SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of
Report (Date of earliest event reported): June 30, 2010
BACTERIN INTERNATIONAL
HOLDINGS, INC.
(Exact
Name of Registrant as Specified in Charter)
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Delaware
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333-158426
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20-5313323
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(State
or other jurisdiction
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(Commission
File Number)
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(IRS
Employer)
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of
incorporation)
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Identification
No.)
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600
Cruiser Lane
Belgrade,
Montana
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59714
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code: (406) 388-0480
K-Kitz,
Incorporated
1630
Integrity Drive East, Columbus, Ohio
43209
(Former
Name or Former Address, if Changed Since Last Report)
Copies
to:
Greenberg
Traurig, LLP
The Tabor
Center
1200
Seventeenth Street, Suite 2600
Denver,
Colorado 80123
Tel.:
(303) 572-6586
Fax:
(303) 572-6540
Attn: C.
Ben Huber, Esq.
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
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o
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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o
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Pre-commencement
communications pursuant to Rule 13e-4 (c) under the Exchange Act (17 CFR
240.13e-4(c))
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CURRENT
REPORT ON FORM 8-K
BACTERIN
INTERNATIONAL HOLDINGS, INC.
June
30, 2010
Items
1.01, 5.01, 5.02, and 5.03. Entry into a Material Definitive
Agreement / Changes in Control of Registrant / Departure of Directors or Certain
Officers; Election of Directors; Appointment of Certain Officers; Compensatory
Arrangements of Certain Officers / Amendments to Articles of Incorporation or
Bylaws;
Summary
On June
30, 2010, we completed a reverse merger transaction (the “Reverse Merger”), in
which we caused Bacterin International, Inc., a Nevada corporation (“Bacterin”
or the “Company”), to be merged with and into KB Merger Sub, Inc., a Nevada
corporation and our newly-created, wholly-owned subsidiary (“Merger
Sub”). The reverse merger was consummated under Nevada corporate law
and pursuant to an Agreement and Plan of Merger, dated as of June 30, 2010 (the
“Merger Agreement”), as discussed below. Concurrently with the
closing of the Reverse Merger, we also completed a private placement of common
stock and warrants to purchase common stock to accredited investors, and
received gross proceeds of approximately $7,508,000 at the closing of the
private placement.
As a
result of the Reverse Merger, we are now engaged, through Bacterin, in the
business of biomaterials research, development, and
commercialization. Bacterin is expanding its intellectual property
base and has successfully leveraged its technical expertise and knowledge of
biofilms into multiple product areas. Bacterin is well positioned for future
growth through established partnerships with major medical device manufacturers
and provider networks, as well as through its own in-house sales force and its
ongoing Bacterin product development of innovative tissue constructs and
bioactive coated devices. Revenues for Bacterin come from product
manufacturing, sales, distribution, licensing agreements and
grants.
Before
the Reverse Merger, our corporate name was K-Kitz, Inc., and our trading symbol
was KKTZ.OB. On June 29, 2010, the Company changed its corporate name
to “Bacterin International Holdings, Inc.” which name change will become
effective for trading purposes on July 1, 2010. The Company intends
to request a trading symbol change to correspond with its name change at the
appropriate time and in accordance with current FINRA regulations that went into
effect June 1, 2010. Accordingly, the trading symbol for the Company will remain
KKTZ.OB until such time as the Company moves to another market or otherwise can
effect a trading symbol change through FINRA. As a result of the Reverse
Merger, consummated pursuant to the Merger Agreement, Bacterin became our
wholly-owned subsidiary, with the former shareholders of Bacterin acquiring
28,237,543 shares of our common stock, representing approximately 96% of our
outstanding common stock prior to taking into account the issuance of any shares
pursuant to the private placement.
Concurrently
with the closing of the Reverse Merger, we completed an initial closing of a
private placement to selected qualified investors of shares of our common stock
at a purchase price of $1.60 per share and detachable warrants to purchase
one-quarter share of our common stock (at an exercise price of $2.50 per
share). In total, we sold 4,934,534 shares of our common stock and
warrants to purchase 1,233,634 shares of common stock as part of this initial
closing, and may sell up to an additional 6,268,472 shares of our common stock
and warrants to purchase 1,567,118 shares of common stock to investors that
participated in the initial closing, management and certain note holders until
July 30, 2010, when the offering period expires. We received gross
proceeds of $7,508,329 in consideration for the sale of the shares of common
stock and warrants, which consisted of (i) $4,026,000 from investors in the
private placement and (ii) $3,482,329 from note holders in an earlier Bacterin
bridge financing who converted into the private placement at a discount to the
purchase price and received warrants with a discounted exercise price, as
described below.
In order
to fund Bacterin’s working capital and capital expenditures during the months
prior to the Reverse Merger and during the offering period, Bacterin and certain
placement agents conducted two bridge financings of approximately $5,250,000 in
aggregate principal amount of convertible notes and warrants, of which
$3,400,000 plus $82,329 in interest accrued thereon was converted into the
private placement (at a discount to the per share purchase
price).
2
Concurrently
with the closing of the Reverse Merger and the private placement, we repurchased
4,319,404 shares of our common stock from one of our shareholders for aggregate
consideration of $100, as well as certain other good and valuable consideration,
and immediately thereafter cancelled those shares.
We are
filing this current report on Form 8-K for the purpose of providing summary
information regarding the Reverse Merger and the private
placement. We expect to file a more complete Form 8-K setting forth
the information required by Items 1.01, 2.01, 3.02, 4.01, 5.01, 5.02, 5.03, 5.06
and 9.01 of that form within the time periods permitted.
The
Reverse Merger
General
At the
closing of the Reverse Merger, the former shareholders of Bacterin received
shares of our common stock for all of the outstanding shares of common stock of
Bacterin held by them. As a result, at the closing of the Reverse
Merger, we issued an aggregate of 28,237,543 shares of our common stock to the
former shareholders of Bacterin. The shares issued to Bacterin’s
former shareholders represent approximately 96% of our outstanding shares of
common stock, exclusive of 4,934,534 shares of common stock issued in the
initial closing of the private placement, or approximately 82% of our
outstanding shares of common stock, inclusive of such shares issued in the
initial closing of the private placement. The consideration issued in
the Reverse Merger was determined as a result of arm’s-length negotiations
between us and Bacterin.
Immediately
prior to the closing of the Reverse Merger, the former shareholders of Bacterin
and the note holders who participated in an earlier bridge financing conducted
by Bacterin also held outstanding stock options and warrants to purchase shares
of common stock of Bacterin. Pursuant to the Merger Agreement, we
have agreed to issue shares of our common stock upon the exercise of these stock
options and warrants in lieu of shares of Bacterin’s common stock previously
issuable thereunder, and, based upon the ratio used to determine the number of
shares issuable to Bacterin stockholders in connection with the Reverse Merger,
we are obligated upon the exercise of those stock options and warrants to issue
4,213,196 shares and 4,879,075 shares of our common stock,
respectively.
To the
extent any of Bacterin’s former stockholders elect to exercise any dissenters
rights in connection with the Reverse Merger, we will be obligated to purchase
any such dissenter’s shares of Bacterin common stock for “fair value” as
determined immediately prior to the Reverse Merger, all in accordance with
Nevada law. In addition, we will also be obligated to issue
additional shares of our common stock to the non-dissenting Bacterin
stockholders such that the non-dissenting stockholders would have held
approximately 96% of our outstanding shares of common stock immediately upon
consummation of the Reverse Merger, exclusive of any shares of our common stock
issued in the private placement. Certain of Bacterin’s former
stockholders, who held approximately 743,940 shares of Bacterin common stock in
the aggregate, provided proper notice to perfect their ability to exercise
dissenters rights (or 371,970 shares of our common stock that they will receive
in the Reverse Merger if they ultimately elect not to exercise such
rights).
Changes
Resulting from the Reverse Merger
We intend
to carry on Bacterin’s biomaterials business as our sole line of business. We
have relocated our executive offices to those of Bacterin at 600 Cruiser Lane,
Belgrade, Montana 59714. Our new telephone number is (406) 388-0480,
fax number is (406) 388-1354, and corporate website is www.bacterin.com. The
contents of our website are not part of this current report.
Our
pre-Reverse Merger stockholders will not be required to exchange their existing
K-Kitz, Inc., stock certificates for new certificates of Bacterin Holdings
International, Inc. since the OTC Bulletin Board will consider our existing
stock certificates as constituting “good delivery” in securities transactions
subsequent to the Reverse Merger. The Nasdaq Capital Market, where we intend to
apply to list our common stock for trading as soon as reasonably practicable,
will also consider the submission of existing stock certificates as “good
delivery.” We cannot be certain that we will receive approval to list our common
stock on the Nasdaq Capital Market.
3
Change
of Board Composition and Executive Officers
Prior to
the closing of the Reverse Merger and private placement, our board of directors
was composed only of Jennifer Jarvis and Michael Funtjar. On June 30, 2010,
concurrently with such transactions, Ms. Jarvis and Mr. Funtjar expanded the
size of the board of directors to five members, and appointed Guy S. Cook,
Mitchell Godfrey, and Kent Swanson to fill the vacancies created
thereby. The new directors then accepted the resignations of Ms.
Jarvis and Mr. Funtjar and appointed Ken Calligar and Daniel Frank to fill the
two vacancies created by their resignations. Upon their appointment,
the new directors further expanded the size of the board of directors to six
members, and appointed Gary Simon to fill the vacancy created
thereby.
Mr. Cook,
Mr. Godfrey and Mr. Swanson are all former Bacterin directors. Mr.
Swanson, Mr. Calligar, Mr. Frank and Mr. Simon are independent of management.
All directors will hold office until the next annual meeting of stockholders and
the election and qualification of their successors.
Prior to
the closing of the Reverse Merger and private placement, Ms. Jarvis was our
President, Chief Executive Officer, and Chief Financial Officer and Mr. Funtjar
was our Secretary and Chief Operating Officer. Ms. Jarvis and Mr.
Funtjar resigned from all of those offices effective on June 30,
2010.
On June
30, 2010, our board of directors named the following persons as our new
executive officers: Guy S. Cook - Chairman of the Board, Chief Executive Officer
and President; Mitchell Godfrey - Secretary and Treasurer; and John P. Gandolfo
- - Interim Chief Financial Officer. These individuals held those same
positions with Bacterin, our wholly-owned subsidiary through which we conduct
our business, prior to the Reverse Merger and will continue to carry on in the
same capacities with Bacterin as will Darrell Holmes - Executive Vice President
of Medical Devices and Jesus Hernandez - Executive Vice President of
Sales. Officers are elected annually by our board of directors and
serve at the discretion of our board.
We have
assumed all of such officers’ current employment agreements (including
intellectual property ownership provisions and restrictive covenants relating to
confidential information) and they have agreed to such assumption.
Change
of Stockholder Control
Except as
described above under “Change of Board Composition and Executive Officers,” no
arrangements or understandings exist among our present or former controlling
stockholders with respect to the election of persons to our board of directors
and, to our knowledge, no other arrangements exist that might result in a change
of control of our company. Further, as a result of our repurchase of shares from
an existing stockholder and the issuance of 28,237,543 shares of common stock to
the former stockholders of Bacterin, a change of stockholder control has
occurred. Prior to the repurchase and the closing of the Reverse Merger,
Jennifer Jarvis beneficially owned 82% of our outstanding shares of common
stock. After these transactions, the former shareholders of Bacterin own
approximately 96% of our outstanding shares of common stock, exclusive of shares
of common stock acquired in the private placement through purchase or conversion
or approximately 82% of our outstanding shares of common stock, inclusive of
such shares of common stock acquired in the private placement through purchase
or conversion. We are continuing as a “smaller reporting company,” as defined
under the Securities Exchange Act of 1934, following the exchange
transaction.
Accounting
Treatment
In
accordance with Statement of Financial Accounting Standards No. 141, “Business
Combinations,” and the assumptions and adjustments described in the accompanying
notes to the unaudited pro forma combined condensed financial statements,
Bacterin is considered the accounting acquiror in the Reverse Merger. Because
Bacterin’s former shareholders as a group retained or received the larger
portion of the voting rights in the combined entity and Bacterin’s senior
management represents all of the senior management of the combined entity,
Bacterin was considered the acquiror for accounting purposes and will account
for the exchange transaction as a reverse acquisition. The acquisition will be
accounted for as the recapitalization of Bacterin since, at the time of the
acquisition, we were a company with minimal assets and liabilities.
Consequently, the assets and liabilities and the historical operations that will
be reflected in the consolidated financial statements will be those of Bacterin
and will be recorded at the historical cost basis of Bacterin.
4
Amendments
to Articles of Incorporation and Bylaws
In connection with
the Reverse Merger, our board of directors and stockholders have approved and we
filed on June 29, 2010, an amendment to our certificate of incorporation with
the Secretary of State of the State of Delaware to change our name to Bacterin
International Holdings, Inc.
Prior to
the Reverse Merger, we amended our by-laws to permit us to set the size of our
board of directors from between one and nine directors.
Bacterin
International Equity Incentive Plan
We
recently adopted the Bacterin International Equity Incentive Plan, which became
effective just prior to the Reverse Merger, under which 6,000,000 shares of our
common stock are reserved for issuance as equity awards. The purpose
of this plan is two fold. First, in connection with the Reverse
Merger, we are substituting each equity award granted under the Bacterin
International, Inc. 2004 Stock Incentive Plan, as most recently amended
effective April 1, 2009, with a substantially similar equity award granted under
our new plan (subject to proportionate adjustments to reflect the ratios used in
consummating the Reverse Merger). Accordingly, of the 6,000,000
shares of our common stock that are reserved for issuance as awards under this
plan, 4,213,196 have been or will be issued as substitute awards, leaving an
additional 1,786,804 shares for issuance thereunder, representing approximately
13.3%,9.3% and 4%, respectively, of the fully-diluted shares of our common stock
immediately following the Reverse Merger and the private
placement. Second, the shares of stock remaining available for
issuance under this plan will be used for attracting and retaining employees,
management, directors and outside consultants, who will be granted awards at
fair market value from time to time under the guidance and approval of our
compensation committee or such other group as is vested by our board with the
power to administer the plan, and in accordance with the terms of such equity
incentive plan.
The
Private Placement
Concurrently
with the closing of the Reverse Merger, we completed the sale of 4,934,534
shares of our common stock and warrants to purchase an additional 1,233,634
shares of our common stock in a private placement to accredited investors in
reliance upon the exemption from registration provided by Section 4(2) of the
Securities Act of 1933 and Regulation D promulgated thereunder. We
sold each share and warrant for an aggregate price of $1.60 per share pursuant
to the terms of a subscription agreement executed and delivered by each investor
on or before the closing of the private placement. Each warrant
entitles the holder to purchase one-quarter share of our common stock at an
exercise price of $2.50 per share for a period of five years from the date of
the closing on their subscription. The form of private placement
subscription agreement is filed as Exhibit 10.1 to this
report. Certain Bacterin note holders also participated in the
private placement by converting certain debt into shares of our common stock and
warrants; however, the conversion of their debt was effected at a 10% discount
to the price per share at which investors purchased securities in such private
placement, being $1.44 per share, and the exercise price of the warrants they
received also carried a 10% discount to the exercise price of the warrants
received by new investors in such private placement, being $2.25 per
share.
We
received gross proceeds from the private placement of $7,508,329 from both
purchases of our common stock and warrants and conversions by existing
convertible note holders into such securities. Placement agents
received an aggregate of $322,080 in cash fees in connection with the private
placement (including the prior bridge financings) and reimbursements of their
out-of-pocket expenses. In addition, the placement agents received
67,686 shares of our common stock and warrants to purchase 251,625 shares of our
common stock at an exercise price of $1.60 per share.
After the
closing of the Reverse Merger and the private placement, we had outstanding
34,420,359 shares of common stock. In addition, we are obligated to
issue 4,213,196 shares of common stock upon the exercise of stock options held
by former holders of Bacterin options, 4,879,075 shares of common stock upon the
exercise of warrants held by former holders of Bacterin warrants, and 1,485,259
shares of common stock upon the exercise of warrants received by investors,
including converting note holders, and placement agents in our private
placement.
Following
the initial closing, the private placement will remain open until July 30, 2010,
subject to the earlier termination at the election of us and the placement
agent. During this time period, we may close on additional
subscriptions and bridge note conversions under the private placement; provided,
however, that the only persons who may participate in the private placement
pursuant to any subsequent closings after the initial closing are (i) investors
or note holders who participate in the initial closing, (ii) members of our
management, and (iii) holders of our convertible bridge notes, regardless if
they participated in the initial closing, so long as the amount raised in the
private placement then meets the conditions for it to constitute a “Qualified
Offering” under the terms of such notes.
5
Lock-Up
Agreements
All
shares of common stock issued in the Reverse Merger to the former holders of
shares in Bacterin will be considered “restricted securities” under U.S. federal
securities laws and may not be resold for a period of one year after the closing
date. Each of the former Bacterin shareholders who served as
directors or executive officers of Bacterin as of the closing of the Reverse
Merger or who have joined as members of our Board of Directors of concurrently
with the consummation of the Reverse Merger (collectively, “Management”), have
executed one-year a lock-up agreement with us which provide that their shares,
including any shares that are now owned or are subsequently acquired by them,
will not be, directly or indirectly, publicly sold, subject to a contract for
sale or otherwise transferred for a period of 12 months following the Reverse
Merger and the private placement; provided, however, that (a) the restrictions
set forth in such lock-up agreement will not to any securities acquired by
Management in the private placement and (b) Guy Cook is permitted to
hypothecate, pledge and grant a security interest in up to 5,000,000 of his
existing shares received from us in connection with the Reverse Merger as
collateral for borrowed funds used to acquire securities in the private
placement and, if such collateral is executed against, shall be permitted to
assign and transfer such shares to the secured party free of any restrictions
set forth therein.
Registration
Rights
We have
agreed to use our best efforts to file a shelf registration statement on Form
S-1 with the U.S. Securities and Exchange Commission (SEC) covering the resale
of all shares of common stock and all shares of common stock underlying the
warrants issued in connection with the private placement (as well as up to
1,177,196 shares of our common stock held by certain of our shareholders at the
time of the closing of the Reverse Merger and the shares underlying the
placement agents’ warrants) on or before the date which is 90 days after the
closing date and use our best efforts to have such shelf registration statement
declared effective by the SEC as soon as practicable thereafter, but in any
event not later than 150 days after the closing date (or 180 days after the
closing date in the event of a full review of the registration statement by the
SEC). We are also obligated to respond to any SEC comments within a
stipulated period of time after receiving any such comments and to maintain the
effectiveness of the shelf registration statement from the effective date
through the earlier of (a) the date on which all the investors in the private
placement have completed the sales or distribution described in the registration
statement relating thereto or, if earlier, until all securities covered by the
registration rights agreement may be sold by the investors in the private
placement under Rule 144(b)(1), and (b) the date that is 18 months following the
private placement closing date. In the event the shelf registration
statement is not filed with, or declared effective by, the SEC on or prior to
the dates set forth above, or we fail to timely satisfy our reporting
requirements, each investor in the private placement will receive cash
liquidated damages equal to 1% of the purchase price for the shares of common
stock and warrants acquired in the private placement for each month (or portion
thereof) that the registration statement is not so filed or effective, or has
failed to timely file required reports, provided that the aggregate payment as a
result of the registration default will in no event exceed 12% of the purchase
price for the shares of common stock and warrants.
Item 7.01. Regulation FD
Disclosure.
A copy of the press release announcing
the matters described in Items 1.01, 5.01, 5.02 and 5.03 above is attached as
Exhibit 99.1 and incorporated herein. The information in this Item
7.01 and the document attached as Exhibit 99.1 are being furnished and shall not
be deemed “filed” for purposes of Section 18 of the Securities and Exchange Act
of 1934, as amended (the “Exchange Act”), nor incorporated by reference in any
filing under the Securities Act of 1933, as amended, or the Exchange Act, except
as shall be expressly set forth by specific reference in such a
filing.
6
(d) Exhibits.
The
exhibits listed in the following Exhibit Index are filed as part of this current
report.
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Description
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2.1
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Agreement
and Plan of Merger, dated as of June 30, 2010, by and among K-Kitz, Inc.,
KB Merger Sub, Inc. and Bacterin International, Inc.
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3.1
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Certificate
of Incorporation, including all amendments to date
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4.1
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Form
of Warrant to Purchase Common Stock
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10.1
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Form
of Private Placement Subscription Agreement to purchase Shares and
Warrants.
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99.1
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Press
Release
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________________
7
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
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Date:
June 30, 2010
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BACTERIN
INTERNATIONAL HOLDINGS, INC.
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By:
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/s/
Guy S. Cook
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Guy
S. Cook
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President
and Chief Executive
Officer
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EXHIBIT
2.1
AGREEMENT
AND PLAN OF MERGER
among
BACTERIN
INTERNATIONAL HOLDINGS, INC., f/k/a K-KITZ, INC.
KB MERGER
SUB, INC. and
BACTERIN
INTERNATIONAL, INC.
June 30,
2010
TABLE
OF CONTENTS
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Page
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1.
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The
Merger
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1
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1.1
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Merger
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2
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1.2
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Effective
Time
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2
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1.3
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Articles
of Incorporation, Bylaws, Directors and Executive
Officers.
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2
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1.4
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Assets
and Liabilities
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2
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1.5
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Manner
and Basis of Converting Shares.
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3
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1.6
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Surrender
and Exchange of Certificates
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4
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1.7
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Parent
Common Stock
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4
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1.8
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Post-Closing
Adjustment
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4
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1.9
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Employee
Stock Options
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4
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1.10
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Convertible
Notes and Warrants
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5
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1.11
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Tax
Matters
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5
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2.
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Representations
and Warranties of the Company
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5
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2.1
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Organization,
Standing, Subsidiaries, Etc.
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6
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2.2
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Qualification
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6
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2.3
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Capitalization
of the Company
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6
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2.4
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Indebtedness
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6
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2.5
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Voting
Agreements
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6
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2.6
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Corporate
Acts and Proceedings
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6
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2.7
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Compliance
with Laws and Instruments
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7
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2.8
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Binding
Obligations
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7
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2.9
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Broker’s
and Finder’s Fees
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7
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2.10
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Financial
Statements
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7
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2.11
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Absence
of Undisclosed Liabilities
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8
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2.12
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Employees
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8
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2.13
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Tax
Returns and Audits
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8
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2.14
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Employee
Benefit Plans; ERISA
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8
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2.15
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Title
to Property and Encumbrances
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9
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2.16
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Condition
of Properties
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9
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2.17
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Insurance
Coverage
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9
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2.18
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Litigation
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10
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2.19
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Licenses
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10
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2.20
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Interested
Party Transactions
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10
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2.21
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Questionable
Payments
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10
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2.22
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Obligations
to or by Stockholders
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10
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2.23
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Disclosure
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10
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3.
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Representations
and Warranties of Parent and Merger Sub
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11
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3.1
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Organization
and Standing
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11
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3.2
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Corporate
Authority
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11
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3.3
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Broker’s
and Finder’s Fees
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11
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3.4
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Capitalization
of Parent
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12
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(i)
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3.5
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Merger
Sub
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12
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3.6
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Validity
of Shares
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12
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3.7
|
SEC
Reporting and Compliance
|
12
|
|
|
3.8
|
Financial
Statements
|
13
|
|
|
3.9
|
Governmental
Consents
|
13
|
|
|
3.10
|
Compliance
with Laws and Other Instruments
|
13
|
|
|
3.11
|
Binding
Obligations
|
14
|
|
|
3.12
|
Absence
of Undisclosed Liabilities
|
14
|
|
|
3.13
|
Parent
Contracts
|
14
|
|
|
3.14
|
Tax
Returns and Audits
|
14
|
|
|
3.15
|
Employee
Benefit Plans; ERISA
|
15
|
|
|
3.16
|
Litigation
|
15
|
|
|
3.17
|
Interested
Party Transactions
|
16
|
|
|
3.18
|
Questionable
Payments
|
16
|
|
|
3.19
|
Obligations
to or by Stockholders
|
16
|
|
|
3.20
|
Employees
|
16
|
|
|
3.21
|
No
General Solicitation
|
16
|
|
|
3.22
|
Disclosure
|
16
|
|
|
|
|||
|
4.
|
Representations,
Warranties and Covenants of the Stockholders
|
17
|
|
|
|
|||
|
5.
|
Deliveries
of Parties
|
17
|
|
|
5.1
|
Company
Deliveries
|
17
|
|
|
5.2
|
Parent
and Merger Sub Deliveries
|
18
|
|
|
5.3
|
Proceedings
and Documents
|
19
|
|
|
5.4
|
Condition
Precedent
|
19
|
|
|
|
|||
|
6.
|
Survival
of Representations and Warranties
|
19
|
|
|
|
|||
|
7.
|
Amendment
of Agreement
|
19
|
|
|
|
|||
|
8.
|
Definitions
|
19
|
|
|
|
|||
|
9.
|
Closing
|
24
|
|
|
|
|||
|
10.
|
Miscellaneous
|
24
|
|
|
10.1
|
Notices
|
24
|
|
|
10.2
|
Entire
Agreement
|
25
|
|
|
10.3
|
Expenses
|
25
|
|
|
10.4
|
Time
|
25
|
|
|
10.5
|
Severability
|
25
|
|
|
10.6
|
Successors
and Assigns
|
25
|
|
|
10.7
|
No
Third Parties Benefited
|
25
|
|
|
10.8
|
Counterparts
|
25
|
|
|
10.9
|
Governing
Law
|
26
|
|
(ii)
LIST OF
EXHIBITS AND SCHEDULES
Exhibits
|
A
|
Articles
of Merger
|
|
|
B
|
Articles
of Incorporation of the Company
|
|
|
C
|
Bylaws
of the Company
|
|
|
D
|
Directors
and Officers of Parent
|
|
|
E
|
Letter
of Transmittal
|
|
|
F
|
Release
|
|
|
G
|
Indemnification
Agreement
|
Company Disclosure
Schedules
|
2.3
|
Capitalization
|
|
|
2.4
|
Indebtedness
|
|
|
2.10
|
Financial
Statements
|
|
|
2.14
|
Schedule
of Employee Benefit Plans
|
|
|
2.18
|
Litigation
|
|
|
2.20
|
Interested
Party Transactions
|
|
|
2.22
|
Obligations
to or by Stockholders
|
(iii)
AGREEMENT AND PLAN OF
MERGER
THIS
AGREEMENT AND PLAN OF MERGER (this “Agreement”) is made
and entered into on June 30, 2010, by and among BACTERIN INTERNATIONAL HOLDINGS,
INC., f/k/a K-KITZ, INC., a Delaware corporation (“Parent”), KB MERGER
SUB, INC., a Nevada corporation (“Merger Sub”), which
is a wholly-owned subsidiary of Parent, and BACTERIN INTERNATIONAL, INC., a
Nevada corporation (the “Company”).
WHEREAS,
the Board of Directors of each of Parent, Merger Sub and the Company have each
determined that it is fair to and in the best interests of their respective
corporations and stockholders for the Company to be merged with and into the
Merger Sub (the “Merger”) upon the
terms and subject to the conditions set forth herein;
WHEREAS,
the Board of Directors of each of Merger Sub and the Company have approved the
Merger in accordance with applicable Nevada law, specifically including Chapters
78 and 92A of the Nevada Revised Statutes (“Nevada Law” or “NRS”), and upon the
terms and subject to the conditions set forth herein and in the Articles of
Merger (the “Articles
of Merger”) attached as Exhibit A hereto; and
the Board of Directors of Parent also has approved this Agreement and the
Articles of Merger;
WHEREAS,
the Company Stockholders (as such term is defined in Section 1.5(a)(ii)) of the
Company have approved, in accordance with Nevada Law, the transactions
contemplated and described in this Agreement and the Articles of Merger,
including, without limitation, the Merger, and Parent, as the sole stockholder
of Merger Sub, has approved this Agreement, the Articles of Merger and the
transactions contemplated and described hereby and thereby, including, without
limitation, the Merger; and
WHEREAS,
simultaneously with the Closing (as such term is defined herein), (a) Parent (as
it will exist as of the closing of the Merger) is selling shares of its Common
Stock, par value $.000001 per share, and warrants to purchase shares of Common
Stock, in a private placement (the “Private Placement”)
to accredited investors, pursuant to the terms of a Confidential Private
Placement Memorandum, dated June __, 2010, as it may be supplemented from time
to time (the “Memorandum”), for the
purpose of financing the ongoing business and operations of the Surviving
Corporation (as defined below) following the Merger, and (b) certain investors
who purchased secured convertible promissory notes of the Company and warrants
to purchase shares of capital stock (the “Bridge Notes”) and
certain investors who have purchased unsecured convertible promissory notes of
the Company and warrants to purchase shares of capital stock (the “Mandatory
Bridge Notes”) are converting certain of the principal and interest outstanding
under such notes into shares of Common Stock of the Parent, all in accordance
with the terms of the Bridge Notes and this Agreement.
NOW,
THEREFORE, in consideration of the mutual agreements and covenants hereinafter
set forth, the parties hereto agree as follows:
1
1. The
Merger.
1.1 Merger. Subject
to the terms and conditions of this Agreement and the Articles of Merger, the
Merger Sub shall be merged with and into the Company in accordance with Chapter
92A of the NRS. At the Effective Time (as hereinafter defined), the
separate legal existence of Merger Sub shall cease, and the Company shall be the
surviving corporation in the Merger (sometimes hereinafter referred to as the
“Surviving
Corporation”) and shall continue its corporate existence under the laws
of the State of Nevada under the name “Bacterin International,
Inc.”
1.2 Effective
Time. The
Merger shall become effective at the date and time of the filing of the Articles
of Merger with the Secretary of State of the State of Nevada in accordance with
Nevada Law. The time at which the Merger shall become effective as
aforesaid is referred to hereinafter as the “Effective
Time.”
1.3 Articles of Incorporation,
Bylaws, Directors and Executive Officers.
(a) The
Articles of Incorporation of the Company, as in effect immediately prior to the
Effective Time, attached as Exhibit B hereto,
shall be the Articles of Incorporation of the Surviving Corporation from and
after the Effective Time until further amended in accordance with applicable
law.
(b) The
Bylaws of the Company, as in effect immediately prior to the Effective Time,
attached as Exhibit
C hereto, shall be the Bylaws of the Surviving Corporation from and after
the Effective Time until amended in accordance with applicable law, the Articles
of Incorporation and such Bylaws.
(c) The
directors and executive officers listed in Exhibit D hereto
shall be the directors and executive officers of the Surviving Corporation, and
each shall hold his or her respective office or offices from and after the
Effective Time until his or her successor shall have been elected and qualified
in accordance with applicable law, or as otherwise provided in the Articles of
Incorporation or Bylaws of the Surviving Corporation.
1.4 Assets and
Liabilities. At
the Effective Time, the Surviving Corporation shall possess all the rights,
privileges, powers and franchises of a public as well as of a private nature,
and be subject to all the restrictions, disabilities and duties of each of
Merger Sub and the Company (collectively, the “Constituent
Corporations”); and all the rights, privileges, powers and franchises of
each of the Constituent Corporations, and all property, real, personal and
mixed, and all debts due to any of the constituent corporations on whatever
account, as well for stock subscriptions as all other things in action or
belonging to each of the Constituent Corporations, shall be vested in the
Surviving Corporation; and all property, rights, privileges, powers and
franchises, and all and every other interest shall be thereafter as effectively
the property of the Surviving Corporation as they were of the several and
respective constituent corporations, and the title to any real estate vested by
deed or otherwise in either of the Constituent Corporations shall not revert or
be in any way impaired by the Merger; but all rights of creditors and all liens
upon any property of any of the Constituent Corporations shall be preserved
unimpaired, and all debts, liabilities and duties of the Constituent
Corporations shall thenceforth attach to the Surviving Corporation, and may be
enforced against it to the same extent as if said debts, liabilities and duties
had been incurred or contracted by it.
2
1.5 Manner and Basis of
Converting Shares.
(a) At
the Effective Time:
(i) each
share of Common Stock, par value $.0001 per share, of Merger Sub that is
outstanding immediately prior to the Effective Time by the sole stockholder of
the Merger Sub shall, by virtue of the Merger and without any action on the part
of the holder thereof, be converted into the right to receive one (1) share of
Common Stock, par value $.00001 per share, of the Surviving Corporation, so that
at the Effective Time, Parent shall be the holder of all of the issued and
outstanding shares of the Surviving Corporation;
(ii) each
share of Common Stock, par value $0.00001 per share, of the Company (the “Company Common
Stock”) that is outstanding immediately prior to the Effective Time by
the stockholders of the Company (the “Company
Stockholders”), shall, by virtue of the Merger and without any action on
the part of the holders thereof, be converted into the right to receive that
number of shares of Common Stock, par value $0.000001 per share, of the Parent
as is determined by multiplying each share of outstanding Company Common Stock
(other than any shares of Company Common Stock held in the treasury of the
Company) by fifty percent (50%), all subject to the rights of holders of the
shares of Company Common Stock to seek appraisal of the “fair value” thereof by
following the procedures required by Nevada Law, specifically NRS §§ 92A.300 to
92A.500. No interest will be paid on any cash held pending surrender
of certificates representing such shares of Company Common Stock, unless
otherwise required by Nevada Law. Company Stockholders who shall have
properly demanded in writing appraisal for their shares of Company Common Stock
in accordance with NRS §§ 92A.300 to 92A.500 (collectively, the “Dissenting Shares”)
shall be entitled to receive payment of the “fair value” of such Dissenting
Shares in accordance with NRS §§ 92A.300 to 92A.500, except that any Dissenting
Shares held by a Company Stockholder who shall have failed to perfect or shall
have effectively withdrawn or lost their rights to appraisal of such Dissenting
Shares under NRS §§ 92A.300 to 92A.500 shall be deemed to have been converted,
as of the Effective Time, into the right to receive the shares of Parent Common
Stock that they would have received had they not attempted to exercise their
dissenters rights.
(iii) each
share of Company Common Stock held in the treasury of the Company immediately
prior to the Effective Time shall be cancelled in the Merger and cease to
exist.
(b) After
the Effective Time, there shall be no further registration of transfers on the
stock transfer books of the Surviving Corporation of the shares of Company
Common Stock that were outstanding immediately prior to the Effective
Time.
3
1.6 Surrender and Exchange of
Certificates. Promptly
after the Effective Time and upon (i) surrender of a certificate or certificates
representing shares of Company Common Stock that were outstanding immediately
prior to the Effective Time or delivery of an affidavit and indemnification in
form reasonably acceptable to counsel for the Parent stating that such
Stockholder has lost their certificate or certificates representing such Company
Common Stock (“Lost Stock Certificate
Affidavit”) or that such certificate or certificates has or have been
destroyed and (ii) delivery of a Letter of Transmittal (as described in Section
4 hereof), Parent shall issue to each record holder of the Company Common Stock
surrendering such certificate or certificates (or delivering a Lost Stock
Certificate Affidavit) and delivering such Letter of Transmittal, a certificate
or certificates registered in the name of such Stockholder representing the
number of shares of Parent Common Stock that such Stockholder shall be entitled
to receive as set forth in Section 1.5(a)(ii) hereof (i.e., one-half of that
number of shares of Company Common Stock represented by the certificate or
certificates or Lost Stock Certificate Affidavit, as
applicable). Until the certificate, certificates or affidavit is or
are surrendered together with the Letter of Transmittal as contemplated by this
Section 1.6 and Section 4 hereof, each certificate or Lost Stock Certificate
Affidavit that immediately prior to the Effective Time represented any
outstanding shares of Company Common Stock shall be deemed at and after the
Effective Time to represent only the right to receive upon surrender as
aforesaid the Parent Common Stock specified in Section 1.5(a)(ii) hereof for the
holder thereof or to perfect any rights of appraisal which such holder may have
pursuant to the applicable provisions of Nevada Law.
1.7 Parent Common
Stock. Parent
agrees that it will cause the Parent Common Stock into which the Company Common
Stock is converted at the Effective Time pursuant to Section 1.5(a)(ii) to be
available for such purpose. Parent further covenants that immediately
prior to the Effective Time there will be no more than 1,180,596 shares of
Parent Common Stock issued and outstanding, not including shares of Parent
Common Stock that may be issued in the Private Placement or upon conversion of
any Bridge Notes, and that no other common or preferred stock or equity
securities or any options, warrants, rights or other agreements or instruments
convertible, exchangeable or exercisable into common or preferred stock or other
equity securities shall be issued or outstanding, except as described
herein.
1.8 Post-Closing
Adjustment. If
any Company Stockholder exercises such stockholder’s dissenter’s rights under
Nevada Law (a “Dissenting
Stockholder”) such that the Company is obligated to pay such stockholder
the “fair value” for such Dissenting Stockholder’s Dissenting Shares, Parent
shall issue to the Company Stockholders (excluding all Dissenting Stockholders),
on a pro rata basis, immediately after the time has expired for Company
Stockholders to exercise dissenters rights, that number of shares of Parent
Common Stock such that the total number of shares issued to all Company
Stockholders (excluding all Dissenting Stockholders) would have equaled 96% of
the total number of shares of Parent Common Stock outstanding immediately after
the Merger (excluding all Dissenting Shares) but prior to any issuances of
securities in the Private Placement or any conversions of Bridge
Notes.
1.9 Employee Stock
Options. Effective
as of the Effective Time, the Parent and Company shall take all necessary
action, including obtaining the consent of the individual holders of options
issued under the Company’s 2004 Stock Incentive Plan, as amended through the
date of this Agreement (the “Company Stock Option
Plan”), if necessary, to (a) issue new options under the Parent’s Equity
Incentive Plan (the “Substitute Options”)
in substitution of each outstanding option issued under the Company Stock Option
Plan (the “Company
Options”) with such adjustments to (i) the number of shares of Parent
Common Stock purchasable under such Substitute Options as is necessary for such
Substitute Options to reflect the right to purchase that number of shares of
Parent Common Stock that the holder thereof would have been entitled to receive
if the Company Option had been exercised immediately prior to the Merger and
(ii) the exercise price of such Substitute Option to reflect, on a proportionate
basis, the change in the number of shares of Parent Common Stock for which the
Substitute Option may be exercised, (b) cancel each Company Option, and
(c) terminate the Company Stock Option Plan. Notwithstanding the
foregoing, the exchange of Company Options for Substitute Options and the terms
of all Substitute Options, including those reflecting any adjustments required
hereby, shall comply with Section 409A of the Code.
4
1.10 Convertible Notes and
Warrants. Effective
as of the Effective Time, the Parent and Company shall take all necessary
action, including obtaining the consent of the individual holders of convertible
promissory notes and warrants issued by the Company prior to the Merger (“Company Notes” and
“Company
Warrants”, respectively), if necessary, to (a) issue new convertible
promissory notes and warrants of the Parent (the “Substitute Notes” and
“Substitute
Warrants”, respectively) in substitution of the outstanding Company Notes
and Company Warrants, respectively (the “Note or Warrant
Exchange”), with such adjustments to (i) the number of shares of Parent
Common Stock into which the Substitute Notes are convertible or that are
purchasable under the Substitute Warrants as is necessary for such Substitute
Notes and Substitute Warrants to reflect the right to convert into or purchase,
as applicable, that number of shares of Parent Common Stock that the holder
thereof would have been entitled to receive if the Company Note or Company
Warrant had been converted into, or exercised for, shares of Parent Common Stock
immediately prior to the Merger, and (ii) the exercise price of each Substitute
Warrant to reflect, on a proportionate basis, the change in the number of shares
of Parent Common Stock for which the Substitute Warrant may be exercised, and
(b) cancel each Company Note and Company Warrant. To the extent
that the Parent and the Company cannot effectuate the Note or Warrant Exchange
described above, Parent agrees to affirmatively assume the obligations of the
Company under the Company Notes and Company Warrants.
1.11 Tax
Matters. The
Merger is intended to qualify as a reorganization within the meaning of Sections
368(a)(1)(A) and 368(a)(2)(E) of the Code and this Agreement is intended to
be a “plan of reorganization” within the meaning of the Treasury Regulations
promulgated under Section 368 of the Code. Each party hereto
shall treat this Agreement as a reorganization within the meaning of Section
368(a) of the Code for all U.S. federal income tax purposes, and shall
treat this Agreement as a “plan of reorganization” within the meaning of the
Treasury Regulations promulgated under Section 368 of the Code, and will
not take any position on any Tax Return or otherwise take any Tax reporting
position inconsistent with such treatment, unless otherwise required by a
“determination” within the meaning of Section 1313 of the Code that such
treatment is not correct. Each party hereto shall act in a manner
that is consistent with the parties’ intention that the arrangement be
treated as a reorganization within the meaning of Section 368(a) of
the Code for all U.S. federal income tax purposes. However, neither the
Company, Parent, nor Merger Sub makes any representation or warranty to any
shareholder or security holder of the Company regarding the U.S. Federal income
tax consequences of the Agreement.
2. Representations and
Warranties of the Company. The
Company hereby represents and warrants to Parent and Merger Sub as
follows:
5
2.1 Organization, Standing,
Subsidiaries, Etc.
(a) The
Company is a corporation duly organized and existing in good standing under the
laws of the State of Nevada, and has all requisite power and authority
(corporate and other) to carry on its business, to own or lease its properties
and assets, to enter into this Agreement and the Articles of Merger and to carry
out the terms hereof and thereof. Copies of the Articles of
Incorporation and Bylaws of the Company that have been delivered to Parent and
Merger Sub prior to the execution of this Agreement are true and complete and
have not since been amended or repealed.
(b) The
Company has no subsidiaries or direct or indirect interest (by way of stock
ownership or otherwise) in any firm, corporation, limited liability company,
partnership, association or other business.
2.2 Qualification. The
Company is duly qualified to conduct business as a foreign corporation and is in
good standing in each jurisdiction wherein the nature of its activities or its
properties owned or leased makes such qualification necessary, except where the
failure to be so qualified could not reasonably be expected to have a material
adverse effect on the condition (financial or otherwise), properties, assets,
liabilities, business operations or results of operations of the Company taken
as a whole (the “Condition of the
Company”).
2.3 Capitalization of the
Company. The
authorized capital stock of the Company consists of 135,000,000 million shares
of common stock, par value $0.00001 per share, and (ii) 15,000,000 shares of
Preferred Stock, par value $0.0001 per share. A capitalization table
illustrating the outstanding capital stock and other Equity Securities of the
Company as of the date hereof is attached as Schedule
2.3. All of such outstanding shares have been, or upon
issuance will be, validly issued, fully paid and nonassessable. As of
the date hereof, except as disclosed in Schedule 2.3, the
Company has no outstanding options, rights or commitments to issue Company
Common Stock or other Equity Securities of the Company, and there are no
outstanding securities convertible or exercisable into or exchangeable for
Company Common Stock or other Equity Securities of the Company.
2.4 Indebtedness. The
Company has no Indebtedness for Borrowed Money, except as disclosed on the
Balance Sheet and Schedule
2.4.
2.5 Voting
Agreements. To
the knowledge of the Company, there is no voting trust, agreement or arrangement
among any of the beneficial holders of Company Stock affecting the nomination or
election of directors or the exercise of the voting rights of Company Common
Stock.
2.6 Corporate Acts and
Proceedings. The
execution, delivery and performance of this Agreement and the Articles of Merger
(together, the “Merger
Documents”) have been duly authorized by the Board of Directors of the
Company and the transactions contemplated thereby have been approved by the
Stockholders in accordance with Nevada Law, and all of the corporate acts and
other proceedings required for the due and valid authorization, execution,
delivery and performance of the Merger Documents and the consummation of the
Merger have been validly and appropriately taken, except for the filing referred
to in Section 1.2.
6
2.7 Compliance with Laws and
Instruments. The
business and operations of the Company have been and are being conducted in
compliance in all material respects with all applicable laws, rules and
regulations, except for such violations thereof for which the penalties, in the
aggregate, would not have a material adverse effect on the Condition of the
Company. The execution, delivery and performance by the Company of
the Merger Documents and the consummation by the Company of the transactions
contemplated by this Agreement: (a) will not require any authorization, consent
or approval of, or filing or registration with, any court or governmental agency
or instrumentality, except for such approvals and other authorizations,
consents, approvals, filings and registrations as shall have been obtained prior
to the Closing, (b) will not cause the Company to violate or contravene (i) any
provision of law, (ii) any rule or regulation of any agency or government, (iii)
any order, judgment or decree of any court, or (iv) any provision of the
Articles of Incorporation or Bylaws of the Company, (c) will not violate or be
in conflict with, result in a breach of or constitute (with or without notice or
lapse of time, or both) a default under, any indenture, loan or credit
agreement, deed of trust, mortgage, security agreement or other contract,
agreement or instrument to which the Company is a party or by which the Company
or any of its properties is bound or affected, except as would not have a
material adverse effect on the Condition of the Company, and (d) will not result
in the creation or imposition of any Lien upon any property or asset of the
Company. The Company is not in violation of, or (with or without
notice or lapse of time, or both) in default under, any term or provision of its
Articles of Incorporation or Bylaws or of any indenture, loan or credit
agreement, deed of trust, mortgage, security agreement or any other material
agreement or instrument to which the Company is a party or by which the Company
or any of its properties is bound or affected, in each case, except as would not
materially and adversely affect the Condition of the Company.
2.8 Binding
Obligations. The
Merger Documents constitute the legal, valid and binding obligations of the
Company and are enforceable against the Company in accordance with their
respective terms, except as such enforcement is limited by bankruptcy,
insolvency and other similar laws affecting the enforcement of creditors’ rights
generally and by general principles of equity.
2.9 Broker’s and Finder’s
Fees. Except
for commissions payable to Middlebury Securities, LLC in connection with the
Private Placement, no Person has, or as a result of the transactions
contemplated or described herein will have, any right or valid claim against the
Company, Parent, Merger Sub or any Stockholder for any commission, fee or other
compensation as a finder or broker, or in any similar capacity.
2.10 Financial
Statements. Attached
hereto as Schedule
2.10 are (a) the Company’s audited balance sheet (the “Balance Sheet”) as of
December 31, 2009 (the “Balance Sheet Date”)
and 2008, and the audited statements of operations, stockholders’ (deficiency)
equity and cash flows for the years ended December 31, 2009 and 2008, and (b)
the Company’s unaudited balance sheet as of March 31, 2010 and the unaudited
statements of operations, stockholders’ (deficiency) equity and cash flows for
the three months ended March 31, 2010 and March 31, 2009 (the “Financial
Statements”). Such Financial Statements (i) are in accordance
with the books and records of the Company, (ii) present fairly in all material
respects the financial condition of the Company at the dates therein specified
and the results of its operations and changes in financial position for the
periods therein specified, and (iii) have been prepared in all material respects
in accordance with generally accepted accounting principles (“GAAP”) applied on a
basis consistent with prior accounting periods.
7
2.11 Absence of Undisclosed
Liabilities. The
Company has no material obligation or liability (whether accrued, absolute,
contingent, liquidated or otherwise, whether due or to become due), arising out
of any transaction entered into at or prior to the Closing, except (a) as
disclosed in Schedule
2.4 hereto, (b) to the extent set forth on or reserved against in the
Balance Sheet or the notes to the Financial Statements, (c) current liabilities
incurred and obligations for agreements entered into and obligations under
agreements entered into in the usual and ordinary course of business since the
Balance Sheet Date, none of which (individually or in the aggregate) has had or
will have a material adverse effect on the Condition of the Company, and (d) by
the specific terms of any written agreement, document or arrangement identified
in the Schedules.
2.12 Employees. The
Company has complied in all material respects with all laws relating to the
employment of labor, and the Company has encountered no material labor union
difficulties. Other than pursuant to ordinary arrangements of
employment compensation, the Company is not under any obligation or liability to
any officer, director or employee of the Company.
2.13 Tax Returns and
Audits. All
required material federal, state and local Tax Returns of the Company have been
accurately prepared and duly and timely filed, and all federal, state and local
Taxes required to be paid with respect to the periods covered by such returns
have been paid. The Company is not and has not been delinquent in the
payment of any Tax. The Company has not had a Tax deficiency proposed
or assessed against it and has not executed a waiver of any statute of
limitations on the assessment or collection of any Tax. None of the
Company’s federal income tax returns nor any state or local income or franchise
tax returns has been audited by governmental authorities. The
reserves for Taxes reflected on the Balance Sheet are and will be sufficient for
the payment of all unpaid Taxes payable by the Company as of the Balance Sheet
Date. Since the Balance Sheet Date, the Company has made adequate
provisions on its books of account for all Taxes with respect to its business,
properties and operations for such period. There are no federal,
state, local or foreign audits, actions, suits, proceedings, investigations,
claims or administrative proceedings relating to Taxes or any Tax Returns of the
Parent now pending, and the Parent has not received any notice of any proposed
audits, investigations, claims or administrative proceedings relating to Taxes
or any Tax Returns.
2.14 Employee Benefit Plans;
ERISA. (a) Except
as disclosed in Schedule 2.14 hereto,
there are no “employee benefit plans” (within the meaning of Section 3(3) of the
ERISA) nor any other employee benefit or fringe benefit arrangements, practices,
contracts, policies or programs of every type other than programs merely
involving the regular payment of wages, commissions, or bonuses established,
maintained or contributed to by the Company, whether written or unwritten and
whether or not funded. The plans listed in Schedule 2.14 hereto
are hereinafter referred to as the “Employee Benefit
Plans.”
(b) All
current and prior material documents, including all amendments thereto, with
respect to each Employee Benefit Plan have been given to Parent and Merger Sub
or their advisors.
8
(c) To
the knowledge of the Company, all Employee Benefit Plans are in material
compliance with the applicable requirements of ERISA, the Internal Revenue Code
of 1986, as amended (the “Code”) and any other
applicable state, federal or foreign law.
(d) There
are no pending claims or lawsuits which have been asserted or instituted against
any Employee Benefit Plan, the assets of any of the trusts or funds under the
Employee Benefit Plans, the plan sponsor or the plan administrator of any of the
Employee Benefit Plans or against any fiduciary of an Employee Benefit Plan with
respect to the operation of such plan, nor does the Company have any knowledge
of any incident, transaction, occurrence or circumstance which might reasonably
be expected to form the basis of any such claim or lawsuit.
(e) There
is no pending or, to the knowledge of the Company, contemplated investigation,
or pending or possible enforcement action by the Pension Benefit Guaranty
Corporation, the Department of Labor, the Internal Revenue Service or any other
government agency with respect to any Employee Benefit Plan and the Company has
no knowledge of any incident, transaction, occurrence or circumstance which
might reasonably be expected to trigger such an investigation or enforcement
action.
(f) No
actual or, to the knowledge of the Company, contingent liability exists with
respect to the funding of any Employee Benefit Plan or for any other expense or
obligation of any Employee Benefit Plan, except as disclosed on the financial
statements of the Company or the Schedules to this Agreement, and no contingent
liability exists under ERISA with respect to any “multi-employer plan,” as
defined in Section 3(37) or Section 4001(a)(3) of ERISA.
2.15 Title to Property and
Encumbrances. The
Company has good, valid and indefeasible marketable title to all properties and
assets used in the conduct of its business (except for property held under valid
and subsisting leases which are in full force and effect and which are not in
default) free of all Liens and other encumbrances, except Permitted Liens and
such ordinary and customary imperfections of title, restrictions and
encumbrances as could not reasonably be expected to, individually or in the
aggregate, materially detract from the value of the property or assets or
materially impair the use made thereof by the Company in its business. Without
limiting the generality of the foregoing, the Company has good and indefeasible
title to all of its properties and assets reflected in the Balance Sheet, except
for property disposed of in the usual and ordinary course of business since the
Balance Sheet Date and for property held under valid and subsisting leases which
are in full force and effect and which are not in default.
2.16 Condition of
Properties. All
facilities, office equipment, fixtures and other properties owned, leased or
used by the Company are in operating condition and repair, subject to ordinary
wear and tear, and are adequate and sufficient for the Company’s business as
presently conducted.
2.17 Insurance
Coverage. There
is in full force and effect one or more policies of insurance issued by insurers
of recognized responsibility, insuring the Company and its properties and
business against such losses and risks, and in such amounts, as are customary
for corporations of established reputation engaged in the same or similar
business and similarly situated.
9
2.18 Litigation. Except
as disclosed in Schedule 2.18 hereto,
there is no legal action, suit, arbitration or other legal, administrative or
other governmental proceeding pending or, to the best knowledge of the Company,
threatened against or affecting the Company or its properties, assets or
business that might reasonably be expected to materially and adversely affect
the Condition of the Company. The Company is not in default with
respect to any order, writ, judgment, injunction, decree, determination or award
of any court or any governmental agency or instrumentality or arbitration
authority.
2.19 Licenses. The
Company possesses from all appropriate governmental authorities all licenses,
permits, authorizations, approvals, franchises and rights necessary for the
Company to engage in the business currently conducted by it, except for those
the absence of which could reasonably be expected to materially and adversely
affect the Condition of the Company, all of which are in full force and
effect.
2.20 Interested Party
Transactions. No
officer, director or stockholder of the Company or any Affiliate or “associate”
(as such term is defined in Rule 405 under the Securities Act) of any such
Person or the Company has or has had, either directly or indirectly, (a) an
interest in any Person that purchases from or sells to the Company any goods or
services, or (b) a beneficial interest in any contract or agreement to which the
Company is a party or by which it may be bound or affected.
2.21 Questionable
Payments. Neither
the Company nor any director, officer or, to the best knowledge of the Company,
agent, employee or other Person associated with or acting on behalf of the
Company, has used any corporate funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity; made
any direct or indirect unlawful payments to government officials or employees
from corporate funds; established or maintained any unlawful or unrecorded fund
of corporate monies or other assets; made any false or fictitious entries on the
books of record of any such corporations; or made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment.
2.22 Obligations to or by
Stockholders. Except
as disclosed in Schedule 2.22, the
Company has no liability or obligation or commitment to any Stockholder or any
Affiliate or “associate” (as such term is defined in Rule 405 under the
Securities Act) of any Stockholder, nor does any Stockholder or any such
Affiliate or associate have any liability, obligation or commitment to the
Company.
2.23 Disclosure. There
is no fact relating to the Company that the Company has not disclosed to Parent
and Merger Sub in writing which has had or is currently having a material and
adverse effect nor, insofar as the Company can now foresee, will materially and
adversely affect, the Condition of the Company. No representation or
warranty by the Company herein and no information disclosed in the schedules or
exhibits hereto by the Company contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statements contained
herein or therein not misleading.
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3. Representations and
Warranties of Parent and Merger Sub. Parent
and Merger Sub represent and warrant to the Company as follows:
3.1 Organization and
Standing. Parent
is a corporation duly organized and existing in good standing under the laws of
the State of Delaware. Merger Sub is a corporation duly organized and existing
in good standing under the laws of the State of Nevada. Parent and
Merger Sub have heretofore delivered to the Company complete and correct copies
of their respective Certificates of Incorporation or Articles of Incorporation,
as applicable, and Bylaws as now in effect. Neither Parent nor Merger
Sub is qualified to conduct business as a foreign corporation in any other
state. Parent and Merger Sub have full corporate power and authority
to carry on their respective businesses as they are now being conducted and as
now proposed to be conducted and to own or lease their respective properties and
assets. Neither Parent nor Merger Sub has any subsidiaries (except
Parent’s ownership of Merger Sub) or direct or indirect interest (by way of
stock ownership or otherwise) in any firm, corporation, limited liability
company, partnership, association or business. Parent owns all of the
issued and outstanding capital stock of Merger Sub free and clear of all Liens,
and Merger Sub has no outstanding options, warrants or rights to purchase
capital stock or other equity securities of Merger Sub, other than the capital
stock owned by Parent. Unless the content otherwise requires, all
references in this Section 3 to the “Parent” shall be treated as being a
reference to the Parent and Merger Sub taken together as one
enterprise.
3.2 Corporate
Authority. Each
of Parent and/or Merger Sub (as the case may be) has full corporate power and
authority to enter into the Merger Documents and the other agreements to be made
pursuant to the Merger Documents, and to carry out the transactions contemplated
hereby and thereby. All corporate acts and proceedings required for the
authorization, execution, delivery and performance of the Merger Documents and
such other agreements and documents by Parent and/or Merger Sub (as the case may
be) have been duly and validly taken or will have been so taken prior to the
Closing. Each of the Merger Documents constitutes a legal, valid and
binding obligation of Parent and/or Merger Sub (as the case may be), each
enforceable against them in accordance with their respective terms, except as
such enforcement may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting creditors’ rights generally and by general
principles of equity.
3.3 Broker’s and Finder’s
Fees. No
person, firm, corporation or other entity is entitled by reason of any act or
omission of Parent or Merger Sub to any broker’s or finder’s fees, commission or
other similar compensation with respect to the execution and delivery of this
Agreement or the Articles of Merger, or with respect to the consummation of the
transactions contemplated hereby or thereby. Parent and Merger Sub
jointly and severally indemnify and hold Company harmless from and against any
and all loss, claim or liability arising out of any such claim from any other
Person who claim they introduced Parent or Merger Sub to, or assisted them
with the transactions contemplated by or described
herein.
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3.4 Capitalization of
Parent. The
authorized capital stock of Parent consists of (a) 95,000,000 shares of Common
Stock, par value $0.000001 per share (the “Parent Common
Stock”), of which not more than 1,177,106 shares will be, prior to the
Effective Time, issued and outstanding, after taking into consideration the
cancellation of Parent Common Stock as indicated in Section 5.2(e)(7)(iii)
hereof, and (b) 5,000,000 shares of “blank check” Preferred Stock, par value
$0.000001 per share, of which no shares are issued and outstanding on the date
hereof. Parent has no outstanding options, rights or commitments to
issue shares of Parent Common Stock or any other Equity Security of Parent or
Merger Sub, and there are no outstanding securities convertible or exercisable
into or exchangeable for shares of Parent Common Stock or any other Equity
Security of Parent or Merger Sub. There is no voting trust, agreement
or arrangement among any of the beneficial holders of Parent Common Stock
affecting the nomination or election of directors or the exercise of the voting
rights of Parent Common Stock.
3.5 Merger
Sub. Merger
Sub was formed specifically for the purpose of the Merger and has not conducted
any business, and will not conduct any business prior to the Closing Date,
except as approved by the Company in preparation for and otherwise in connection
with the transactions contemplated by this Agreement, the Articles of Merger,
the Private Placement and the other agreements to be made pursuant to or in
connection with this Agreement and the Articles of Merger.
3.6 Validity of
Shares. The
shares of Parent Common Stock to be issued at the Closing pursuant to Section
1.5(a)(ii) hereof, when issued and delivered in accordance with the terms hereof
and of the Articles of Merger, shall be duly and validly issued, fully paid and
non-assessable. Based in part on the representations and warranties
of the Company Stockholders as contemplated by Section 4 hereof and assuming
that, to the extent that any Company Stockholders are not accredited investors,
there are no more than 35 of such unaccredited investors, each of whom is a
“sophisticated purchaser,” the issuance of the Parent Common Stock upon the
Merger pursuant to Section 1.5(a)(ii) will be exempt from the registration and
prospectus delivery requirements of the Securities Act and from the
qualification or registration requirements of any applicable state blue sky or
securities laws.
3.7 SEC Reporting and
Compliance. (a) Parent
filed a registration statement on Form S-1 (No. 333-158426) under the Securities
Act which became effective on September 25, 2009. Since that date,
Parent has filed with the Commission all registration statements, periodic
reports and other forms and reports required to be filed pursuant to the
Exchange Act. Parent has not filed with the Commission a certificate
on Form 15 pursuant to Rule 12h-3 of the Exchange Act.
(b) Parent
has delivered to the Company true and complete copies of the registration
statements and other forms and reports (collectively, the “Parent SEC
Documents”) filed by the Parent with the Commission. The
Parent SEC Documents, as of their respective dates, complied in all material
respects with the requirements of the Securities Act or Exchange Act and the
rules and regulations of the Commission promulgated thereunder and did not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements contained therein not
misleading.
(c) Parent
has not filed, and nothing has occurred with respect to which Parent would be
required to file, any report on Form 8-K since the last filing of a Parent SEC
Document.
12
(d) Parent
is not an investment company within the meaning of Section 3 of the Investment
Company Act.
(e) The
shares of Parent Common Stock are quoted on the Over-the-Counter (OTC) Bulletin
Board under the symbol “KKITZ.OB,” and Parent is in compliance in all material
respects with all rules and regulations of the OTC Bulletin Board applicable to
it and the Parent Common Stock.
(f) Between
the date hereof and the Closing Date, Parent shall continue to satisfy the
filing requirements of the Exchange Act and all other requirements of applicable
securities laws and rules and the OTC Bulletin Board.
(g) The
Parent SEC Documents include all certifications and statements required of it,
if any, by (i) Rule 13a-14 or 15d-14 under the Exchange Act, and (ii) 18 U.S.C.
Section 1350 (Section 906 of the Sarbanes-Oxley Act of 2002), and each of such
certifications and statements contain no qualifications or exceptions to the
matters certified therein other than a knowledge qualification, permitted under
such provision, and have not been modified or withdrawn and neither the Company
nor any of its officers has received any notice from the SEC or any other
governmental entity questioning or challenging the accuracy, completeness, form
or manner of filing or submission of such certifications or
statements.
(h) Parent
has otherwise complied with the Securities Act, Exchange Act and all other
applicable federal and state securities laws.
3.8 Financial
Statements. The
balance sheets, and statements of income, changes in financial position and
stockholders’ equity contained in the Parent SEC Documents (the “Parent Financial
Statements”) (i) have been prepared in accordance with GAAP applied on a
basis consistent with prior periods (and, in the case of unaudited financial
information, on a basis consistent with year-end audits), (ii) are in accordance
with the books and records of the Parent, and (iii) present fairly in all
material respects the financial condition of the Parent at the dates therein
specified and the results of its operations and changes in financial position
for the periods therein specified.
3.9 Governmental
Consents. All
material consents, approvals, orders, or authorizations of, or registrations,
qualifications, designations, declarations, or filings with any federal or state
governmental authority on the part of Parent or Merger Sub required in
connection with the consummation of the Merger and the Private Placement shall
have been obtained prior to, and be effective as of, the Closing.
3.10 Compliance with Laws and
Other Instruments. The
execution, delivery and performance by Parent and/or Merger Sub of this
Agreement, the Articles of Merger and the other agreements to be made by Parent
or Merger Sub pursuant to or in connection with this Agreement or the Articles
of Merger and the consummation by Parent and/or Merger Sub of the transactions
contemplated by the Merger Documents will not cause Parent and/or Merger Sub to
violate or contravene (i) any provision of law, (ii) any rule or regulation of
any agency or government, (iii) any order, judgment or decree of any court, or
(iv) any provision of their respective certificates of incorporation or by-laws
as amended and in effect on and as of the Closing Date and will not violate or
be in conflict with, result in a breach of or constitute (with or without notice
or lapse of time, or both) a default under any material indenture, loan or
credit agreement, deed of trust, mortgage, security agreement or other agreement
or contract to which Parent or Merger Sub is a party or by which Parent and/or
Merger Sub or any of their respective properties are bound or affected, except
where any such violation, conflict, breach or default could not reasonably be
expected to have a material and adverse effect on the Condition of Parent (as
defined in Section 3.12), and (v) will not result in the creation or imposition
of any material Lien upon any property or asset of Parent or Merger
Sub
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3.11 Binding
Obligations. The
Merger Documents constitute the legal, valid and binding obligations of the
Parent and Merger Sub, and are enforceable against the Parent and Merger Sub, in
accordance with their respective terms, except as such enforcement is limited by
bankruptcy, insolvency and other similar laws affecting the enforcement of
creditors’ rights generally and by general principles of equity.
3.12 Absence of Undisclosed
Liabilities. Neither
Parent nor Merger Sub has any material obligation or liability
(whether accrued, absolute, contingent, liquidated or otherwise, whether due or
to become due), arising out of any transaction entered into at or prior to the
Closing, except (a) as disclosed in the Parent SEC Documents, (b) to the extent
set forth on or reserved against in the balance sheet of Parent as of December
31, 2008 (the “Parent
Balance Sheet”) or the notes to the Parent Financial Statements, (c)
current liabilities incurred and obligations under agreements entered into in
the usual and ordinary course of business since March 31, 2010 (the “Parent Balance Sheet
Date”), none of which (individually or in the aggregate) materially and
adversely affects the condition (financial or otherwise), properties, assets,
liabilities, business operations, results of operations or prospects of the
Parent or Merger Sub, taken as a whole (the “Condition of the
Parent”), and (d) by the specific terms of any written agreement,
document or arrangement attached as an exhibit to the Parent SEC
Documents. Without limiting the foregoing, Parent has no Indebtedness
for Borrowed Money. There is no real property owned or leased by
Parent.
3.13 Parent
Contracts. The
Parent SEC Reports contain true and accurate copies of all agreements required
to be filed as material contracts under Item 601(b)(10) of Regulation S-K under
the Securities Act and the Exchange Act (the “Parent Material
Contracts”). To the knowledge of Parent, no party to any
Parent Material Contract has a claim against Parent in respect of any breach or
default thereunder. Prior to the Effective Time, each of the Parent
Material Contracts shall be terminated and of no further force and
effect.
3.14 Tax Returns and
Audits. All
required federal, state and local Tax Returns of the Parent have been accurately
prepared in all material respects and duly and timely filed, and all federal,
state and local Taxes required to be paid with respect to the periods covered by
such returns have been paid to the extent that the same are material and have
become due, except where the failure so to file or pay could not reasonably be
expected to have a material adverse effect upon the Condition of the
Parent. The Parent is not and has not been delinquent in the payment
of any Tax. The Parent has not had a Tax deficiency assessed against
it. None of the Parent’s federal income tax returns nor any state or
local income or franchise tax returns has been audited by governmental
authorities. The reserves for Taxes reflected on the Parent Balance
Sheet are sufficient for the payment of all unpaid Taxes payable by the Parent
with respect to the period ended on the Parent Balance Sheet
Date. Since the Parent Balance Sheet Date, the Parent has made
adequate provisions on its books of account for all Taxes with respect to its
business, properties and operations for such period. There are no
federal, state, local or foreign audits, actions, suits, proceedings,
investigations, claims or administrative proceedings relating to Taxes or any
Tax Returns of the Parent now pending, and the Parent has not received any
notice of any proposed audits, investigations, claims or administrative
proceedings relating to Taxes or any Tax Returns.
14
3.15 Employee Benefit Plans;
ERISA. (a) Except
as disclosed in the Parent SEC Documents, there are no “employee benefit plans”
(within the meaning of Section 3(3) of ERISA) nor any other employee benefit or
fringe benefit arrangements, practices, contracts, policies or programs other
than programs merely involving the regular payment of wages, commissions, or
bonuses established, maintained or contributed to by the Parent. Any
plans listed in the Parent SEC Documents are hereinafter referred to as the
“Parent Employee
Benefit Plans.”
(b) Any
current and prior material documents, including all amendments thereto, with
respect to each Parent Employee Benefit Plan have been given to the Company or
its advisors.
(c) All
Parent Employee Benefit Plans are in material compliance with the applicable
requirements of ERISA, the Code and any other applicable state, federal or
foreign law.
(d) There
are no pending, or to the knowledge of the Parent, threatened, claims or
lawsuits which have been asserted or instituted against any Parent Employee
Benefit Plan, the assets of any of the trusts or funds under the Parent Employee
Benefit Plans, the plan sponsor or the plan administrator of any of the Parent
Employee Benefit Plans or against any fiduciary of a Parent Employee Benefit
Plan with respect to the operation of such plan.
(e) There
is no pending, or to the knowledge of the Parent, threatened, investigation or
pending or possible enforcement action by the Pension Benefit Guaranty
Corporation, the Department of Labor, the Internal Revenue Service or any other
government agency with respect to any Parent Employee Benefit Plan.
(f) No
actual or, to the knowledge of Parent, contingent liability exists with respect
to the funding of any Parent Employee Benefit Plan or for any other expense or
obligation of any Parent Employee Benefit Plan, except as disclosed on the
financial statements of the Parent or the Parent SEC Documents, and to the
knowledge of Parent, no contingent liability exists under ERISA with respect to
any “multi-employer plan,” as defined in Section 3(37) or Section 4001(a)(3) of
ERISA.
3.16 Litigation. Except
as disclosed in the Parent SEC Documents, there is no legal action, suit,
arbitration or other legal, administrative or other governmental proceeding
pending or, to the knowledge of Parent, threatened against or affecting the
Parent or Merger Sub or their properties, assets or business. Neither
Parent nor Merger Sub is in default with respect to any order, writ, judgment,
injunction, decree, determination or award of any court or any governmental
agency or instrumentality or arbitration authority.
15
3.17 Interested Party
Transactions. Except
as disclosed in the Parent SEC Documents, no officer, director or stockholder of
the Parent or any Affiliate or “associate” (as such term is defined in Rule 405
under the Securities Act) of any such Person or Parent has or has had, either
directly or indirectly, (a) an interest in any Person that (i) furnishes or
sells services or products that are furnished or sold or are proposed to be
furnished or sold by the Parent or (ii) purchases from or sells or furnishes to
Parent any goods or services, or (b) a beneficial interest in any contract or
agreement to which Parent is a party or by which it may be bound or
affected.
3.18 Questionable
Payments. Neither
Parent, Merger Sub nor, to the knowledge of Parent, any director, officer,
agent, employee or other Person associated with or acting on behalf of Parent or
Merger Sub, has used any corporate funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity; made
any direct or indirect unlawful payments to government officials or employees
from corporate funds; established or maintained any unlawful or unrecorded fund
of corporate monies or other assets; made any false or fictitious entries on the
books of record of any such corporations; or made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment.
3.19 Obligations to or by
Stockholders. Except
as disclosed in the Parent SEC Documents, Parent has no liability or obligation
or commitment to any stockholder of Parent or any Affiliate or “associate” (as
such term is defined in Rule 405 under the Securities Act) of any stockholder of
Parent, nor does any stockholder of Parent or any such Affiliate or associate
have any liability, obligation or commitment to Parent.
3.20 Employees. Other
than pursuant to ordinary arrangements of employment compensation, Parent is not
under any obligation or liability to any officer, director, employee or
Affiliate of Parent.
3.21 No General
Solicitation. In
issuing Parent Common Stock in the Merger hereunder, neither Parent nor anyone
acting on its behalf has offered to sell the Parent Common Stock by any form of
general solicitation or advertising.
3.22 Disclosure. There
is no fact relating to Parent or Merger Sub that Parent and/or Merger Sub has
not disclosed to the Company in writing that materially and adversely affects
nor, insofar as Parent can now foresee, will materially and adversely affect,
the condition (financial or otherwise), properties, assets, liabilities,
business operations, results of operations or prospects of Parent. No
representation or warranty by Parent herein and no information disclosed in the
schedules or exhibits hereto by Parent contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
contained herein or therein misleading.
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4. Representations, Warranties
and Covenants of the Stockholders. Promptly
after the Effective Time, Parent shall cause to be mailed to each holder of
record of Company Common Stock that was converted pursuant to Section 1.5 hereof
into the right to receive Parent Common Stock a letter of transmittal (“Letter of
Transmittal”) in substantially the form attached hereto as Exhibit E which shall
contain additional representations, warranties and covenants of such
Stockholder, including without limitation, that (i) such Stockholder has full
right, power and authority to deliver such Company Common Stock and Letter of
Transmittal, (ii) the delivery of such Company Common Stock will not violate or
be in conflict with, result in a breach of or constitute a default under, any
indenture, loan or credit agreement, deed of trust, mortgage, security agreement
or other agreement or instrument to which such Stockholder is bound or affected,
(iii) such Stockholder has good, valid and marketable title to all shares of
Company Common Stock indicated in such Letter of Transmittal and that such
Stockholder is not affected by any voting trust, agreement or arrangement
affecting the voting rights of such Company Common Stock, (iv) such Stockholder
is an “accredited investor” or a “sophisticated purchaser” as such term is
defined in Regulation D under the Securities Act and that such Stockholder is
acquiring Parent Common Stock for investment purposes, and not with a view to
selling or otherwise distributing such Parent Common Stock in violation of the
Securities Act or the securities laws of any state, and (v) such Stockholder has
had an opportunity to ask and receive answers to any questions such Stockholder
may have had concerning the terms and conditions of the Merger and the Parent
Common Stock and has obtained any additional information that such Stockholder
has requested. Delivery shall be effected, and risk of loss and title
to the Parent Common Stock shall pass, only upon delivery to the Parent (or an
agent of the Parent) of (x) certificates evidencing ownership thereof as
contemplated by Section 1.6 hereof (or affidavit of lost certificate), and (y)
the Letter of Transmittal containing the representations, warranties and
covenants contemplated by this Section 4.
5. Deliveries of
Parties.
5.1 Company
Deliveries. At
Closing, the Company shall deliver to Parent and Merger Sub the following
documents and instruments and take the following actions, any of which may be
waived in whole or in part by Parent:
(a) A
certificate of a duly authorized officer certifying that, except for filing the
Articles of Merger, all conditions and actions required to consummate the Merger
that are within the control of the Company have occurred or been
taken;
(b) A
certificate of incumbency executed by the Secretary of the Company certifying
the names, titles and signatures of the officers authorized to execute on behalf
of the Company any documents referred to in this Agreement;
(c) A
certificate of the Secretary of the Company or other duly authorized officer,
certifying that (i) the Articles of Incorporation and Bylaws of the Company
delivered to Parent and Merger Sub prior to, or at the time of, the execution of
this Agreement have been validly adopted and have not been amended or modified
and (ii) that copies of resolutions of the Board of Directors and the Company
Stockholders authorizing and approving the Merger, including the execution,
delivery and performance of the Merger Documents and all other documents and
instruments to be delivered pursuant hereto and thereto, and delivered to Parent
and Merger Sub prior to, or at the time of, the execution of this Agreement have
been validly adopted and have not been amended or modified;
(d) Evidence
as of a recent date of the good standing and corporate existence of the Company
issued by the Secretary of State of the State of Nevada; and
17
(e) Such
additional supporting documentation and other information with respect to the
transactions contemplated hereby as Parent and Merger Sub may reasonably
request.
5.2 Parent and Merger Sub
Deliveries. At
Closing, the Parent and Merger Sub shall deliver to the Company following
documents and instruments and take the following actions, any of which may be
waived in whole or in part by the Company:
(a) A
certificate of a duly authorized officer certifying that, except for filing the
Articles of Merger, all conditions and actions required to consummate the Merger
that are within the control of Parent or Merger Sub have occurred or been
taken;
(b) A
certificate of incumbency executed by the Secretary of the Parent and Merger Sub
certifying the names, titles and signatures of the officers authorized to
execute on behalf of Parent and Merger Sub any documents referred to in this
Agreement;
(c) A
certificate of the Secretary of the Parent and Merger Sub or other duly
authorized officer, certifying that (i) the Certificate of Incorporation and
Articles of Incorporation, as applicable, and Bylaws of each of Parent and
Merger Sub delivered to the Company prior to, or at the time of, the execution
of this Agreement have been validly adopted and have not been amended or
modified and (ii) that copies of resolutions of the Boards of Directors of each
Parent and Merger Sub and the sole stockholder of Merger Sub authorizing and
approving the Merger, including the execution, delivery and performance of the
Merger Documents and all other documents and instruments to be delivered
pursuant hereto and thereto, and delivered to the Company prior to, or at the
time of, the execution of this Agreement have been validly adopted and have not
been amended or modified;
(d) Evidence
as of a recent date of the good standing and corporate existence of each of
Parent and Merger Sub issued by the Secretary of State of the State of Delaware
and the Secretary of State of the State of Nevada, respectively;
(e) A
certificate of Globex Transfer, LLC, Parent’s transfer agent and registrar,
certifying as of the business day prior to the date any shares of Parent Common
Stock are first issued in the Private Placement, and before taking into
consideration the cancellation of Parent Common Stock as indicated in Section
5.2(e)(7)(iii) hereof, a true and complete list of the names and addresses of
the record owners of all of the outstanding shares of Parent Common Stock,
together with the number of shares of Parent Common Stock held by each record
owner;
(f) A
letter from Globex Transfer, LLC, Parent’s transfer agent and registrar, setting
forth that the number of shares of Parent Common Stock that would be issued and
outstanding as of the Closing Date after taking into consideration the
cancellation of Parent Common Stock as indicated in Section 5.2(e)(7)(iii)
hereof, but prior to the closing of the Private Placement and the Merger, is no
more than 1,180,596 shares of Parent Common Stock;
(g) An
agreement in writing from W.T. Uniack & Co. CPA’s P.C., in form and
substance reasonably satisfactory to the Company, to deliver copies of the audit
opinions with respect to any and all financial statements of Parent that had
been audited by such firm;
18
(h) The
executed resignations of Jennifer Jarvis and Michael J. Funtjar as directors and
officers of Parent, with the director resignations to take effect at the
Effective Time, (ii) executed releases from each of Jennifer Jarvis and Michael
J. Funtjar in the form attached hereto as Exhibit F, (iii)
evidence of expansion of the Board of Directors to five directors and
appointment of Guy Cook, Mitchell Godfrey, and Kent Swanson to the vacancies
created thereby, (iv) executed indemnification agreements with each of Guy Cook,
Mitchell Godfrey, and Kent Swanson in the form attached hereto as Exhibit G, and
(v) an executed transfer and repurchase letter agreement executed by
Jennifer Jarvis, together with a stock power executed in blank by her, to effect
the repurchase and cancellation of that number of shares of Parent Common Stock
owned by Jennifer Jarvis necessary to reduce the total outstanding number of
shares of Parent Common Stock to 1,180,596 shares, being 4,319,404 shares of
Parent Common Stock, in consideration for $100.00;
(i) Evidence
of the delivery of irrevocable instructions to Globex Transfer, LLC authorizing
the issuance of stock certificates representing the Parent Common Stock issuable
to the Company Stockholders upon surrender of their certificates representing
Company Common Stock (or affidavit of lost or destroyed certificate and
indemnity); and
(j) Such
additional supporting documentation and other information with respect to the
transactions contemplated hereby as Parent and Merger Sub may reasonably
request.
5.3 Proceedings and
Documents. All corporate and other proceedings and actions
taken in connection with the transactions contemplated hereby and all
certificates, agreements, instruments and documents mentioned herein or incident
to any such transactions shall be satisfactory in form and substance to the
Company, Parent and Merger Sub.
5.4 Condition
Precedent. Notwithstanding anything to the contrary set forth
herein, the parties agree and acknowledge that it is a condition precedent to
the consummation of the Merger that all funds and executed documents required to
close under the Private Placement shall be in escrow and available for release
to the Parent conditioned only upon the closing of the Merger contemplated by
this Agreement and the Articles of Merger.
6. Survival of Representations
and Warranties. The
representations and warranties of the parties made in Sections 2 and 3 of this
Agreement (including the Schedules to the Agreement which are hereby
incorporated by reference) shall survive for six (6) months beyond the Effective
Time. This Section 6 shall not limit any claim for fraud or any
covenant or agreement of the parties which by its terms contemplates performance
after the Effective Time.
7. Amendment of
Agreement. This
Agreement and the Articles of Merger may be amended or modified at any time in
all respects by an instrument in writing executed (i) in the case of this
Agreement by the parties hereto and (ii) in the case of the Articles of Merger
by the parties thereto.
8. Definitions. Unless
the context otherwise requires, the terms defined in this Section 8 shall have
the meanings herein specified for all purposes of this Agreement, applicable to
both the singular and plural forms of any of the terms herein
defined.
19
“Merger Sub” shall
have the meaning assigned to it in the introductory paragraph of this
Agreement.
“Affiliate” shall mean
any Person that directly or indirectly controls, is controlled by, or is under
common control with, the indicated Person.
“Agreement” shall have
the meaning assigned to it in the introductory paragraph of this
Agreement.
“Articles of Merger”
shall have the meaning assigned to it in the second recital of this
Agreement.
“Balance Sheet” and
“Balance Sheet
Date” shall have the meanings assigned to such terms in Section 2.10
hereof.
“Bridge Notes” shall
have the meaning assigned to it in the fourth recital hereof.
“Closing” and “Closing Date” shall
have the meanings assigned to such terms in Section 9 hereof.
“Code” shall mean the
Internal Revenue Code of 1986, as amended.
“Commission” shall
mean the U.S. Securities and Exchange Commission.
“Company” shall have
the meaning assigned to it in the introductory paragraph of this
Agreement.
“Company Common Stock”
shall have the meaning assigned to it in Section 1.5(a)(ii) hereof.
“Company Notes” shall
have the meaning assigned to it in Section 1.10 hereof.
“Company Options”
shall have the meaning assigned to it in Section 1.9 hereof.
“Company Stockholders”
shall have the meaning assigned to it in Section 1.5(a)(ii) hereof.
“Company Stock Option
Plan” shall have the meaning assigned to it in Section 1.9
hereof.
“Company Warrants”
shall have the meaning assigned to it in Section 1.10 hereof.
“Condition of the
Company” shall have the meaning assigned to it in Section 2.2
hereof.
“Condition of the
Parent” shall have the meaning assigned to it in Section 3.12
hereof.
20
“Constituent
Companies” shall have the meaning assigned to it in Section 1.4
hereof.
“Default” shall mean a
default or failure in the due observance or performance of any covenant,
condition or agreement on the part of the Company to be observed or performed
under the terms of this Agreement or the Articles of Merger, if such default or
failure in performance shall remain unremedied for five (5) days.
“Dissenting Shares”
shall have the meaning assigned to it in Section 1.5(a)(ii) hereof.
“Dissenting
Stockholders” shall have the meaning assigned to it in Section 1.5(a)(ii)
hereof.
“Effective Time” shall
have the meaning assigned to it in Section 1.2 hereof.
“Employee Benefit
Plans” shall have the meaning assigned to it in Section 2.16
hereof.
“Equity Security”
shall mean any stock or similar security of an issuer or any security (whether
stock or Indebtedness for Borrowed Money) convertible, with or without
consideration, into any stock or similar equity security, or any security
(whether stock or Indebtedness for Borrowed Money) carrying any warrant or right
to subscribe to or purchase any stock or similar security, or any such warrant
or right.
“ERISA” shall mean the
Employee Retirement Income Securities Act of 1974, as amended.
“Exchange Act” shall
mean the Securities Exchange Act of 1934, as amended.
“Event of Default”
shall mean (a) the failure of the Company to pay any Indebtedness for Borrowed
Money, or any interest or premium thereon, within five (5) days after the same
shall become due, whether such Indebtedness shall become due by scheduled
maturity, by required prepayment, by acceleration, by demand or otherwise, (b)
an event of default under any agreement or instrument evidencing or securing or
relating to any such Indebtedness, or (c) the failure of the Company to perform
or observe any material term, covenant, agreement or condition on its part to be
performed or observed under any agreement or instrument evidencing or securing
or relating to any such Indebtedness when such term, covenant or agreement is
required to be performed or observed.
“Financial Statements”
shall have the meaning assigned to it in Section 2.10 hereof.
“GAAP” shall mean
generally accepted accounting principles in the United States, as in effect from
time to time.
“Indebtedness” shall
mean any obligation of a Person which under generally accepted accounting
principles is required to be shown on the balance sheet of such Person as a
liability. Any obligation secured by a Lien on, or payable out of the proceeds
of production from, property of a Person shall be deemed to be
Indebtedness.
21
“Indebtedness for Borrowed
Money” shall mean (a) all Indebtedness in respect of money borrowed
including, without limitation, Indebtedness which represents the unpaid amount
of the purchase price of any property and is incurred in lieu of borrowing money
or using available funds to pay such amounts and not constituting an account
payable or expense accrual incurred or assumed in the ordinary course of
business of a Person, (b) all Indebtedness evidenced by a promissory note, bond
or similar written obligation to pay money, or (c) all such Indebtedness
guaranteed by a Person or for which a Person is otherwise contingently
liable.
“Investment Company
Act” shall mean the Investment Company Act of 1940, as
amended.
“Knowledge” and “know” means, when
referring to any person or entity, the actual knowledge of such person or entity
of a particular matter or fact, and what that person or entity would have
reasonably known after due inquiry. An entity will be deemed to have
"knowledge" of a particular fact or other matter if any individual who is
serving, or who has served, as an executive officer of such entity has actual
"knowledge" of such fact or other matter, or had actual "knowledge" during the
time of such service of such fact or other matter, or would have had "knowledge"
of such particular fact or matter after due inquiry.
“Letter of
Transmittal” shall have the meaning assigned to it in Section 4
hereof.
“Lien” shall mean any
mortgage, pledge, security interest, encumbrance, lien or charge of any kind,
including, without limitation, any conditional sale or other title retention
agreement, any lease in the nature thereof and the filing of or agreement to
give any financing statement under the Uniform Commercial Code of any
jurisdiction and including any lien or charge arising by statute or other
law.
“Lost Stock Certificate
Affidavit” shall have the meaning assigned to it in Section 1.6
hereof.
“Memorandum” shall
have the meaning assigned to it in the fourth recital hereof.
“Merger” shall have
the meaning assigned to it in the first recital hereof.
“Merger Documents”
shall have the meaning assigned to it in Section 2.6 hereof.
“Nevada Law” or “NRS” shall have the
meanings assigned to them in the second recital of this Agreement.
“Parent” shall have
the meaning assigned to it in the introductory paragraph of this
Agreement.
“Parent Balance Sheet”
shall have the meaning assigned to it in Section 3.12 hereof.
22
“Parent Balance Sheet
Date” shall have the meaning assigned to it in Section 3.12
hereof.
“Parent Common Stock”
shall have the meaning assigned to it in Section 3.4 hereof.
“Parent Employee Benefit
Plans” shall have the meaning assigned to it in Section 3.16
hereof.
“Parent Financial
Statements” shall have the meaning assigned to it in Section 3.8
hereof.
“Parent Material
Contracts” shall have the meaning assigned to it in Section 3.8
hereof.
“Parent SEC Documents”
shall have the meaning assigned to it in Section 3.7 hereof.
“Permitted Liens”
shall mean (a) Liens for taxes and assessments or governmental charges or levies
not at the time due or in respect of which the validity thereof shall currently
be contested in good faith by appropriate proceedings; (b) Liens in respect of
pledges or deposits under workmen’s compensation laws or similar legislation,
carriers’, warehousemen’s, mechanics’, laborers’ and materialmens’ and similar
Liens, if the obligations secured by such Liens are not then delinquent or are
being contested in good faith by appropriate proceedings; and (c) Liens
incidental to the conduct of the business of a Person that were not incurred in
connection with the borrowing of money or the obtaining of advances or credits
and which do not in the aggregate materially detract from the value of its
property or materially impair the use made thereof by a Person in its
business.
“Person” shall include
all natural persons, corporations, business trusts, associations, limited
liability companies, partnerships, joint ventures and other entities and
governments and agencies and political subdivisions.
“Private Placement”
shall have the meaning assigned to it in the fourth recital hereof.
“Securities Act” shall
mean the Securities Act of 1933, as amended.
“Substitute Notes”
shall have the meaning assigned to it in Section 1.10 hereof.
“Substitute Options”
shall have the meaning assigned to it in Section 1.9 hereof.
“Substitute Warrants”
shall have the meaning assigned to it in Section 1.10 hereof.
“Surviving
Corporation” shall have the meaning assigned to it in Section 1.1
hereof.
23
“Tax” or “Taxes” shall mean (a)
any and all taxes, assessments, customs, duties, levies, fees, tariffs, imposts,
deficiencies and other governmental charges of any kind whatsoever (including,
but not limited to, taxes on or with respect to net or gross income, franchise,
profits, gross receipts, capital, sales, use, ad valorem, value added, transfer,
real property transfer, transfer gains, transfer taxes, inventory, capital
stock, license, payroll, employment, social security, unemployment, severance,
occupation, real or personal property, estimated taxes, rent, excise, occupancy,
recordation, bulk transfer, intangibles, alternative minimum, doing business,
withholding and stamp), together with any interest thereon, penalties, fines,
damages costs, fees, additions to tax or additional amounts with respect
thereto, imposed by the United States (federal, state or local) or other
applicable jurisdiction; (b) any liability for the payment of any amounts
described in clause (a) as a result of being a member of an affiliated,
consolidated, combined, unitary or similar group or as a result of transferor or
successor liability, including, without limitation, by reason of Regulation
section 1.1502-6; and (c) any liability for the payments of any amounts as a
result of being a party to any Tax Sharing Agreement or as a result of any
express or implied obligation to indemnify any other Person with respect to the
payment of any amounts of the type described in clause (a) or (b).
“Tax Return” shall
include all returns and reports (including elections, declarations, disclosures,
schedules, estimates and information returns (including Form 1099 and
partnership returns filed on Form 1065) required to be supplied to a Tax
authority relating to Taxes.
9. Closing. The
closing of the Merger (the “Closing”) shall occur
concurrently with the Effective Time (the “Closing
Date”). The Closing shall occur at the offices of Greenberg
Traurig, LLP’s office in the Metlife Building, 200 Park Avenue, New York, New
York. At the Closing, the parties shall cause the Articles of Merger
to be filed with the Secretary of State for the State of Nevada and all of the
other documents and certificates and agreements referenced in Section 5 will be
executed and delivered as described therein. At the Effective Time, all actions
to be taken at the Closing shall be deemed to be taken
simultaneously.
10. Miscellaneous.
10.1 Notices. Any
notice, request or other communication hereunder shall be given in writing and
shall be served either personally by overnight delivery or delivered by mail,
certified return receipt and addressed to the following addresses:
|
If
to Parent or
|
||
|
Merger
Sub:
|
Bacterin
International Holdings, Inc. f/k/a K-Kitz, Inc.
|
|
|
1630
Integrity Drive East
|
||
|
Columbus,
Ohio 43209
|
||
|
Attn:
Jennifer Jarvis
|
||
|
If
to the Company:
|
Bacterin
International, Inc.
|
|
|
600
Cruiser Lane
|
||
|
Belgrade,
Montana 59714
|
||
|
Attn: Guy
S. Cook
|
24
|
With
a copy to:
|
Greenberg
Traurig, LLP
|
|
|
1200
17th
Street, Suite 2400
|
||
|
Denver,
Colorado 80123
|
||
|
Attn: Marc
J. Musyl
|
Notices
shall be deemed received at the earlier of actual receipt or three (3) business
days following mailing. Counsel for a party (or any authorized
representative) shall have authority to accept delivery of any notice on behalf
of such party.
10.2 Entire
Agreement. This
Agreement, including the schedules and exhibits attached hereto and other
documents referred to herein, contains the entire understanding of the parties
hereto with respect to the subject matter hereof. This Agreement
supersedes all prior agreements and undertakings between the parties with
respect to such subject matter.
10.3 Expenses. Each
party shall bear and pay all of the legal, accounting and other expenses
incurred by it in connection with the transactions contemplated by this
Agreement.
10.4 Time. Time
is of the essence in the performance of the parties’ respective obligations
herein contained.
10.5 Severability. Any
provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
10.6 Successors and
Assigns. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors, assigns and heirs; provided, however, that neither
party shall directly or indirectly transfer or assign any of its rights
hereunder in whole or in part without the written consent of the others, which
may be withheld in its sole discretion, and any such transfer or assignment
without said consent shall be void.
10.7 No Third Parties
Benefited. This
Agreement is made and entered into for the sole protection and benefit of the
parties hereto, their successors, assigns and heirs, and no other Person shall
have any right or action under this Agreement.
10.8 Counterparts. This
Agreement may be executed in one or more counterparts, with the same effect as
if all parties had signed the same document. Each such counterpart shall be an
original, but all such counterparts together shall constitute a single
agreement.
25
10.9 Governing
Law. This
Agreement shall be governed by and construed and enforced in accordance with the
laws of the State of New York. This Agreement and the transactions
contemplated hereby shall be subject to the exclusive jurisdiction of the courts
of New York, New York. The parties to this Agreement agree that any
breach of any term or condition of this Agreement or the transactions
contemplated hereby shall be deemed to be a breach occurring in the State of New
York by virtue of a failure to perform an act required to be performed in the
State of New York. The parties to this Agreement irrevocably and
expressly agree to submit to the jurisdiction of the courts of the State of New
York for the purpose of resolving any disputes among the parties relating to
this Agreement or the transactions contemplated hereby. The parties
irrevocably waive, to the fullest extent permitted by law, any objection which
they may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement and the transactions
contemplated hereby, or any judgment entered by any court in respect hereof
brought in New York, New York, and further irrevocably waive any claim that any
suit, action or proceeding brought in New York, New York has been brought in an
inconvenient forum. With respect to any action before the above
courts, the parties hereto agree to service of process by certified or
registered United States mail, postage prepaid, addressed to the party in
question.
[Signature
page to follow]
26
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement to be binding
and effective as of the day and year first above written.
|
PARENT:
|
||
|
BACTERIN
INTERNATIONAL HOLDINGS,
INC.,
f/k/a K-KITZ, INC.
|
||
|
By:
|
/s/ Jennifer Jarvis
|
|
|
Jennifer
Jarvis
|
||
|
President,
CEO and CFO
|
||
|
MERGER
SUB:
|
||
|
KB
MERGER SUB, INC.
|
||
|
By:
|
/s/ Jennifer Jarvis
|
|
|
Jennifer
Jarvis
|
||
|
President,
Secretary and Treasurer
|
||
|
THE
COMPANY:
|
||
|
BACTERIN
INTERNATIONAL, INC.
|
||
|
By:
|
/s/ Guy S. Cook
|
|
|
Guy
S. Cook
|
||
|
President
and Chief Executive
Officer
|
||
Signature
Page to Agreement and Plan of Merger
EXHIBIT
3.1
EXHIBIT
4.1
these
securities have not been registered with the united states securities and
exchange commission or the securities commission of any state pursuant to an
exemption from registration under regulation d promulgated under the securities
act of 1933, as amended (the “act”). this
warrant shall not constitute an offer to sell nor a solicitation of an offer to
buy the securities in any jurisdiction in which such offer or solicitation would
be unlawful. the securities are “restricted” and may not be resold or
transferred except as permitted under the act pursuant to registration or
exemption therefrom.
COMMON
STOCK PURCHASE WARRANT
To
Purchase Shares of $.000001 Par Value Common Stock (“Common Stock”) of
[Pubco]
No.
[__] to
purchase _______ Shares of Common Stock of
[PUBCO]
THIS
CERTIFIES that, for value received, ______________(the “Purchaser” or “Holder”) is entitled,
upon the terms and subject to the conditions hereinafter set forth, at any time
on or after the date hereof and on or prior to 8:00 p.m. New York City Time on
the date that is five (5) years after the date hereof (the “Termination Date”),
but not thereafter, to subscribe for and purchase from [Pubco], a Delaware
corporation (the “Company”),
___________ shares of Common Stock (such shares, the “Warrant Shares”) at
an Exercise Price equal to $1.25 per share (as adjusted from time to time
pursuant to the terms hereof, the “Exercise
Price”). The Exercise Price and the number of shares for which
the Warrant is exercisable shall be subject to adjustment as provided
herein. This Warrant is being issued in connection with the
Subscription Agreement dated on or about June 2010 (the “Subscription
Agreement”), entered into between the Company and the Purchaser in
connection with the Company’s offering of between $7,000,000 and $12,000,000 in
Common Stock (the “Common Stock” or the
“Shares”, and
such offering, the “Offering”). Capitalized
terms used herein and not otherwise defined shall have the meaning ascribed
thereto in the Subscription Agreement.
1.
Title of
Warrant. Prior to the expiration hereof and subject to
compliance with applicable laws, this Warrant and all rights hereunder are
transferable, in whole or in part, at the office or agency of the Company by the
Holder hereof in person or by duly authorized attorney, upon surrender of this
Warrant together with (a) the Assignment Form
annexed hereto properly endorsed, and (b) any other documentation reasonably
necessary to satisfy the Company that such transfer is in compliance with all
applicable securities laws. The term “Holder” shall refer
to the Purchaser or any subsequent transferee of this Warrant.
2.
Authorization of
Shares. The Company covenants that all shares of Common Stock
which may be issued upon the exercise of rights represented by this Warrant
will, upon exercise of the rights represented by this Warrant and payment of the
Exercise Price as set forth herein, be duly authorized, validly issued, fully
paid and nonassessable and free from all taxes, liens and charges in respect of
the issue thereof (other than taxes in respect of any transfer occurring
contemporaneously with such issue or otherwise specified herein).
3. Exercise of
Warrant.
(a) The
Holder may exercise this Warrant, in whole or in part, at any time and from time
to time by delivering (which may be by facsimile) to the offices of the Company
or any transfer agent for the Common Stock this Warrant, together with a Notice of Exercise in
the form annexed hereto specifying the number of Warrant Shares with respect to
which this Warrant is being exercised, together with payment in cash to the
Company of the Exercise Price therefore.
(b) In
the event that this Warrant is not exercised in full, the number of Warrant
Shares shall be reduced by the number of such Warrant Shares for which this
Warrant is exercised and/or surrendered, and the Company, if requested by Holder
and at its expense, shall within three (3) Trading Days (as defined below) issue
and deliver to the Holder a new Warrant of like tenor in the name of the Holder
or as the Holder (upon payment by Holder of any applicable transfer taxes) may
request, reflecting such adjusted Warrant Shares. Notwithstanding
anything to the contrary set forth herein, upon exercise of any portion of this
Warrant in accordance with the terms hereof, the Holder shall not be required to
physically surrender this Warrant to the Company unless such Holder is
purchasing the full amount of Warrant Shares represented by this
Warrant. The Holder and the Company shall maintain records showing
the number of Warrant Shares so purchased hereunder and the dates of such
purchases or shall use such other method, reasonably satisfactory to the Holder
and the Company, so as not to require physical surrender of this Warrant upon
each such exercise. The Holder and any assignee, by
acceptance of this Warrant or a new Warrant, acknowledge and agree that, by
reason of the provisions of this Section, following exercise of any portion of
this Warrant, the number of Warrant Shares which may be purchased upon exercise
of this Warrant may be less than the number of Warrant Shares set forth on the
face hereof. Certificates for shares of Common Stock purchased
hereunder shall be delivered to the Holder hereof within three (3) Trading Days
after the date on which this Warrant shall have been exercised as
aforesaid. The Holder may withdraw its Notice of Exercise at any time
if the Company fails to timely deliver the relevant certificates to the Holder
as provided in this Agreement. A Notice of Exercise shall be deemed
sent on the date of delivery if delivered before 8:00 p.m. New York Time on such
date, or the day following such date if delivered after 8:00 p.m. New York Time;
provided that the Company is only obligated to deliver Warrant Shares against
delivery of the Exercise Price from the holder hereof and, if the Holder is
purchasing the full amount of Warrant Shares represented by this Warrant,
surrender of this Warrant (or appropriate affidavit and/or indemnity in lieu
thereof). In lieu of delivering physical certificates representing
the Warrant Shares issuable upon conversion of this Warrant, provided the
Company’s transfer agent is participating in the Depository Trust Company
(“DTC”) Fast
Automated Securities Transfer program, upon request of the Holder, the Company
shall use its best efforts to cause its transfer agent to electronically
transmit the Warrant Shares issuable upon exercise to the Holder, by crediting
the account of the Holder’s prime broker with DTC through its Deposit Withdrawal
At Custodian (“DWAC”) system. The
time periods for delivery described above shall apply to the electronic
transmittals through the DWAC system. The Company agrees to coordinate with DTC
to accomplish this objective.
(c) The
term “Trading
Day” means (i) if the Common Stock is not listed on the New York or
American Stock Exchange but sale prices of the Common Stock are reported on
NASDAQ National Market or another automated quotation system, including the OTC
Bulletin Board, a day on which trading is reported on the principal automated
quotation system on which sales of the Common Stock are reported, (ii) if the
Common Stock is listed on the New York Stock Exchange or the American Stock
Exchange, a day on which there is trading on such stock exchange, or (iii) if
the foregoing provisions are inapplicable, a day on which quotations are
reported by National Quotation Bureau Incorporated.
(d) If
at any time this Warrant is exercised following the six month anniversary of the
final closing of the Offering, but before the Termination Date and on the
Trading Day immediately preceding the Holder's delivery of an Exercise Notice in
respect of such exercise, a Registration Statement (as defined in the
Subscription Agreement) covering the Warrant Shares that are the subject of the
Exercise Notice (the “Unavailable Warrant
Shares”) is not available for the resale of such Unavailable Warrant
Shares, the Holder of this Warrant also may exercise this Warrant as to any or
all of such Unavailable Warrant Shares and, in lieu of making the cash payment
otherwise contemplated to be made to the Company upon such exercise in payment
of the aggregate Exercise Price, elect instead to receive upon such exercise a
reduced number of shares of Common Stock (the “Net Number”)
determined according to the following formula (a “Cashless
Exercise”):
Net
Number = (A x B) - (A x
C)
B
For
purposes of the foregoing formula:
A= the
total number of shares with respect to which this Warrant is then being
exercised in a Cashless Exercise.
B= the
Market Price on the Trading Day immediately preceding the date of the Exercise
Notice.
C= the
Exercise Price then in effect for the applicable Warrant Shares at the time of
such exercise.
There
cannot be a Cashless Exercise unless “B” exceeds “C”.
The term
“Market Price” means the last sale price of the Common
Stock on the Principal Market for the date of determination or, if the Common
Stock is not listed or admitted to trading on any Principal Market, and the last
sale price cannot be determined as contemplated above, the Market Price of the
Common Stock shall be as reasonably determined in good faith by the Company’s
Board of Directors and the Holder. The term “Principal Market” means
the exchange or other market upon which the Company’s Common Stock is listed or
its price reported. If the Fair Market Value of the Common Stock
cannot be determined by the Company’s Board of Directors and the Holder after
five (5) business days, such determination shall be made by a third party
appraisal firm mutually agreeable by the Board of Directors and the Holder,
whose expense shall be borne equally by the Company and the Holder (the “Independent
Appraiser”).
4.
No Fractional Shares or
Scrip. No fractional shares or scrip representing fractional
shares shall be issued upon the exercise of this Warrant. In lieu of
issuance of a fractional share upon any exercise hereunder, the Company will
either round up to nearest whole number of shares or pay the cash value of that
fractional share, which cash value shall be calculated on the basis of the
average closing price of the Common Stock during the five (5) Trading Days
immediately preceding the date of exercise.
5.
Charges, Taxes and
Expenses. Issuance of certificates for shares of Common Stock
upon the exercise of this Warrant shall be made without charge to the Holder
hereof for any issue or transfer tax or other incidental expense in respect of
the issuance of such certificate, all of which taxes and expenses shall be paid
by the Company, and such certificates shall be issued in the name of the Holder
of this Warrant or in such name or names as may be directed by the Holder of
this Warrant; provided, however, that in the
event certificates for shares of Common Stock are to be issued in a name other
than the name of the Holder of this Warrant, this Warrant when surrendered for
exercise shall be accompanied by the Assignment Form attached hereto duly
executed by the Holder hereof; and provided further, that the
Company shall not be required to pay any tax or taxes which may be payable in
respect of any transfer involved in the issuance of any Warrant certificates or
any certificates for the Warrant Shares other than the issuance of a Warrant
Certificate to the Holder in connection with the Holder’s surrender of a Warrant
Certificate upon the exercise of all or less than all of the Warrants evidenced
thereby.
6.
Closing of
Books. The Company will at no time close its shareholder books
or records in any manner which interferes with the timely exercise of this
Warrant.
7.
No Rights as Shareholder
until Exercise. Subject to Section 12 of this Warrant and the
provisions of any other written agreement between the Company and the Purchaser,
the Purchaser shall not be entitled to vote or receive dividends or be deemed
the holder of Warrant Shares or any other securities of the Company that may at
any time be issuable on the exercise hereof for any purpose, nor shall anything
contained herein be construed to confer upon the Purchaser, as such, any of the
rights of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action (whether upon any
recapitalization, issuance of stock, reclassification of stock, change of par
value, or change of stock to no par value, consolidation, merger, conveyance or
otherwise) or to receive notice of meetings, or to receive dividends or
subscription rights or otherwise until the Warrant shall have been exercised as
provided herein. However, at the time of the exercise of this Warrant
pursuant to Section 3 hereof, the Warrant Shares so purchased hereunder shall be
deemed to be issued to such Holder as the record owner of such shares as of the
close of business on the date on which this Warrant shall have been
exercised.
8.
Assignment and Transfer of
Warrant. This Warrant may be assigned by the surrender of this
Warrant and the Assignment Form annexed hereto duly executed at the office of
the Company (or such other office or agency of the Company or its transfer agent
as the Company may designate by notice in writing to the registered Holder
hereof at the address of such Holder appearing on the books of the Company);
provided, however, that this
Warrant may not be resold or otherwise transferred except (i) in a transaction
registered under the Securities Act of 1933, as amended (the “Act”), or (ii) in a
transaction pursuant to an exemption, if available, from registration under the
Act and whereby, if reasonably requested by the Company, an opinion of counsel
reasonably satisfactory to the Company is obtained by the Holder of this Warrant
to the effect that the transaction is so exempt.
9.
Loss, Theft, Destruction or
Mutilation of Warrant; Exchange. The Company represents,
warrants and covenants that (a) upon receipt by the Company of evidence and/or
indemnity reasonably satisfactory to it of the loss, theft, destruction or
mutilation of any Warrant or stock certificate representing the Warrant Shares,
and in case of loss, theft or destruction, of indemnity reasonably satisfactory
to it, and (b) upon surrender and cancellation of such Warrant or stock
certificate, if mutilated, the Company will make and deliver a new Warrant or
stock certificate of like tenor and dated as of such cancellation, in lieu of
this Warrant or stock certificate, without any charge therefor. This
Warrant is exchangeable at any time for an equal aggregate number of Warrants of
different denominations, as requested by the holder surrendering the same, or in
such denominations as may be requested by the Holder following determination of
the Exercise Price. No service charge will be made for such
registration or transfer, exchange or reissuance.
10.
Saturdays, Sundays,
Holidays, etc. If the last or appointed day for the taking of
any action or the expiration of any right required or granted herein shall be a
Saturday, Sunday or a legal holiday, then such action may be taken or such right
may be exercised on the next succeeding day not a legal holiday.
11.
Effect of Certain
Events. If at any time while this Warrant or any portion thereof is
outstanding and unexpired there shall be a transaction (by merger or otherwise)
in which more than 50% of the voting power of the Company is disposed of, the
Holder of this Warrant shall have the right thereafter to purchase, by exercise
of this Warrant and payment of the aggregate Exercise Price in effect
immediately prior to such action, the kind and amount of shares and other
securities and property which it would have owned or have been entitled to
receive after the happening of such transaction had this Warrant been exercised
immediately prior thereto, subject to further adjustment as provided in Section
12.
12.
Adjustments of Exercise
Price and Number of Warrant Shares. The number of and kind of securities
purchasable upon exercise of this Warrant and the Exercise Price shall be
subject to adjustment from time to time as set forth in this Section
12.
(a) Subdivisions, Combinations,
Stock Dividends and other Issuances. If the Company
shall, at any time while this Warrant is outstanding, (i) pay a stock dividend
or otherwise make a distribution or distributions on any equity securities
(including instruments or securities convertible into or exchangeable for such
equity securities) in shares of Common Stock, (ii) subdivide outstanding shares
of Common Stock into a larger number of shares, or (iii) combine outstanding
Common Stock into a smaller number of shares, then the Exercise Price shall be
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock outstanding before such event and the denominator of which shall
be the number of shares of Common Stock outstanding after such
event. Any adjustment made pursuant to this Section 12(a) shall
become effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution and shall become
effective immediately after the effective date in the case of a subdivision or
combination. The number of shares which may be purchased hereunder
shall be increased or decreased proportionately to any reduction or increase in
Exercise Price pursuant to this Section 12(a), so that after such adjustments
the aggregate Exercise Price payable hereunder for the increased or decreased
number of shares shall be the same as the aggregate Exercise Price in effect
just prior to such adjustments.
(b) Other Distributions.
If at any time after the date hereof the Company distributes to holders of its
Common Stock, other than as part of its dissolution, liquidation or the winding
up of its affairs, any shares of its capital stock, any evidence of indebtedness
or any of its assets (other than Common Stock), then the number of Warrant
Shares for which this Warrant is exercisable shall be increased to equal: (i)
the number of Warrant Shares for which this Warrant is exercisable immediately
prior to such event, (ii) multiplied by a fraction, (A) the numerator of which
shall be the Fair Market Value (as defined below) per share of Common Stock on
the record date for the dividend or distribution, and (B) the denominator of
which shall be the Fair Market Value price per share of Common Stock on the
record date for the dividend or distribution minus the amount allocable to one
share of Common Stock of the value (as jointly determined in good faith by the
Board of Directors of the Company and the Holder) of any and all such evidences
of indebtedness, shares of capital stock, other securities or property, so
distributed. For purposes of this Warrant, “Fair Market Value”
shall equal the average closing trading
price of the Common Stock on the Principal Market for the five (5) Trading Days
preceding the date of determination or, if the Common Stock is not listed or
admitted to trading on any Principal Market, and the average price cannot be
determined as contemplated above, the Fair Market Value of the Common Stock
shall be as reasonably determined in good faith by the Company’s Board of
Directors and the Holder. If the Fair Market Value of the Common
Stock cannot be determined by the Company’s Board of Directors and the Holder
after five (5) business days, such determination shall be made by an Independent
Appraiser. The fair market value as determined by the Independent
Appraiser shall be final. The Exercise Price shall be reduced to
equal: (i) the Exercise Price in effect immediately before the occurrence of any
event (ii) multiplied by a fraction, (A) the numerator of which is the number of
Warrant Shares for which this Warrant is exercisable immediately before the
adjustment, and (B) the denominator of which is the number of Warrant Shares for
which this Warrant is exercisable immediately after the adjustment.
(c) Merger, etc. If at
any time after the date hereof there shall be a merger or consolidation of the
Company with or into or a transfer of all or substantially all of the assets of
the Company to another entity, then the Holder shall be entitled to receive upon
or after such transfer, merger or consolidation becoming effective, and upon
payment of the Exercise Price then in effect, the number of shares or other
securities or property of the Company or of the successor corporation resulting
from such merger or consolidation, which would have been received by the Holder
for the shares of stock subject to this Warrant had this Warrant been exercised
just prior to such transfer, merger or consolidation becoming effective or to
the applicable record date thereof, as the case may be. The Company
will not merge or consolidate with or into any other corporation, or sell or
otherwise transfer its property, assets and business substantially as an
entirety to another corporation, unless the corporation resulting from such
merger or consolidation (if not the Company), or such transferee corporation, as
the case may be, shall expressly assume in writing the due and punctual
performance and observance of each and every covenant and condition of this
Warrant to be performed and observed by the Company.
(d) Reclassification,
etc. If at any time after the date hereof there shall be a
reorganization or reclassification of the securities as to which purchase rights
under this Warrant exist into the same or a different number of securities of
any other class or classes, then the Holder shall thereafter be entitled to
receive upon exercise of this Warrant, during the period specified herein and
upon payment of the Exercise Price then in effect, the number of shares or other
securities or property resulting from such reorganization or reclassification,
which would have been received by the Holder for the shares of stock subject to
this Warrant had this Warrant at such time been exercised.
13.
Notice of
Adjustment. Whenever the number of Warrant Shares or number or
kind of securities or other property purchasable upon the exercise of this
Warrant or the Exercise Price is adjusted, the Company shall promptly mail to
the Holder of this Warrant a notice setting forth the number of Warrant Shares
(and other securities or property) purchasable upon the exercise of this Warrant
and the Exercise Price of such Warrant Shares after such adjustment and setting
forth the computation of such adjustment and a brief statement of the facts
requiring such adjustment.
14.
Authorized
Shares. The Company covenants that during the period the
Warrant is outstanding and exercisable, it will reserve from its authorized and
unissued Common Stock a sufficient number of shares to provide for the issuance
of the Warrant Shares upon the exercise of any and all purchase rights under
this Warrant. The Company further covenants that its issuance of this
Warrant shall constitute full authority to its officers who are charged with the
duty of executing stock certificates to execute and issue the necessary
certificates for the Warrant Shares upon the exercise of the purchase rights
under this Warrant. The Company will take all such reasonable action
as may be necessary to assure that such Warrant Shares may be issued as provided
herein without violation of any applicable law, regulation, or rule of any
applicable market or exchange.
15.
Compliance with Securities
Laws. The Holder hereof acknowledges that the Warrant Shares
acquired upon the exercise of this Warrant, if not registered (or if no
exemption from registration exists), will have restrictions upon resale imposed
by state and federal securities laws. Each certificate representing
the Warrant Shares issued to the Holder upon exercise (if not registered, for
resale or otherwise, or if no exemption from registration exists) will bear
substantially the following legend: THE SHARES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE ACT, AND, ACCORDINGLY, MAY NOT BE OFFERED, TRANSFERRED,
SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES
LAWS.
16.
Intent of
Purchase. Without limiting the Purchaser’s right to transfer,
assign or otherwise convey the Warrant or Warrant Shares in compliance with all
applicable securities laws, the Holder of this Warrant, by acceptance hereof,
acknowledges that this Warrant and the Warrant Shares to be issued upon exercise
hereof are being acquired solely for the Purchaser’s own account and not as a
nominee for any other party, and that the Purchaser will not offer, sell or
otherwise dispose of this Warrant or any Warrant Shares to be issued upon
exercise hereof except under circumstances that will not result in a violation
of applicable federal and state securities laws.
17.
Miscellaneous.
(a) Issue Date; Choice of Law;
Venue; Jurisdiction. The provisions of this Warrant shall be
construed and shall be given effect in all respects as if it had been issued and
delivered by the Company on the date hereof. This Warrant shall be
binding upon any successors or assigns of the Company. This Warrant
will be construed and enforced in accordance with and governed by the laws of
the State of New York, except for matters arising under the Act, without
reference to principles of conflicts of law. Each of the parties
consents to the exclusive jurisdiction of the Federal and State Courts sitting
in the County of New York in the State of New York in connection with any
dispute arising under this Warrant and hereby waives, to the maximum extent
permitted by law, any objection, including any objection based on forum non conveniens or venue,
to the bringing of any such proceeding in such jurisdiction.
(b) Modification and
Waiver. This Warrant and any provisions hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of the same is sought. Any amendment
effected in accordance with this paragraph shall be binding upon the Purchaser,
each future holder of this Warrant and the Company. No waivers of, or
exceptions to, any term, condition or provision of this Warrant, in any one or
more instances, shall be deemed to be, or construed as, a further or continuing
waiver of any such term, condition or provision.
(c) Notices. Any
notice or other communication required or permitted to be given hereunder shall
be in writing by facsimile, mail or personal delivery and shall be effective
upon actual receipt of such notice. The addresses for such
communications shall be to the addresses as shown on the books of the Company or
to the Company at the address set forth in the Offering Documents. A
party may from time to time change the address to which notices to it are to be
delivered or mailed hereunder by notice in accordance with the provisions of
this Section 17(c).
(d) Severability. Whenever
possible, each provision of this Warrant shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Warrant is held to be invalid, illegal or unenforceable in any respect under any
applicable law or rule in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect the validity, legality or enforceability of
any other provision of this Warrant in such jurisdiction or affect the validity,
legality or enforceability of any provision in any other jurisdiction, but this
Warrant shall be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision had never been contained
herein.
(e) Specific
Enforcement. The Company and the Holder acknowledge and agree
that irreparable damage would occur in the event that any of the provisions of
this Warrant were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall
be entitled to an injunction or injunctions to prevent or cure breaches of the
provisions of this Warrant and to enforce specifically the terms and provisions
hereof, this being in addition to any other remedy to which either of them may
be entitled by law or equity.
(f) Counterparts/Execution. This
Warrant may be executed by facsimile and in any number of counterparts, and each
such counterpart hereof shall be deemed to be an original instrument, but all
such counterparts together shall constitute one agreement. Execution
and delivery of this Warrant by facsimile transmission (including delivery of
documents in Adobe PDF format) shall constitute execution and delivery of this
Warrant for all purposes, with the same force and effect as execution and
delivery of an original manually signed copy hereof.
[SIGNATURE
PAGE FOLLOWS]
IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
officers thereunto duly authorized.
Dated: June
__, 2010
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[Pubco]
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By:
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Name:
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Title:
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[SIGNATURE
PAGE TO THE COMMON STOCK PURCHASE WARRANT]
NOTICE OF
EXERCISE
To: [Pubco]
(1) The
undersigned hereby elects to exercise the attached Warrant for and to purchase
thereunder, ______ shares of Common Stock, and herewith makes payment therefor
of $_______.
(2) Please
issue a certificate or certificates representing said shares of Common Stock in
the name of the undersigned or in such other name as is specified
below:
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(Name)
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(Address)
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(3) Please
issue a new Warrant for the unexercised portion of the attached Warrant in the
name of the undersigned or in such other name as is specified
below:
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(Name)
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||
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(Date)
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(Signature)
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(Address)
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Dated:
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Signature
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ASSIGNMENT
FORM
(To
assign the foregoing warrant, execute
this form
and supply required information.
Do not
use this form to exercise the warrant.)
FOR VALUE RECEIVED, the foregoing
Warrant and all rights evidenced thereby are hereby assigned to
_________________________________________________________
whose address is
_______________________________________________________________________.
_______________________________________________________________________
Dated: ______________,
Holder’s
Signature: ________________________________
Holder’s
Address: _________________________________
_________________________________
Signature
Guaranteed: _________________________________________________
NOTE: The
signature to this Assignment Form must correspond with the name as it appears on
the face of the Warrant, without alteration or enlargement or any change
whatsoever, and must be guaranteed by a bank or trust
company. Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to assign
the foregoing Warrant.
3
EXHIBIT
10.1
COMMON
STOCK OFFERING
SUBSCRIPTION
AGREEMENT
As of
June 4, 2010
Mr. Guy
S. Cook
Chief
Executive Officer and President
Bacterin
International, Inc.
600
Cruiser Lane
Belgrade,
MT 59714
Investors:
1.
Subscription; Escrow
Arrangement.
(a) The undersigned subscriber (the
“Subscriber”)
hereby irrevocably subscribes for and agrees to purchase that number of shares
of common stock (the “Common Stock”, or the
“Shares”) set
forth on the signature page hereto of a publicly-traded company (“Pubco”) which, as a
condition to the closing of the subscription hereunder, will acquire by reverse
triangular merger (the “Merger”) all of the
outstanding shares of capital stock of Bacterin International, Inc., a Nevada
corporation (the “Company”), and change
its name to “Bacterin International Holdings, Inc.” (the “Name Change”), along
with warrants to purchase additional Shares (the “Warrants”) in the
form of Exhibit
A hereto (each a “Warrant” and together
with the Shares, the “Securities”), in
connection with the offering of a minimum of $7,000,000 (“Minimum Offering
Amount”) in Securities for cash, all subject to the Company’s right to
sell up to an additional $5,000,000 of Shares (the “Offering”). This
Subscription Agreement (this “Subscription
Agreement”) together with the Exhibits and the Company’s Confidential
Private Placement Memorandum dated June 2010 constitute the “Offering
Documents”.
This
subscription is based upon the information provided in the Offering Documents,
audited financial statements for the period ended December 31, 2009, unaudited
financial statements for the period ended March 31, 2010, and upon the
Subscriber’s own investigation as to the merits and risks of this
investment. The Subscriber shall deliver herewith duly executed copies of
the signature pages to the following documents: (i) the Subscription Agreement,
(ii) the Accredited Investor Questionnaire & Form W-9 (and W-8BEN, if
applicable), and (iii) the Registration Rights Agreement.
The
closing of the purchase of the Securities shall occur upon the earlier of the
consummation of the Merger or June 16, 2010, which date may be extended by the
Company and the Placement Agent (as defined in Section 3(h)) for up to an
additional 30 days (the “Closing” and such
date the “Closing
Date”).
Pubco
shall deliver PDF copies of all Common Stock share certificates and Warrants to
the Subscribers on the Closing Date or, if later, immediately following the
effectiveness of the Name Change. Pubco will deliver originally executed
instruments representing the Subscriber’s Securities promptly following the
Closing Date or, if later, the effectiveness of the Name Change.
(b)
Subject to the terms and conditions
hereinafter set forth, the Subscriber hereby subscribes for and agrees to
purchase the number of Shares set forth on the signature page hereto at a price
per share of $0.80 (the “Purchase Price”), and
when this Agreement is accepted and executed by the Company, the Company agrees
to issue such Securities to the Subscriber. The subscription price is
payable by wire transfer to “TD Bank, Wilmington Delaware, as Escrow Agent for
Bacterin Middlebury Escrow Account.” pursuant to the following wire
instructions.
WIRING
INSTRUCTIONS
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Bank’s
Name and Address:
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TD
Bank, Wilmington Delaware
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Name
of Account:
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Bacterin
Middlebury Escrow Account
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Account
#:
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4245010973
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ABA
Routing #:
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031101266
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International
Swift Code:
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NRTHUS33
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Provided
that (i) the Subscriber has satisfied all conditions set forth herein, (ii)
Pubco has accepted and executed this Subscription Agreement, and (iii) the
Merger has been consummated, the Securities purchased by the Subscriber will be
delivered by Pubco promptly following the Closing Date or, if later, the Name
Change. In the event that a closing does not occur, Subscriber’s funds
will be returned by Escrow Agent to the Subscriber.
2.. Subscriber Representations,
Warranties and Agreements. The Subscriber hereby acknowledges, represents
and warrants as follows (with the understanding that the Company will rely on
such representations and warranties in determining, among other matters, the
suitability of this investment for the Subscriber in order to comply with
federal and state securities laws):
(a)
In connection with this subscription, the Subscriber has read the Offering
Materials, the Company’s audited financial statements for the period ended
December 31, 2009, and the Company’s unaudited financial statements for the
period ended March 31, 2010. The Subscriber acknowledges that these are
not intended to set forth all of the information which might be deemed pertinent
by an investor who is considering an investment in the Securities. It is
the responsibility of the Subscriber (i) to determine what additional
information he desires to obtain in evaluating this investment and (ii) to
obtain such information from the Company.
2
(b) This
Offering is limited to persons who are “accredited investors,” as that term is
defined in Regulation D under the Securities Act of 1933, as amended (the “Act”), and who have
the financial means and the business, financial and investment experience and
acumen to conduct an investigation as to, and to evaluate, the merits and risks
of this investment. The Subscriber hereby represents that he has read, is
familiar with and understands Rule 501 of Regulation D under the Act. The
Subscriber is an “accredited investor” as defined in Rule 501(a) of Regulation
D.
(c) The
Subscriber has had full access to all the information which the Subscriber (or
the Subscriber’s advisor) considers necessary or appropriate to make an informed
decision with respect to the Subscriber’s investment in the Securities.
The Subscriber acknowledges that the Company has made available to the
Subscriber and the Subscriber’s advisors the opportunity to examine and copy any
contract, matter or information which the Subscriber considers relevant or
appropriate in connection with this investment and to ask questions and receive
answers relating to any such matters including, without limitation, the
financial condition, management, employees, business, obligation, corporate
books and records, budgets, business plans of and other matters relevant to the
Company. To the extent the Subscriber has not sought information regarding
any particular matter, the Subscriber represents that he or she had and has no
interest in doing so and that such matters are not material to the Subscriber in
connection with this investment. The Subscriber has accepted the
responsibility for conducting the Subscriber’s own investigation and obtaining
for itself such information as to the foregoing and all other subjects as the
Subscriber deems relevant or appropriate in connection with this
investment. The Subscriber is not relying on any representation other than
that contained herein. The Subscriber acknowledges that no representation
regarding projected revenues or a projected rate of return has been made to it
by any party.
(d)
The Subscriber understands that the Offering of the Securities has not been
registered under the Act, in reliance on an exemption for private offerings
provided pursuant to Section 4(2) of the Act and that, as a result, the
Securities will be “restricted securities” as that term is defined in Rule 144
under the Act and, accordingly, under Rule 144 as currently in effect, that the
Securities must be held for at least twelve months after the investment has been
made (or indefinitely if the Subscriber is deemed an “affiliate” within the
meaning of such rule) unless the Securities are subsequently registered under
the Act and qualified under any other applicable securities law or exemptions
from such registration and qualification are available. Except as set
forth herein, the Subscriber understands that Pubco is under no obligation to
register the Securities under the Act or to register or qualify the Securities
under any other applicable securities law, or to comply with any other exemption
under the Act or any other securities law, and that the Subscriber has no right
to require such registration. The Subscriber further understands that the
Offering of the Securities has not been qualified or registered under any
foreign or state securities laws in reliance upon the representations made and
information furnished by the Subscriber herein and any other documents delivered
by the Subscriber in connection with this subscription; that the Offering has
not been reviewed by the SEC or by any foreign or state securities authorities;
that the Subscriber’s rights to transfer the Securities will be restricted,
which includes restrictions against transfers unless the transfer is not in
violation of the Act and applicable state securities laws (including investor
suitability standards); and that Pubco may in its sole discretion require the
Subscriber to provide at the Subscriber’s own expense an opinion of its counsel
to the effect that any proposed transfer is not in violation of the Act or any
state securities laws.
3
(e)
The Subscriber is empowered and duly authorized to enter into this Subscription
Agreement which constitutes a valid and binding agreement of the Subscriber
enforceable against the Subscriber in accordance with its terms; and the person
signing this Subscription Agreement on behalf of the Subscriber is empowered and
duly authorized to do so.
(f) The
Subscriber acknowledges that there will be no market for the Securities and that
the Subscriber may not be able to sell or dispose of them; the Subscriber has
liquid assets sufficient to assure that the purchase price of the Securities
will cause no undue financial difficulties and that, after purchasing the
Securities the Subscriber will be able to provide for any foreseeable current
needs and possible personal contingencies; the Subscriber is able to bear the
risk of illiquidity and the risk of a complete loss of this
investment.
(g)
The information in any documents delivered by the Subscriber in connection with
this subscription, including, but not limited to the Investor Questionnaire
attached as Exhibit
B hereto, is true, correct and complete in all respects as of the date
hereof. The Subscriber agrees promptly to notify the Company in writing of
any change in such information after the date hereof.
(h)
The offering and sale of the Securities to the Subscriber were not made through
any advertisement in printed media of general and regular paid circulation,
radio or television or any other form of advertisement, or as part of a general
solicitation.
(i) The
Subscriber recognizes that an investment in the Securities involves significant
risks, which risks could give rise to the loss of the Subscriber’s entire
investment in such Securities.
(j) The
Subscriber is acquiring the Securities, as principal, for the Subscriber’s own
account for investment purposes only, and not with a present intention toward or
for the resale, distribution or fractionalization thereof, and no other person
has a beneficial interest in the Securities. The Subscriber has no present
intention of selling or otherwise distributing or disposing of the Securities,
and understands that an investment in the Securities must be considered a
long-term illiquid investment.
3.
Representations and Warrants
of the Company. As a material inducement of the Subscribers to
enter into this Subscription Agreement and subscribe for the Securities, the
Company represents and warrants to the Subscriber, as of the date hereof, as
follows:
4
(a)
Organization and
Standing. The Company is a duly organized corporation, validly
existing and in good standing under the laws of the State of Nevada, has full
power to carry on its business as and where such business is now being conducted
and to own, lease and operate the properties and assets now owned or operated by
it and is duly qualified to do business and is in good standing in each
jurisdiction where the conduct of its business or the ownership of its
properties requires such qualification except where the failure to be so
qualified would not have a Material Adverse Effect on the Company. “Material Adverse
Effect” means any circumstance, change in, or effect on the Company that,
individually or in the aggregate with any other similar circumstances, changes
in, or effects on, the Company taken as a whole: (i) is, or is reasonably
expected to be, materially adverse to the business, operations, assets,
liabilities, employee relationships, customer or supplier relationships,
prospects, results of operations or the condition (financial or otherwise) of
the Company taken as a whole, or (ii) is reasonably expected to adversely affect
the ability of the Company to operate or conduct the Company’s business in the
manner in which it is currently operated or conducted or proposed to be operated
or conducted by the Company.
(b)
Authority. The
execution, delivery and performance of this Subscription Agreement and the
Offering Documents by the Company and the consummation of the transactions
contemplated hereby have been duly authorized by the Board of Directors of the
Company.
(c)
No
Conflict. The execution, delivery and performance of this
Subscription Agreement and the consummation of the transactions contemplated
hereby do not (i) violate or conflict with the Company’s Articles of
Incorporation, as amended and as in effect as of the date hereof (the “Articles of
Incorporation”), the Company’s By-laws, as in effect as of the date
hereof (the “By-laws”) or other
organizational documents, (ii) conflict with or result (with the lapse of time
or giving of notice or both) in a material breach or default under any material
agreement or instrument to which the Company is a party or by which the Company
is otherwise bound, or (iii) violate any order, judgment, law, statute, rule or
regulation applicable to the Company, except where such violation, conflict or
breach would not have a Material Adverse Effect on the Company. This
Subscription Agreement when executed by the Company will be a legal, valid and
binding obligation of the Company enforceable in accordance with its terms
(except as may be limited by bankruptcy, insolvency, reorganization, moratorium
and similar laws and equitable principles relating to or limiting creditors’
rights generally).
(d)
Authorization.
Issuance of the Securities to Subscriber has been duly authorized by all
appropriate corporate actions of the Company.
(e) Litigation and Other
Proceedings. Except as disclosed on Schedule 3(e) hereto,
there are no actions, suits, proceedings or investigations pending or, to the
knowledge of the Company, threatened against the Company at law or in equity
before or by any court or Federal, state, municipal or their governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign which could materially adversely affect the Company. The Company
is not subject to any continuing order, writ, injunction or decree of any court
or agency against it which would have a material adverse effect on the
Company.
(f)
Use of
Proceeds. The proceeds of this Offering and sale of the Securities,
net of payment of placement expenses, will be used by the Company for working
capital and other general corporate purposes pursuant to the restrictions set
forth in the Securities and on Schedule 3(f)
hereto.
5
(g)
Consents/Approvals.
No consents, filings (other than Federal and state securities filings relating
to the issuance of the Securities pursuant to applicable exemptions from
registration, which the Company hereby undertakes to make in a timely fashion),
authorizations or other actions of any governmental authority are required to be
obtained or made by the Company for the Company’s execution, delivery and
performance of this Subscription Agreement which have not already been obtained
or made or will be made in a timely manner following the Closing.
(h)
No
Commissions. The Company has not incurred any obligation for any
finder’s, broker’s or agent’s fees or commissions in connection with the
transaction contemplated hereby other than the placement agent fees payable to
Middlebury Securities, LLC, as placement agent (the “Placement Agent”) in
connection with the Offering.
(i) Capitalization.
A capitalization table illustrating the issued capital stock of the Company
immediately prior to the Merger and of Pubco immediately following the Merger
and the Closing of this Offering is attached as Schedule 3(i).
All of such outstanding shares have been, or upon issuance will be, validly
issued, fully paid and nonassessable. As of the date hereof, except as
disclosed in Schedule
3(i) or Schedule 3(n), (i) no
shares of the Company’s capital stock are subject to preemptive rights or any
other similar rights or any liens or encumbrances suffered or permitted by the
Company, there are no outstanding debt securities, there are no outstanding
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or any of its
subsidiaries is or may become bound to issue additional shares of capital stock
of the Company or any of its subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of the
Company or any of its subsidiaries, (ii) there are no agreements or arrangements
under which the Company or any of its subsidiaries is obligated to register the
sale of any of their securities under the Securities Act of 1933, as amended
(“Securities
Act” or “1933
Act”), (iii) there are no outstanding securities of the Company or any of
its subsidiaries which contain any redemption or similar provisions, and there
are no contracts, commitments, understandings or arrangements by which the
Company or any of its subsidiaries is or may become bound to redeem a security
of the Company or any of its subsidiaries, and (iv) there are no securities or
instruments containing anti-dilution or similar provisions that will be
triggered by the issuance or exercise of the Shares or Warrants as described in
this Subscription Agreement. The Company has furnished to the Subscriber
true and correct copies of the Articles of Incorporation, the By-laws, and the
terms of all securities convertible or exchangeable into or exercisable for
Common Stock and the material rights of the holders thereof in respect
thereto. Schedule 3(i) and
Schedule 3(n)
also list all outstanding debt of the Company with sufficient detail acceptable
to Subscriber.
6
(j)
Employee
Relations. Neither the Company nor any of its subsidiaries is
involved in any labor dispute nor, to the knowledge of the Company or any of its
subsidiaries, is any such dispute threatened, the effect of which would be
reasonably likely to result in a Material Adverse Effect. Neither the
Company nor any of its subsidiaries is a party to a collective bargaining
agreement.
(k)
Intellectual
Property Rights. The Company and its subsidiaries own or possess adequate
rights or licenses to use all trademarks, trade names, service marks, service
mark registrations, service names, patents, patent rights, copyrights,
inventions, licenses, approvals, governmental authorizations, trade secrets and
rights necessary to conduct their respective businesses as now conducted.
The Company and its subsidiaries do not have any knowledge of any infringement
by the Company or its subsidiaries of trademark, trade name rights, patents,
patent rights, copyrights, inventions, licenses, service names, service marks,
service mark registrations, trade secret or other similar rights of others, or
of any such development of similar or identical trade secrets or technical
information by others and, except as set forth on Schedule 3(k), there
is no claim, action or proceeding being made or brought against, or to the
Company’s knowledge, being threatened against, the Company or its subsidiaries
regarding trademarks, trade name rights, patents, patent rights, inventions,
copyrights, licenses, service names, service marks, service mark registrations,
trade secrets or other infringement.
(l)
Environmental
Laws. The Company and its subsidiaries (i) are to the Company’s
knowledge in compliance with any and all applicable foreign, federal, state and
local laws and regulations relating to the protection of human health and
safety, the environment or hazardous or toxic substances or wastes, pollutants
or contaminants (“Environmental Laws”),
(ii) have received all permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective businesses, and
(iii) are in compliance with all terms and conditions of any such permit,
license or approval where such noncompliance or failure to receive permits,
licenses or approvals referred to in clauses (i), (ii) or (iii) above could
have, individually or in the aggregate, a Material Adverse Effect.
(m)
Disclosure. To the Knowledge (as
defined below) of the Company and its subsidiaries at the time of the execution
of this Subscription Agreement, no representation or warranty by the Company in
this Subscription Agreement, the Offering Documents, nor in any certificate,
Schedule or Exhibit delivered or to be delivered pursuant to this Subscription
Agreement or the Offering Documents contains or will contain any untrue
statement of material fact or omits or will omit to state a material fact
necessary to make the statements contained herein or therein not
misleading. To the knowledge of the Company and its subsidiaries at the
time of the execution of this Subscription Agreement, there is no information
concerning the Company and its subsidiaries or their respective businesses which
has not heretofore been disclosed to the Subscribers that would have a Material
Adverse Effect. For purposes of this paragraph (m), “Knowledge” shall mean
the actual knowledge of the Company’s Chief Executive Officer, Chief Financial
Officer or General Counsel.
7
(n)
Title.
The Company and its subsidiaries have good and marketable title in fee simple to
all real property and good and marketable title to all personal property owned
by them which is material to the business of the Company and its subsidiaries,
in each case free and clear of all liens, encumbrances and defects except such
as are described in Schedule 3(n) or such
as do not materially and adversely affect the value of such property and do not
interfere with the use made and proposed to be made of such property by the
Company or any of its subsidiaries. Any real property and facilities held
under lease by the Company or any of its subsidiaries are held by them under
valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made of such
property and buildings by the Company and its subsidiaries.
(o)
Insurance. The
Company and each of its subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
management of the Company believes to be prudent and customary in the businesses
in which the Company and its subsidiaries are engaged.
(p)
Regulatory
Permits. To the Company’s knowledge, the Company and its
subsidiaries possess all material certificates, authorizations and permits
issued by the appropriate federal, state or foreign regulatory authorities,
necessary to conduct their respective businesses, and neither the Company nor
any such subsidiary has received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization or
permit.
(q)
Foreign Corrupt
Practices Act. To the Company’s knowledge, neither the Company, nor
any director, officer, agent, employee or other person acting on behalf of the
Company or any subsidiary has, in the course of acting for, or on behalf of, the
Company, directly or indirectly used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political activity; directly or indirectly made any direct or indirect unlawful
payment to any foreign or domestic government official or employee from
corporate funds; violated or is in violation of any provision of the U.S.
Foreign Corrupt Practices Act of 1977, as amended, or any similar treaties of
the United States; or directly or indirectly made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment to any foreign or domestic
government or party official or employee.
(r)
Tax
Status. The Company and each of its subsidiaries has made or filed
all United States federal and state income and all other tax returns, reports
and declarations required by any jurisdiction to which it is subject and all
such returns, reports and declarations are true, correct and accurate in all
material respects. The Company has paid all taxes and other governmental
assessments and charges, shown or determined to be due on such returns, reports
and declarations, except those being contested in good faith, for which adequate
reserves have been established, in accordance with generally accepted accounting
principles.
(s) Compliance with Laws.
The business of the Company and its subsidiaries has been and is presently being
conducted so as to comply with all applicable material federal, state and local
governmental laws, rules, regulations and ordinances.
8
(t)
Employee Benefit
Plans; ERISA. Schedule 3(t) sets
forth a true, correct and complete list of all employee benefit plans, programs,
policies and arrangements, whether written or unwritten (the “Company Plans”), that
the Company, any subsidiary or any other corporation or business which is now or
at the relevant time was a member of a controlled group of companies or trades
or businesses including the Company or any subsidiary, within the meaning of
section 414 of the Internal Revenue Code of 1986, as amended (the “Code”), maintain or
have maintained on behalf of current or former members, partners, principals,
directors, officers, managers, employees, consultants or other personnel. There
has been no prohibited transaction within the meaning of Section 406 of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”), or Section
4975 of the Code, with respect to any of the Company Plans; none of the Company
Plans is or was subject to Section 412 of the Code or Section 302 or Title IV of
ERISA; and each of the Company Plans has been operated and administered in all
material respects in accordance with all applicable laws, including ERISA.
There are no actions, suits or claims pending or threatened (other than routine
claims for benefits), whether by participants, the Internal Revenue Service, the
Department of Labor or otherwise, with respect to any Company Plan and no facts
exist under which any such actions, suits or claims are likely to be brought or
under which the Company or any subsidiary could incur any liability with respect
to a Company Plan other than in the ordinary course. None of the
Company Plans is or was a multiemployer plan within the meaning of Section 3(37)
of ERISA. Neither the Company nor any subsidiary has announced, proposed or
agreed to any change in benefits under any Company Plan or the establishment of
any new Company Plan. There have been no changes in the operation or
interpretation of any Company Plan since the most recent annual report, which
would have any material effect on the cost of operating, maintaining or
providing benefits under such Company Plan. Neither the Company nor any
subsidiary has incurred any liability for the misclassification of employees as
leased employees or independent contractors. Except as provided for in this
Subscription Agreement and in the Offering Documents, the consummation of the
transactions contemplated by this Subscription Agreement, either alone or in
combination with another event, will not (i) result in any individual becoming
entitled to any increase in the amount of compensation or benefits or any
additional payment from the Company or any subsidiary (including, without
limitation, severance, golden parachute or bonus payments or otherwise), or (ii)
accelerate the vesting or timing of payment of any benefits or compensation
payable in respect of any individual.
(u)
Restrictions on
Business Activities. There is no judgment, order, decree, writ or
injunction binding upon the Company or any subsidiary or, to the knowledge of
the Company or any subsidiary, threatened that has or could prohibit or impair
the conduct of their respective businesses as currently conducted or any
business practice of the Company or any subsidiary, including the acquisition of
property, the provision of services, the hiring of employees or the solicitation
of clients, in each case either individually or in the aggregate.
(v)
Issuance of Shares
and/or Warrant Shares. The Shares and Warrant Shares are duly
authorized and reserved for issuance and, upon delivery of the Shares and/or
exercise of the Warrants, as applicable, in accordance with the terms thereof,
such Shares and/or Warrant Shares will be validly issued, fully paid and
non-assessable, free and clear of any and all liens, claims and encumbrances and
the holders of such Shares and/or Warrant Shares (as defined in the Warrant)
shall be entitled to all rights and preferences accorded to a holder of Common
Stock.
9
4.
Registration
Rights. Subscriber will have certain demand and “piggyback”
registration rights as set forth in the Registration Rights Agreement attached
as Exhibit
C hereto.
5.
Legends. The
Subscriber understands and agrees that Pubco will cause any necessary legends to
be placed upon any instruments(s) evidencing ownership of the Securities,
together with any other legend that may be required by federal or state
securities laws or deemed necessary or desirable by Pubco.
6.
General
Provisions.
(a) Confidentiality.
The Subscriber covenants and agrees that it will keep confidential and will not
disclose or divulge any confidential or proprietary information that such
Subscriber may obtain from Pubco or the Company pursuant to financial
statements, reports, and other materials submitted by Pubco or the Company to
such Subscriber in connection with this offering or as a result of discussions
with or inquiry made to Pubco or the Company, unless such information is known,
or until such information becomes known, to the public through no action by the
Subscriber; provided, however, that the
Subscriber may disclose such information to its attorneys, accountants,
consultants, and other professionals to the extent necessary in connection with
his or her investment in Pubco or the Company so long as any such professional
to whom such information is disclosed is made aware of the Subscriber’s
obligations hereunder and such professional agrees to be likewise bound as
though such professional were a party hereto.
(b) Successors. The
covenants, representations and warranties contained in this Subscription
Agreement shall be binding on the Subscriber’s, Pubco’s and the Company’s heirs
and legal representatives and shall inure to the benefit of the respective
successors and assigns of the parties. The rights and obligations of this
Subscription Agreement may not be assigned by any party without the prior
written consent of the other parties.
(c) Counterparts.
This Subscription Agreement may be executed in counterparts, each of which shall be deemed an original agreement, but all of which together shall constitute one and the same instrument.
(d) Execution by
Facsimile. Execution and delivery of
this Subscription Agreement by facsimile transmission (including the delivery of
documents in Adobe PDF format) shall constitute execution and delivery of this
Subscription Agreement for all purposes, with the same force and effect as
execution and delivery of an original manually signed copy
hereof.
10
(e)
Governing Law and
Jurisdiction. This Subscription Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts to be wholly performed within such state and without regard to
conflicts of laws provisions. Any legal action or proceeding arising out
of or relating to this Subscription Agreement and/or the Offering Documents may
be instituted in the courts of the State of New York sitting in New York County
or in the United States of America for the Southern District of New York, and
the parties hereto irrevocably submit to the jurisdiction of each such court in
any action or proceeding. The Subscriber hereby irrevocably waives and
agrees not to assert, by way of motion, as a defense, or otherwise, in every
suit, action or other proceeding arising out of or based on this Subscription
Agreement and/or the Offering Documents and brought in any such court, any claim
that Subscriber is not subject personally to the jurisdiction of the above named
courts, that Subscriber’s property is exempt or immune from attachment or
execution, that the suit, action or proceeding is brought in an inconvenient
forum or that the venue of the suit, action or proceeding is
improper.
(f) (i) Indemnification
Generally. Pubco, on the one hand, and the Subscriber, on the other
hand (each an “Indemnifying Party”),
shall indemnify the other from and against any and all losses, damages,
liabilities, claims, charges, actions, proceedings, demands, judgments,
settlement costs and expenses of any nature whatsoever (including, without
limitation, reasonable attorneys’ fees and expenses) resulting from any breach
of a representation and warranty, covenant or agreement by the Indemnifying
Party and all claims, charges, actions or proceedings incident to or arising out
of the foregoing.
(ii) Indemnification
Procedures. Each person entitled to indemnification under this
Section 6(f) (an “Indemnified Party”)
shall give notice as promptly as reasonably practicable to each party required
to provide indemnification under this Section 6(f) of any action commenced
against or by it in respect of which indemnity may be sought hereunder, but
failure to so notify an Indemnifying Party shall not release such Indemnifying
Party from any liability that it may have, so long as such failure shall not
have materially prejudiced the position of the Indemnifying Party. Upon
such notification, the Indemnifying Party shall assume the defense of such
action if it is a claim brought by a third party, and, if and after such
assumption, the Indemnifying Party shall not be entitled to reimbursement of any
expenses incurred by it in connection with such action except as described
below. In any such action, any Indemnified Party shall have the right to
retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Party unless (i) the Indemnifying Party and the
Indemnified Party shall have mutually agreed to the contrary or (ii) the named
parties in any such action (including any impleaded parties) include both the
Indemnifying Party and the Indemnified Party and representation of both parties
by the same counsel would be inappropriate due to actual or potential differing
or conflicting interests between them. The Indemnifying Party shall not be
liable for any settlement of any proceeding effected without its written consent
(which shall not be unreasonably withheld or delayed by such Indemnifying
Party), but if settled with such consent or if there be final judgment for the
plaintiff, the Indemnifying Party shall indemnify the Indemnified Party from and
against any loss, damage or liability by reason of such settlement or
judgment.
g.
Notices. All
notices, requests, demands, claims and other communications hereunder shall be
in writing and shall be delivered by certified or registered mail (first class
postage pre-paid), guaranteed overnight delivery, or facsimile transmission if
such transmission is confirmed by delivery by certified or registered mail
(first class postage pre-paid) or guaranteed overnight delivery, to the
following addresses and facsimile numbers (or to such other addresses or
facsimile numbers which such party shall subsequently designate in writing to
the other party):
11
(i) if
to Pubco or the Company:
Mr. Guy S. Cook
CEO and President
Bacterin International,
Inc.
600 Cruiser Lane
Belgrade, MT 59714
(ii) if
to the Subscriber to the address set forth next to its name on the signature
page hereto.
h. Entire
Agreement. This Subscription Agreement (including the Exhibits
attached hereto) and the Offering Documents delivered at the Closing pursuant
hereto, contain the entire understanding of the parties in respect of its
subject matter and supersedes all prior agreements and understandings between or
among the parties with respect to such subject matter. The Exhibits
constitute a part hereof as though set forth in full above.
i.
Amendment;
Waiver. This Subscription Agreement may not be modified, amended,
supplemented, canceled or discharged, except by written instrument executed by
both parties. No failure to exercise, and no delay in exercising, any
right, power or privilege under this Subscription Agreement shall operate as a
waiver, nor shall any single or partial exercise of any right, power or
privilege hereunder preclude the exercise of any other right, power or
privilege. No waiver of any breach of any provision shall be deemed to be
a waiver of any proceeding or succeeding breach of the same or any other
provision, nor shall any waiver be implied from any course of dealing between
the parties. No extension of time for performance of any obligations or
other acts hereunder or under any other agreement shall be deemed to be an
extension of the time for performance of any other obligations or any other
acts. The rights and remedies of the parties under this Subscription
Agreement are in addition to all other rights and remedies, at law or equity,
that they may have against each other.
[SIGNATURE PAGE
FOLLOWS]
12
SIGNATURE PAGE TO COMMON
STOCK SUBSCRIPTION AGREEMENT
INFORMATION
IN RESPONSE TO THIS SECTION WILL BE KEPT STRICTLY CONFIDENTIAL
DOLLAR
AMOUNT INVESTED $_____________________________
NUMBER
OF SHARES PURCHAED (@ $0.80 PER SHARE)
______________________________
NAME IN WHICH SHARES AND WARRANTS
SHOULD BE ISSUED:
____________________________________________________
AMOUNT
INVESTED TO BE SENT VIA: o Check (enclosed)
o
Wire
Address
Information
For
individual subscribers this address should be the Subscriber’s primary legal
residence. For entities other than individual subscribers, please provide
address information for the entities primary place of business.
Information regarding a joint subscriber should be included in the column at
right.
|
Legal
Address
|
Legal
Address
|
|
|
City,
State, and Zip Code
|
City,
State, and Zip
Code
|
Alternate Address
Information
Subscribers
who wish to receive correspondence at an address other than the address listed
above should complete the Alternate Address section below.
|
Alternate
Address for Correspondence
|
Alternate
Address for Correspondence
|
|
|
City,
State and Zip Code
|
City,
State and Zip Code
|
|
|
Telephone
|
Telephone
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|
Facsimile
|
Facsimile
|
|
|
Tax
ID # or Social Security #
|
Tax
ID # or Social Security
#
|
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AGREED
AND SUBSCRIBED
|
AGREED
AND SUBSCRIBED
|
|||
|
SIGNATURE
OF JOINT SUBSCRIBER (if any)
|
||||
|
This
__ day of June, 2010
|
This
__ day of June, 2010
|
|||
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By:
|
By:
|
|||
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Name:
|
Name:
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|||
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Title
(if any):
|
Title
(if any):
|
|||
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Subscriber
Name (Typed or Printed)
|
Additional
Subscriber Name (Typed or
Printed)
|
|||
[SIGNATURE
PAGE TO SUBSCRIPTION AGREEMENT]
CERTIFICATE
OF SIGNATORY
(To be
completed if the Shares and Warrants are
being
subscribed for by an entity)
I,____________________________, am
the_______________________________ of ____________ (the “Entity”).
I certify that I am empowered and duly
authorized by the Entity to execute and carry out the terms of the Subscription
Agreement and to purchase and hold the Shares and Warrants, and certify further
that the Subscription Agreement has been duly and validly executed on behalf of
the Entity and constitutes a legal and binding obligation of the
Entity.
IN WITNESS WHEREOF, I have set my hand
this ____ day of June, 2010.
|
|
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(Signature)
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[CERTIFICATE
OF SIGNATORY TO COMMON STOCK SUBSCRIPTION AGREEMENT]
EXHIBIT
99.1
|
Bacterin International Holdings,
Inc. Completes
|
|
Merger and $7.5 Million
Raise
|
Belgrade
MT – June 30, 2010 – Bacterin International, Inc. “(Bacterin”), a Nevada
company, today announced that it has completed a reverse merger transaction with
Bacterin International Holdings, Inc. f/k/a K-Kitz (the “Company”), in which the
Company caused its wholly-owned subsidiary to be merged with and into Bacterin,
with Bacterin as the surviving company. Concurrently with the closing
of the merger, the Company also completed a private placement of common stock
and warrants to purchase common stock to accredited investors, and received
gross proceeds of approximately $7,508,000 at the closing of the private
placement.
As a
result of, the merger, the Company has terminated its prior business and is now
engaged, through Bacterin, solely in the business of biomaterials research, development, and
commercialization. Bacterin is in the process of expanding its
intellectual property base and has successfully leveraged its technical
expertise and knowledge of biofilms into multiple product areas. Bacterin
markets its products through its in-house sales force and select distributors.
To further its growth opportunities, Bacterin has established partnerships with
major medical device manufacturers and provider networks, in addition to the
vast universe of private and unaffiliated hospital and surgical practices to
which it markets. Bacterin also maintains an ongoing product development of
innovative tissue constructs and bioactive coated devices. Revenues
for Bacterin come from product manufacturing, sales, distribution, licensing
agreements and grants.
Before
the merger, the Company’s corporate name was K-Kitz, Inc., and its trading
symbol was KKTZ.OB. On June 29, 2010, the Company changed its
corporate name to “Bacterin International Holdings, Inc.” which name change will
become effective for trading purposes on July 1, 2010. The Company
intends to request a trading symbol change to correspond with its name change at
the appropriate time and in accordance with current FINRA regulations that went
into effect June 1, 2010. Accordingly, the trading symbol for the Company will
remain KKTZ.OB until such time as the Company moves to another market or
otherwise can effect a trading symbol change through FINRA.
In
connection with the merger, the Company also completed an initial closing of a
private placement to selected qualified investors of shares of its common stock
at a purchase price of $1.60 per share and detachable warrants to purchase
one-quarter of a share of its common stock (at an exercise price of $2.50 per
share) for each share purchased. In total, the Company sold 4,934,534
shares of its common stock and warrants to purchase 1,233,634 shares of its
common stock in the initial closing (excluding shares and warrants issued to the
placement agent). The Company may sell up to an additional 6,268,472 shares of
common stock and warrants to purchase 1,567,118 shares of common stock to
investors that participated in the initial closing, management and certain note
holders until July 30, 2010, when the offering period expires. The
Company received gross proceeds of $7,508,329 in consideration for the sale of
the shares of common stock and warrants, which consisted of (i) $4,026,000 from
investors in the private placement, which included directors and executive
officers of the Company, and (ii) $3,482,329 from note holders in an earlier
Bacterin bridge financing who converted certain principal and interest
outstanding under their notes into the private placement at a 10 percent
discount to the purchase price therein, being $1.44 per share, and received
warrants with a 10% discounted exercise price of $2.25. The Company
intends to use the cash proceeds of approximately $4,000,000 from the
capital raise to pay expenses associated with the merger and private placement
and for working capital, including the expansion of its sales
force.
1
Following
the completion of the merger and the initial closing under the private
placement, the Company now has approximately 34.4 million shares outstanding and
44.9 million fully diluted shares.
Middlebury Securities, LLC, a wholly
owned subsidiary of Middlebury Group, LLC acted as sole placement agent in
connection with the private placement.
"Today launches a new era for
our company. The funds raised will be utilized to expand our sales
force and increase our marketing activities,” commented Guy Cook, president and
founder of Bacterin and the president and CEO of the newly merged
Company. “Our scientifically advanced biologic products, which we
believe provide superior surgical outcomes in a more cost effective manner, are
FDA approved and reimbursed by all insurance providers, and as of May 2010,
available in over 6,000 medical institutions. With the cash infusion
from this raise, we will be able to accelerate the build-out of our biologics
direct sales force to address the growing demand for our revolutionary bone
graft material allowing us to remain confident in achieving our forecasted
revenue and profit goals. The increase in our planned sales efforts
will effectively support the achievement of the company’s revenue goal of $20.6
million for 2010, and should enhance its growth pace for the foreseeable
future.”
About the Company and
Bacterin
The
Company’s sole business is now to hold and operate Bacterin. Bacterin
processes and markets innovative, biologic allografts for transplantation. The
Company’s products, OsteoSpongeÒ, OsteoSpongeÒ SC and OsteoWrapÒ, are made from
demineralized bone that is malleable and flexible, which enables more efficient
and precise handling. It also markets BacFastÒ and OsteoLockÒ, which are used in spine
surgery, designed to minimize graft back-out, and increase osteoinductivity.
Bacterin’s latest allograft, OsteoSelectÒ DBM Putty has excellent
handling characteristics and is distributed as a sterile product, with
osteoinductivity testing completed on every lot after terminal
sterilization. Headquartered in Belgrade, Montana, Bacterin operates
a 32,000 sq. ft., state-of-the-art, fully compliant and FDA registered facility,
equipped with five “Class 100” clean rooms.
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This
news release contains disclosures that are forward-looking statements.
Forward-looking statements include statements that are predictive in nature,
that depend upon or refer to future events or conditions, or that include words
such as "continue," "efforts," "expects," "anticipates," "intends," "plans,"
"believes," "estimates," "projects," "forecasts," "strategy," "will," "goal,"
"target," "prospects," "potential," "optimistic," "confident," "likely,"
"probable" or similar expressions. These forward-looking statements are based on
current expectations or beliefs and include, but are not limited to, statements
about maximizing gross profit dollars and the Company's potential to achieve top
and bottom line growth. Statements of historical fact also may be deemed to be
forward-looking statements. We caution that these statements by their nature
involve risks and uncertainties, and actual results may differ materially
depending on a variety of important factors, including, among others: the
company's ability to meet its obligations under existing and anticipated
contractual obligations; the company's ability to develop, market, sell and
distribute desirable applications, products and services and to protect its
intellectual property; the ability and willingness of third-party manufacturers
to timely and cost-effectively fulfill orders from the company; the ability of
the company's customers to pay and the timeliness of such payments, particularly
during recessionary periods; the company's ability to obtain financing as and
when needed; changes in consumer demands and preferences; the company's ability
to attract and retain management and employees with appropriate skills and
expertise; the impact of changes in market, legal and regulatory conditions and
in the applicable business environment, including actions of competitors; and
other factors. The company undertakes no obligation to release publicly any
revisions to any forward-looking statements to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated
events.
Contacts:
Bacterin
International Holdings, Inc.
Guy Cook,
President
(406)
388-0480
GCook@bacterin.com
Grannus
Financial Advisors, Inc.
Yvonne
Zappulla, managing director
1120
Avenue of the Americas, 4th Floor
New York,
New York 10036
(212)
681-4108
Yvonne@grannusfinancial.com
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