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STOCK SUBSCRIPTION AGREEMENT
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By and Between
HEMASURE INC.
and
COBE LABORATORIES, INC.
Dated May 3, 1999
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TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS
1.01. Certain Defined Terms...................................................1
1.02. Other Definitions.......................................................4
1.03. Terms Generally.........................................................5
ARTICLE II
SUBSCRIPTION AND SALE
2.01. Subscription and Sale of the Shares.....................................6
2.02. Firm Share Purchase Price...............................................6
2.03. First Closing...........................................................6
2.04. The Option; Option Purchase Price.......................................6
2.05. The Option Closing......................................................7
2.06. Closing Deliveries by the Company.......................................7
2.07. Closing Deliveries by the Purchaser.....................................8
2.08. Other First Closing Deliveries..........................................9
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.01. Organization, Authority and Qualification of the Company;
Subsidiaries..........................................................9
3.02. Capital Stock of the Company; Ownership of the Shares..................10
3.03. No Conflict............................................................10
3.04. Governmental Consents and Approvals....................................11
3.05. SEC Filings; Financial Statements......................................11
3.06. No Undisclosed Liabilities.............................................11
3.07. Conduct of the Business................................................12
3.08. Litigation.............................................................12
3.09. Compliance with Laws...................................................12
3.10. Material Contracts.....................................................12
3.11. Intellectual Property..................................................13
3.12. Year 2000 Compliance...................................................14
3.13. Title to Properties; Absence of Encumbrances...........................14
3.14. Employee Benefit Matters; Labor Matters................................14
3.15. Brokers................................................................15
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Section Page
3.16. Limitations on Representations and Warranties..........................15
3.17. Disclosure Schedule....................................................16
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
4.01. Organization and Authority of the Purchaser............................16
4.02. No Conflict............................................................16
4.03. Governmental Consents and Approvals....................................17
4.04. Investment Purpose.....................................................17
4.05. Status of Shares; Limitations on Transfer and Other Restrictions.......17
4.06. Sophistication and Financial Condition of Purchaser....................17
4.07. Year 2000 Compliance...................................................17
ARTICLE V
ADDITIONAL AGREEMENTS
5.01. Actions Regarding Market...............................................18
5.02. Confidentiality........................................................18
5.03. Public Announcements...................................................18
5.04. Capital Increase.......................................................18
5.05. Further Action.........................................................19
ARTICLE VI
INDEMNIFICATION
6.01. Survival of Representations and Warranties.............................19
6.02. Indemnification........................................................19
6.03. Limits on Indemnification..............................................21
ARTICLE VII
GENERAL PROVISIONS
7.01. Waiver.................................................................21
7.02. Expenses...............................................................22
7.03. Notices................................................................22
7.04. Headings...............................................................23
7.05. Severability...........................................................23
7.06. Entire Agreement.......................................................23
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Section Page
7.07. Assignment.............................................................24
7.08. No Third Party Beneficiaries...........................................24
7.09. Amendment..............................................................24
7.10. Governing Law..........................................................24
7.11. Arbitration............................................................24
7.12. Counterparts...........................................................25
7.13. Specific Performance...................................................25
EXHIBITS
2.06(d) FORM OF OPINION OF THE COMPANY'S COUNSEL
2.07(c)(i) FORM OF OPINION OF INTERNAL COUNSEL OF THE PURCHASER
2.07(c)(ii) FORM OF OPINION OF THE PURCHASER'S OUTSIDE COUNSEL
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STOCK SUBSCRIPTION AGREEMENT, dated May 3, 1999, by and
between HEMASURE INC., a Delaware corporation (the "Company"), and COBE
LABORATORIES, INC., a Colorado corporation (the "Purchaser").
W I T N E S S E T H:
WHEREAS, the Company wishes to issue and sell to the
Purchaser, and the Purchaser wishes to purchase from the Company, up to
$12,000,000 of common stock, par value $.01 per share, of the Company ("Common
Stock"), upon the terms and subject to the conditions set forth herein. All
shares of Common Stock which may be purchased pursuant to this Agreement are
collectively referred to as the "Shares"; and
WHEREAS, simultaneously with the execution of this Agreement,
the parties hereto are executing the Stockholder's Agreement (as defined below)
and the Distribution Agreement (as defined below);
NOW, THEREFORE, in consideration of the premises and the
mutual agreements and covenants hereinafter set forth, the Purchaser and the
Company hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this
Agreement, the following terms shall have the following meanings:
"Action" means any claim, action, suit, arbitration, inquiry,
proceeding or investigation by or before any Governmental Authority.
"Affiliate" means, with respect to any specified Person, any
other Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person.
"Agreement" or "this Agreement" means this Stock Subscription
Agreement, dated May 3, 1999, by and between the Company and the Purchaser
(including the Exhibits hereto and the Disclosure Schedule) and all amendments
hereto made in accordance with the provisions of Section 7.09.
"Alliance Agreements" means this Agreement, the Stockholder's
Agreement and the Distribution Agreement.
"Business" means the business of the development and
manufacture of leukoreduction products.
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"Business Day" means any day that is not a Saturday, a Sunday
or other day on which banks are required or authorized by law to be closed in
The City of New York.
"Code" means the Internal Revenue Code of 1986, as amended
through the date hereof.
"Company Systems" shall mean all computer, hardware, software,
systems and equipment (including embedded microcontrollers in noncomputer
equipment) embedded within or required to operate the current products of the
Company (i.e., currently distributed, currently supported or subject to valid
agreements requiring the Company to provide support, maintenance, enhancement or
bug fixes), and/or material to or necessary for the Company to carry on the
Business as currently conducted.
"control" (including the terms "controlled by" and "under
common control with"), with respect to the relationship between or among two or
more Persons, means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the affairs or
management of a Person, whether through the ownership of voting securities, as
trustee or executor, by contract or otherwise, including, without limitation,
the ownership, directly or indirectly, of securities having the power to elect a
majority of the board of directors or similar body governing the affairs of such
Person.
"Disclosure Schedule" means the Disclosure Schedule delivered
in connection with this Agreement, dated as of the date hereof, and incorporated
herein by reference.
"Distribution Agreement" means the Amended and Restated
Distribution Agreement, dated the date hereof, between the Company and the
Purchaser.
"Encumbrance" means any security interest, pledge, mortgage,
lien (including, without limitation, environmental and tax liens), charge,
encumbrance, adverse claim, preferential arrangement or restriction of any kind,
including, without limitation, any restriction on the use, voting, transfer,
receipt of income or other exercise of any attributes of ownership, but
excluding Permitted Encumbrances.
"Governmental Authority" means any United States federal,
state, local, supranational or any foreign government, governmental, regulatory
or administrative authority, agency or commission or any court, tribunal, or
judicial or arbitral body.
"Governmental Order" means any order, writ, judgment,
injunction, decree, stipulation, determination or award entered by or with any
Governmental Authority.
"Intellectual Property" means (i) United States, international
and foreign patents, patent applications and statutory invention registrations,
(ii) trademarks, service marks, trade dress, logos, and other source
identifiers, including registrations and applications for registration
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thereof, (iii) copyrights, including registrations and applications for
registration thereof, (iv) confidential and proprietary information, including
trade secrets and know-how and (v) material computer software developed by or on
behalf of the Company, or manufactured, distributed, sold, licensed or marketed
by the Company.
"Law" means any federal, state, local or foreign statute, law,
ordinance, regulation, rule, code, order, other requirement or rule of law.
"Leased Real Property" means the real property leased by the
Company, as tenant, together with, to the extent leased by the Company, all
buildings and other structures, facilities or improvements currently or
hereafter located thereon, all fixtures, systems, equipment and items of
personal property of the Company attached or appurtenant thereto, and all
easements, licenses, rights and appurtenances relating to the foregoing.
"Liabilities" means any and all debts, liabilities and
obligations, whether accrued or fixed, absolute or contingent, matured or
unmatured or determined or determinable, including, without limitation, those
arising under any Law (including, without limitation, any Environmental Law),
Action or Governmental Order and those arising under any contract, agreement,
arrangement, commitment or undertaking.
"Material Adverse Effect" means any circumstance, change in,
or effect on the Business, the Company or any Subsidiary that, individually or
in the aggregate with any other circumstances, changes in, or effects on, the
Business, the Company or any Subsidiary is, or would be reasonably expected to
be, materially adverse to the Business, financial condition or results of
operations of the Company and the Subsidiaries, taken as a whole.
"Permitted Encumbrances" means such of the following as to
which no enforcement, collection, execution, levy or foreclosure proceeding
shall have been commenced: (a) liens for taxes, assessments and governmental
charges or levies not yet due and payable which are not in excess of the amount
accrued therefor on the Company Balance Sheet; (b) Encumbrances imposed by law,
such as materialmen's, mechanics', carriers', workmen's and repairmen's liens
and other similar liens arising in the ordinary course of business securing
obligations that (i) are not overdue for a period of more than 30 days and (ii)
are not in excess of $25,000 in the case of a single property or $100,000 in the
aggregate at any time; (c) pledges or deposits to secure obligations under
workers' compensation laws or similar legislation or to secure public or
statutory obligations; and (d) minor survey exceptions, reciprocal easement
agreements and other customary encumbrances on title to real property that (i)
were not incurred in connection with any indebtedness, (ii) do not render title
to the property encumbered thereby unmarketable and (iii) do not, individually
or in the aggregate, materially adversely affect the value or use of such
property for its current and anticipated purposes.
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"Person" means any individual, partnership, firm, corporation,
association, trust, unincorporated organization or other entity, as well as any
syndicate or group that would be deemed to be a person under Section 13(d)(3) of
the Exchange Act.
"Purchase Price Bank Account" means a bank account in the
United States to be designated by the Company in a written notice to the
Purchaser at least five Business Days before each Closing.
"Purchaser Systems" shall mean all computer, hardware,
software, systems and equipment (including embedded microcontrollers in
noncomputer equipment) embedded within or required to operate the current
products of the Purchaser (i.e., currently distributed, currently supported or
subject to valid agreements requiring the Purchaser to provide support,
maintenance, enhancement or bug fixes), and/or material to or necessary for the
Purchaser to carry on its business as currently conducted.
"SEC" means the United States Securities and Exchange
Commission.
"Stockholder's Agreement" means the Stockholder's Agreement,
dated the date hereof, by and between the Company and the Purchaser.
"Subsidiaries" means HemaPharm Inc., a Delaware corporation,
HemaSure A/S, a company organized under the laws of the Kingdom of Denmark, and
HemaSure A/B, a company organized under the laws of the Kingdom of Sweden.
"Vendors" means any and all vendors who are unaffiliated with
the Company or the Purchaser, as the case may be, who supply raw materials,
components, spare parts, supplies, goods, merchandise or services to the Company
or the Purchaser, as the case may be.
"Year 2000 Compliant" means that the Company Systems or
Purchaser Systems, as the case may be, provide uninterrupted millennium
functionality in that the Company Systems or Purchaser Systems, as the case may
be, will record, store, process and present calendar dates falling on or after
January 1, 2000, in the same manner and with the same functionality as the
Company Systems or Purchaser Systems, as the case may be, record, store, process
and present calendar dates falling on or before December 31, 1999.
SECTION 1.02. Other Definitions. The meanings of the following
terms can be found in the Sections of this Agreement indicated below:
Term Section
Capital Increase.....................................Section 2.04(b)
Closing..............................................Section 2.05
Closing Date.........................................Section 2.05
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COBE.................................................Section 3.01(a)
Common Stock.........................................Recitals
Company..............................................Preamble
Company Balance Sheet................................Section 3.05(b)
Company Benefit Plans................................Section 3.14
Company Loss.........................................Section 6.02(b)
Company SEC Reports..................................Section 3.05(a)
Confidentiality Agreement............................Section 5.02
ERISA................................................Section 3.14(a)
Exchange Act.........................................Section 3.04
Exercise Date........................................Section 2.04(a)
FDA..................................................Section 3.09(a)
Firm Shares..........................................Section 2.01
First Closing........................................Section 2.03
First Closing Date...................................Section 2.03
First Purchase Price.................................Section 2.02
Indemnified Party....................................Section 6.02(c)
Indemnifying Party...................................Section 6.02(c)
IRS..................................................Section 3.14(d)
Licensed Intellectual Property.......................Section 3.11(a)
Loss.................................................Section 6.02(b)
Material Contracts...................................Section 3.10(a)
Multiemployer Plan...................................Section 3.14(b)
Multiple Employer Plan...............................Section 3.14(b)
Option...............................................Section 2.04(a)
Option Closing.......................................Section 2.05
Option Closing Date..................................Section 2.05
Option Purchase Price................................Section 2.04(a)
Option Shares........................................Section 2.04(a)
Owned Intellectual Property..........................Section 3.11(a)
Per Share Option Purchase Price......................Section 2.04(a)
Preferred Stock......................................Section 3.02
Purchase Price.......................................Section 2.04(a)
Purchaser............................................Preamble
Purchaser Loss.......................................Section 6.02(a)
Regulated Products...................................Section 3.09(a)
Securities Act.......................................Section 3.05(a)
Sepracor.............................................Section 2.08
Shares...............................................Recitals
Third Party Claims...................................Section 6.02(c)
SECTION 1.03. Terms Generally. References in this Agreement to
articles, sections, paragraphs, clauses, schedules and exhibits are to articles,
sections, paragraphs, clauses,
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schedules and exhibits in or to this Agreement unless otherwise indicated.
Whenever the context may require, any pronoun includes the corresponding
masculine, feminine and neuter forms. Any term defined by reference to any
agreement, instrument or document has the meaning assigned to it whether or not
such agreement, instrument or document is in effect. The words "include",
"includes" and "including" are deemed to be followed by the phrase "without
limitation". Unless the context otherwise requires, any agreement, instrument or
other document defined or referred to herein refers to such agreement,
instrument or other document as from time to time amended, supplemented or
otherwise modified from time to time. Unless the context otherwise requires,
references herein to any Person include its successors and assigns. The words
"shall" and "will" have the same meaning and effect.
ARTICLE II
SUBSCRIPTION AND SALE
SECTION 2.01. Subscription and Sale of the Shares. On the date
hereof, the Company shall sell to the Purchaser, and the Purchaser shall
purchase from the Company, 4,500,000 shares of Common Stock (the "Firm Shares").
SECTION 2.02. Firm Share Purchase Price. The aggregate
purchase price to be paid by the Purchaser to the Company for the Firm Shares is
$9,000,000, payable at the First Closing (as defined below) by wire transfer in
immediately available funds (the "First Purchase Price").
SECTION 2.03. First Closing. The subscription and purchase of
the Firm Shares contemplated by this Agreement is taking place at a closing (the
"First Closing") being held at the offices of Shearman & Sterling, 000 Xxxxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx on the date hereof ("First Closing Date").
SECTION 2.04. The Option; Option Purchase Price. (a) Subject
to Section 2.04(b) below, the Company hereby grants to the Purchaser the right
and option (the "Option") to purchase, at the election of the Purchaser,
$3,000,000 (the "Option Purchase Price") in aggregate value of Common Stock
("Option Shares") for a price per share equal to the Per Share Option Purchase
Price. The Option may be exercised by the Purchaser on one occasion at any time
during the period commencing 90 days after the First Closing and expiring on the
first year anniversary date of the First Closing, and the Option must be
exercised in its entirety, if at all. The "Per Share Option Purchase Price"
shall be equal to the average closing price of each share of the Common Stock as
quoted on the OTC bulletin board during the 30 trading days immediately prior to
the date (the "Exercise Date") the Purchaser shall provide irrevocable written
notice to the Company of its intent and agreement to exercise the Option, which
notice shall include the Purchaser's calculation of the number of Option Shares
the Purchaser elects to purchase and the Purchaser's calculation of the Per
Share Option Purchase Price. The Option Purchase Price shall
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be payable at the Option Closing (as defined below), if any, by wire transfer in
immediately available funds. Each of the First Purchase Price and the Option
Purchase Price is individually referred to as a "Purchase Price." For so long as
the Option shall remain unexercised without the exercise period of the Option
having expired, the Company shall reserve from time to time, as is reasonably
practicable, such number of shares of its authorized but unissued Common Stock
as shall enable the Company to issue Option Shares to the Purchaser.
(b) Notwithstanding anything herein to the contrary, the
Option shall not be deemed granted, nor may it be exercised, until such time as
the stockholders of the Company duly approve an amendment to the certificate of
incorporation of the Company increasing the number of authorized shares of
Common Stock from 20,000,000 shares to 35,000,000 shares (the "Capital
Increase"), and such amended certificate of incorporation is filed with the
Secretary of State of Delaware.
SECTION 2.05. The Option Closing. The purchase of the Option
Shares pursuant to the Option shall take place at a closing (the "Option
Closing" and each of the First Closing and the Option Closing is referred to
individually as a "Closing") to be held at the offices of Shearman & Sterling,
000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx at 10:00 A.M. New York time on the
tenth Business Day after the Exercise Date or at such other place or at such
other time or on such other date as the Company and the Purchaser may mutually
agree upon in writing (the day on which the Option Closing takes place being the
"Option Closing Date" and each of the First Closing Date and the Option Closing
Date being referred to individually as a "Closing Date").
SECTION 2.06. Closing Deliveries by the Company. At each
Closing, the Company shall deliver or cause to be delivered to the Purchaser:
(a) a newly issued stock certificate, issued to the Purchaser
and evidencing the Shares being purchased at such Closing;
(b) a receipt for the applicable Purchase Price;
(c) for the First Closing only, a true and complete copy,
certified by the Secretary or an Assistant Secretary of the Company, of
the resolutions duly and validly adopted by the board of directors of
the Company evidencing (i) its authorization of the execution and
delivery of the Alliance Agreements and the consummation of the
transactions contemplated hereby and thereby, including the issuance of
the Firm Shares and the Option Shares (upon exercise of the Option),
(ii) the expansion of the board of directors of the Company from five
to seven directors and the election of the individuals designated by
the Purchaser in writing to the board of directors (which designees
shall be to the reasonable satisfaction of the Company), each to serve
until the next annual meeting of the Company's stockholders and (iii)
the appointment of at least one of the Purchaser's designees to each
committee of the board of directors;
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(d) from Battle Xxxxxx LLP, a legal opinion, addressed to the
Purchaser and dated such Closing Date, substantially in the form of
Exhibit 2.06(d) (except that with respect to the Option Closing Battle
Xxxxxx LLP will only be required to deliver the opinion in Paragraph 6
of Exhibit 2.06(b));
(e) for the First Closing only, a copy of (i) the certificate
of incorporation, as amended, of the Company, certified by the
Secretary of State of Delaware, as of a date not earlier than five
Business Days prior to the applicable Closing Date and accompanied by a
certificate of the Secretary or Assistant Secretary of the Company,
dated as of the applicable Closing Date, stating that no amendments
have been made to such certificate of incorporation since such date,
and (ii) the by-laws of the Company, certified by the Secretary or
Assistant Secretary of the Company;
(f) for the First Closing only, good standing certificates for
the Company from the Secretary of State of Delaware dated as of a date
not earlier than five Business Days prior to such Closing Date; and
(g) for the First Closing only, a certificate of the registrar
and transfer agent of the Company, certifying the number of outstanding
shares of Common Stock of the Company as of a date not more than two
Business Days prior to such Closing Date.
SECTION 2.07. Closing Deliveries by the Purchaser. At each
Closing, the Purchaser shall deliver to the Company:
(a) the applicable Purchase Price to the Purchase Price Bank
Account;
(b) a receipt acknowledging delivery of the stock certificate
specified in Section 2.06(a);
(c) for the First Closing only, a legal opinion addressed to
the Company and dated such Closing Date from (i) internal counsel for
the Purchaser, substantially in the form of Exhibit 2.07(c)(i) hereto,
and (ii) Shearman & Sterling, as outside counsel to the Purchaser,
substantially in the form of Exhibit 2.07(c)(ii) hereto;
(d) for the First Closing only, a true and complete copy,
certified by the Secretary or Assistant Secretary of the Purchaser, of
the resolutions duly and validly adopted by the board of directors of
the Purchaser evidencing its authorization of the execution and
delivery of the Alliance Agreements and the consummation of the
transactions contemplated hereby and thereby;
(e) for the First Closing only, a copy of (i) the certificate
of incorporation, as amended, of the Purchaser, certified by the
Secretary of State of Colorado, as of a date not earlier than five
Business Days prior to the applicable Closing Date and accompanied
9
by a certificate of the Secretary or Assistant Secretary of the
Purchaser, dated as of the applicable Closing Date, stating that no
amendments have been made to such certificate of incorporation since
such date, and (ii) the by-laws of the Purchaser, certified by the
Secretary or Assistant Secretary of the Purchaser; and
(f) for the First Closing only, a good standing certificate
for the Purchaser from the Secretary of State of Colorado as of a date
not earlier than five Business Days prior to such Closing Date.
SECTION 2.08. Other First Closing Deliveries. At the First
Closing, the Company shall cause to be delivered to the Purchaser a side letter
agreement from Sepracor, Inc., a Delaware company ("Sepracor"), addressed to the
Company to the effect that Sepracor will vote its shares of Common Stock
beneficially owned by it in favor of the Capital Increase.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As an inducement to the Purchaser to enter into this
Agreement, the Company hereby represents and warrants to the Purchaser as
follows:
SECTION 3.01. Organization, Authority and Qualification of the
Company; Subsidiaries. (a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and the
Company has all necessary corporate power and authority to enter into each of
this Agreement and the other Alliance Agreements, to carry out its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. The Company is duly qualified to do business and is in good
standing in each jurisdiction in which the properties owned or leased by it or
the operation of its Business makes such qualification necessary, except to the
extent that the failure to be so qualified would not, individually or in the
aggregate, have a Material Adverse Effect. The execution and delivery of this
Agreement and the other Alliance Agreements by the Company, the performance by
the Company of its obligations hereunder and thereunder and the consummation by
the Company of the transactions contemplated hereby and thereby have been duly
authorized by all requisite action on the part of the Company other than, with
respect to the Capital Increase, the approval of the Capital Increase by the
stockholders of the Company and the filing with the Secretary of State of
Delaware of an amended certificate of incorporation of the Company relating to
the Capital Increase. Each of the Alliance Agreements has been duly executed and
delivered by the Company, and (assuming due authorization, execution and
delivery by the Purchaser and COBE BCT, Inc. ("COBE"), as the case may be) each
of the Alliance Agreements constitutes a legal, valid and binding obligation of
the Company enforceable against the Company in accordance with its terms, except
as may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights and
general
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principals of equity. The Company is not in violation of any of the provisions
of its certificate of incorporation or by-laws.
(b) The Subsidiaries are the only Persons in which the
Company beneficially owns a 10% or greater equity interest (directly or
indirectly), except as disclosed in Section 3.01(b) of the Disclosure Schedule,
no Subsidiary has any material assets, Liabilities or business activities, and
no Subsidiary, currently or at any time in the past, has owned or leased any
real property.
SECTION 3.02. Capital Stock of the Company; Ownership of the
Shares. As of the date hereof and without giving effect to the consummation of
the transactions contemplated hereby, the authorized capital stock of the
Company consists of 20,000,000 shares of Common Stock and 1,000 shares of
preferred stock, par value $.01 per share, of the Company ("Preferred Stock").
As of the date hereof, (a) (i) 10,421,071 shares of Common Stock are issued and
outstanding, all of which are validly issued, fully paid and nonassessable, (ii)
no shares of Common Stock are held in the treasury of the Company, and (iii)
6,788,028 shares of Common Stock are reserved for issuance pursuant to the
exercise of any rights to purchase, or options, warrants or other securities
convertible into or exchangeable for, Common Stock, including the Option
(assuming a $2.00 Per Share Option Purchase Price), (b) no shares of Preferred
Stock have been issued and are outstanding and (c) 219,860 shares of Common
Stock are authorized for issuance pursuant to the Company Benefit Plans. None of
the issued and outstanding shares of Common Stock was issued in violation of any
preemptive rights. Except for the Company Benefit Plans and the warrants
described above, there are no options, warrants, convertible securities or other
rights, agreements, arrangements or commitments relating to the capital stock of
the Company or obligating the Company to issue or sell any shares of capital
stock of, or any other equity interest in, the Company. There are no outstanding
contractual obligations of the Company to repurchase, redeem or otherwise
acquire any shares of Common Stock or to provide funds to, or make any
investment (in the form of a loan, capital contribution or otherwise) in, any
other Person. Upon consummation of the First Closing as contemplated hereby,
including receipt by the Company of the First Purchase Price, the Firm Shares
owned by Purchaser will be fully paid and nonassessable. Upon consummation of
the Option Closing as contemplated hereby, including receipt by the Company of
the Option Purchase Price, the Option Shares owned by the Purchaser will be
fully paid and nonassessable.
SECTION 3.03. No Conflict. The execution, delivery and
performance of the Alliance Agreements by the Company do not and will not (a)
violate, conflict with or result in the breach of any provision of the charter
or by-laws of the Company, (b) conflict with or violate any Law or Governmental
Order applicable to the Company or any of its assets, properties or businesses,
including, without limitation, the Business, or (c) except as disclosed in
Section 3.03 of the Disclosure Schedule, conflict with, result in any breach of,
constitute a default (or event which with the giving of notice or lapse of time,
or both, would become a default) under, require any consent under, or give to
others any rights of termination, amendment, acceleration, suspension,
revocation or cancellation of, or result in the creation of any Encumbrance on
any of
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the assets or properties of the Company pursuant to, any note, bond, mortgage or
indenture, contract, agreement, lease, sublease, license, permit, franchise or
other instrument, obligation or arrangement to which the Company is a party or
by which any of its assets or properties is bound or affected, except, with
respect to clauses (b) and (c), as would not, individually or in the aggregate,
have a Material Adverse Effect.
SECTION 3.04. Governmental Consents and Approvals. The
execution, delivery and performance of the Alliance Agreements by the Company do
not and will not require any consent, approval, authorization or other order of,
action by, filing with or notification to any Governmental Authority, except for
the applicable requirements, if any, of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and except as disclosed in Section 3.04 of the
Disclosure Schedule.
SECTION 3.05. SEC Filings; Financial Statements. (a) Except as
set forth in Section 3.10(a) of the Disclosure Schedule, the Company has filed
all forms, reports and documents required to be filed by it with the SEC since
January 1, 1998 (collectively, the "Company SEC Reports"). As of the respective
dates on which they were filed, (i) the Company SEC Reports complied in all
material respects with the requirements of the Securities Act of 1933, as
amended (together with the rules and regulations promulgated thereunder, the
"Securities Act"), and the Exchange Act, as the case may be, and (ii) none of
the Company SEC Reports contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading.
(b) Each of the consolidated financial statements (including,
in each case, any notes thereto) contained in the Company SEC Reports was
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods indicated (except as may be indicated
in the notes thereto or, in the case of unaudited statements, as permitted by
Form 10-Q and Regulation S-X of the SEC), and each presented fairly, in all
material respects, the consolidated financial position, results of operations
and cash flows of the Company as at the respective dates thereof and for the
respective periods indicated therein, except as otherwise noted therein
(subject, in the case of unaudited statements, to normal and recurring year-end
adjustments that could not be reasonably expected to, individually or in the
aggregate, have a Material Adverse Effect). The balance sheet of the Company
contained in the Company SEC Reports as of December 31, 1998 is hereinafter
referred to as the "Company Balance Sheet."
(c) The Company has no current intention of filing with the
SEC any amendments or modifications on Exchange Act Form 10K-A and is not
currently obligated to file any report on Exchange Act Form 8-K (except as may
be required with respect to the transactions contemplated hereby), pursuant to
the Securities Act or the Exchange Act.
SECTION 3.06. No Undisclosed Liabilities. There are no
Liabilities of the Company which would be required to be reflected on a balance
sheet, or the notes thereto,
12
prepared in accordance with generally accepted accounting principles, other than
Liabilities (i) reflected or reserved against on the Company Balance Sheet, (ii)
disclosed in Section 3.06 of the Disclosure Schedule or (iii) incurred since the
date of the Company Balance Sheet in the ordinary course of the business,
consistent with the past practices, of the Company and which are not reasonably
likely, individually or in the aggregate, to have a Material Adverse Effect.
SECTION 3.07. Conduct of the Business. Since December 31,
1998, except as contemplated by, or disclosed pursuant to, this Agreement or
disclosed in any SEC Report filed after December 31, 1998, the Company has
conducted the Business only in the ordinary course and in a manner consistent
with past practices.
SECTION 3.08. Litigation. Except as disclosed in Section 3.08
of the Disclosure Schedule or as disclosed in the SEC Reports filed prior to the
date of this Agreement, there are no Actions by or against the Company or any
Affiliate thereof (and relating to the Business or the Company), or affecting
any of the assets of the Company, pending before any Governmental Authority or,
to the knowledge of the Company threatened to be brought by or before any
Governmental Authority. Except as disclosed in Section 3.08 of the Disclosure
Schedule, neither the Company nor any of the assets of the Company is subject to
any Governmental Order (nor, to the knowledge of the Company, are there any such
Governmental Orders threatened to be imposed by any Governmental Authority)
which has or has had, individually or in the aggregate, a Material Adverse
Effect.
SECTION 3.09. Compliance with Laws. Except as disclosed in
Section 3.09 of the Disclosure Schedule, the Company is not in default or
violation of any Law or Governmental Order (including, but not limited to, those
of the Food and Drug Administration (the "FDA") or any nongovernmental
self-regulatory agency and including environmental laws or regulations), except
for such defaults or violations that would not, individually or in the
aggregate, have a Material Adverse Effect. The Company has timely filed or
otherwise provided all registrations, reports, data, and other information and
applications with respect to its medical device, pharmaceutical, consumer,
health care and other governmentally regulated products (the "Regulated
Products") required to be filed with or otherwise provided to the FDA or any
Governmental Authority with jurisdiction over the manufacture, use or sale of
the Regulated Products, and all regulatory licenses or approvals in respect
thereof are in full force and effect, except where the failure to file timely
such registrations, reports, data, information and applications or the failure
to have such licenses and approvals in full force and effect would not,
individually or in the aggregate, have a Material Adverse Effect.
SECTION 3.10. Material Contracts. (a) Except as set forth in
Section 3.10(a) of the Disclosure Schedule, other than as filed as Exhibits to
the SEC Reports, there are no contracts, agreements, leases, licenses or
commitments to which the Company is a party that are material to the Company
("Material Contracts").
13
(b) Except as disclosed in Section 3.10(b) of the Disclosure
Schedule, each Material Contract is valid and binding on the Company and is in
full force and effect. The Company is not in material breach of, or default
under, any Material Contract.
(c) Except as disclosed in Section 3.10(c) of the Disclosure
Schedule, to the knowledge of the Company, no other party to any Material
Contract is in breach thereof or default thereunder.
SECTION 3.11. Intellectual Property. (a) Section 3.11(a) of
the Disclosure Schedule sets forth a true and complete list of all (i) material
patents and patent applications and other material Intellectual Property, in
each case owned by the Company ("Owned Intellectual Property"), and (ii)
licenses of Intellectual Property to the Company or by the Company to a third
party, in each case that are material to the Business ("Licensed Intellectual
Property"), other than (A) any end-user operating system obtained with the
purchase or license of equipment and (B) any end-user application software, in
each case, that is commonly available.
(b) The Company is the exclusive owner of the entire and
unencumbered right, title and interest in and to each item of Owned Intellectual
Property.
(c) The Owned Intellectual Property of the Company is
subsisting and has not been adjudged invalid or unenforceable in whole or part.
(d) Except as disclosed in Section 3.11(d) of the Disclosure
Schedule, no claims have been asserted, or are pending or, to the knowledge of
the Company, threatened against the Company (i) based upon or challenging or
seeking to deny or restrict the use by the Company of any of the Owned
Intellectual Property or Licensed Intellectual Property, (ii) alleging that any
services provided by, processes used by or products manufactured or sold by the
Company or that the use of Owned Intellectual Property or Licensed Intellectual
Property in the ordinary course of business of the Company infringes upon or
misappropriates any Intellectual Property right of any third party or (iii)
alleging that any Intellectual Property licensed pursuant to the Licensed
Intellectual Property infringes upon any Intellectual Property right of any
third party or is being licensed or sublicensed in conflict with the terms of
any license or other agreement.
(e) Except as disclosed in Section 3.11(e) of the Disclosure
Schedule, the Company has not granted any license or other right to any third
party with respect to the Owned Intellectual Property or Licensed Intellectual
Property, except to the customers of the Company pursuant to written license
agreements entered into in the ordinary course of business.
(f) To the knowledge of the Company (i) there has been no
misappropriation of any material trade secrets or other material confidential
Intellectual Property of the Company by any person, (ii) neither the Company nor
any employee, independent contractor or agent of the Company has misappropriated
any trade secrets or software of any other person in the course of such
performance as an employee, independent contractor or agent, and (iii) no
employee,
14
independent contractor or agent of the Company is in default or breach of any
term of any employment agreement, nondisclosure agreement,
assignment-of-invention agreement or similar agreement or contract relating in
any way to the protection, ownership, development, use or transfer of
Intellectual Property.
SECTION 3.12. Year 2000 Compliance. The Company has (i)
undertaken an assessment of those Company Systems that could be adversely
affected by a failure to be Year 2000 Compliant and (ii) developed a plan and
time line for rendering such Company Systems Year 2000 Compliant. The Company
has made available for review to the Purchaser copies of all material documents
related to such assessment and plan implementation efforts, including
communications to and from customers and material Vendors and suppliers and all
plans, time lines and cost estimates for rendering the Company Systems Year 2000
Compliant. Based on such review and assessment, all Company Systems are Year
2000 Compliant or will be Year 2000 Compliant as required to avoid having a
Material Adverse Effect.
SECTION 3.13. Title to Properties; Absence of Encumbrances.
(a) Other than the leaseholds created under the Leased Real Property identified
in Section 3.13(a) of the Disclosure Schedule, the Company has no ownership or
leasehold interest in any real property.
(b) The Company has good and valid title to, or, in the case
of leased properties and assets, valid leasehold interests in, all of the
tangible properties and assets, real, personal and mixed, used or held for use
in, or which are necessary to conduct, the Business as currently conducted, free
and clear of any Encumbrances except for Permitted Encumbrances.
SECTION 3.14. Employee Benefit Matters; Labor Matters. (a) For
purposes of this Agreement, "Company Benefit Plans" means (i) all employee
benefit plans (as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) and all bonus, stock option, stock
purchase, restricted stock, incentive, deferred compensation, retiree medical or
life insurance, supplemental retirement, severance or other benefit plans,
programs or arrangements, and all employment, termination, severance or other
contracts or agreements, whether legally enforceable or not, to which the
Company is a party, with respect to which the Company has any obligation or
which are maintained, contributed to or sponsored by the Company for the benefit
of any current or former employee, officer or director of the Company, (ii) each
employee benefit plan for which the Company could incur liability under Section
4069 of ERISA in the event such plan has been or was to be terminated, (iii) any
plan in respect of which the Company could incur liability under Section 4212(c)
of ERISA and (iv) any contracts or arrangements between the Company or any of
its Affiliates and any employee of the Company including, without limitation,
any contracts or arrangements relating to a sale of the Company.
(b) Except for the Company Benefit Plans listed in the
Disclosure Schedule, none of the Company Benefit Plans provides for the payment
of separation, severance, termination or similar-type benefits to any person or
obligates the Company to pay separation,
15
severance, termination or similar-type benefits solely or partially as a result
of any transaction contemplated by this Agreement and the other Alliance
Agreements.
(c) Each Company Benefit Plan is now and always has been
operated in accordance with its terms and the requirements of all applicable
Laws, including, without limitation, ERISA and the Code, except where such
failure would not, individually or in the aggregate, have a Material Adverse
Effect. The Company has performed all obligations required to be performed by it
under, is not in any respect in default under or in violation of, and has no
knowledge of any default or violation by any party to, any Company Benefit Plan,
except where such failure to perform obligations, default or violation would
not, individually or in the aggregate, have a Material Adverse Effect. No
action, claim or proceeding is pending or, to the knowledge of the Company,
threatened with respect to any Company Benefit Plan (other than claims for
benefits in the ordinary course) and, to the knowledge of the Company, no fact
or event exists that could give rise to any material action, claim or
proceeding.
(d) Each Company Benefit Plan that is intended to be qualified
under Section 401(a) of the Code has received a favorable determination letter
from the Internal Revenue Service ("IRS") and each trust established in
connection with any Company Benefit Plan which is intended to be exempt from
federal income taxation under Section 501(a) of the Code has received a
determination letter from the IRS that it is so exempt.
(e) The Company has not incurred any Liability under, arising
out of or by operation of Title IV of ERISA (other than liability for premiums
to the Pension Benefit Guaranty Corporation arising in the ordinary course),
including, without limitation, any Liability in connection with (i) the
termination or reorganization of any employee benefit plan subject to Title IV
of ERISA or (ii) the withdrawal from any Multiemployer Plan or Multiple Employer
Plan, and no fact or event exists which could give rise to any such Liability.
SECTION 3.15. Brokers. No broker, finder or investment banker
is entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Company.
SECTION 3.16. Limitations on Representations and Warranties.
Except for the representations and warranties expressly contained in this
Agreement and the other Alliance Agreements, neither the Company nor any other
person or entity makes any representation or warranty to the Purchaser, express
or implied, and the Company hereby disclaims any such representation or
warranty, whether by the Company or any of its agents, brokers or
representatives or any other person or entity, notwithstanding the delivery or
disclosure to the Purchaser or any of its officers, directors, employees, agents
or representatives or any other person or entity of any document or other
information by the Company or any of its agents, brokers or representatives or
any other person or entity. In addition, if, to the Purchaser's actual
knowledge, any of the representations and warranties set forth in this Agreement
are not true as
16
of any Closing, and the Purchaser elects nonetheless to close, the Purchase
shall be deemed to have waived any claim for breach of such representation and
warranty.
SECTION 3.17. Disclosure Schedule. Any event, fact or
circumstance described in any section of the Disclosure Schedule shall be deemed
a disclosure for purposes of all other portions of the Disclosure Schedule,
provided the relevance of the disclosure to such other portions can be
reasonably discerned from the applicable section of the Disclosure Schedule.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
As an inducement to the Company to enter into this Agreement,
the Purchaser hereby represents and warrants to the Company as follows:
SECTION 4.01. Organization and Authority of the Purchaser. The
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of the State of Colorado. The Purchaser has all necessary
corporate power and authority to enter into this Agreement and the other
Alliance Agreements to which it is a party, to carry out its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement and the other Alliance
Agreements by the Purchaser, the performance by the Purchaser of its obligations
hereunder and thereunder and the consummation by the Purchaser of the
transactions contemplated hereby and thereby have been duly authorized by all
requisite action on the part of the Purchaser. This Agreement and the other
Alliance Agreements have been duly executed and delivered by the Purchaser, and
(assuming due authorization, execution and delivery by the Company) constitute
legal, valid and binding obligations of the Purchaser enforceable against the
Purchaser in accordance with their terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights and general principals of
equity.
SECTION 4.02. No Conflict. Assuming the making and obtaining
of all filings, notifications, consents, approvals, authorizations and other
actions referred to in Section 4.03, except as may result from any facts or
circumstances relating solely to the Company, the execution, delivery and
performance of the Alliance Agreements by the Purchaser does not and will not
(a) violate, conflict with or result in the breach of any provision of the
certificate of incorporation or by-laws of the Purchaser, (b) conflict with or
violate any Law or Governmental Order applicable to the Purchaser or (c)
conflict with, or result in any breach of, constitute a default (or event which
with the giving of notice or lapse or time, or both, would become a default)
under, require any consent under, or give to others any rights of termination,
amendment, acceleration, suspension, revocation, or cancellation of, or result
in the creation of any Encumbrance on any of the assets or properties of the
Purchaser pursuant to, any note, bond, mortgage or indenture, contract,
agreement, lease, sublease, license, permit, franchise or other
17
instrument or arrangement to which the Purchaser is a party or by which any of
such assets or properties are bound or affected which, with respect to clauses
(b) and (c) above would have a material adverse effect on the ability of the
Purchaser to consummate the transactions contemplated by the Alliance
Agreements.
SECTION 4.03. Governmental Consents and Approvals. The
execution, delivery and performance of the Alliance Agreements by the Purchaser
do not and will not require any consent, approval, authorization or other order
of, action by, filing with, or notification to, any Governmental Authority.
SECTION 4.04. Investment Purpose. The Purchaser is acquiring
the Shares for its own account solely for the purpose of investment and not with
a view to, or for offer or sale in connection with, any distribution thereof.
SECTION 4.05. Status of Shares; Limitations on Transfer and
Other Restrictions. The Purchaser understands that the Shares have not been and
will not be registered under the Securities Act or under any state securities
laws (other than in accordance with the Stockholder's Agreement) and are being
offered and sold in reliance upon federal and state exemptions for transactions
not involving any public offering and that the Shares have not been approved or
disapproved by the SEC or by any other federal or state agency. The Purchaser
further understands that such exemption depends in part upon, and such Shares
are being sold in reliance on, the representations and warranties set forth in
this Article IV. The Purchaser understands that (i) none of the Shares may be
sold, transferred or assigned unless registered by the Company pursuant to the
Securities Act and any applicable state securities laws, or unless an exemption
therefrom is available, and, accordingly, it may not be possible for the
Purchaser to liquidate its investment in the Shares, and it agrees not to sell,
assign or otherwise transfer or dispose of any Shares unless such Shares have
been so registered or an exemption from registration is available, and (ii) the
Shares are subject to certain restrictions on transfer and voting, as set forth
in the Stockholder's Agreement.
SECTION 4.06. Sophistication and Financial Condition of
Purchaser. The Purchaser represents and warrants to the Company that it is an
"Accredited Investor" as defined in Regulation D under the Securities Act and
that it considers itself to be an experienced and sophisticated investor and to
have such knowledge and experience in financial and business matters as are
necessary to evaluate the merits and risks of an investment in the Shares. The
Purchaser also represents it has not been organized for the sole purpose of
acquiring the Shares. The Purchaser has been furnished access to such
information and documents as it has requested and has been afforded an
opportunity to ask questions of and receive answers from representatives of the
Company concerning the terms and conditions of this Agreement and the purchase
of the Shares contemplated hereby.
SECTION 4.07. Year 2000 Compliance. The Purchaser has (i)
undertaken an assessment of those Purchaser Systems that could be adversely
affected by a failure to be Year
18
2000 Compliant and (ii) developed a plan and time line for rendering such
Purchaser Systems Year 2000 Compliant. The Purchaser has made available for
review to the Company copies of all material documents related to such
assessment and plan implementation efforts, including communications to and from
customers and material Vendors and suppliers and all plans, time lines and cost
estimates for rendering the Purchaser Systems Year 2000 Compliant. Based on such
review and assessment, all Purchaser Systems are Year 2000 Compliant or will be
Year 2000 Compliant as required to avoid having a material adverse effect on the
Purchaser's ability to perform any of its obligations under the Alliance
Agreements.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Actions Regarding Market. Prior to the exercise
of the Option, the Company shall not take any action outside the ordinary course
of business which would reasonably be expected to cause or result in
stabilization or to influence the price of any security of the Company in
connection with the sale of the Shares, except as may be approved by the board
of directors of the Company.
SECTION 5.02. Confidentiality. Notwithstanding anything herein
to the contrary, the Confidentiality Agreement dated November 12, 1997, as
amended (the "Confidentiality Agreement"), between the Company and COBE shall
remain in full force and effect in accordance with its terms.
SECTION 5.03. Public Announcements. The initial press release
relating to this Agreement shall be a joint press release the text of which has
been agreed to by each of the Purchaser and the Company. Thereafter, unless
otherwise required by applicable Law, each of the Purchaser and the Company
shall use commercially reasonable efforts to consult with the other before
issuing any press release or otherwise making any organized, pre-arranged or
pre-scheduled public statements with respect to any of the Alliance Agreements
or any of the other transactions hereby or thereby.
SECTION 5.04. Capital Increase. The Company shall use its best
efforts and take all actions permitted by Law to (a) call and hold an annual
meeting of the stockholders of the Company as expeditiously as possible for the
purpose of voting upon the Capital Increase; (b) cause the board of directors of
the Company to recommend, and not withdraw its recommendation, to the
stockholders to vote in favor of the Capital Increase; and (c) upon any approval
by the stockholders of the Company of the Capital Increase, expeditiously file
an amended certificate of incorporation of the Company relating to the Capital
Increase with the Secretary of State of Delaware.
19
SECTION 5.05. Further Action. Each of the parties hereto shall
use all reasonable efforts to take, or cause to be taken, all appropriate
action, do or cause to be done all things necessary, proper or advisable under
applicable Law, and execute and deliver such documents and other papers, as may
be required to carry out the provisions of the Alliance Agreements and
consummate and make effective the transactions contemplated by the Alliance
Agreements.
ARTICLE VI
INDEMNIFICATION
SECTION 6.01. Survival of Representations and Warranties. The
representations and warranties of the respective parties contained in this
Agreement and all statements contained in this Agreement and the Disclosure
Schedule shall survive until May 15, 2000. If written notice of a claim has been
given prior to the expiration of the applicable representations and warranties
by either party, then the relevant representations and warranties of the other
party shall survive as to such claim, until such claim has been finally
resolved.
SECTION 6.02. Indemnification. (a) The Purchaser, its
Affiliates and its successors and assigns and the officers, directors, employees
and agents of the Purchaser, its Affiliates and its successors and assigns shall
be indemnified and held harmless by the Company for any and all Liabilities,
losses, damages, claims, costs and expenses, interest, awards, judgments and
penalties (including, without limitation, reasonable attorneys' fees and
expenses) actually suffered or incurred by them (including, without limitation,
any Action brought or otherwise initiated by any of them) (hereinafter a
"Purchaser Loss"), arising out of or resulting from:
(i) the breach of any representation or warranty made by the
Company contained in this Agreement; or
(ii) the breach of any covenant or agreement by the Company
contained in this Agreement.
To the extent that the Company's undertakings set forth in this Section 6.02(a)
may be unenforceable, the Company shall contribute the maximum amount that it is
permitted to contribute under applicable Law to the payment and satisfaction of
all Purchaser Losses incurred by the Purchaser.
(b) The Company, its Affiliates and its successors and assigns
and the officers, directors, employees and agents of the Company, its Affiliates
and its successors and assigns shall be indemnified and held harmless by the
Purchaser for any and all Liabilities, losses, damages, claims, costs and
expenses, interest, awards, judgments and penalties (including, without
limitation, reasonable attorneys' fees and expenses) actually suffered or
incurred by them
20
(including, without limitation, any Action brought or otherwise initiated by any
of them) (hereinafter a "Company Loss"; and each of a Company Loss and Purchaser
Loss is hereinafter referred to as a "Loss" with respect to such party), arising
out of or resulting from:
(i) the breach of any representation or warranty made by the
Purchaser contained in this Agreement; or
(ii) the breach of any covenant or agreement by the Purchaser
contained in this Agreement.
To the extent that the Purchaser's undertakings set forth in this Section
6.02(b) may be unenforceable, the Purchaser shall contribute the maximum amount
that it is permitted to contribute under applicable Law to the payment and
satisfaction of all Company Losses incurred by the Company.
(c) Whenever a claim shall arise for indemnification under
this Article VI, the party entitled to indemnification (the "Indemnified Party")
shall give notice to the other party (the "Indemnifying Party") of any matter
that the Indemnified Party has determined has given or could give rise to a
right of indemnification under this Agreement promptly, but in no event later
than 30 days, except with respect to any claim exceeding, or potential Loss
reasonably likely to exceed, $250,000, in which cases such notice shall not be
later than 10 days, stating the amount of the Loss, if known, and method of
computation thereof, and containing a reference to the provisions of this
Agreement in respect of which such right of indemnification is claimed or
arises. The obligations and Liabilities of the Indemnifying Party under this
Article VI with respect to Losses arising from claims of any third party which
are subject to the indemnification provided for in this Article VI ("Third Party
Claims") shall be governed by and contingent upon the following additional terms
and conditions: if an Indemnified Party shall receive notice of any Third Party
Claim, the Indemnified Party shall give the Indemnifying Party notice of such
Third Party Claim following receipt by the Indemnified Party of such notice in
the time frame provided above; provided, however, that the failure to provide
such notice shall not release the Indemnifying Party from any of its obligations
under this Article VI except to the extent the Indemnifying Party is materially
prejudiced by such failure and shall not relieve the Indemnifying Party from any
other obligation or Liability that it may have to any Indemnified Party
otherwise than under this Article VI. If the Indemnifying Party acknowledges in
writing its obligation to indemnify the Indemnified Party hereunder against any
Losses that may result from such Third Party Claim, then the Indemnifying Party
shall be entitled to assume and control the defense of such Third Party Claim at
its expense and through counsel of its choice if it gives notice of its
intention to do so to the Indemnified Party within ten days of the receipt of
such notice from the Indemnified Party; provided, however, that if there exists
or is reasonably likely to exist a conflict of interest that would make it
inappropriate in the judgment of the Indemnified Party, in its reasonable
discretion, for the same counsel to represent both the Indemnified Party and the
Indemnifying Party, then the Indemnified Party shall be entitled to retain its
own counsel at the expense of the Indemnifying Party. In the event the
Indemnifying Party exercises the right to undertake any such defense
21
against any such Third Party Claim as provided above, the Indemnified Party
shall cooperate with the Indemnifying Party in such defense and make available
to the Indemnifying Party, at the Indemnifying Party's expense, all witnesses,
pertinent records, materials and information in the Indemnified Party's
possession or under the Indemnified Party's control relating thereto as is
reasonably required by the Indemnifying Party. Similarly, in the event the
Indemnified Party is, directly or indirectly, conducting the defense against any
such Third Party Claim, the Indemnifying Party shall cooperate with the
Indemnified Party in such defense and make available to the Indemnified Party,
at the Indemnifying Party's expense, all such witnesses, records, materials and
information in the Indemnifying Party's possession or under the Indemnifying
Party's control relating thereto as is reasonably required by the Indemnified
Party. No such Third Party Claim may be settled by the Indemnifying Party
without the prior written consent of the Indemnified Party, which consent shall
not be unreasonably withheld or delayed.
SECTION 6.03. Limits on Indemnification. (a) Notwithstanding
anything to the contrary contained in this Agreement, the maximum amount of
indemnifiable Losses which may be recovered from the Company arising out of or
resulting from the causes enumerated in Section 6.02(a) shall be (x) prior to
the Option Closing, if any, $4,500,000 and (y) following the Option Closing, if
any $6,000,000. Notwithstanding any provision of this Agreement, for the
avoidance of doubt, the parties expressly acknowledge and agree that the
indemnification provisions set forth in the Distribution Agreement are not
affected in any way by this Agreement, including, without limitation, by any
provision of this Article VI, and remain in full force and effect in accordance
with the terms of the Distribution Agreement.
(b) Notwithstanding anything herein to the contrary, in no
event shall the Company or the Purchaser indemnify hereunder the other from and
against any facts or circumstances relating to their respective performance of
any of their respective obligations under the Distribution Agreement or
otherwise in respect of matters, directly or indirectly, relating to the
Distribution Agreement.
(c) Notwithstanding anything to the contrary elsewhere in this
Agreement, Losses shall not include, and no Indemnifying Party shall, in any
event, be liable to any other party for, any consequential, punitive or special
damages (including, but not limited to, damages for lost profits).
ARTICLE VII
GENERAL PROVISIONS
SECTION 7.01. Waiver. The Company and the Purchaser may (a)
extend the time for the performance of any of the obligations or other acts of
the other party, (b) waive any inaccuracies in the representations and
warranties of the other party contained herein or in any document delivered by
the other party pursuant hereto or (c) waive compliance with any of the
22
agreements or conditions of the other party contained herein. Any such extension
or waiver shall be valid only if set forth in an instrument in writing signed by
the party to be bound thereby. Any waiver of any term or condition shall not be
construed as a waiver of any subsequent breach or a subsequent waiver of the
same term or condition, or a waiver of any other term or condition, of this
Agreement. The failure of any party to assert any of its rights hereunder shall
not constitute a waiver of any of such rights.
SECTION 7.02. Expenses. Except as otherwise specified in this
Agreement, all costs and expenses, including, without limitation, fees and
disbursements of counsel, financial advisors and accountants, incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such costs and expenses.
SECTION 7.03. Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given or
made (and shall be deemed to have been duly given or made upon receipt) by
delivery in person, by courier service, by cable, by telecopy, by telegram, by
telex or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the following addresses (or at such
other address for a party as shall be specified in a notice given in accordance
with this Section 7.03):
(a) if to the Company:
HemaSure Inc.
000 Xxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Fax: 000-000-0000
Attention: President and Chief Executive Officer
with a copy to:
Battle Xxxxxx LLP
Park Avenue Tower
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000-0000
Fax: 000-000-0000
Attention: Xxxx X. Xxxxxx, III, Esq.
23
(b) if to the Purchaser:
COBE Laboratories, Inc.
0000 Xxx Xxxxxx
Xxxxxxxx, XX 00000-0000
Fax: 000-000-0000
Attention: Xxxxxx X. Xxxx
with a copy to:
Legal Department
COBE Laboratories, Inc.
0000 Xxx Xxxxxx
Xxxxxxxx, XX 00000
Telecopier: (000) 000-0000
and
Shearman & Sterling
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy: 212-848-7179
Attention: Xxxxx X. Xxxxx, Esq.
and Xxxxxxx X. Xxxxxxxxxxxx, Esq.
SECTION 7.04. Headings. The descriptive headings contained in
this Agreement are for convenience of reference only and shall not affect in any
way the meaning or interpretation of this Agreement.
SECTION 7.05. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any Law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner in
order that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
SECTION 7.06. Entire Agreement. This Agreement and the other
Alliance Agreements constitute the entire agreement of the parties hereto with
respect to the subject matter hereof and thereof and supersedes all prior
agreements and undertakings, both written and
24
oral, between the Company and the Purchaser with respect to the subject matter
hereof and thereof.
SECTION 7.07. Assignment. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties; provided, however, neither party hereto shall assign or delegate any of
the rights or obligations created under this Agreement without the prior written
consent of the other party.
SECTION 7.08. No Third Party Beneficiaries. Except for the
provisions of Article VI relating to Indemnified Parties, this Agreement shall
be binding upon and inure solely to the benefit of the parties hereto and their
permitted assigns and nothing herein, express or implied, is intended to or
shall confer upon any other Person any legal or equitable right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement.
SECTION 7.09. Amendment. This Agreement may not be amended or
modified except (a) by an instrument in writing signed by, or on behalf of, the
Company and the Purchaser or (b) by a waiver in accordance with Section 7.01.
SECTION 7.10. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York, excluding
(to the greatest extent permissible by law) any rule of law that would cause the
application of the laws of any jurisdiction other than the State of New York,
without regard to principles of conflict of law.
SECTION 7.11. Arbitration. (a) If a dispute arises from or
relates to this Agreement or the breach thereof, whether of law or fact, of any
nature whatsoever, and such dispute cannot be settled through direct discussions
between the parties, the parties agree to endeavor first to settle the dispute
in an amicable manner by mediation administered by the American Arbitration
Association under its Commercial Mediation Rules before resorting to litigation.
Mediation shall take place in New York, New York. If the dispute cannot be
resolved within 60 days of the initiation thereof by such party, any party may
initiate arbitration in accordance with the provisions of Section 7.11(b) below.
(b) All disputes arising under this Agreement that cannot be
amicably resolved under Section 7.11(a) above, shall be settled by binding
arbitration. Judgment upon the award rendered may be entered in any court in the
New York, New York metropolitan area. Each party agrees to the following
arbitration procedures:
(i) Any party requesting arbitration shall serve a written
demand for arbitration on another party. The demand shall set forth in
reasonable detail a statement of the nature of the dispute, the amount
involved and the remedies sought. No later than 20 calendar days after
a demand for arbitration is served, the parties shall jointly select
and appoint a retired judge of the Courts of the State of New York to
act as the arbitrator. In the event that the parties do not agree on
the selection of an arbitrator, the party seeking
25
arbitration shall apply to the United States District Court for the
Southern District of New York for appointment of a retired judge to
serve as arbitrator.
(ii) No later than ten calendar days after appointment of an
arbitrator, the parties shall jointly prepare and submit to the
arbitrator a set of rules for the arbitration. In the event that the
parties cannot agree on the rules for the arbitration, the arbitrator
shall establish the rules. No later than ten calendar days after the
arbitrator is appointed, such arbitrator shall arrange for a hearing to
commence on a mutually convenient date. The hearing shall commence no
later than 120 calendar days after the arbitrator is appointed and
shall continue from day to day until completed.
(iii) The arbitrator shall issue his or her award in writing
no later than 20 calendar days after the conclusion of the hearing. The
arbitration award shall be final and binding regardless of whether any
party fails or refuses to participate in the arbitration. The
arbitrator is empowered to hear and determine all disputes between the
parties hereto concerning the subject matter of this Agreement, and the
arbitrator may award money damages (but specifically not punitive
damages), injunctive relief, rescission, restitution, costs, and
attorneys' fees. The arbitrator shall not have the power to amend this
Agreement in any respect.
(iv) In the event that any party serves a proper demand for
arbitration under this Agreement, all parties may pursue discovery in
accordance with the Rules of Civil Procedure of the State of New York
the provisions of which are incorporated herein by reference, with the
following exceptions: (A) the parties hereto may conduct all discovery,
including depositions for discovery purposes, without leave of the
arbitrator; and (B) all discovery shall be completed no later than the
commencement of the arbitration hearing or 120 calendar days after the
date that a proper demand for arbitration is served, whichever occurs
earlier, unless upon a showing of good cause the arbitrator extends or
shortens that period.
SECTION 7.12. Counterparts. This Agreement may be executed in
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
SECTION 7.13. Specific Performance. The parties hereto agree
that irreparable damage would occur in the event any provision of this Agreement
was not performed in accordance with the terms hereof and that the parties shall
be entitled to specific performance of the terms hereof, in addition to any
other remedy at law or equity.
26
IN WITNESS WHEREOF, the Company and the Purchaser have caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
HEMASURE INC.
By: /s/ Xxxx X. XxXxxxx, III
--------------------------------------
Name: Xxxx X. XxXxxxx, III
Title: President
COBE LABORATORIES, INC.
By: /s/ Xxxxxx X. Xxxx, Xx.
--------------------------------------
Name: Xxxxxx X. Xxxx, Xx.
Title: Vice President
