. 710,652
(UF-145.C1/PCT-AU, Peck), "Materials and
Methods for Detection of Oxalate," filed 6
Jun 1995, issued on 20 Jun 2000. Licensed
from UFRFI.
o The Company also has foreign patent
applications, not separately listed,
filed in Australia, Canada, Europe,
India, Japan, Korea, and Mexico where it
is seeking protection of similar scope to
that claimed in the above U.S. patents.
These
<PAGE>
foreign licenses are licensed under the same
license agreement covering the U.S. patents
and patent application.
(c) Oxalate Patents (IXN-100 Series-Accounts 18304 et seq.)
o U.S. Application No. 09/083,362 (IXN-100,
Allison and Sidhu), "Materials and
Methods for Treating or Preventing
Oxalate Related Disease," filed May 22, 1998
(claiming priority from provisional
application U.S. 60/047,473, filed 23 May
1997), was allowed on 14 June 14 2000.
Licensed from Milton J. Allison (see
Schedule 2.20); Sidhu rights assigned to the
Company.
o U.S. Application No. 09/500,500
(IXN-100C1XC1, Allison and Sidhu),
"Materials and Methods for Treating or
Preventing Oxalate Related Disease"
(claiming priority from provisional
applications US 60/150,259, filed 23
August 1999 and US 60/047,473, filed 23
May 1997), filed 9 February 2000.
Licensed from Milton J. Allison (see
Schedule 2.20); Sidhu rights assigned to
Ixion.
o The Company also has foreign patent
applications, not separately listed,
filed in Australia, Canada, Europe,
India, Japan, Korea, and Mexico where it is
seeking protection of similar scope to that
claimed in the above U.S. patents. These
foreign licenses are licensed under the same
license agreement covering the U.S. patents
and patent application.
o US 5,187,071 (Fischer and Jensen), "Method for
the Selective Control of Weeds, Pests, and
Microbes," was issued on 16 February 1993.
Licensed from Fischer and Jensen.
o All of the above patents are licensed
pursuant to license agreements requiring the
payment of royalties to the owners of the
patent rights. In addition, the Company has a
license agreement with Brookhaven National
Laboratory requiring the payment of royalties
for the use of T7 technology used in
recombinant oxalate degrading enzyme, as well
as a license agreement with UFRFI relating to
its former lease at the Biotechnology
Development Institute under which royalties
may be payable. Finally, the Company's
oxalate diagnostic test may require a license
from Roche Diagnostics for the use of PCR
technology.
<PAGE>
Trademarks owned by the Company:
--------------------------------
o IXION (R)
o XENTRIX TM
o Charitable Benefit Warrant (R)
o Ox-Control TM
<PAGE>
EXHIBIT 2.12
------------
Insurance Policies not in Effect
None.
(The Company believes that its insurance policies are on a "claims made" basis.)
<PAGE>
SCHEDULE 2.13
-------------
Law suits, Actions, Investigations, etc. against the Company
None.
<PAGE>
SCHEDULE 2.13 continued
-----------------------
Pending Claims, Investigations, Charges, etc. , relating to Wages, Compensation,
Equal Employment, etc.
None.
<PAGE>
SCHEDULE 2.14
-------------
Description of Real Property Leased or Owned by Company
5,016 square feet of combined office and laboratory space located at
13709 Progress Boulevard, Alachua, Florida; includes $30,698.00 in improvements.
<PAGE>
SCHEDULE 2.15
-------------
Agreements/Contracts to which Company is a Party
a) Material contracts which cannot be cancelled:
None.
b) Contractual obligation to officers or directors of the Company:
o Charitable Benefit Warrant Agreement, dated as of December 10, 1997 with
David C. Peck
o Stock Option grants at various dates to Messrs. Gaines, Peck, Peck
and Ms. Ramsey.
o Consulting Agreement with David C. Peck dated July 1, 1996
o Employment Agreement with David C. Peck, dated August 1994.
o Note Purchase Agreement, dated as of September 13, 1996 (piggyback
registration rights for shares issued to officers upon conversion of the
convertible debentures, expiring August 31, 2006.)
o Employment Agreement with Weaver H. Gaines dated August 31, 1994.
o Consulting Agreement with Ammon B. Peck, dated March 2000
o Convertible Promissory Note with Weaver H. Gaines, dated March 31, 1993
o Convertible Promissory Note with David C. Peck, dated October 15, 1993
o Demand Promissory Note, Bridge Loan with Weaver H. Gaines, dated April 15,
1996
o Demand Promissory Note, Bridge Loan with David C. Peck, dated April 15, 1996
o Deferred Compensation Plan Agreement with Weaver H. Gaines, dated January 1,
1994
o Deferred Compensation Plan Agreement with Ammon B. Peck, dated June 1, 1994
o Deferred Compensation Plan Agreement with David C. Peck, dated April 1, 1994
o Consulting Agreement with Thomas P. Stagnaro, dated September 21, 1998
o University of Florida Monitoring Agreement regarding Dr. Ammon B. Peck's
conflict of interest
c) - g)
-------
None.
<PAGE>
SCHEDULE 2.16
-------------
Condition of Assets
None.
<PAGE>
SCHEDULE 2.17
-------------
Accounts and Note Receivables not created in the Ordinary Course of Business
None.
<PAGE>
SCHEDULE 2.18
-------------
Permits, Licenses, Approvals, etc. that Company currently does not have that
would negatively affect the ability to run Business
None.
<PAGE>
SCHEDULE 2.19
-------------
List of Company's Banks
o Sun Trust Bank, North Florida, NA
o The Unified Funds
<PAGE>
SCHEDULE 2.20
-------------
Assets and Intellectual Property owned by Officers, Directors, Shareholders or
Affiliates of Company
Milton J. Allison, a member of the Company's Scientific Advisory Board and a
shareholder of the Company, is the licensor of certain patent rights to the
Company as disclosed in Schedule 2.11 relating to U.S. Application No.
09/083,362 and U.S. Application No. 09/500,500 and foreign filings related
thereto.
<PAGE>
SCHEDULE 2.21
-------------
Salary Information of Company's Officers and Directors
Salaries:
---------
Gaines $95,000 base salary
Peck, AB $50,000 consulting fee
Peck, DC $60,000 consulting fee
Sidhu $60,000 base salary
Ramsey $45,000 base salary
Incentive Compensation Plan:
----------------------------
In 1994, the Company adopted an incentive compensation plan (the "Bonus
Plan") for all employees of the Company, pursuant to which participants will be
awarded cash bonuses (if the Company has sufficient cash to prudently pay such
bonuses) or deferred bonuses (if the Company can not prudently pay cash
bonuses), based on the performance of the Company during the previous 12 months.
Bonuses will be paid based on the base salary in effect at the end of the prior
fiscal year to all qualified persons on the payroll at the date of the
declaration of the bonus. Bonuses will be prorated for any person not employed
during the entire previous 12-month period.
Awards levels may range as follows:
-senior vice president or above: up to 50% of participant' base salary
or consulting fee.
-vice presidents: up to 30% of participants base salary or consulting
fee.
Based on the results for 1998-1999, the Audit & Benefits Committee
awarded 69% of the maximum bonus to the eligible officers, employees, and
consultants, based on 1998 base salaries or fees paid, as follows:
Gaines 34.5% of base salary or $32,775
Peck, D. 34.5% of base salary or $20,700
Peck, A. 34.5% of base salary or $17,250
Sidhu 13.8% of base salary or $7,176
Ramsey 10.4% of fees paid
Directors are paid no cash salaries, but receive awards under the Board Retainer
Plan and the 1994 Stock Option Plan. They do not receive bonuses.
<PAGE>
SCHEDULE 2.22
-------------
Employee Pension Benefit Plans within s.3(2)(A) of ERISA, any Policies or
Plans that Provide for Vacation, Severance and Leave Benefits, and
Discretionary Employer Contributions that have not been Contributed
to Company's 401(K) Plan, etc.
o No ERISA plans
o The employment contracts with Weaver Gaines and David Peck.
o The Company has workers' compensation insurance providing for
benefits for injured workers.
o Company policy provides for up to 25 days of vacation (depending
on service), up to 12 days of sick leave annually, and 11 paid
holidays.
o The Company has agreed to pay for health insurance for
certain employees, and intends to propose a Company health plan to
the board.
o There is an informal severance policy providing two weeks of
salary per year of service.
o The 1994 Stock Option Plan and the Board Retainer Plan may be
deemed to provide benefits to employees.
<PAGE>
SCHEDULE 2.23
-------------
Brokers
None.
<PAGE>
SCHEDULE 2.24
-------------
Labor Discussions, Agreements, etc.
None.
<PAGE>
SCHEDULE 2.25
-------------
Other Names under which Company has Conducted Business
None.
<PAGE>
SCHEDULE 3.1
Consents of Governmental or Other Regulatory Agencies to Enable Purchaser to
Carry out Transaction
None.
<PAGE>
EXHIBIT 1.1
-----------
SHAREHOLDERS' AGREEMENT
THIS SHAREHOLDERS' AGREEMENT ("Agreement"), made and entered into as of
this 14th day of July, 2000 (the "Effective Date") by and among IXION
BIOTECHNOLOGY, INC., a Delaware corporation (the "Corporation"), and Q-MED AB
(publ), a Swedish company ("Q-MED"), QVESTOR LLC, a Delaware Limited Liability
Company ("QVESTOR"), AMMON B. PECK Ph.D and WEAVER H. GAINES, (referred to
herein individually as the "Shareholder" and collectively as the
"Shareholders"), as follows:
W I T N E S S E T H:
--------------------
WHEREAS, the Shareholders are now the owners of a majority of
the Corporation's outstanding shares of stock (the "Shares"); and
WHEREAS, the Shareholders desire to promote their mutual interests and
the interest of the Corporation by imposing certain restrictions and obligations
on themselves, the Corporation, and the Shares pursuant to the terms and
conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants set forth herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, intending to be
legally bound, the parties agree as follows:
TERMS
-----
1. DEFINITIONS
For purposes of this Agreement, the following terms shall have the
meaning indicated below:
"Dispose Of" shall mean pledge, hypothecate, give, assign, encumber,
sell, grant an option with respect to, or otherwise transfer, other than
pursuant to a plan of merger or consolidation, to anyone, whether or not it is
then a Shareholder; provided, however, that a pledge by all Shareholders of all
Shares to secure future financing for the Corporation shall not be deemed a
disposition of Shares.
2. RESTRICTION ON DISPOSITION
(a) While this Agreement is in force and effect, no
Shareholder shall Dispose Of its interest in any of the Shares now or later
owned by it, except by the terms of this Agreement. Any attempted or purported
transfer of an ownership interest in violation of this Agreement shall be void
and shall constitute an
<PAGE>
abandonment of the Shareholder's Shares. No transfer of ownership interests
pursuant to this Agreement shall be recognized by the Corporation until it is
duly entered upon the books and records of the Corporation and all indicia of
ownership are changed accordingly.
(b) The Share certificates shall bear the following legend or
a legend to the following effect:
These shares have not been registered under the Securities Act of
1933, and may not be sold, transferred, pledged, or hypothecated
except pursuant to registration under such Act or pursuant to an
available exemption from registration under said Act. The transfer of
these shares is further restricted under the terms of a Shareholders'
Agreement dated as of July 14, 2000 between the holder of this
certificate and the Corporation, a copy of which is on file at the
principal office of the Corporation. No transfer will be recognized by
the Corporation until, as the case may be, counsel to the Corporation
is satisfied there is no violation of the Securities Act of 1933, the
other shareholders consent to the transfer, or both.
(c) By virtue of such legend and with notice, any transferee
of the Shares of the Corporation becomes a party to, and is bound by, this
Agreement.
3. DISPOSITIONS OF SHARES
(a) Restriction. No Shareholder shall Dispose Of his or its
Shares, except pursuant to the terms of this Agreement, provided that this
section 3 shall not apply to (i) bona fide gifts or bequests by any Shareholder
to a third person or member of the Shareholder's family or (ii) bona fide gifts
or bequests by a Shareholder to a charitable institution or not-for- profit
entity, where the cumulative total of subsections (i) and (ii) do not exceed ten
percent of the Shareholder's fully diluted holdings of the Shares measured as of
the date of the gift or bequest.
(b) Corporation's Option to Purchase Shares. A Shareholder
(the "Offering Shareholder") who desires to Dispose Of any Shares in response to
a bona fide offer from a third party (the "Third Party Offer") shall first offer
such Shares to the Corporation and the other Shareholders at the same price and
on the same terms contained in the Third Party Offer. The Offering Shareholder
shall give a notice ("Notice") signed by the Offering Shareholder to the
Corporation and on the same day give Notice to the other Shareholders of such
Offering Shareholder's desire to Dispose Of his or its Shares. The Notice shall
specify the number of Shares (the "Offered Shares") the Offering Shareholder
intends to Dispose Of and the purchase price and terms of any offer to purchase
the Shares made by the Third Party Offeror. The Corporation shall have the
irrevocable and exclusive first option, but not the obligation, to purchase all
or, subject to paragraph 3(c) below, a
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part of the Offered Shares, at the price and on substantially the same or
comparable terms to those set forth in the Notice, provided the Corporation
gives notice of its election to purchase to the Offering Shareholder within
thirty (30) days after the Corporation receives the Notice.
(c) Other Shareholders' Option to Purchase Shares. If the
Corporation does not elect to purchase all of the Offered Shares covered by the
Notice as provided in paragraph 3(b), then, subject to paragraph 3(e), each
Shareholder other than the Offering Shareholder shall have the irrevocable and
exclusive second option, but not the obligation, to purchase from the Offering
Shareholder that part of the Offered Shares that the Corporation has not elected
to purchase, pro rata to its holdings of Shares on the date the Corporation
received the Notice (exclusive of the Shares offered for sale or otherwise owned
by the Offering Shareholder). Each Shareholder who elects to purchase all or
a part of its pro rata portion of the Offered Shares shall give notice of such
election to the Offering Shareholder and the other Shareholders, as the case may
be, within forty-five (45) days after the receipt of the Notice by the
Corporation. Each such notice shall state the number of Shares which the
Shareholder giving the notice elects to purchase. The purchase price shall be
the same as set forth in the Third Party Offer.
(i) If any Shareholder fails to exercise its right to
purchase its full pro rata portion of the Offered Shares, each of the other
Shareholders who has given notice of election to purchase its full pro rata
portion of the Offered Shares shall have an additional ten (10) days after the
expiration of such forty-five (45) day period in which to give the Offering
Shareholder and the other Shareholders, further notice (the "Further Notice") of
its election to purchase all or a part of the Remaining Shares (as defined in
(ii) below). Each Further Notice shall state the number of additional Shares
that the Shareholder giving the Further Notice elects to purchase. The Shares
shall be apportioned among those Shareholders who have given a Further Notice
according to the procedure described below or in such different portions as such
Shareholders may agree among themselves. Each of the Participating Shareholders,
as defined in (ii) below, shall be apportioned (1) that number of additional
Shares that it elected to purchase in its Further Notice and which it has not
yet been apportioned pursuant to this paragraph 3(c)(i), or (2) its pro rata
portion of the Unpurchased Shares (as defined in (ii) below), whichever is less.
If the apportionment is followed and there remain at least one Participating
Shareholder and any Unpurchased Shares, the procedure described above shall be
repeated.
(ii) For purposes of paragraph 3(c)(i), the following
definitions shall apply:
(1) The "Remaining Shares" shall be the Offered Shares
that the Corporation and the Shareholders have not elected to purchase.
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(2) A "Participating Shareholder" shall be a
Shareholder who has given a Further Notice and who has not yet been apportioned
pursuant to paragraph 6(c)(i) that number of additional Shares that it elected
to purchase in its Further Notice.
(3) "Unpurchased Shares" shall be the Remaining
Shares that have not yet been apportioned to Participating Shareholders pursuant
to paragraph 3(c)(i).
(4) A "Participating Shareholder's Pro Rata Portion"
of the Unpurchased Shares shall be the number of Unpurchased Shares multiplied
by the fraction formed by dividing the number of Shares that such Participating
Shareholder held on the date the Corporation received the Notice by the number
of Shares that all of the Participating Shareholders held on the date the
Corporation received the Notice.
(d) Effect of an Election to Purchase. The Corporation
and each Shareholder giving notice of election to purchase Shares pursuant to
paragraph 3(b) or 3(c), respectively, shall be obligated severally (but not
jointly) to purchase from the Offering Shareholder, and the Offering
Shareholder, provided the Corporation, the other Shareholders, or a combination
of the Corporation and the other Shareholders elect to purchase all of the
Offered Shares, shall be obligated to sell to the Corporation or the other
Shareholders, or the Corporation and the other Shareholders, as the case may be,
the number of Offered Shares stated therein, at the price and on substantially
similar terms to those contained in the Third Party Offer.
(e) Consequences if Not All Shares are to be Purchased.
If an Offering Shareholder gives Notice and the Corporation, and the other
Shareholders do not elect, pursuant to paragraphs 3(b) and 3(c), respectively,
to purchase all of the Offered Shares, the Offering Shareholder may elect to
sell to the Corporation, if it has elected to purchase part of the Offered
Shares and to the Shareholders, if any, who have elected to purchase part of the
Offered Shares, the aggregate number of such Shares which the Corporation and
such Shareholders have elected to purchase at the price and on substantially
similar terms to those contained in the Third Party Offer. If the Corporation
and the other Shareholders have failed to elect to purchase all of the Offered
Shares pursuant to the provisions above, the Offering Shareholder may sell the
Offered Shares (i) to the third party offeror identified in the Notice at the
price and on the terms contained in the Third Party Offer or (ii) to any other
third party at the identical terms set forth in the Third Party Offer. Such sale
to a third party must be closed within thirty (30) days after nonelection by the
Corporation and the other Shareholders. If such sale is not closed within such
time period, the sale of the Offering Shareholder's Shares will again be
governed by the provisions of this section 3.
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(f) Restrictions on Third Party Purchaser.
Notwithstanding an Offering Shareholder's right to sell Offered Shares to a
third party as set forth above, the Offering Shareholder may not sell Offered
Shares to any competitor or potential competitor of the Corporation.
(g) Continuing Restriction on Remaining Shares. If any
Shares have been offered for sale pursuant to this section 3 and that offer has
not been finally accepted in accordance with the provisions of this section 3,
then such Shares still owned by the Offering Shareholder shall remain subject to
the terms of this Agreement.
(h) Q-MED and QVESTOR Exception. Notwithstanding the
above provisions of this Section 3, Q-MED and QVESTOR may sell, transfer, or
assign their respective Shares of the Corporation to any subsidiary or affiliate
of Q-MED or any business entity in which Q-MED owns an interest in excess of
fifty percent (50%), without first offering such shares to the Corporation or
the other shareholders.
4. DEATH, DISSOLUTION OR DISABILITY OF SHAREHOLDER
(a) Death or Dissolution of Shareholder
(i) Option to Purchase Shares on Death or
Dissolution of Shareholder. Subject to the terms of section 4 (d) hereof, upon
the death of a Shareholder (a "Decedent") or upon the dissolution of a
Shareholder which is an Entity, whether by operation of law, judicially, or
voluntarily (a "Dissolved Shareholder") during the term of this Agreement, the
Corporation and the remaining Shareholders ("Remaining Shareholders") shall have
the irrevocable and exclusive successive options, but not the obligation,
subject to subsection 4(a)(vi) hereof, to purchase, and the personal
representative of the Decedent or the Trustee(s) of the Dissolved Shareholder
shall sell all of the Decedent's or Dissolved Shareholder's Shares owned at the
date of death or dissolution, at the price and in the manner set forth in this
Agreement. The provisions of this section will apply to any Shares held by joint
tenancy only upon the death of both joint tenants.
(ii) Corporation's First Option to Purchase Shares. The
Corporation shall have the irrevocable and exclusive first option to purchase
all, but not less than all, of the Decedent's or Dissolved Shareholder's Shares,
provided the Corporation gives notice of its election to purchase to the
personal representative of the Decedent or the Trustee(s) of the Dissolved
Shareholder within thirty (30) days after the date of appointment of the
personal representative of the Decedent's estate ("Date of Appointment") or the
date of dissolution of the Dissolved Shareholder (the "Date of Dissolution").
The purchase price to be paid by the Corporation shall be
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equal to the Agreed Value of the Shares on the date of death of the Decedent or
the Date of Dissolution.
(iii) Life Insurance. The Corporation may, but is not
obligated to, secure life insurance on the Shareholders from a life insurance
company selected by the Corporation. This insurance need not be in an amount
necessary to pay the entire purchase price for the Shares at death. Each of the
Shareholders agrees to do everything necessary to cause insurance policies to be
issued pursuant to this Agreement, if the Corporation elects to do so. The
Corporation, which shall be the owner of the life insurance policies, agrees to
pay the premiums as they become due, and each policy shall be the sole and
absolute property of the Corporation. Any dividends payable upon the policies
prior to maturity by the death of the insured Shareholder shall be paid to the
Corporation in cash or disposed of as the Corporation may direct. This Agreement
shall extend to and include all additional life insurance policies issued
pursuant to this Agreement.
(iv) Shareholders' Second Option to Purchase Shares. If
the Corporation does not elect to purchase the Shares of the Decedent or
Dissolved Shareholder as provided in subsection 4(a)(ii), then subject to
subsection 4(a)(vi), the Remaining Shareholders shall have the irrevocable and
exclusive second option, but not the obligation, to purchase from the personal
representative of the Decedent or the Trustee(s) of the Dissolved Shareholder,
that part of the Shares, pro rata, to such Remaining Shareholder's holdings of
Shares on the date of death of the Decedent or the Date of Dissolution. Each
Remaining Shareholder who elects to purchase all or part of its pro rata portion
of the Decedent's or Dissolved Shareholder's Shares shall give notice of such
election to the personal representative of the Decedent or the Trustee(s) of the
Dissolved Shareholder and to the Remaining Shareholders within sixty (60) days
after the Date of Appointment or the Date of Dissolution. The purchase price to
be paid shall be equal to the Agreed Value of the Shares on the date of death of
the Decedent or the Date of Dissolution.
(aa) If any Remaining Shareholder fails to
exercise its right to purchase its full pro rata portion of the Shares of the
Decedent or the Dissolved Shareholder, each Remaining Shareholder who has given
notice of election to purchase its full pro rata portion of the Shares of the
Decedent or the Dissolved Shareholder shall have an additional twenty (20) days
after the expiration of such sixty (60) day period in which to give to the
personal representative of the Decedent or the Trustee(s) of the Dissolved
Shareholder and the other Remaining Shareholders further notice (the "Further
Notice") of its election to purchase all or a part of the Shares of the Decedent
or the Dissolved Shareholder. Each Further Notice shall state the number of
additional shares that the Remaining Shareholder giving the Further Notice
elects to purchase. The Shares shall be apportioned among those Remaining
Shareholders who have given a Further Notice according to the procedure
described below or in such different portions as such Shareholders may agree
among themselves. Each of the
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Participating Shareholders shall be apportioned (1) that number of additional
shares of Shares that it elected to purchase in its Further Notice and which has
not yet been apportioned pursuant to this subsection 4(a)(iv)(aa) or (2) its pro
rata portion of the Unpurchased Shares, whichever is less. If the apportionment
is followed and there remain at least one Participating Shareholder and any
Unpurchased Shares, the procedure described above shall be repeated.
(bb) For purposes of subsection 4(a)(iv)(aa),
the following definitions shall apply:
a. The "Remaining Shares" shall be the
Offered Shares that the Shareholders have not elected to purchase.
b. A "Participating Shareholder" shall
be a Shareholder who has given a Further Notice and who has not yet been
apportioned pursuant to subsection 4(a)(iv)(aa) that number of additional shares
that he elected to purchase in his Further Notice.
c. "Unpurchased Shares" shall be the
Remaining Shares that have not yet been apportioned to Participating
Shareholders pursuant to subsection 4(a)(iv)(aa).
d. A "Participating Shareholder's Pro
Rata Portion" of the Unpurchased Shares shall be the number of Unpurchased
Shares multiplied by the fraction formed by dividing the number of shares of
Shares that such Participating Shareholder held on the Date of Appointment or
Date of Dissolution by the number of shares of Shares that all of the
Participating Shareholders held on the Date of Appointment or Date of
Dissolution.
(v) Effect of an Election. The Corporation or
each Shareholder giving notice of election to purchase Shares pursuant to
subsection 4(a)(ii) or 4(a)(iv), respectively, shall be obligated severally (but
not jointly) to purchase from the personal representative of the Decedent or the
Trustee(s) of the Dissolved Shareholder, and the personal representative of the
Decedent or the trustee(s) of the Dissolved Shareholder, provided the
Corporation, or such Remaining Shareholders have elected to purchase all of the
Offered Shares, shall be obligated to sell to the Corporation, or such Remaining
Shareholders, as the case may be, the number of shares of Shares of the Decedent
or Dissolved Shareholder stated therein, at the price determined pursuant to
subsection 4(a)(ii) or 4(a)(iv).
(vi) Consequences if All Shares are Not to be
Purchased. If the Corporation or the Remaining Shareholders do not elect,
pursuant to subsections 4(a)(ii) and 4(a)(iv), to purchase all of the Shares of
the Decedent or the Dissolved Shareholder, the personal representative of the
Decedent or the Trustee(s) of the Dissolved Shareholder may elect to sell to the
Remaining
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Shareholders, if any, who have elected to purchase part of the Shares
of the Decedent or the Dissolved Shareholder, the aggregate number of such
shares which such Shareholders have elected to purchase at the price and on the
terms and conditions determined pursuant to subsection 4(a)(iv). If the
Corporation or the Remaining Shareholders have failed to elect to purchase all
of the Offered Shares pursuant to the provisions above, the personal
representative of the Decedent or the Trustee(s) of the Dissolved Corporation,
prior to any transfer of the Shares to a third party, shall again offer to sell
the Shares at a purchase price equal to the price offered by the bona fide third
party purchaser, first to the Corporation and then to the Remaining Shareholders
in the same manner as set forth in Subsections 3(b) - 3(e) hereof.
(b) Disability of Shareholder
(i) Option to Purchase Shares upon Disability
of Shareholder. Subject to the terms of section 4 (d), below, if a Shareholder
becomes physically or mentally unable to perform his or her regular and
customary duties to the Corporation for a continuous period of [one hundred
(100)] days (the "Date of Disability"), such Shareholder shall be considered
totally and permanently disabled (a "Disabled Shareholder"). The Corporation and
the Remaining Shareholders shall have the irrevocable and exclusive successive
options, but not the obligation, to purchase and the Disabled Shareholder, or
such Shareholder's guardian or other person possessing the legal power to act on
such Shareholder's behalf to satisfy his contractual obligations
("Representative"), shall sell all of the Shares owned by the Disabled
Shareholder at the Date of Disability at the price and in the manner set forth
in this Agreement.
(ii) Corporation's First Option to Purchase Shares.
Within thirty (30) days after the Date of Disability, the Corporation may elect,
at its option, to purchase all of the Shares owned by the Disabled Shareholder
in the same manner as set forth in subsection 4(a)(ii) hereof. The purchase
price of the Shares shall equal its Agreed Value as of the Date of Disability.
(iii) Disability Insurance. In order to assure
sufficient funds are available to pay for a purchase by the Corporation of a
Shareholder's Shares in the event of his or her disability, the Corporation may,
but is not obligated to, secure disability insurance from a company selected by
the Corporation. Each of the Shareholders agrees to do everything necessary to
cause disability insurance policies to be issued pursuant to this Agreement, if
the Corporation elects to do so. The Corporation, which shall be the owner of
the disability insurance policies, agrees to pay the premiums as they become due
and each policy shall be the sole and absolute property of the Corporation. This
Agreement shall extend to and include all additional disability insurance
policies issued pursuant to this Agreement.
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(iv) Shareholders Second Option to Purchase Shares.
If the Corporation does not elect to purchase the Shares owned by the Disabled
Shareholder, the Remaining Shareholders shall have the irrevocable, and
exclusive second option, but not the obligation, to purchase from the Disabled
Shareholder that part of the Disabled Shareholder's Shares, pro rata to its
holdings of Shares on the Date of the Disability in the manner provided in
subsection 4(a)(iv). The purchase price to be paid by the Remaining Shareholders
shall equal the Agreed Value of the Shares as of the Date of Disability.
(v) Consequences if all Shares are Not to be
Purchased. If the Corporation or the Remaining Shareholders do not elect,
pursuant to subsections 4(b)(ii) and 4(b)(iv), respectively, to purchase all of
the Shares of the Disabled Shareholder, the Disabled Shareholder may elect to
sell to the Remaining Shareholders, if any, who have elected to purchase part of
the Shares of the Disabled Shareholder, the aggregate number of shares of such
Shares which such Remaining Shareholders have elected to purchase at the price
determined pursuant to subsection 4(b)(iv). If the Corporation or the Remaining
Shareholders have failed to elect to purchase all of the Shares of the Disabled
Shareholder pursuant to the above provisions, the Disabled Shareholder may sell
its stock to a third party within thirty (30) days thereafter at the Agreed
Value: (i) only on the same terms and conditions as the Shares have been offered
to the Corporation and Remaining Shareholders and (ii) only if the purchaser
agrees in writing to be bound by all of the terms and conditions of this
Agreement. If such sale is not closed within thirty (30) days after nonelection
by the Corporation and Remaining Shareholders, the sale of the Disabled
Shareholder's Shares shall again be governed by provisions of this section 4.
(c) Continuous Restriction on Remaining Shares. If any Shares
have been offered for sale pursuant to this section 4 and that offer has not
been finally accepted in accordance with the provisions of this section 4, then
the Shares still held by the personal representative of the Decedent, the
Trustee(s) of the Dissolved Shareholder or the Disabled Shareholder shall remain
subject to the terms of this Agreement.
(d) Execution of Voting Trust Agreement. In the event of
Shareholder's death, dissolution or disability, the personal representative of
the Decedent or the Trustee(s) of the Dissolved Shareholder, or the
Shareholder's Representative, within ten (10) days after receiving notice of the
election to purchase by the Corporation or the Remaining Shareholders pursuant
to the options set forth in section 4 (a) or (b), may take the following actions
, in which case the terms of section 4 (a) or (b) shall not apply:
(i) Provide notice to the Corporation and
Remaining Shareholders , set forth herein, that such personal representative of
the Decedent, or Trustee of the Dissolved Shareholder, or Shareholder's
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Representative has elected to establish a Voting Trust Agreement, substantially
in the form of Exhibit 1 hereto, under which QVESTOR will be appointed as
Trustee and shall have the right to exercise, in person or by proxy, all of such
Shareholder's voting rights and powers in respect of the Shares registered in
the name of the Trustee, and to take part in or consent to any and all corporate
or shareholder action; and
(ii) Simultaneously with the execution of the Voting
Trust Agreement, or as soon as reasonably practicable thereafter, deposit with
the Trustee, the certificate or certificates for their respective Shares,
together with instruments duly executed for the transfer of their shares to the
Trustee. Pending the delivery of such instruments, each Shareholder hereby
transfers the Shares to the Trustee. The Shares shall be vested in the Trustee
and shall be transferred to the name of the Trustee on the books of the Company,
and the Trustee shall issue and deliver a Certificate to each such personal
representative of the Decedent, Trustee of the Dissolved Shareholder or
Shareholder's Representative representing his beneficial ownership of the
deposited Shares (a "Certificate"); and
(iii) Complete the actions required by subsections
(d)(i) and (ii) within ninety (90) days following the notice by the Corporation
or Remaining Shareholders of their election to purchase the Shareholder's
Shares.
5. VOTING AGREEMENT
Each of the parties hereto agrees to nominate, and cause the
Corporation to nominate, for election to the Corporation's Board of Directors at
any special or annual meeting of stockholders of the Corporation, four nominees
proposed by Shareholders QVESTOR and Q-Med, ("Nominees") and each of the parties
hereto agrees to vote, at any special or annual meeting of the stockholders of
the Corporation, to elect such Nominees to the Corporation's Board of Directors.
6. AGREED VALUE OF SHARES
The Corporation and the Shareholders stipulate that the Agreed Value of
each Share for purposes of this Agreement shall be the value set forth on
Schedule "A" attached hereto from time to time. The Agreed Value shall be
established not less often than once each calendar year by the Shareholders at
the Corporation's Annual Meeting and shall be set forth on a new Schedule "A" to
be attached to this Agreement. If for any reason the Shareholders shall have
failed to stipulate the value for the year in which a Shareholder dies, is
dissolved, becomes disabled, is terminated or announces its intention to sell
its Shares, the last previously stipulated value shall control. In the event the
Shareholders have failed to stipulate the value of the Shares for more than 18
months and the Agreed Value of the Corporation's Shares is disputed by an
Offering Shareholder, the personal representative of the deceased Shareholder,
the trustee(s) of a dissolved Shareholder or a Disabled Shareholder covered
under this Agreement (hereinafter
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referred to collectively as the "Selling Shareholders"), the value of the
Corporation's Shares will be set by appraisal. The Selling Shareholders, at
their expense, shall have the right to choose an MAI appraiser to independently
appraise the business and worth of the Corporation as of the date of the event
which created a requirement or option to purchase the Shares. Such appraisal
shall then be presented to the Board of Directors of the Corporation for their
approval. If a majority of the Board approves the amount of the appraisal
prepared by the Selling Shareholders' MAI, such appraisal shall be deemed the
fair market value of the Corporation ("FMV") from which the Agreed Value of the
Shares will be determined for purposes of said transaction. Should a majority of
the Corporation's Board of Directors fail to approve the appraisal prepared by
the Selling Shareholders' MAI, the Board may, at its expense, choose a second
MAI to independently appraise the business and worth of the Corporation. Once
the Board's MAI has completed its appraisal, the appraisals of the two MAIs
shall be averaged to determine the FMV of the Corporation unless the MAIs
disagree on FMV by an amount exceeding ten percent (10%) of the highest such
appraisal. If the difference in the appraisals does exceed ten percent (10%),
the two MAIs may designate a third MAI to perform an independent appraisal of
the company and assign a FMV to its Shares. The cost of the third MAI's
appraisal shall be borne equally by the Selling Shareholders and the
Corporation, and the FMV determined by such appraiser shall be binding on all
parties. Once the FMV of the Corporation is established in accordance with this
section, the Agreed Value for said transaction will be calculated by dividing
the FMV of the Corporation by the number of shares of Shares outstanding at the
date when the event occurred which created a requirement or option to purchase
the Shares.
7. CLOSING
The Corporation shall set a reasonable time after acceptance by the
Corporation and/or the other Shareholders of an offer from an Offering
Shareholder for closing a purchase under this Agreement.
8. DELIVERY OF SHARES
Upon the payment to the Shareholder of the purchase price as provided
in this Agreement, the Shareholder shall assign and deliver the Shares purchased
under this Agreement to the Corporation (as transfer agent) free and clear of
all liens, charges, and encumbrances of any nature whatsoever, duly endorsed for
transfer.
9. DOCUMENTARY STAMPS
Whenever any Shares are sold pursuant to this Agreement, the party who
triggers the sale of Shares must purchase and affix to the Share certificate any
documentary stamps required by Florida law.
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10. PIGGY-BACK REGISTRATION RIGHTS
If the Corporation elects to register any of its Shares under the
Securities Act of 1933 and/or applicable state securities laws, the Corporation
shall provide the Shareholders notice of such election, and, subject to the
approval of the lead underwriter in any such registration, the Shareholders
shall be entitled to "piggy-back" registration rights for not less than fifty
percent ) of their Shares at no expense, other than applicable broker's
commission.
11. DOCUMENTATION
While employed by the Corporation, each employee and consultant
Shareholder shall prepare and maintain adequate and current documentation of his
work for the Corporation. Upon any termination of such employment, the employee
Shareholder shall leave reasonable and orderly documentation of his work and
cooperate fully with the Corporation in connection with the training of any
person or persons employed to perform the employee Shareholder's duties and the
orderly and smooth transfer of the employee Shareholder's duties to such person
or persons.
12. TERMINATION OR MODIFICATION OF AGREEMENT
(a) This Agreement will terminate upon the occurrence of
any of the following events:
(i) cessation of the Corporation's business;
(ii) receivership, filing for relief under the
Bankruptcy Code, or dissolution of the
Corporation;
(iii) the written agreement of all parties hereto;
(iv) the initial public offering of the Corporation's
shares on a listed stock exchange; or
(v) the sale of all or substantially all of the
stock or assets of the Corporation.
(b) This Agreement may only be modified by the written
agreement of all parties hereto. Unanimous approval of all Shareholders shall be
required for any amendment to be effective.
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13. ABANDONMENT
If a Shareholder attempts or purports to attempt to Dispose Of its
Shares in violation of this Agreement, then the Shareholder shall be deemed to
have abandoned its ownership interest in its Shares, and the Corporation shall
be empowered (but not obligated) to redeem such Shareholder's ownership interest
in its Shares. The redemption price in the event of an abandonment shall be no
greater than the price paid for the Shares by the abandoning Shareholder,
without credit or attribution of interest, or the then-current book value of its
Shares, whichever sum is less, said lower value being a disincentive to a
Shareholder to abandon its interest in its Shares. The redemption price under
this paragraph shall be paid to the abandoning Shareholder over a period of two
(2) years in annual installments beginning one year after the date of
abandonment, with no interest accruing. Each Shareholder which is a party hereto
hereby irrevocably constitutes and appoints the Shareholders who have not
abandoned their interests in their Shares as its attorneys-in-fact to terminate
its ownership interest in the Corporation in the event it shall abandon its
interest as provided herein, and to execute, file of record, and record, as
appropriate, such documents and instruments as may be required to effectuate the
transfer of its ownership interest.
14. INABILITY OF CORPORATION TO PURCHASE SHARES
If the Corporation does not have sufficient surplus to permit it
lawfully to purchase all of the Shares as it deems desirable hereunder to
purchase, the Shareholders shall promptly take such measures to vote their
respective holdings of Shares to reduce the capital of the Corporation, to
revalue the capital of the Corporation so as to increase its surplus, or to take
such other steps as may be appropriate or necessary in order to enable the
Corporation lawfully to perform its obligations hereunder, including, by way of
illustration and not by way of limitation, an up-to-date appraisal of the assets
of the Corporation.
15. NONIMPAIRMENT
In no event shall the purchase of a Shareholder's Shares cause the
Corporation's solvency and continuing operations to be impaired. Accordingly, in
the event insurance proceeds (if obtained for death of a Shareholder) are
insufficient to discharge the Corporation's obligation to purchase a
Shareholder's Shares, then, notwithstanding any other provision of this
Agreement, the payment of the purchase price of the Shares shall be accomplished
so as not to cause the solvency and continued operations to be impaired on such
terms and conditions as the directors of the Corporation in good faith
determine.
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<PAGE>
16. STATUS OF TRANSFEREES
Except with respect to donees of a Shareholder as set forth in section
3 hereof, any person or entity acquiring any Share of stock in the Corporation,
by accepting it, shall be deemed to be a party to this Agreement and to agree to
be subject to all the terms and conditions of this Agreement as if he or it
signed this Agreement as a Shareholder. Each such transferee shall sign an
agreement joining to this Agreement.
17. INDEBTEDNESS OF TRANSFEROR TO CORPORATION
If the transferor of any Shares sold hereunder is indebted to the
Corporation at the time the purchase price for the Shares is to be paid by the
Corporation, the purchase price paid for such Shares, including any interest or
any deferred payments of such purchase price, shall first be applied against the
outstanding balance of such indebtedness, and the balance of such purchase price
and interest shall be paid to the transferor of the Shares as hereinabove
provided.
18. PURCHASE BY THE CORPORATION
Whenever the Corporation, pursuant to this Agreement, purchases Shares,
all Shareholders shall do all things and execute and deliver all papers as may
be necessary to consummate such purchase. All Shares so purchased by the
Corporation shall be cancelled.
19. SPECIFIC PERFORMANCE
The parties hereby declare that it is impossible to measure in money
the damages that will accrue to a part or to the Shareholder by reason of a
failure of a party to perform any of the obligations under this Agreement.
Therefore, if the Corporation, any Shareholder, the personal representative of a
Decedent or the trustee(s) of a Dissolved Shareholder shall institute any action
or proceeding to specifically enforce the provisions hereof, then any person
(including the Corporation) against whom such action or proceeding is brought
hereby waives the claim or defense therein that such party has an adequate
remedy at law, and such person shall not urge in any such action or proceeding
the claim or defense that an adequate remedy at law exists so as to defeat the
claim for specific performance of this Agreement.
20. NOTICES
Any and all notices, designations, consents, offers, acceptances, or
any other communication provided for herein shall be given in writing which
shall be addressed to the Shareholders at the current address which the
Shareholders have furnished to the Corporation and which is on file at the
Corporation's office and to
14
<PAGE>
the Corporation at its principal office, or if none, to the last known address
of the addressee, and shall be deemed given (i) when actually received by hand
delivery or express courier, or (ii) five (5) days after posting by postage
pre-paid certified or registered mail.
21. GOVERNING LAW
This Agreement shall be governed, construed, interpreted, and enforced
in accordance with the laws of the State of Delaware.
22. ARBITRATION/ATTORNEY FEES
The parties will attempt in good faith to resolve any controversy or
claim arising out of or relating to this Agreement by mediation in accordance
with the Center for Public Resources Model Procedure for Mediation of Business
Disputes.
If the matter has not been resolved pursuant to the aforesaid mediation
procedure within sixty days of the commencement of such procedure (which period
may be extend by mutual agreement), the controversy shall be settled by
arbitration in accordance with the Center for Public Resources Rules for
Non-Administered Arbitration of Business Disputes, by three arbitrators, of whom
each party shall appoint one. The arbitration shall be governed by the United
States Arbitration Act, 9 U.S.C. ss. 1-16, and judgment upon the award rendered
by the Arbitrator(s) may be entered by any court having jurisdiction thereof.
The place of arbitration shall be Orlando, Florida.
The prevailing party in such arbitration shall be entitled to an award
of attorney's fees incurred during the mediation and arbitration.
23. BINDING EFFECT
This Agreement will inure to the benefit of and be binding upon the
Corporation, its successors and assigns, including, but not limited to, any
Corporation or entity that may acquire all or substantially all of the
Corporation's assets and business or into which the Corporation may be
consolidated or merged, and upon the Shareholders, their successors, assigns,
heirs, and legal representatives, as the case may be, and shall bind all who
sign regardless of whether one or more persons who hold Shares fail to sign this
Agreement.
24. MULTIPLE COPIES OR COUNTERPARTS OF AGREEMENT.
The original and one or more copies of this Agreement may be executed
by one or more of the parties. In such event, all of such executed copies
shall have the same force and effect as the executed original, and all of such
counterparts, taken together, shall have the effect of a fully executed
original.
15
<PAGE>
25. NO ASSIGNMENT
This Agreement and a Shareholder's rights hereunder may not be assigned
by a Shareholder to any firm, entity, or person without the express, written
approval of the Corporation and the other Shareholders.
26. INVALID PROVISION
The invalidity or unenforceability of a particular provision of this
Agreement shall not affect the other provisions hereof, and the agreement shall
be construed in all respects as if the invalid or unenforceable provisions were
omitted.
27. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement and understanding of
the parties with respect to the transfer of the Shares and supersedes any and
all prior agreements regarding the Shares, whether written or oral.
28. SURVIVAL
All sections of this Agreement shall survive the termination
of this Agreement for any reason as are necessary to effect the rights of the
parties hereto or of any Trustee appointed hereunder.
IN WITNESS WHEREOF, the Corporation and QVESTOR have executed this
instrument by and through their authorized officers and the individual
Shareholders have hereunto placed their hands on the day and year first above
written.
"CORPORATION":
Witnesses: IXION BIOTECHNOLOGY, INC.
/S/ /S/
-------------------------------- By:---------------------------------
Thomas P. Stagnaro Weaver Gaines
Chairman and Chief Executive Officer
16
<PAGE>
"Q-MED":
Witnesses: Q-MED AB (publ)
/S/ /S/
-------------------------------- By:----------------------------------
Terence F. Brennan Per Olof Wallstrom
President and Chief Executive Officer
/S/ /S/
-------------------------------- By:----------------------------------
Terence F. Brennan Bengt Agerup
-------------------------------- Member of the Board of Directors
17
<PAGE>
"QVESTOR":
Witnesses: QVESTOR LLC
/S/ /S/
-------------------------------- By:------------------------------------
Terence F. Brennan Per Olof Wallstrom
18
<PAGE>
Witnesses: AMMON B. PECK PH.D
/S/ /S/
------------------------------- ----------------------------------
Theodore Lee Snow Ammon B. Peck, Individually
/S/
-------------------------------
Kimberly A. Ramsey
Witnesses: WEAVER H. GAINES
/S/ /S/
------------------------------- ----------------------------------
Thomas P. Stagnaro Weaver H. Gaines, Individually
19
<PAGE>
SCHEDULE A
----------
Agreed Value
------------
The Agreed Value for the Shares as of July -----, 2000 is $4.00 per share.
the "CORPORATION":
Witnesses: IXION BIOTECHNOLOGY, INC.
-------------------------------- By:------------------------------
Weaver Gaines
-------------------------------- Chairman and Chief Executive Officer
"Q-MED":
Witnesses: Q-MED AB (publ)
-------------------------------- By:------------------------------
Per Olof Wallstrom
-------------------------------- President and Chief Executive Officer
-------------------------------- By:------------------------------
Bengt Agerup
-------------------------------- Member of the Board of Directors
"QVESTOR":
Witnesses: QVESTOR LLC
-------------------------------- By:------------------------------
Per Olof Wallstrom
--------------------------------
20
<PAGE>
Witnesses: AMMON B. PECK PH.D
------------------------------- ----------------------------------
Ammon B. Peck, Individually
-------------------------------
Witnesses: WEAVER H. GAINES
------------------------------- ----------------------------------
Weaver H. Gaines, Individually
-------------------------------
21
<PAGE>
EXHIBIT 1
---------
VOTING TRUST AGREEMENT
This is a Voting Trust Agreement (the "Agreement") dated as of
----------------, among IXION Biotechnology Inc. ("Company"), -----------------
("Shareholder") and QVESTOR, LLC, a Delaware limited liability company, as
Trustee.
Background
The Shareholder currently owns ---------- shares of common stock (the
"Shares") of IXION BIOTECHNOLOGY, INC. (the "Company"). Pursuant to section 4(d)
of a Shareholders' Agreement dated July 14, 2000 among the Shareholder, the
Company, and certain other shareholders named therein ("Shareholders
Agreement"), the parties desire to enter into this Agreement regarding the
deposit of the Shares with the Trustee. Accordingly, in consideration of the
mutual covenants and agreements set forth below, the parties agree as follows:
Terms
1. Filing. A copy of this Agreement and any amendment to this Agreement
shall be filed in the principal office of the Company, and shall be open to the
inspection of any shareholder of the Company. All voting trust certificates (the
"Certificates") issued pursuant to this Agreement shall be issued, received, and
held subject to all the terms of this Agreement. Every person entitled to
receive voting trust certificates under this Agreement, representing shares of
common stock of the Company, and their permitted transferees and assigns, shall
be bound by the provisions of this Agreement.
2. Appointment of the Trustee. The Trustee shall be QVESTOR, LLC.
3. Transfer of Stock to Trustee. As soon as reasonably possible after
the execution of this Agreement, the Shareholder will deposit with the Trustee,
the certificate or certificates for the Shares, together with instruments duly
executed for the transfer of the Shares to the Trustee. Pending the delivery of
such instruments, the Shareholder hereby transfers the Shares to the Trustee.
The Shares shall be vested in the Trustee and shall be transferred to the name
of the Trustee on the books of the Company.
4. Trust Certificates. Following the deposit by the Shareholder of the
certificate or certificates representing their respective Shares with the
Trustee, the Trustee shall issue and deliver a Certificate to the Shareholder
representing his
<PAGE>
beneficial ownership of the Shares (a "Certificate"), in substantially the form
attached to this Agreement as Exhibit A.
5. Rights of Trustee.
(a) The Trustee shall have the right to exercise, in person or
by proxy, all of the Shareholder's voting rights and powers in respect of the
Shares registered in the name of the Trustee, and to take part in or consent to
any and all corporate or shareholder action. The right to vote shall include,
without limitation, the right to vote on the election ofdirectors. The Trustee
may in all matters act either at a meeting or by written consent. The parties
acknowledge that the Trustee, for purposes of this Agreement, shall be permitted
to vote the Shares and to exercise all such powers as are necessary for every
legitimate business purpose for the Company. The Trustee shall have no liability
for any actions taken pursuant to this Agreement, except for those actions taken
in bad faith or in willful violation of this Agreement.
(b) It is expressly understood and agreed that the Shareholder
or any future holders of Certificates (the "Holders") shall not have any right
with respect to any Shares held by the Trustee to vote, to take part in, to
consent to or in any way control or limit any corporate or shareholders' action.
(c) In voting the Shares held pursuant to this Agreement
(either in person or by Proxy), the Trustee shall exercise its reasonable
business judgment and may take such part in the management of the Company's
affairs as it deems appropriate.
(d) It is expressly understood and agreed that at any time,
subject to compliance with: (i) all applicable federal and state securities
laws, (ii) all applicable shareholder agreements and (iii) any underwriter
lock-up agreements that a Holder may sell, assign or otherwise transfer any of
the Certificates and may pledge or otherwise encumber the Certificates;
provided, however, the Shares represented by such Certificates shall continue to
be bound by this Agreement and the new Holder shall sign a copy of this
Agreement.
(e) The Trustee shall have the right, in its sole discretion
and at any time during the term of this Agreement, to permit any Holder to sell,
assign or otherwise transfer all or any portion of the Shares represented by the
Holder's Certificates free of this Agreement, and this Agreement will continue
in full force and effect with respect to all remaining Shares.
(f) It is also expressly understood and agreed that the
Trustee has no rights in the Shares other than the voting rights set forth in
this Agreement. All of the economic benefits of ownership of the Shares remain
vested in the Shareholders. The Trustee may not at any time sell, transfer,
assign, pledge or otherwise encumber any of the Shares without the consent of
the relevant Holders.
2
<PAGE>
6. Term. This Agreement shall continue in effect for a period extending
until the earlier of (a) July 15, 2010 or (b) the date that the Trustee and
Shareholder agree in writing to terminate this Agreement.
7. Termination Procedure.
(a) Upon the termination of this Agreement, the Trustee shall
mail written notice of such termination to the registered owners of the
Certificates, at the addresses appearing on the transfer books of the Trustee.
After the date of any such notice, the Certificates shall cease to have any
effect, and the Holders of the Certificates shall have no further rights under
this Agreement other than to receive certificates for shares of stock of the
Company or other property distributable under the terms of this Agreement and
upon the surrender of the Certificates.
(b) Promptly following the termination of this Agreement and
the surrender to the Trustee of the Certificates, the Trustee shall take all
actions necessary to have the record ownership of that number of Shares
represented by the Certificates transferred on the books of the Company into the
name of the Holder or the Holder's nominees and shall have the Certificates
representing such Shares delivered to such Holder or the Holder's nominee. The
Trustee shall deliver to each registered Holder, stock certificates for the
number of Shares represented by the Certificate held by such Holder, upon the
surrender of the properly endorsed Certificate.
8. Dividends.
(a) Prior to the termination of this Agreement the Holders
shall be entitled to receive payments of cash dividends, if any, paid by the
Company upon a like number and class of shares of Common Stock as is represented
by each Certificate. If any dividend or distribution in respect of the Shares
deposited with the Trustee is paid, in whole or in part, in stock of the Company
having general voting powers, the Trustee shall receive and hold, subject to the
terms of this Agreement, the certificates for stock which are distributed on
account of such dividend or distribution and the Holder shall be entitled to
receive a Certificate issued under this Agreement for the number of shares and
class of stock received as such dividend or distribution with respect to the
Shares represented by such Certificate. The Trustee shall have no interest in
such dividend Shares, other than the right to exercise voting rights.
(b) If any dividend or distribution in respect of the stock
deposited with the Trustee is paid other than in cash or in capital stock having
general voting powers, then the Trustee shall distribute such dividend or
distribution to the Holders registered as such at the close of business on the
day fixed by the Trustee for taking a record to determine the Holders entitled
to receive such distribution.
3
<PAGE>
Such distribution shall be made to such Holders ratably, in accordance with the
number of Shares represented by their respective Certificates.
(c) The Trustee shall instruct the Company, in writing, to pay
all cash dividends directly to the Holders or their legal representatives.
(d) The Company is authorized to report or direct the
reporting of such dividends to federal or state taxing authorities, as required
by law, using the respective taxpayer identification number of each Holder. Each
Holder agrees to provide the Company with such additional information as is
requested by the Company for such purpose.
9. Dissolution of the Company. In the event of the dissolution or total
or partial liquidation of the Company, whether voluntary or involuntary, to the
extent that any distributions are received by the Trustee, the Trustee shall
distribute any securities, rights, or property, to which the Holders are
entitled, among the registered Holders or their legal representatives in
proportion to their interests, as shown by the books of the Trustee.
10. Reorganization of Company. In case the Company is merged into or
consolidated with another corporation, or entity, or all or substantially all of
the assets of the Company are transferred to another corporation or entity, then
in connection with such transfer, the term "Company" for all purposes of this
Agreement shall be taken to include such successor corporation or entity, and
the Trustee shall receive and hold as Trustee under this Agreement any stock of
such successor corporation received on account of the ownership, of the stock
held under this Agreement, prior to such merger, consolidation, or transfer.
11. Trustee.
(a) The Trustee (and any successor Trustee) may at any time
resign by mailing to the registered Holders a written resignation, to take
effect thirty days thereafter or upon the prior acceptance of the duties of
Trustee by a successor Trustee.
(b) The rights, powers, and privileges of the Trustee named
under this Agreement shall be possessed by any successor Trustee, with the same
effect as though such successors had originally been parties to this Agreement.
The word "Trustee" as used in this Agreement, means the Trustee or any successor
Trustee acting under this Agreement.
12. Notices. To be effective, a notice or other communication required
or permitted by this Agreement must be in writing. All notices and other
communications shall be delivered by overnight courier service or hand delivery.
Communications shall be addressed to the intended recipient at the address
4
<PAGE>
specified below, or to such other address as the intended recipient may have
designated in a writing previously delivered to the sender:
If to the Company: If to the Trustee:
IXION BIOTECHNOLOGY, INC. QVESTOR
13704 Progress Boulevard, Box 13 c/o The Corporation Trust Company
Alachua, Florida 32615 1209 Orange Street
Wilmington, DE
With a copy to:
Terence F. Brennan, Esq.
Holland & Knight LLC
P.O. Box 1526
Orlando, FL 32802
If to the Shareholder:
------------------------------
------------------------------
------------------------------
13. Governing Law and Venue. This Agreement shall be governed by and
construed under the laws of Delaware. Any suit brought to enforce or construe
any provision of this Agreement shall be brought only in the appropriate court
located in Orange County, Florida; provided, however, the Trustee may initiate
an action in any jurisdiction having jurisdiction over the parties to enjoin a
violation of this Agreement.
14. Entire Agreement. This Agreement, including its exhibits,
constitutes the entire agreement of the parties concerning its subject matter
and supersedes any prior or contemporaneous agreements or understandings among
them, concerning its subject matter.
15. Amendment. Upon the written consent of the Trustee and Shareholder
any provisions of this Agreement may be amended.
16. Voting Power. For the purposes of this Agreement, "Voting Power"
related to Shares shall mean the underlying voting power of the Shares.
17. Counterparts. This agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same instrument.
5
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Voting Trust
Agreement as of the date first written above.
Date:------------------------- ------------------------------
Shareholder
QVESTOR, LLC ("Trustee")
Date:------------------------- By:---------------------------
IXION BIOTECHNOLOGY, INC. ("Company")
13704 Progress Boulevard, Box 13
Alachua, Florida 32615
Date:------------------------- By:----------------------------
6
<PAGE>
EXHIBIT A (to Exhibit 1)
------------------------
Trust Certificate
-----------------
No. ------ --------------- Shares of Stock
QVESTOR, LLC, the Trustee of the shares deposited under a Voting Trust
Agreement effective ------------------, having received certain shares of IXION
BIOTECHNOLOGY, INC., a Delaware corporation (the "Company"), pursuant to such
Agreement, hereby certifies that ----------------- will be entitled to receive a
certificate for --------------- fully paid --------------- shares of the Company
on the expiration of the Voting Trust Agreement, and in the meantime shall be
entitled to receive payments equal to any dividends that may be collected by the
Trustee upon a like number of such shares held by him under the terms of the
Voting Trust Agreement.
Neither this certificate, nor the shares of capital stock for which it
is issued, have been registered under the Securities Act of 1933, as amended, or
any applicable state securities laws, and no transfer or assignment of this
certificate or the shares for which it is issued may be made in the absence of
an effective registration statement under such laws or the availability of
exemptions from the registration provisions thereof in respect of such transfer
or assignment.
This certificate is subject to restrictions on transfer contained in
the Voting Trust Agreement dated as of -------------------, and the Shareholders
Agreement dated July 14, 2000 among the Company, the Shareholder, and certain
other shareholders named therein, including without limitation, all conditions,
rights of first refusal, options, or other restrictions on transfer of the
shares and is transferable only on the books of the undersigned Trustee by the
registered holder in person or by his duly authorized attorney, and the holder
hereof consents that the undersigned Trustee may treat the registered holder
hereof as the trust owner for all purposes, except the delivery of share
certificates, which delivery shall not be made without the surrender hereof.
IN WITNESS WHEREOF, the undersigned have executed this Voting Trust
Certificate as of this --------- day of -----------------------.
QVESTOR, LLC
By:--------------------------
7
<PAGE>
EXHIBIT 5.6
-----------
Certificate of Company
See attached.
<PAGE>
EXHIBIT 5.7
-----------
Written Opinion of Company's Counsel (Brashear & Associates, P.L.)
July 14, 2000
Qvester, LLC
Gentlemen:
We refer to the Stock Purchase Agreement, dated as of July 14, 2000
(the "Purchase Agreement"), between Ixion Biotechnology, Inc., a Delaware
corporation (the "Company") and Qvester LLC, a Delaware limited liability
company (the "Purchaser"). We render this opinion pursuant to subsection 5.7 of
the Purchase Agreement as counsel to the Company. Capitalized terms used but not
defined herein have the meanings given them in the Purchase Agreement.
I. Documents Reviewed
In preparing this opinion we have reviewed the following documents:
A. The Purchase Agreement;
B. The Shareholders' Agreement dated July 14, 2000 among the
Company, the Purchaser, Ammon B. Peck Ph.D, Weaver H. Gaines
and David C. Peck (the "Shareholders' Agreement");
C. The Employment Agreement dated July 14, 2000 between the
Company and Weaver H. Gaines (the "Employment Agreement");
D. Voting Trust Agreement dated July 14, 2000, between the
Company and the Purchaser (the "Voting Trust Agreement");
E. David C. Peck Director's Agreement dated July 14, 2000
(the "Director's Agreement");
F. Agreements and Releases dated as of July 14, 2000, between
the Company and Weaver H. Gaines, Theodore L. Snow, David C.
Peck and Ammon B. Peck, respectively (collectively, the
"Agreement and Release").
(Note: The above-referenced Shareholders' Agreement, Employment
Agreement , Voting Trust Agreement, Director's Agreement, and Agreement and
Release shall hereinafter be referred to collectively as the "Documents.")
G. The form of stock certificates of the Company's Common
Stock to be issued pursuant to the Purchase Agreement;
H. The minute books, stock books and stock transfer ledgers of
the Company.
<PAGE>
In addition, we have examined such records, certificates and other
documents of the Company as we have deemed necessary, relevant or appropriate to
enable us to render the opinions expressed below. We have, when relevant facts
were not independently established, relied upon representations and certificates
of the officers of the Company. In addition, having no independent knowledge of
contrary facts, we have also obtained at our request, examined and relied upon,
certificates of public officials and certificates, affidavits, opinions and
written representations of the officers of the Company and such other corporate
records, documents, orders, certificates and other instruments as in our
judgment are necessary or appropriate to enable us to render the opinions
expressed below. Except as expressed below, we have made no special
investigation or review of any judgments, decrees, franchises, certificates,
permits or the like, and have made no independent search of the records of any
judicial authority or governmental agency.
II. Qualifications, Exceptions, Assumptions and Limitations.
The opinions expressed in Section III herein are subject to the
following qualifications, exceptions, assumptions and limitations:
A. We express no opinion as to the laws of any jurisdiction other than the State
of Delaware, the State of Florida and the federal laws of the United States of
America.
B. We have assumed: (i) the genuineness of all signatures on and the
authenticity of all documents examined by us and the conformity to originals of
all documents submitted as certified or photostatic copies thereof; (ii) that
all documents and agreements to which the Company is a party will be construed
in accordance with the internal laws of the jurisdictions specified by the
parties therein; (iii) that no fraud or dishonesty exists with respect to any of
the matters relevant to our opinions; and (iv) the legal capacity of all natural
persons.
C. This opinion is further subject to the qualifications that the enforceability
of the Articles, the Purchase Agreement and the Documents may be limited by and
subject to (i) applicable bankruptcy, insolvency, reorganization, fraudulent
transfer or conveyance, moratorium or other similar laws affecting creditors'
rights; (ii) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law), commercial
reasonableness and conscionability; and (iii) the power of the courts to award
damages in lieu of equitable remedies.
D. We have assumed, with respect to the Purchaser: (i) the due authorization,
execution and delivery by such Purchaser of all documents and instruments to
which it is a party; (ii) the legality, binding effect, validity and
enforceability as to or as against such Purchaser of all documents and
instruments to which it is a party or by which it is bound; (iii) the absence of
any requirement of consent, approval or authorization by any person or by any
governmental authorities with respect to such Purchaser; and (iv) the
organization, existence and good standing of the Purchaser and that such
Purchaser has all necessary power and authority to execute, deliver and perform
the Documents to which it is a party.
E. We have assumed that the Purchaser's principal place of business is in the
State of Delaware.
Page 2
<PAGE>
F. We have assumed: (i) the due authorization, execution and delivery by all
parties other than the Company of the Purchase Agreement and the Documents and
of all agreements and documents which are to be executed and delivered by such
other parties pursuant thereto; (ii) the accuracy of the representations and
warranties made by the Company as to matters of fact in or pursuant to the
Purchase Agreement and the Documents; and (iii) that the Purchase Agreement and
the Documents are valid, binding and enforceable obligations of all the parties
thereto (other than the Company).
G. We have further assumed those matters described in Section II.K of the Report
on Standards for Florida Opinions dated April 8, 1991, issued by the Business
Law Section of the Florida Bar (the "Report"), a copy of which is attached
hereto, is incorporated by reference into this opinion.
III. Opinions
Based upon and relying on the assumptions and limitations set forth herein, it
is our opinion that:
A. The Company is duly incorporated and is validly existing and in good standing
under the laws of the State of Delaware.
B. The Company is duly qualified as a foreign corporation to transact business
in the state of Florida, and is in good standing in every jurisdiction in which
the failure to so qualify might reasonably be expected to have a material
adverse effect upon the business prospects, financial condition or operating
results of the Company.
C. The Company has all necessary corporate power and authority to execute,
deliver and perform the Purchase Agreement and the Documents to which the
Company is a party, and to own its property and to conduct its business in the
manner in which such business is currently being conducted.
D. The Purchase Agreement and the Documents to which the Company is a party have
been duly authorized, executed and delivered by the Company, and each such
agreement is a valid and binding obligation of the Company, enforceable against
the Company in accordance with their terms.
E. In accordance with subsection 2.2 of the Purchase Agreement, the Company's
Certificate of Incorporation authorizes the issuance of 20,000,000 shares of
common stock and 1,000,000 shares of Preferred Stock.
F. In accordance with subsection 5.8(b) of the Purchase Agreement, the
employment agreement dated August 31, 1994 between David C. Peck and the Company
and the consulting agreement dated July 1, 1996 between David C. Peck and the
Company have been terminated and pursuant to such termination, David C. Peck has
released the Company, the Purchaser and Q-Med AB from all liability and
obligations whatsoever arising under the aforementioned agreements or the
termination thereof, other than those obligations recognized in the Director's
Agreement.
G. In accordance with subsection 5.10 of the Purchase Agreement, the Company has
terminated the following deferred compensation plans and all modification
amendments and renewals thereof: (i) the Deferred Compensation Plan Agreement
with David C. Peck dated April 1, 1994; (ii) the Deferred Compensation Plan
Agreement with Ammon B. Peck dated June 1,
Page 3
<PAGE>
1994; (iii) the Deferred Compensation Plan Agreement with Weaver H. Gaines dated
January 1, 1994; and (iv) the Deferred Compensation Plan Agreement with Theodore
L. Snow dated January 3, 1994. Moreover, the Company has obtained releases in
favor of the Company, the Purchaser and Q-Med AB from the aforementioned
individuals releasing the Company, the Purchaser and Q-Med AB from all
obligations and liabilities whatsoever arising under the aforementioned plans or
the termination thereof. In addition, all deferred compensation amounts arising
pursuant to the aforementioned plans have been converted into Company Common
Stock at the rate of Four Dollars ($4.00) per share.
H. In accordance with subsection 5.9 of the Purchase Agreement, any landlord's
consents that may be required under the Real Property leases with respect to the
properties leased by the Company to permit such leases to remain in effect on
their current terms and conditions following the Closing have been obtained by
the Company.
I. The Common Stock issuable at the Closing have been duly authorized and
reserved for issuance by the Company, there are no statutory or, to our
knowledge, contractual or preemptive rights of stockholders with respect to the
issuance of such Common Stock, and such Common Stock shall be validly issued,
fully paid and nonassessable.
J. The execution and delivery by the Company of the Purchase Agreement, the
Documents and the other agreements contemplated in the Purchase Agreement, the
issuance of the Common Stock to the Purchaser upon Closing, do not and will not
(a) conflict with or result in a breach of the terms, conditions or provisions
of, (b) constitute a default under, (c) result in the creation of any lien,
mortgage, security interest, charge or other encumbrance upon the Company's
capital stock or assets pursuant to, (d) give any third party the right to
accelerate any obligation under, (e) result in a violation of, or (f) require
any authorization, consent, approval, exemption or other action by or notice to
any court or administrative or governmental body pursuant to, the Articles, the
Company's Bylaws, or, to the best of our knowledge, any law, statute, rule or
regulation to which the Company is subject, or any agreement, instrument, order,
judgment or decree to which the Company is subject and which is known to us.
K. As of the Closing Date and giving effect to the transaction contemplated in
this Agreement, the authorized capital stock of the Company consists solely of
twenty million (20,000,000) shares of Common Stock, of which 6,773,653 common
shares are issued and outstanding, 268,400 common shares (less shares reserved
for Purchaser prior to Closing) are reserved for issuance upon exercise of
options granted, and 48,185 common shares (including warrants to purchase 3,042
common shares claimed by The University of Florida Research Foundation, Inc.)
are reserved for issuance upon exercise of outstanding warrants. Except as set
forth in Schedule 2.2 of the Purchase Agreement, there are no outstanding or
authorized options, warrants, calls, subscriptions, rights (including any
preemptive rights or rights of first refusal), agreements or commitments of any
character obligating the Company to issue any shares of its capital stock. All
issued and outstanding shares of the Company's capital stock are duly
authorized, validly issued, fully paid and nonassessable and free of preemptive
rights.
L. To the best of our knowledge, there are no (a) outstanding shares of stock or
securities convertible into or exchangeable or exercisable for shares of the
Company's capital stock, (b) other than as set forth in Schedule 2.2 of the
Purchase Agreement, outstanding options for the purchase of, or any agreements
providing for the issuance (contingent or otherwise) of, or commitments or
claims of any character relating to, any such capital stock or any shares of
stock or securities convertible into or exchangeable or exercisable for any such
capital stock.
Page 4
<PAGE>
M. To the best of our knowledge, based on information provided to us by the
Company: (i) there have been no material change in the business, assets,
properties, operations, financial status or prospects of the Company since the
Balance Sheet Date; (ii) there is no material action, suit, proceeding or
investigation against the Company which is pending or threatened before any
court, arbitrator or governmental agency or authority; (iii) the Company is not
in violation of or in default under the Articles or any judgments, injunctions,
orders or decrees binding upon it; and (iv) there is no claim that the Company
is not in material violation or default of or under its bylaws or the agreements
required to be listed in Schedule 2.15 to the Purchase Agreement.
The qualification of any opinion or statement herein by the use of the words "to
the best of" or words of similar import (unless otherwise stated) means that,
during the course of our representation of the Company, no information has come
to our attention which gives us actual knowledge of the existence of such
matters, documents or facts, and no inference as to our knowledge thereof shall
be drawn from the fact of our representation of any party or otherwise. Except
as expressly set forth herein, we have not undertaken any independent
investigation to determine the existence or absence of such facts (and have not
caused to be made any review of any court file or indices) and no inference as
to our knowledge concerning such facts should be drawn from the fact that such
representation has been undertaken by us.
This opinion is as of the date hereof, and we undertake no, and hereby disclaim
any, obligation to advise you of any change in any matter set forth herein
occurring after the date hereof. Without our prior written consent, this opinion
may not be relied upon by anyone other than you and your legal counsel or quoted
in whole or in part or otherwise referred to in any report or document furnished
to any person or entity.
Sincerely,
BRASHEAR & ASSOCIATES, P.L.
/S/
By:--------------------------
Bruce Brashear, Esq.
Page 5
<PAGE>
EXHIBIT 5.8(a)
--------------
Employment Agreement between Company and W. Gaines
See attached.
<PAGE>
EXHIBIT 5.8(b)
--------------
Director's Agreement of David Peck
See attached.
<PAGE>
EXHIBIT 6.5
-----------
Certificate of Purchaser
See attached.
<PAGE>
EXHIBIT 6.6
-----------
Side Letter (Q-Med) and Amended and Restated Side Letter (Q-Med)
See attached.
