Exhibit 10.44
STOCK PURCHASE AND VESTING AGREEMENT
------------------------------------
THIS STOCK PURCHASE AND VESTING AGREEMENT is made this 21st day of
March, 2002, by and between Spine Wave, Inc., a Delaware corporation (the
"Company"), and Protein Polymer Technologies, Inc., a Delaware corporation
("Purchaser").
NOW THEREFORE, IT IS HEREBY AGREED:
1. Sale of Stock. Subject to the terms hereof, the Company shall sell
to Purchaser and Purchaser shall purchase from the Company Four Hundred Thousand
(400,000) shares of common stock of the Company (the "Stock"). The sale and
purchase shall occur at the offices of the Company on the date set forth above
or at such other place and time as the parties may agree (the "Closing").
2. Consideration. In exchange for and as full consideration for the
Stock, the Purchaser shall (i) enter into that certain Amendment No. 1 to the
Supply and Services Agreement dated April 12, 2001 attached hereto as Exhibit A
(the "Amendment"), (ii) have entered into and delivered to the Company that
certain Certificate of Acknowledgement of Termination by and among the Company,
Purchaser and Windamere Venture Partners, LLC terminating that certain Voting
Agreement dated April 12, 2001, attached hereto as Exhibit B (the "Certificate
of Termination"), (iii) have entered into and delivered to the Company that
certain Letter Agreement attached hereto as Exhibit C (the "Letter Agreement")
and (iv) have previously voted all of the shares of the Company's capital stock
beneficially held by Purchaser in favor of (A) the Company's merger with VERTx,
Inc. (the "Merger") and (B) the Company's sale and issuance of shares of the
Company's Series A Preferred Stock (the "Series A Financing") to certain
investors immediately thereafter and (C) any matter that could reasonably be
expected to facilitate the Merger and Series A Financing as well as delivered to
the Company or its representatives written evidence thereof. In addition,
Purchaser shall deliver two (2) duly executed blank Assignments Separate from
Certificate in the form attached hereto as Exhibit D, which Assignments Separate
from Certificate shall only be used in connection with the exercise of the
Company's Repurchase Option as set forth in Section 5 below. The Company and the
Purchaser agree that the fair market value of each share of Stock as of the date
of this Agreement equals $0.05 per share (the "Purchase Price").
3. Issuance of Stock. Upon the execution and delivery of the
Amendment, Certificate of Termination and Letter Agreement by the Purchaser and
contingent upon the Company's verification of Purchaser's vote in favor of the
approval of the Merger and the Series A Financing, the Company shall issue a
duly executed certificate evidencing the Stock in the name of Purchaser and
provide Purchaser with a copy of such certificate. The original of such
certificate shall be held in escrow by the Company until the expiration of the
Repurchase Option (as defined below); provided however, upon Purchaser's
request, Company shall release to Purchaser a certificate representing that
number of shares of the Stock which, as of the date of such request, are no
longer subject to the Repurchase Option.
4. Repurchase Option. The Stock shall be subject to a right (but not
an obligation) of repurchase by the Company (the "Repurchase Option"). The
Company shall have the
right to purchase Unvested Shares (as defined below) from the Purchaser at the
Purchase Price as follows.
a. All of the Stock shall initially be considered "Unvested
Shares" subject to the Repurchase Option.
b. The Repurchase Option shall lapse with respect to such portion
of the Stock upon the attainment by Purchaser of each of the performance
milestones as set forth on Exhibit E attached hereto (the "Milestones").
c. The Repurchase Option shall also terminate and cease to be
exercisable with respect to any and all Unvested Shares in the event of (i) the
consummation of a merger or consolidation of the Company ("Merger") with and
into another corporation where the Company's stockholders of record immediately
prior to such merger or consolidation hold less than fifty percent (50%) of the
outstanding voting stock of the successor corporation, (ii) a sale or transfer
of greater than fifty percent (50%) of the outstanding voting stock of the
Company (other than as a result of a transaction or series of transactions the
primary purpose of which is the raising of equity capital) (a "Sale") or (iii)
the completion of a sale of all or substantially all of the Company's assets.
d. The Repurchase Option shall be exercised by written notice
signed by the President or Treasurer of the Company and delivered as provided in
subparagraph 9(b) hereof. The Company shall pay for the shares of Stock it has
elected to repurchase by delivery of a cashier's check or by wire transfer of
immediately available funds in an aggregate amount equal to the Purchase Price
multiplied by the number of shares of Stock being repurchased.
e. Adjustments to Stock. If, from time to time during the term of
the Repurchase Option, there is any change affecting the Company's outstanding
common stock as a class that is effected without the receipt of consideration by
the Company (through merger, consolidation, reorganization, reincorporation,
stock dividend, dividend in property other than cash, stock split, liquidating,
dividend, combination of shares, change in corporation structure or other
transaction not involving the receipt of consideration by the Company), then any
and all new, substituted or additional securities or other property to which
Purchaser is entitled by reason of Purchaser's ownership of Stock shall be
immediately subject to the Repurchase Option and be included in the word "Stock"
for all purposes of the Repurchase Option with the same force and effect as the
shares of the Stock presently subject to the Repurchase Option, but only to the
extent the Stock is, at the time, covered by such Repurchase Option. While the
aggregate Purchase Price shall remain the same after each such event, the
Purchase Price per share of Stock upon exercise of the Repurchase Option shall
be appropriately adjusted.
5. Exercise of Repurchase Option. The Company shall have the right to
exercise its Repurchase Option as follows:
a. The Company shall have the right to exercise its Repurchase
Option to repurchase any Unvested Shares covered by the First Milestone and the
Second
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Milestone (each as defined and set forth on Exhibit E) from Purchaser at the
Purchase Price at any time on or after **.
b. The Company shall have the right to exercise its Repurchase
Option to repurchase any Unvested Shares covered by the Third Milestone (as
defined and set forth on Exhibit E) from Purchaser at the Purchase Price at any
time on or after **.
6. Right of First Refusal. Stock subject to the Repurchase Option may
not be transferred, except for transfers by operation of law or other
involuntary transfer. Before any shares of Stock registered in the name of
Purchaser, not subject to the Repurchase Option and not otherwise restricted by
applicable federal and state securities laws may be sold or transferred
(excluding transfer by operation of law or other involuntary transfer) such
shares shall first be offered to the Company in the following manner:
a. The Purchaser or its transferee shall deliver a notice pursuant
to subparagraph 10(b) ("Notice") to the principal business office of the Company
stating (i) the bona fide intention to sell or transfer such shares, (ii) the
number of such shares of Stock to be sold or transferred, (iii) the price and
other terms, if any, for which Purchaser or its transferee proposes to sell or
transfer such shares of Stock, and (iv) the name and address of the proposed
purchaser or transferee, if any, and that such identified purchaser or
transferee is committed to acquire the stated number of shares on the stated
price and terms.
b. The Company shall have the right at any time within ten (10)
days of receipt of the Notice to purchase all of the shares to which the Notice
refers at the price per share specified in the Notice. Said right shall be
exercised by written notice signed by the President or any Vice President of the
Company and delivered as provided in subparagraph 10(b) hereof, which notice
shall specify the time, place and date for settlement of such purchase.
c. In the event the Company does not, for any reason, exercise its
right pursuant hereto, the Company may assign such right, provided such right
shall not extend beyond such ten (10) day period. If exercised by the assignee
pursuant hereto, the right to purchase shall be exercised by written notice
signed by the exercising assignee and delivered as provided in subparagraph
10(b) hereof, which notice shall specify the time, place and date for settlement
of such purchase. Purchaser shall sell the shares to the Company or such
assignees within thirty (30) days after the date of the Notice.
d. If all of the shares to which the Notice refers are not
purchased, as provided in subparagraphs 6(b) or 6(c) above, the Purchaser may
sell such shares to the person named in the Notice at the price and terms
specified in the Notice, provided that such sale or transfer is consummated
within seventy five (75) days of the date of the Notice to the Company, and
provided further that any such sale is in accordance with all the terms and
conditions hereof. If Purchaser does not consummate the sale or transfer within
such seventy five (75) day period, the right provided hereby shall be deemed to
be revived with respect to such shares and no sale or transfer shall be effected
without first offering the shares in accordance herewith.
** Material is confidential and has been omitted and filed separately with the
Securities and Exchange Commission.
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e. Notwithstanding the above, neither the Company nor the
assignees of the Company shall have any right of first refusal under this
Section 6 at any time subsequent to the following: (i) the closing of a bona
fide, firm commitment underwritten public offering of the common stock of the
Company pursuant to a Registration Statement declared effective under the Act,
(ii) the first date on which the Stock is held of record by more than five
hundred (500) persons (ii) a Merger or Sale, other than a Merger or Sale in
which the consideration includes capital stock that is not registered under the
Securities Act of 1933, as amended, and/or is not listed on a national
securities exchange, unless the issuer is subject to a contractual obligation to
register and list such stock within six months of such Merger or Sale. In
addition, the Company's right of first refusal under this Section 6 shall not
apply to the proposed sale or transfer by Purchaser of stock subject to this
Agreement as part of the sale of all or substantially all of Purchaser's assets
("Sale of Assets") except in the event that the Sale of Assets is to a direct
competitor of the Company or to such other entity which directly or indirectly
controls a direct competitor of the Company and provided that in such
circumstance, the time period set forth in subparagraph 6(d) above shall be 180
days.
7. "Market Stand-Off" Agreement. If requested by the Company and an
underwriter of Common Stock (or other securities) of the Company, Purchaser
shall not sell or otherwise transfer or dispose of any Common Stock (or other
securities) of the Company held by such Holder (other than those included in the
registration) for no more than (i) 180 days from the effective date of the first
registration of the Company's securities, including securities to be sold on its
behalf to the public in an underwritten offering and (ii) 90 days for the next
two subsequent registration statement of the Company after the initial public
offering; provided, however, that all executive officers, directors and two
percent (2%) or greater stockholders of the Company must enter into similar
lock-up agreements as well.
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to common stock held by Purchaser until
the end of such period.
8. Representations and Warranties of Purchaser.
a. Due Authorization. Purchaser hereby represents and warrants to
Company that it is duly authorized and empowered to enter into and perform this
Agreement; and the execution and performance of this Agreement by Purchaser does
not and will not conflict with or violate any contract, agreement, indenture,
mortgage, instrument, writ, judgment, or order of any court, arbiter or
governmental or quasi-governmental body to which Purchaser is a party or by
which Purchaser is bound.
b. Investment Intent. This Agreement is made with Purchaser in
reliance upon its representation to the Company, which by Purchaser's acceptance
hereof confirms, that the Stock has been acquired by Purchaser for investment
for an indefinite period for Purchaser's own account, not as a nominee or agent,
and not with a view to the sale or distribution of any part thereof, and that
Purchaser has no present intention of selling, granting participation in, or
otherwise distributing the same. By executing this Agreement, Purchaser further
represents that Purchaser does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer, or grant participations, to such
person or to any third person, with respect to any of the Stock.
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c. Restricted Securities. Purchaser understands that the Stock has
not been registered under the Act, on the ground that the sale provided for in
this Agreement is exempt from the registration requirements of the Act, and that
the Company's reliance on such exemption is predicated on Purchaser's
representations set forth herein.
Purchaser understands that if the Company does not register with the
Securities and Exchange Commission pursuant to Section 12 or 15 of the
Securities Exchange Act of 1934, as amended, or if a registration statement
covering the Stock (or a filing pursuant to the exemption from registration
under Regulation A of the Act) under the Act is not in effect when Purchaser
desires to sell the Stock, Purchaser may be required to hold the Stock for an
indeterminate period. The Purchaser also acknowledges that Purchaser understands
that any sale of the Stock that might be made by Purchaser in reliance upon Rule
144 under the Act may be made only in limited amounts in accordance with the
terms and conditions of that rule and that Purchaser may not be able to sell the
Stock at the time or in the amount Purchaser so desires. Purchaser is familiar
with Rule 144 and understands that the Stock constitutes "restricted securities"
within the meaning of that Rule.
d. Investment Experience. In connection with the investment
representations made herein Purchaser represents that Purchaser is either an
"Accredited Investor", as that term is defined in Rule 501 of Regulation D
promulgated under the Act, or is able to fend for itself in the transactions
contemplated by this Agreement, has such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and risks of its
investment, has the ability to bear the economic risks of its investment and has
been furnished with and has had access to such information as Purchaser has
requested and deems appropriate to its investment decision.
e. Limitations on Disposition. Purchaser agrees that in no event
will Purchaser make a disposition of any of the Stock, unless and until (i)
Purchaser shall have notified the Company of the proposed disposition, and (ii)
Purchaser shall have furnished the Company with an opinion of counsel
satisfactory to the Company to the effect that such disposition will not require
registration of such Stock under the Act or that appropriate action necessary
for compliance with the Act has been taken, or (iii) the Company shall have
waived, expressly and in writing, its rights under clauses (i) and (ii) of this
subparagraph. In addition, prior to any disposition of any of the Stock, the
Company shall require the transferee or assignee to provide in writing
investment representations and such transferee's or assignee's agreement to be
bound by the market stand-off provisions hereof in a form acceptable to the
Company.
The Company shall not be required (i) to transfer on its books any
shares of Stock of the Company which shall have been sold or transferred in
violation of any of the provisions set forth in this Agreement, or (ii) to treat
as owner of such shares or to accord the right to vote as such owner or to pay
dividends to any transferee to whom such shares shall have been so transferred.
Purchaser shall, during the term of this Agreement, exercise all rights and
privileges of a stockholder of the Company with respect to the Stock after the
issuance, and prior to the repurchase, thereof.
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f. Legends. All certificates representing any shares of Stock of
the Company subject to the provisions of this Agreement shall have endorsed
thereon the following legends:
(i) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THESE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION
OR RESALE, AND THEY MAY NOT BE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT FOR SUCH SHARES UNDER THE ACT OR PURSUANT TO RULE 144 UNDER THE ACT OR
AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT
REQUIRED UNDER THE ACT."
(ii) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO THE TERMS AND CONDITIONS OF A CERTAIN STOCK PURCHASE AND VESTING AGREEMENT
BETWEEN THE COMPANY AND THE HOLDER HEREOF WHICH INCLUDES A MARKET STAND-OFF
AGREEMENT, A RIGHT OF REPURCHASE AND A RIGHT OF FIRST REFUSAL ON THE SALE OF THE
SECURITIES. THESE SECURITIES MAY NOT BE SOLD, ASSIGNED, TRANSFERRED, ENCUMBERED,
OR IN ANY MANNER DISPOSED OF EXCEPT IN CONFORMITY WITH THE TERMS OF SUCH
AGREEMENT. COPIES OF THE AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE
SECRETARY OF THE COMPANY."
(iii) Any legend required to be placed thereon by applicable state
laws.
9. Representations and Warranties of Company.
a. Company hereby represents and warrants to Purchaser that it is
duly authorized and empowered to enter into and perform this Agreement; and the
execution and performance of this Agreement by the Company does not and will not
conflict with or violate any contract, agreement, indenture, mortgage,
instrument, writ, judgment, or order of any court, arbiter or governmental or
quasi governmental body to which the Company is a party or by which the Company
is bound.
b. To the best of its knowledge, all business and financial
information that the Company has provided to Purchaser is accurate in all
material respects; provided, however, that Purchaser acknowledges that the
business and financial information provided by the Company to Purchaser includes
certain statements and estimates provided by the Company and its representatives
with respect to the historical, pro forma and anticipated performance of the
Company or that of potential strategic partners. Such statements and estimates
reflect various assumptions by the Company, which may or may not prove to be
accurate, as well as the exercise of a substantial degree of judgement by the
Company as to the scope and presentation of such information.
10. Miscellaneous.
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a. Further Instruments and Actions. The parties agree to execute
such further instruments and to take such further action as may reasonably be
necessary to carry out the intent of this Agreement.
b. Notices. All notices required or permitted hereunder shall be
in writing and shall be deemed effectively given: (i) upon personal delivery to
the party to be notified, (ii) when sent by confirmed facsimile transmission if
sent during normal business hours of the recipient; if not, then on the next
business day, or (iii) for domestic addresses one (1) business day after deposit
with a nationally recognized overnight courier, specifying next day delivery,
with written verification of receipt and for international addresses three (3)
business days after deposit with a nationally recognized overnight courier,
specifying next day delivery, with written verification of receipt. All
communications shall be sent to the party to be notified at the address as set
forth on the signature pages hereof or at such other address as such party may
designate by ten (10) days advance written notice to the other parties hereto.
c. Governing Law, Assignment and Enforcement. This Agreement is
governed by the internal law of California and shall inure to the benefit of the
successors and assigns of the Company and, subject to the restrictions on
transfer herein set forth, be binding upon Purchaser, its successors and
assigns. The prevailing party in any action to enforce this Agreement shall be
entitled to attorneys' fees and costs. The parties agree that damages are not an
adequate remedy for breach hereof and each party shall accordingly be entitled
to specific performance of this Agreement.
d. Entire Agreement; Amendments and Waivers. This Agreement and
the related Amendment, Certificate of Termination and Letter Agreement, among
Purchaser and Company, and all of even date herewith (and any agreements,
exhibits or schedules referenced therein), constitute the entire agreement and
understanding between the parties with respect to the subject matter contained
herein, and there are no promises, representations, conditions, provisions or
terms related thereto other than as set forth in this Agreement and the related
Amendment, Certificate of Termination and Letter Agreement between the Purchaser
and Company all of even date herewith. This Agreement may only be amended with
the written consent of the parties hereto, or their successors or assigns, and
no oral waiver or amendment shall be effective under any circumstances
whatsoever.
e. Cooperation. Purchaser agrees to cooperate affirmatively with
the Company, to the extent reasonably requested by the Company, to enforce
rights and obligations pursuant to this Agreement.
11. California Commissioner of Corporations. THE SALE OF THE
SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH
THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, AND THE ISSUANCE OF
SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION
THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL UNLESS THE SALE OF SECURITIES
IS EXEMPT FROM QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA
CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY
CONDITIONED UNLESS THE SALE IS SO EXEMPT.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
SPINE WAVE, INC.
By: /s/ Xxxx XxXxxxxxx
--------------------------------------------
Xxxx XxXxxxxxx,
President and Chief Executive Officer
Address: 00000 Xx Xxxxxx Xxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
PURCHASER
Protein Polymer Technologies, Inc.
/s/J. Xxxxxx Xxxxxxxx
--------------------------------------------
J. Xxxxxx Xxxxxxxx
President and Chief Executive Officer
Address: 00000 Xxxxxxxx Xxxxxx Xxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
EXHIBIT A
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[AMENDMENT]
EXHIBIT B
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CERTIFICATE OF ACKNOWLEDGEMENT OF TERMINATION
OF VOTING AGREEMENT
The undersigned parties to that certain Voting Agreement dated as
of April 12, 2001, as amended through the date hereof (the "Voting Agreement"),
by and among Spine Wave, Inc., Protein Polymer Technologies, Inc. and Windamere
Venture Partners, LLC, hereby acknowledge and consent to the following:
Pursuant to Sections 5 and 7 of the Voting Agreement,
effective as of the effective date of this Certificate of
Acknowledgement of Termination of Voting Agreement, the Voting Agreement
is hereby terminated in its entirety for all time, is of no further
force and effect and no party thereto shall have any remaining rights or
obligations thereunder.
This Certificate of Acknowledgement of Termination of Voting
Agreement has been executed and is effective as of March __, 2002 and may be
executed in more than one counterpart, each of which shall be deemed an
original, but all of which shall constitute one and the same instrument.
SPINE WAVE, INC.
By:
---------------------------------
Xxxx XxXxxxxxx,
President and Chief Executive
Officer
PROTEIN POLYMER TECHNOLOGIES, INC.
By:
---------------------------------
J. Xxxxxx Xxxxxxxx,
President and Chief Executive
Officer
WINDAMERE VENTURE PARTNERS, LLC
By:
---------------------------------
Its:
---------------------------------
EXHIBIT C
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LETTER AGREEMENT
March 21, 2002
Protein Polymer Technologies, Inc.
00000 Xxxxxxxx Xxxxxx Xxxx
Xxx Xxxxx, XX 00000
Attn: J. Xxxxxx Xxxxxxxx, President and Chief Executive Officer
Re: License Agreement.
Dear Xx. Xxxxxxxx:
This letter agreement (the "Letter Agreement") sets forth our
understanding regarding the treatment of a certain termination provision under
that certain License Agreement dated as of April 12, 2001, as amended, by and
between Spine Wave, Inc. ("Spine Wave") and Protein Polymer Technologies, Inc.
("PPTI"). This Letter Agreement is being entered into in connection with and as
consideration under the Stock Purchase and Vesting Agreement of even date
herewith between Spine Wave and PPTI.
1. Termination of License Agreement. Notwithstanding the provisions of
Section 9.2(b) of the License Agreement, and subject to the limitation set forth
in the following sentence, Spine Wave and PPTI hereby agree that if Spine Wave
has not closed its currently contemplated Series A Preferred Stock Financing on
or before April 12, 2002, PPTI shall not, at any time prior to May 12, 2002,
exercise its right to terminate the License Agreement pursuant to Section 9.2(b)
thereof if and provided that Spine Wave has paid to PPTI all payments due and
payable as of April 1, 2002 under that certain Supply and Services Agreement
dated as of April 12, 2001, as amended through the date hereof.
2. License Agreement. Except as otherwise modified in this Letter
Agreement, the License Agreement and the terms and conditions therein remain
unchanged and in full force and effect.
3. Amendments and Waivers. Any term of this Letter Agreement may be
amended and the observance of any term of this Letter Agreement may be waived
only with the written consent of Spine Wave and PPTI.
4. Counterparts. This Letter Agreement may be executed in two
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
5. Governing Law. This Letter Agreement shall be construed and the
rights of the parties shall be determined in accordance with the substantive
laws of the State of California, without regard to its conflict of laws
principles.
Very truly yours,
SPINE WAVE, INC.
By:
-------------------------------------------
Xxxx XxXxxxxxx,
President and Chief Executive Officer
AGREED AND ACCEPTED:
PROTEIN POLYMER TECHNOLOGIES, INC.
By:
-------------------------------------
J. Xxxxxx Xxxxxxxx,
President and Chief Executive Officer
EXHIBIT D
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ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, Protein Polymer Technologies, Inc. hereby sells,
assigns and transfers unto _____________________________, ______________________
(__) shares of the Common Stock of Spine Wave, Inc., standing in its name on the
books of said corporation represented by Certificate No. herewith and does
hereby irrevocably constitute and appoint __________________ attorney to
transfer said stock on the books of the within-named corporation with full power
of substitution in the premises.
Dated: _________________, _____.
Protein Polymer Technologies, Inc.
_________________________________________________
By:
Its:
This Assignment Separate from Certificate was executed in conjunction
with the terms of a Stock Purchase Agreement between the above assignor and
Spine Wave, Inc. dated March__, 2002.
EXHIBIT E
---------
MILESTONES **
** Material is confidential and has been omitted and filed separately with the
Securities and Exchange Commission.
APPENDIX A
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1. Completion of all Acute Toxicity testing and reports (see Pre-clinical Tests
below)
2. Completion of all Chronic Testing with ninety (90) day report (see
Pre-clinical Tests below)
3. Characterization of the Master Cell Bank for the protein selected for the IDN
4. Characterization of the protein selected for the IDN
5. Characterization of the specified IDN material
6. Qualification of the protein manufacturing process for submission of an
investigational device exemption application for a pilot clinical study of
the IDN with the FDA
7. Successful results, in the Company's reasonable judgment, from the mechanical
testing
Preclinical Tests*
Acute Tests
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Test Article Form Animal Model Follow up
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Cytotoxicity MEM extract In-vitro L929 48 hours
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Sensitization Saline/CSO Guinea pig 22 days
extracts
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Intracutaneous Saline/CSO Rabbit 7 days
reactivity extracts
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Systemic Saline/CSO Mouse 72 hours
toxicity extracts
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Pyrogenicity Saline extract In vitro N/A
LAL Endotoxin
--------------------------------------------------------------------------------
Irritation In-situ cured Rabbit (muscle) 5 days
implant
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Genotoxicity - Saline/DMSO In vitro N/A
Bacterial extracts
reverse mutation
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Genotoxicity Saline/DMSO In vitro N/A
Chromosome extracts
aberration
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Genotoxicity Saline/DMSO In vitro N/A
Micronucleus extracts
test
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Chronic Tests
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Test Article Form Animal Model Follow up
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Subchronic In-situ cured Rabbit (peri- 30 days
Neural toxicity implant sciatic nerve
injection)
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Implantation In-situ cured Sheep 90 day interim
implant intradiscal 1 year total
injection
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Chronic toxicity In-situ cured Rabbit 7 days
implant
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* The tests required are subject to change based on feedback from the FDA.
