Exhibit 10.1
REVENUE INTERESTS ASSIGNMENT AGREEMENT
Dated as of October 16, 2001
among
VITA SPECIAL PURPOSE CORP.,
as Assignor,
ORTHOVITA, INC.
and
XXXX CAPITAL ROYALTY ACQUISITION FUND, L.P.,
as Assignee
Table of Contents
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ARTICLE I DEFINITIONS..........................................................1
Section 1.01 Definitions...............................................1
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ARTICLE II PURCHASE AND SALE OF ASSIGNED INTERESTS............................20
Section 2.01 Purchase and Sale........................................20
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Section 2.02 Payments in Respect of the Assigned Interest.............21
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Section 2.03 Purchase Price...........................................25
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Section 2.04 No Assumed Obligations...................................25
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF ASSIGNOR AND ORTHOVITA..........25
Section 3.01 Organization.............................................25
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Section 3.02 Corporate Authorization..................................26
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Section 3.03 Governmental Authorization...............................26
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Section 3.04 Ownership................................................26
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Section 3.05 Financial Statements.....................................27
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Section 3.06 No Undisclosed Liabilities...............................27
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Section 3.07 Solvency.................................................28
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Section 3.08 Litigation...............................................28
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Section 3.09 Compliance with Laws.....................................28
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Section 3.10 Conflicts................................................29
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Section 3.11 Material Contracts.......................................29
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Section 3.12 Intellectual Property....................................30
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Section 3.13 Regulatory Approval......................................33
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Section 3.14 Transfer of Intellectual Property Rights.................34
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Section 3.15 Subordination............................................34
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Section 3.16 Place of Business........................................34
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Section 3.17 Broker's Fees............................................34
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Section 3.18 Other Information........................................34
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Section 3.19 Distribution Agreements and License Agreements...........35
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Section 3.20 Insurance................................................37
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Section 3.21 Organizational Documents of Assignor.....................37
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF ASSIGNEE.........................38
Section 4.01 Organization.............................................38
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Section 4.02 Authorization............................................38
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Section 4.03 Broker's Fees............................................38
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i
Table of Contents
(continued)
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Section 4.04 Conflicts................................................38
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Section 4.05 Consents.................................................39
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ARTICLE V COVENANTS...........................................................39
Section 5.01 Consents and Waivers.....................................39
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Section 5.02 Access; Books and Records................................39
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Section 5.03 Material Contracts.......................................41
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Section 5.04 Confidentiality; Public Announcement.....................41
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Section 5.05 Right of First Refusal...................................42
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Section 5.06 Quarterly Reports........................................44
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Section 5.07 Purchase Options.........................................44
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Section 5.08 Security Agreements......................................46
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Section 5.09 Best Efforts; Further Assurance..........................47
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Section 5.10 Remittance to Lockbox Account............................48
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Section 5.11 Additional Covenants of Assignor and Orthovita...........50
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Section 5.12 Future Agreements........................................55
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Section 5.13 Licensing Agreement......................................57
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Section 5.14 Guarantee................................................57
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Section 5.15 Financial Statements.....................................60
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Section 5.16 Special Purpose Entity...................................60
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Section 5.17 No Short Selling or Trading While in the Possession of
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Material Non-Public Information........................61
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Section 5.18 Notification of Significant Discounts and Write-Offs.....62
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Section 5.19 Financial Covenants......................................62
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ARTICLE VI THE CLOSING; CONDITIONS TO CLOSING AND FUNDING.....................63
Section 6.01 Closings.................................................63
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Section 6.02 Conditions Applicable to Assignee........................63
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Section 6.03 Conditions Applicable to Assignor........................67
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Section 6.04 Termination Event........................................68
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ARTICLE VII TERMINATION.......................................................68
Section 7.01 Termination Date.........................................68
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Section 7.02 Effect of Termination....................................68
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ii
Table of Contents
(continued)
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ARTICLE VIII MISCELLANEOUS....................................................69
Section 8.01 Survival.................................................69
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Section 8.02 Specific Performance.....................................69
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Section 8.03 Notices..................................................69
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Section 8.04 Schedules................................................72
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Section 8.05 Successors and Assigns...................................72
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Section 8.06 Indemnification..........................................72
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Section 8.07 Expenses.................................................74
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Section 8.08 Independent Nature of Relationship.......................74
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Section 8.09 Entire Agreement.........................................75
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Section 8.10 Amendments; No Waivers...................................75
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Section 8.11 Interpretation...........................................75
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Section 8.12 Headings and Captions....................................75
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Section 8.13 Counterparts; Effectiveness..............................76
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Section 8.14 Severability.............................................76
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Section 8.15 Force Majeure............................................76
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Section 8.16 Governing Law; Jurisdiction..............................77
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Section 8.17 Intentionally omitted....................................78
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Section 8.18 Waiver of Jury Trial.....................................78
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iii
EXHIBITS AND SCHEDULES*
EXHIBITS
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Exhibit A Projected Net Sales
Exhibit B 1999, 2000 and 2001 Financial Statements of
Orthovita (on a consolidated basis)
Exhibit C Form of Assignment
Exhibit D Form of Security Agreement
Exhibit E(i) Form of Legal Opinion of Counsel to Assignor
Exhibit E(ii) Form of Legal Opinion of Patent Counsel to
Assignor
Exhibit E(iii) Form of Infringement Opinion of Patent Counsel
to Assignor
Exhibit F Form of Stock Purchase Agreement
Exhibit G Certificate of Incorporation of Assignor
Exhibit H Bylaws of Assignor
Exhibit I Form of Pledge Agreement
Exhibit J Orthovita Assignment Agreement
Exhibit K Orthovita Trademark Assignment Agreement
Exhibit L Vita Licensing Patent Assignment
Exhibit M Vita Licensing Trademark Assignment
SCHEDULES
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Schedule A Proprietary Technology
Schedule 3.03 Governmental Authorization
Schedule 3.04 Ownership
Schedule 3.10(a) Filings
Schedule 3.12(a) List of Patents and Trademarks Owned by
Assignor
Schedule 3.12(i) Intellectual Property (Payments)
Schedule 3.13(a) Regulatory Approval
Schedule 3.13(b) Status of FDA Applications
Schedule 3.16 Place of Business of Assignor and Orthovita
Schedule 3.20 Insurance Policies
Schedule 6.02(g) List of Filing Offices
iv
* Non-material Exhibits and Schedules have been omitted from this filing.
REVENUE INTERESTS ASSIGNMENT AGREEMENT
REVENUE INTERESTS ASSIGNMENT AGREEMENT (as amended, supplemented or
otherwise modified from time to time, this "Agreement") is made and entered into
as of October 16 , 2001 by and among ORTHOVITA, INC., a Pennsylvania corporation
("Orthovita"), VITA SPECIAL PURPOSE CORP., a Delaware corporation and
wholly-owned subsidiary of Orthovita ("Assignor"), and XXXX CAPITAL ROYALTY
ACQUISITION FUND, L.P., a Delaware limited partnership ("Assignee").
WHEREAS, Orthovita has assigned, transferred and/or licensed all of
its rights, title and interests in and to the Intellectual Property (as
hereinafter defined) and the Royalty Interests (as hereinafter defined) to Vita
Licensing, Inc. ("Vita Licensing"), and Vita Licensing has in turn transferred
such assets to Assignor; and
WHEREAS, Assignor wishes to sell, assign, convey and transfer to
Assignee, and Assignee wishes to purchase from Assignor, the Assigned Interests
(as hereinafter defined), upon and subject to the terms and conditions
hereinafter set forth;
WHEREAS, Orthovita wishes to sell, assign, convey and transfer to
Assignee, and Assignee wishes to purchase from Orthovita, the common stock of
Orthovita, in the amount and for the purchase price set forth in the Stock
Purchase Agreement (as hereinafter defined) and
NOW, THEREFORE, in consideration of the mutual covenants, agreements
representations and warranties set forth herein, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions.
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The following terms, as used herein, shall have the following
meanings:
"Advance Payments" shall mean for the calendar year ending December
31, 2003, the first $1.0 million received by Orthovita in the Fiscal Year 2003
in respect of annual Net Sales for Fiscal Year 2003 (including payments under
License Agreements and Distribution Agreements); for the calendar year ending
December 31, 2004, the first $2.0 million received by Orthovita in the Fiscal
Year 2004 in respect of annual Net Sales for Fiscal Year 2004 (including
payments under any License Agreements or Distribution Agreements); and for each
subsequent calendar year thereafter through the year ending December 31, 2016,
the first $3.0 million received by Orthovita in respect of annual Net Sales
during the applicable Fiscal Year (including payments under License Agreements
or Distribution Agreements).
"Advance Payment Amounts" shall have the meaning set forth in Section
2.02(a).
"Affiliate" shall mean, with respect to any Person, any other Person
that, directly or indirectly, controls, is controlled by, or is under common
control with, such Person.
"Aggregate Purchase Price" shall mean the sum of (x) the Closing
Purchase Price Payment, and (y) the Common Stock Purchase Price.
"Agreement" shall have the meaning set forth in the first paragraph
hereof.
"Applicable Discount Rate" shall mean ***.
"Applicable Percentage" shall mean, as of any date of determination,
(a) with respect to annual Net Sales of up to $100 million, the Initial
Applicable Percentage; and (b) with respect to annual Net Sales in excess of
$100 million, 1.75%.
"Appraisal Firm" shall mean a nationally recognized firm that engages
in the business of valuing financial assets similar to the assets to be
appraised hereunder, which firm shall be selected by Assignee and shall be
reasonably acceptable to the Assignor. The Appraisal Firm shall not be an
Affiliate of the Assignee.
"Assigned Interests" shall mean Assignee's right to receive amounts
equal to the Applicable Percentage of the Net Sales.
"Assignee" shall have the meaning set forth in the first paragraph
hereof.
"Assignee Concentration Account" shall mean a segregated account
established for the benefit of Assignee and maintained at the Lockbox Bank
pursuant to the terms of the Lockbox Agreement and this Agreement. Assignee
Concentration Account shall be the account into which the funds held in the
Joint Concentration Account which are payable to Assignee pursuant to this
Agreement are swept by the Lockbox Bank in accordance with the terms of this
Agreement and the Lockbox Agreement.
"Assignee Indemnified Party" shall have the meaning set forth in
Section 8.06(a).
2
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
"Assignee Option Repurchase" shall have the meaning set forth in
Section 5.07(a).
"Assignee Option Repurchase Price" shall have the meaning set forth
in Section 5.07(a).
"Assignee RHAKOSS Purchase Option" shall have the meaning set forth
in Section 5.07(d).
"Assignee's Account" shall mean an account maintained by Assignee at
any financial institution and designated in writing by Assignee to Assignor, as
Assignee may so designate from time to time.
"Assignee's Consultants" shall mean, collectively, Assignee's
employees, officers, directors, agents or other authorized representatives.
"Assignment" shall mean each Assignment pursuant to which Assignor
shall assign to Assignee all of its rights and interests in and to the Assigned
Interests purchased hereunder, which Assignment shall be substantially in the
form of Exhibit C.
"Assignment Documents" shall mean collectively, (i) the Orthovita
Assignment Agreement, (ii) the Orthovita Trademark Assignment Agreement; (iii)
the Vita Licensing Patent Assignment Agreement and (iv) the Vita Licensing
Trademark Assignment.
"Assignor" shall have the meaning set forth in the first paragraph
hereof.
"Assignor Concentration Account" shall mean a segregated account
established for the benefit of the Assignor and maintained at the Lockbox Bank
pursuant to the terms of the Lockbox Agreement and this Agreement. Assignor
Concentration Account shall be the account into which the funds held in the
Joint Concentration Account which are payable to Assignor pursuant to the terms
of the Vita SPC Patent License Agreement (less the amounts payable to Assignee
pursuant to this Agreement) are swept in accordance with the terms of this
Agreement and the Lockbox Agreement.
"Assignor Indemnified Party" shall have the meaning set forth in
Section 8.06(b).
"Assignor Option Repurchase" shall have the meaning set forth in
Section 5.07(c).
3
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
"Assignor Option Repurchase Price" shall have the meaning set forth
in Section 5.07(c).
"Assignor RHAKOSS Repurchase Option" shall have the meaning set forth
in Section 5.07(d).
"Assignor's Account" shall have the meaning set forth in Section
2.03.
"Audit Costs" shall mean, with respect to any audit of the books and
records of Assignor or Orthovita with respect to amounts payable or paid under
this Agreement or any License Party Audit, the cost of such audit, including,
without limitation, all reasonable fees, costs and expenses incurred in
connection therewith.
"Audit Reports" shall mean, with respect to a License Party Audit,
any and all reports, findings and other written information related to such
License Party Audit.
"Bankruptcy Event" shall mean:
(i) Orthovita or Assignor shall commence any case, proceeding
or other action (A) under any existing or future law of
any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization, relief of debtors
or the like, seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it bankrupt
or insolvent, or seeking reorganization, arrangement,
adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its
respective debts, or (B) seeking appointment of a
receiver, trustee, custodian or other similar official for
it or for all or substantially all of its assets, or
Assignor or Orthovita shall make a general assignment for
the benefit of its respective creditors; or
(ii) the commencement against Assignor or Orthovita of any
case, proceeding or other action of a nature referred to
in clause (i) above which (A) results in the entry of an
order for relief or any such adjudication or appointment,
and (B) remains undismissed, undischarged or unbonded for
a period of forty-five (45) days; or
(iii) the commencement against Assignor or Orthovita of any
case, proceeding or other action seeking issuance of a
warrant of attachment, execution,
4
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
distraint or similar process against all or substantially
all of its assets which results in the entry of an order
for any such relief which shall not have been vacated,
discharged, stayed, satisfied or bonded pending appeal
within forty-five (45) days from the entry thereof; or
(iv) Assignor or Orthovita shall take any action in furtherance
of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i),
(ii) or (iii) above of this definition of "Bankruptcy
Event"; or
(v) Assignor or Orthovita shall generally not, or shall be
unable to, or shall admit in writing its inability to, pay
its respective debts as they become due; or
(vi) Assignor or Orthovita shall be Insolvent.
"Business Day" shall mean any day other than a Saturday, a Sunday,
any day which is a legal holiday under the laws of the City of New York, or any
day on which banking institutions located in the City of New York are required
by law or other governmental action to close.
"Call Option Event" shall mean any one of the following events:
(i) ***
(ii) ***
(iii) ***
5
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
***
"Certificate of Incorporation" shall mean the certificate of
incorporation of Assignor, dated as of October 9, 2001, as amended to date, a
copy of which is attached hereto as Exhibit G.
"Change of Control" shall mean:
(i) any Person (other than Assignor, Orthovita, any trustee or
other fiduciary holding securities under an employee
benefit plan of Assignor, Orthovita or any Affiliate
thereof or any controlling stockholder of Assignor or
Orthovita on the date hereof) shall, after the Closing
Date, become the "beneficial owner" (as defined in Rule
13d-3 under the Securities Exchange Act of 1934), directly
or indirectly, of securities of either Assignor or
Orthovita representing more than 50% of the combined
voting power of Assignor's or Orthovita's, as the case may
be, then outstanding securities eligible to vote generally
in the election of directors; or
(ii) Assignor's members or Orthovita's stockholders approve a
merger or consolidation of Assignor or Orthovita, as
applicable, with any other Person, other than a merger or
consolidation which would result in either Assignor's or
Orthovita's voting securities outstanding immediately
prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities
of the surviving entity) more than 50% of the combined
voting power of Assignor's or Orthovita's, as the case may
be voting securities or such surviving entity's voting
securities outstanding immediately after such merger or
consolidation; provided, however, that a merger or
consolidation effected to implement a recapitalization or
redomestication of either Assignor or Orthovita (or
similar transaction) in which no Person acquires more than
50% of the combined voting power of Assignor's or
Orthovita's, as the case may be, then outstanding
securities shall in no way constitute a Change of Control;
or
6
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
(iii) during any period of two consecutive years (not including
any period prior to the date of this Agreement),
individuals who at the beginning of such period constitute
the Board of Directors of Orthovita (together with any new
directors, as applicable (other than a director designated
by a Person who has entered into an agreement with
Assignor or Orthovita to effect a transaction described in
clause (i) or (ii) of this definition of "Change of
Control"), whose election by such Board of Directors or
nomination for election by Assignor's or Orthovita's
stockholders, as applicable, was approved by a vote of a
majority of the directors then still in office who were
directors at the beginning of such period or whose
election or nomination for election was previously so
approved) cease for any reason to constitute at least a
majority of the Board of Directors of Orthovita or
Assignor, as applicable, then in office.
"Closing" shall have the meaning set forth in Section 6.01.
"Closing Date" shall mean October 16, 2001.
"Closing Purchase Price Payment" shall have the meaning set forth in
Section 2.03.
"Collateral" shall have the meaning set forth in the Security
Agreement.
"Combination Product" shall mean a product, method or service that
incorporates, contains or combines as one of its elements (A) (i) VITOSS,
RHAKOSS or CORTOSS, ***
"Common Stock Purchase Price" shall have the meaning set forth in the
Stock Purchase Agreement.
"Confidential Information" shall mean, as it relates to Assignor,
Orthovita and the Products, the Proprietary Technology, know-how, trade secrets,
confidential business information, financial data and other like information
(including ideas, research and development, know-how, formulas, schematics,
compositions, technical data, specifications, customer and supplier lists,
pricing and cost information, and business and marketing plans and
7
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
proposals), inventory, ideas, algorithms, processes, computer software programs
or applications (in both source code and object code form), client lists and
tangible or intangible proprietary information or material. Notwithstanding the
foregoing definition, Confidential Information shall not include information
already in the public domain at the time such information is disclosed.
"CORTOSS" means a cortical bone void filler comprising a resin
composite.
"Daily Amount" shall have the meaning set forth in Section
2.02(d)(i).
"Deposit Accounts" shall mean, collectively, the Lockbox Account, the
Orthovita Concentration Account, the Joint Concentration Account, Assignor
Concentration Account and Assignee Concentration Account, each established and
maintained pursuant to the Lockbox Agreement.
"Discrepancy Notice" shall have the meaning set forth in Section
2.02(k).
"Distribution Agreement" shall mean any existing or future agreement
pursuant to which Orthovita or any affiliate or agent of Orthovita agrees to
sell the Products in the Territories, whether to end-users, for redistribution
by the purchaser thereof, or otherwise.
"Distributor" shall mean any Person that enters into a Distribution
Agreement with Orthovita or any Affiliate of Orthovita for the redistribution of
the Products.
"Dollars" or "US$" shall mean the freely transferable lawful money of
the United States.
"Europe" shall mean (i) the member states of the European Union, (ii)
Gibralter, Norway, Iceland, Switzerland, Malta, Albania, Croatia, Macedonia,
Slovakia, Bosnia-Hercegovina, Czech Republic, Poland, Slovenia, Bulgaria,
Hungary, Romania and Yugoslavia, and (iii) any states or other political
entities that may succeed to the geographical territories occupied by the states
referenced in the preceding clauses (i) and (ii).
"European Union" shall mean Belgium, France, Italy, Luxembourg,
Netherlands, Germany, Denmark, Greece, Ireland, United Kingdom, Spain, Portugal,
Austria, Finland and Sweden.
8
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
"Existing Distribution Agreement" shall mean each Distribution
Agreement in existence on the date hereof or as of any date as of which a
representation or warranty herein is deemed made or remade, as applicable.
"Existing License Agreement" shall mean each License Agreement in
existence on the date hereof or as of any date as of which a representation or
warranty herein is deemed made or remade, as applicable.
"Excluded Liabilities and Obligations" shall have the meaning set
forth in Section 2.04.
"Fair Market Value" shall mean the amount reasonably calculated by
Orthovita's Board of Directors or a duly appointed committee of the Board;
provided, that if Assignee, in its sole discretion, disagrees with such
calculation of Fair Market Value, then Fair Market Value shall mean the amount
as determined by an opinion of the Appraisal Firm. The Appraisal Firm shall
determine the Fair Market Value of the security, property, or assets, as the
case may be, in question on the basis of what a willing buyer, under no
compulsion to buy, would pay a willing seller, under no compulsion to sell, in
an arm's-length transaction. For the avoidance of doubt, it is agreed and
understood that any Appraisal Firm calculating Fair Market Value shall be
entitled to utilize such valuation methodologies as it deems appropriate for
making such calculation, and the foregoing sentence shall not create any
implication that the parties intend to in any way designate any particular
valuation methodology as the preferred approach. The Appraisal Firm shall
deliver its determination of Fair Market Value in writing to Orthovita and to
the Assignee. The fees and expenses of the Appraisal Firm shall be paid by the
Assignee unless the Appraisal Firm's determination of Fair Market Value is at
least 25% higher than that of Orthovita's Board of Directors.
"FDA" shall mean the United States Food and Drug Administration.
"Field of Use" shall mean: (a) *** or (b) any other uses and
indications cleared as of the date hereof or cleared in the future for VITOSS,
CORTOSS or RHAKOSS (i) ***
9
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
"Financial Statements" shall mean (i) the consolidated balance sheets
of Orthovita and its subsidiaries at December 31, 1999, December 31, 2000 and
June 30, 2001 and the related consolidated statements of operations and cash
flows and the consolidated statements of changes in stockholders' equity of
Orthovita and its subsidiaries audited for the years ended December 31, 1999 and
December 31, 2000 and unaudited for the six months ended June 30, 2001, and the
accompanying footnotes thereto, copies of which are attached hereto as Exhibit
B.
"Fiscal Year" shall mean the calendar year, except that for 2001
Fiscal Year shall mean from the Closing Date through December 31, 2001.
"GAAP" shall mean generally accepted accounting principles in the
United States in effect from time to time.
"Government Authority" means any government, court, regulatory or
administrative agency or commission, or other governmental authority, agency or
instrumentality, whether federal, state or local (domestic or foreign),
including, without limitation, the U.S. Patent and Trademark Office, the FDA,
the U.S. National Institute of Health or any other government authority located
in North America.
"Guaranteed Obligations" shall have the meaning in Section 5.14(a).
"Initial Applicable Percentage" shall mean 3.5%; provided, however,
that if the Initial Applicable Percentage is adjusted pursuant to Section
2.02(e) or (f), then "Initial Applicable Percentage" shall mean the percentage
as so adjusted.
"Insolvent" shall mean, with respect to Assignor or Orthovita, as
applicable, a financial condition such that Assignor's or Orthovita's respective
debts (in the case of Orthovita, on a consolidated basis) (excluding the
obligation of Assignor to make payments in respect of the Assigned Interests
pursuant to this Agreement, including pursuant to Section 5.07) is greater than
the Fair Market Value of Assignor's or Orthovita's tangible and intangible
assets (in the case of Orthovita, on a consolidated basis), respectively.
"Intellectual Property" shall mean all inventions (whether patentable
or unpatentable and whether or not reduced to practice), all improvements
thereto, and all patents, patent rights, patent applications and invention
disclosures, together with all reissues, continuations, continuations-in-part,
revisions, extensions, and reexaminations thereof, all registered or
unregistered trademarks, trade names, service marks, including all goodwill
associated therewith, and copyrights and all applications and registrations for
any of the foregoing owned or controlled
10
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
by or issued to Orthovita or Assignor, and relating to the Proprietary
Technology and the Products in the Territories.
"Investor Shares" shall have the meaning ascribed to such term in the
Stock Purchase Agreement.
"Joint Concentration Account" shall mean a segregated account
established for the benefit of Orthovita, Assignor and Assignee and maintained
at the Lockbox Bank pursuant to the terms of the Lockbox Agreement and this
Agreement. The Joint Concentration Account shall be the account into which the
Lockbox Bank sweeps the funds held in the Lockbox Account.
"Knowledge" shall mean, with respect to Assignor and/or Orthovita, as
applicable, the actual knowledge of an officer or representative of such Person
relating to a particular matter. Notwithstanding the foregoing, an officer or
representative of Assignor, Orthovita or any affiliate thereof charged with
responsibility for the aspect of the business relevant or related to the matter
at issue shall be deemed to have knowledge of a particular matter if, in the
prudent exercise of his or her duties and responsibilities in the ordinary
course of business, such officer or representative should have known of such
matter.
"Letter of Intent" shall mean the letter dated July 11, 2001 between
Xxxx Capital Partners and Orthovita, as amended on September 4, 2001 and as the
same may be amended to the date hereof.
"License Agreement" shall mean any existing or future co-promotion,
manufacturing, marketing or partnering agreements other than a Distribution
Agreement entered into by Orthovita relating to the Products and/or the
Proprietary Technology pursuant to which Orthovita or any Affiliate of Orthovita
grants a license to distribute the Products in the Territories or for use of the
Proprietary Technology.
"Licensees" shall mean, collectively, the licensees under the License
Agreements; each a "Licensee".
"License Party Audit" shall have the meaning set forth in Section
5.12(d).
"Liens" shall mean all liens, encumbrances, security interests,
mortgages or charges of any kind.
11
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
"Lockbox Account" shall mean collectively, any lockbox and segregated
lockbox account established and maintained at the Lockbox Bank pursuant to a
Lockbox Agreement and this Agreement. The Lockbox Account shall be the account
into which all payments made in respect of the sale of the Products are to be
remitted.
"Lockbox Agreement" shall mean any agreement entered into by a
Lockbox Bank, Orthovita, Assignor and Assignee, in form and substance reasonably
satisfactory to the parties thereto, pursuant to which, among other things, the
Lockbox Account, the Joint Concentration Account, Assignee Concentration Account
and Assignor Concentration Account shall be established and maintained.
"Lockbox Bank" shall mean such bank or financial institution approved
by each of Assignee and Assignor and a party to any Lockbox Agreement.
"Losses" shall mean collectively, any and all claims, damages,
losses, judgments, liabilities, costs and expenses (including, without
limitation, reasonable expenses of investigation and reasonable attorneys' fees
and expenses in connection with any action, suit or proceeding) incurred as a
result of a Person not a party hereto bringing an action, suit or proceeding
against a party hereto.
"Material Adverse Change" shall mean, with respect to Assignor and/or
Orthovita, as applicable, a material adverse change in the business, operations,
assets or financial condition of the Assignor and/or Orthovita, in each case
taken as a whole, after the date hereof, other than losses incurred by Orthovita
in the ordinary course of business.
"Material Adverse Effect" shall mean (i) a Material Adverse Change,
(ii) a materially adverse effect on the validity or enforceability of any of the
Transaction Documents (other than by virtue of a breach of a representation or
warranty of Assignee contained within any of the Transaction Documents), (iii) a
material adverse effect on the ability of the Assignor or Orthovita to perform
any of its material obligations under any of the Transaction Documents, (iv) a
material adverse effect on the right of Orthovita or Assignor to receive the
payments payable under all of its Distribution Agreements or License Agreements,
taken as a whole, or any other rights and remedies of Orthovita or Assignor
under its Distribution Agreements or License Agreements, taken as a whole, (v) a
material adverse effect on the right of Assignee to receive the Assigned
Interests or the Applicable Percentage of Net Sales or (vi) a material adverse
effect on the Assigned Interests taken as a whole, including, without
limitation, any material adverse effect on the ability of the Assignor to
manufacture, distribute and/or market the Products; provided, however, that any
order or other action taken by a regulatory body with
12
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
respect to the Products, including without limitation by the FDA and any foreign
government equivalent, having authority over Orthovita, its operations or the
Products, including without limitation a total or partial recall of any Product,
has any of the effects contemplated under clauses (i) through (vi) above, shall
not constitute a Material Adverse Effect.
"Material Contracts" shall mean any contract, agreement or other
arrangement to which either Assignor or Orthovita is a party or any of
Assignor's or Orthovita's respective assets or properties are bound or committed
(other than the Transaction Documents) for which breach, nonperformance,
cancellation or failure to renew would reasonably be expected to have a Material
Adverse Effect.
"North America" shall mean the United States, Canada and Mexico.
"Net Sales" shall mean, (A) for any period of determination, the
aggregate sales revenues of the Products during such period, in finished
packaged form (x) as invoiced by Orthovita or any Affiliate of Orthovita,
Distributors, Licensees or others to end-users of the Products in the United
States, (y) as invoiced by Orthovita or any Affiliate of Orthovita to
Distributors or end-users in Canada and Mexico, and (z) the aggregate European
sales revenues of the Products as invoiced by Orthovita or any Affiliate of
Orthovita to Distributors, less (i) customary cash, trade discounts and rebates
actually granted or paid but only if and to the extent the same are in
accordance with sound business practices and not in excess of customary industry
standards, (ii) allowances and adjustments actually credited to customers for
Products that are spoiled, damaged, outdated, obsolete, returned or otherwise
recalled, but only if and to the extent the same are in accordance with sound
business practices and not in excess of customary industry standards (but in no
event shall such amount be greater than *** percent of Net Sales in any year
(excluding a significant recall of any Product by a Government Authority in the
Territories)), (iii) charges included as part of the aggregate sales price for
freight, postage, shipping, delivery, service and insurance charges, to the
extent invoiced, (iv) taxes, duties or other governmental charges when included
in the invoice, and (v) with respect to Combination Products that contain or
otherwise combine Products with one or more other components, an amount equal to
the aggregate sales of such Products during such period, as invoiced to
customers, Distributors or Licensees, as applicable, multiplied by the Revenue
Adjustment Factor, and (B) ***
13
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
Notwithstanding the foregoing, if Orthovita or any Affiliate or Licensee of
Orthovita commences direct sales of the Products to end-users in any country or
countries in Europe, Orthovita, Assignor and Assignee shall agree on the method
(if different than as set forth above), on a country by country basis, for
calculating Net Sales in respect of such direct sales to end users.
"Notice of Election" shall have the meaning set forth in Section
5.05(b).
"Obligations" shall mean any and all obligations of Assignor or
Orthovita under this Agreement and the other Transaction Documents.
"Offered Interests" shall have the meaning set forth in Section
5.05(a).
"Orthovita" shall have the meaning set forth in the first paragraph
hereof.
"Orthovita Assignment Agreement" shall mean, collectively, the
Assignment Agreement, dated as of May 19, 1999, pursuant to which Orthovita
assigned certain Patents to Vita Licensing, Inc., as the same shall have been
amended, and the Assignment dated as of October 16, 2001 pursuant to which
Orthovita assigned certain non-registered Intellectual Property to Assignor.
"Orthovita Concentration Account" shall mean a segregated account
established for the benefit of Orthovita and maintained at the Lockbox Bank
pursuant to the terms of the Lockbox Agreement and this Agreement. The Orthovita
Concentration Account shall be the account into which the funds held in the
Joint Concentration Account which are payable to Orthovita pursuant to this
Agreement are swept by the Lockbox Bank in accordance with the terms of this
Agreement and the Lockbox Agreement.
"Orthovita Trademark Assignment Agreement" shall mean the Assignment
dated as of October 16, 2001, pursuant to which Orthovita assigned certain
Trademarks to Vita Licensing, as the same shall have been amended as of the
Closing Date.
"Other Interests" shall have the meaning set forth in Section
5.05(a).
"Owned Intellectual Property" shall have the meaning set forth in
Section 3.12(d).
"Patent Office" shall mean the respective patent office (foreign or
domestic) for any Patent.
14
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
"Patents" shall mean, relating solely to the sales of the Products in
the Territories and/or the Proprietary Technology and not any other products or
proprietary technologies of Assignor, Orthovita or its Affiliates, all patents,
patent applications and patent disclosures issued or filed in the Territories,
together with all reissues, continuations, continuations-in-part, revisions,
extensions, and reexaminations thereof relating to the Products and/or the
Proprietary Technology, composition of matter, formulation, or methods of
manufacture or use thereof that are issued or filed in the Territories,
including, without limitation, those identified in Schedule 3.12(a). For
avoidance of doubt, the term "Patents" does not include any patents, patent
applications and patent disclosures issued or filed in jurisdictions outside of
the Territories, nor does it include any reissues, continuations,
continuations-in-part, revisions, extensions, and reexaminations thereof
relating to the Products and/or the Proprietary Technology, composition of
matter, formulation, or methods of manufacture or use thereof that are issued or
filed in jurisdictions outside of the Territories.
"Person" means an individual, corporation, partnership, association,
trust or other entity or organization, but not including a government or
political subdivision or any agency or instrumentality of such government or
political subdivision.
"Pledge Agreement" shall mean the Pledge Agreement dated as of the
date hereof by and between Vita Licensing and Assignee providing for, among
other things, the grant by Vita Licensing in favor of Assignee of its common
stock in Assignor.
"PMA" shall mean Pre-Marketing Application.
"Products" shall mean (i) VITOSS, CORTOSS and RHAKOSS, (ii) ***
"Projected Net Sales" shall mean, with respect to any Fiscal Year
during the Revenue Interest Period, the net sales of the Products to end-users
in North America and to Distributors for distribution in Europe projected by
Orthovita for such Fiscal Year, as set forth in Exhibit A hereto.
15
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
"Proposed Transfer" shall have the meaning set forth in Section
5.05(a).
"Proposed Transfer Notice" shall have the meaning set forth in
Section 5.07(d).
"Proprietary Technology" shall mean the proprietary technology set
forth and described on Schedule A hereto.
"Purchase Option Exercise Period" shall have the meaning set forth in
Section 5.07(a).
"Purchase Option Event" shall mean any one of the following events:
(i) any Change of Control;
(ii)*** ;
(iii)*** ;
(iv)*** ; or
(v) a Termination Event shall have occurred.
Notwithstanding clause (ii) of this definition of "Purchase Option Event" to the
contrary, in the event of a Transfer involving only Other Interests in
accordance with Section 5.05, then such Transfer under such clause (ii) above
shall not constitute a Purchase Option Event.
16
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
"Quarterly Report" shall mean, with respect to the relevant fiscal
quarter of Assignor, (i) a report showing all payments made by Assignor to
Assignee under this Agreement during such quarter and showing in reasonable
detail the basis for the calculation of such payments, (ii) a reconciliation of
such report referred to in clause (i) above to all information and data
deliverable to Orthovita by the parties to any Distribution Agreements and/or
License Agreements, together with relevant supporting documentation and (iii)
such additional information as Assignee may reasonably request.
"Reformulated Product" shall mean any improvement in VITOSS, CORTOSS
or RHAKOSS ***.
"Registered Intellectual Property" shall have the meaning set forth
in Section 3.12(a).
"Regulatory Agency" shall mean a regulatory agency with
responsibility for the approval of the marketing and sale of drugs in any
country.
"Repurchase Event" shall have the meaning set forth in Section
5.07(e).
"Revenue Adjustment Factor" shall mean, with respect to any
Combination Product, a fraction the numerator of which is the invoice price of
the related Product, if sold separately, and the denominator of which is the sum
of (x) the invoice price of the related Product, if sold separately, and (y) the
total invoice price of any other components of such Combination Product, if sold
separately. If the Product or other components of the Combination Product are
not sold separately then the parties hereto will discuss and mutually agree on
the appropriate values of the active and other components of the Combination
Product.
"Revenue Interest Period" shall mean the period from and including
September 30, 2001 through and including December 31, 2016, unless earlier
terminated upon a repurchase of the Assigned Interests by the Assignor or
otherwise in accordance with the terms of this Agreement.
"Revenue Interests" shall mean, (a) with respect to any Distribution
Agreements, all of Orthovita's or Assignor's rights to receive payments in
respect of sales of the Products in the Territories, whether to end-users or
Distributors, (b) with respect to License Agreements, all of Orthovita's or
Assignor's rights under such License Agreements, including, without limitation,
rights to receive payments in respect of sale of the Products in the Territories
and (c) otherwise,
17
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
all of Orthovita's or Assignor's rights, however derived, to receive payments in
respect of sales of the Products in the Territories.
"RHAKOSS" means bone replacements and spinal bone implants comprising
a pre-formed resin composite.
"Royalty Interests" means the Assignor's right to receive payments in
respect of Orthovita's sale of certain products, including, without limitation,
the Products, pursuant to the Vita SPC Patent License Agreement.
"Security Agreement" shall mean the Security Agreement dated as of
the date hereof by and between Assignor and Assignee providing for, among other
things, the grant by Assignor in favor of Assignee of a valid, continuing,
perfected lien on and security interest in, the Assigned Interests and the other
Collateral described therein.
"Stock Purchase Agreement" shall mean the Stock Purchase Agreement,
dated as of the date hereof, by and between Orthovita and the Assignee.
"Term" shall mean the term of this Agreement, which shall commence on
the date hereof and terminate on the earlier of (i) December 31, 2016 and (ii)
the consummation of a Repurchase Event under either Section 5.07(a) or 5.07(c).
"Termination Event" shall mean:
(i) a Bankruptcy Event shall have occurred; or
(ii) if (A) any representation, warranty or certification made
by either Assignor or Orthovita in any of the Transaction Documents or in any
certificate at any time given by either Assignor or Orthovita in writing
pursuant hereto or thereto or in connection herewith or therewith shall be
inaccurate on the date as of which it was made or deemed made, and such
inaccuracy would, individually or in the aggregate with other inaccuracies on
the part of Assignor or Orthovita, as the case may be, reasonably be expected to
have a Material Adverse Effect or (B) there has occurred a breach of or default
under any term, covenant, or agreement under any Transaction Document by either
Assignor or Orthovita, which would, individually or in the aggregate with other
breaches on the part of Assignor or Orthovita, as the case may be, reasonably be
expected to have a Material Adverse Effect, and such false representation,
warranty or certification or breach or default, as the case may be, if capable
of cure, has not been cured within thirty (30) days following receipt by
Assignor or Orthovita, as applicable, from
18
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
Assignee of notice of such false representation, warranty or certification or
breach or default, as the case may be and requesting that the same be cured.
"Territories" shall mean North America and Europe, as such terms are
defined herein.
"Transaction Documents" shall mean, collectively, this Agreement, the
Assignment Documents, the Security Agreement, the Pledge Agreement and any
Lockbox Agreement. For purposes of the representations and warranties contained
in Article III, the term Transaction Documents shall not include the Lockbox
Agreement and any Assignment Document that is not dated the date hereof and
executed by Assignor, Orthovita and/or Assignee and delivered on the Closing
Date until such documents are executed and delivered.
"Transfer" or "Transferred" shall mean any sale, conveyance,
assignment, disposition or transfer, excluding any transfer pursuant to a
Distribution Agreement or License Agreement.
"Transfer Notice" shall have the meaning set forth in Section
5.05(a).
"Transferees" shall have the meaning set forth in Section 2.02(c).
"True-Up Amount" shall have the meaning set forth in Section
2.02(d)(ii).
"True-Up Date" for any fiscal quarter shall mean the 20th day
following the end of each such fiscal quarter of Assignor, unless such date is
not a Business Day in which case the applicable date will be the immediately
succeeding Business Day.
"United States" shall mean the United States of America.
"UCC" shall mean the Uniform Commercial Code (or any similar or
equivalent legislation) as in effect in any applicable jurisdiction.
"Vita License Agreement" shall mean the Vita Licensing Inc. License
to Orthovita, Inc. dated as of July 15, 2000, as amended to date, by and between
Vita Licensing and Orthovita.
"Vita Licensing Patent Assignment Agreement" shall mean the
Assignment between Vita Licensing and Assignor, dated as of October 16, 2001,
pursuant to which Vita Licensing assigned certain Patents to Assignor, as the
same shall have been amended as of the Closing Date.
19
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
"Vita Licensing Trademark Assignment Agreement" shall mean the
Assignment between Vita Licensing and Assignor, dated as of October 16, 2001,
pursuant to which Vita Licensing assigned certain Trademarks to Assignor, as the
same shall have been amended as of the Closing Date.
"Vita SPC Patent License Agreement" shall mean the agreement between
Vita Licensing and Assignor, dated as of October 16 , 2001, providing for, among
other things, the payment to Assignor of the Royalty Interests.
"Vita SPC Trademark License Agreement" shall mean the agreement
between Vita Licensing and Assignor, dated as of October 16, 2001, providing for
the licensing of certain trademarks by Assignor to Vita Licensing.
"VITOSS" means a resorbable cancellous calcium phosphate bone void
filler.
"Weighted Average Applicable Percentage" shall mean, with respect to
any Fiscal Year, the average Applicable Percentage for such Fiscal Year weighted
on the basis of the amount of Net Sales during such Fiscal Year against which
such Applicable Percentage was applied in calculating amounts payable pursuant
to Sections 2.02(d). For example, if Net Sales equaled $200 million during a
Fiscal Year during the Revenue Interest Period, the Weighted Average Applicable
Percentage would equal 2.63%, based on the following calculations:
1. (3.5%/1/ x $100 million) + (1.75% x $100 million) = $5.25 million.
2. $5.25 million/$200 million = 2.63%.
ARTICLE II
PURCHASE AND SALE OF ASSIGNED INTERESTS
Section 2.01 Purchase and Sale.
Upon the terms and subject to the conditions set forth in this
Agreement, Assignor agrees to sell, assign, transfer and convey to Assignee, and
Assignee agrees to purchase from Assignor, free and clear of all Liens (except
those Liens created in favor of Assignee pursuant to
----------------------
1 Assumes no adjustments to the Initial Applicable Percentage are required
under Section 2.02(e) or (f).
20
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
the Security Agreement and any other Transaction Document) and subject to the
conditions set forth in Article VI, all of Assignor's rights and interests in
and to the Assigned Interests on the Closing Date. Assignee's ownership interest
in each of the Assigned Interests so acquired shall vest immediately upon
Assignor's receipt of the payment for such Assigned Interests pursuant to
Section 2.03.
Section 2.02 Payments in Respect of the Assigned Interest.
(a) Assignee shall be entitled to receive the Advance Payments for the
calendar year ending December 31, 2003 and for each calendar year thereafter
during the Revenue Interest Period. During the calendar year ending December 31,
2003 and during each calendar year thereafter included in the Revenue Interest
Period, proceeds from the sale of Products in the Territories which are received
from time to time in the Lockbox Account of up to the total Advance Payment to
which Assignee is entitled hereunder for that particular year (the "Advance
Payment Amounts") shall be swept from the Joint Concentration Account into the
Assignee Concentration Account on a daily basis pursuant to Section 5.10.
(b) During the Fiscal Year ending December 31, 2003 and during each
Fiscal Year thereafter included in the Revenue Interest Period, once Assignee
has received the Advance Payment due Assignee for the applicable Fiscal Year
pursuant to subsection 2.02(a) above, Orthovita and Assignor shall be entitled
to retain in full (and Assignee shall not be entitled to receive the Applicable
Percentage in respect of) Net Sales in an amount equal to (x) the quotient
obtained by dividing the Advance Payment for such Fiscal Year by the Weighted
Average Applicable Percentage applicable to Net Sales to date for such Fiscal
Year, minus (y) the Advance Payment for such Fiscal Year. After retention by
Assignor in full of Net Sales in the amount set forth in the preceding sentence,
Assignee shall thereafter be entitled to the Applicable Percentage of Net Sales
for the remainder of such Fiscal Year, subject to subsections (d), (e) and (f)
below.
(c) Upon any sale of the Investor Shares (as such term is defined in
the Stock Purchase Agreement) other than to a Transferee (as hereinafter
defined), Assignor shall receive a credit to be applied against amounts payable
to Assignee under Section 2.02(d) in an amount equal to (I) the proceeds of such
sale until such time as the proceeds (or any portion thereof) of such sale,
together with the proceeds of all prior sales of Investor Shares, equal
$5,000,000 (five million dollars) less the amount of any underwriting fees,
discounts or commissions attributable to such sale of Investor Shares by the
Assignee or Transferee, as applicable, and (II) thereafter, 1/3 of the sales
price for such Investor Shares in excess of $5,000,000, if any, less 1/3 of the
21
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
underwriting fees, discounts or commissions attributable to the sale of the
Investor Shares by Assignee or a Transferee, as applicable, that generates
credits to Assignor pursuant to this clause (II) of this Subsection 2.02(c). The
provisions of this Subsection 2.02(c) shall also apply to sales of Investor
Shares by an Affiliate of Assignee or any other Person who purchases Investor
Shares from Assignee in a transaction that is not a bona fide acquisition of
such stock (such Affiliates or other Persons are referred to as "Transferees").
Following termination of this Agreement, Assignee shall promptly pay to Assignor
(in lieu of any credit therefore as provided in this subsection (c)) the amount
of any outstanding credits and shall also pay to Assignor any amounts described
in the preceding clauses (I) and (II) arising from dispositions of the Investor
Shares following termination of this Agreement; provided, however, the aggregate
credits applied on behalf of Assignor or, following termination of this
Agreement, paid to Assignor, may not exceed the aggregate amounts paid or
payable to Assignee under this Agreement.
(d) Subject to the satisfaction of the provisions of subsections (a)
and (b) above, if applicable, Assignee shall be entitled to receive an amount
equal to the Applicable Percentage of Net Sales made during the Revenue Interest
Period, payable as follows:
(i) the Applicable Percentage of Net Sales which shall be
swept from the Joint Concentration Account into Assignee Concentration Account
on a daily basis (the "Daily Amount") pursuant to Section 5.10; and
(ii) in the event that the aggregate of the Daily Amounts
received by Assignee during any period commencing on the first day of each
Fiscal Year and ending on the last day of a fiscal quarter, taking into account
the Advance Payments made in respect of such Fiscal Year, any credits against
amounts payable to Assignee as provided in Section 2.02(c) and any true-up
payment previously made under this Section 2.02(d)(ii) in respect of such Fiscal
Year, (x) is less than the Weighted Average Applicable Percentage of Net Sales
for such period, then on the applicable True-Up Date, Assignor shall pay to
Assignee an amount equal to such difference, or (y) is greater than the Weighted
Average Applicable Percentage of Net Sales for such period, then on the
applicable True-Up Date, Assignee shall pay to Assignor an amount equal to such
difference attributable to any payments previously made by Assignor in respect
of such Fiscal Year, and, if any excess amount then remains attributable to the
credits under Section 2.02(c), then Assignee shall pay to Assignor an amount
equal to such difference attributable to any payments previously made by
Assignor in respect of any previous Fiscal Years, and, if any excess amount then
still remains attributable to the credits under Section 2.02(c), then Assignee
shall carryover any such remaining amounts payable to Assignor under clause (y)
to the next
22
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
subsequent fiscal quarter or quarters until such time as they are no longer
outstanding/2/ (any amount payable pursuant to the preceding clause (x) or
clause (y), a "True-Up Amount"). Assignor shall, within five (5) Business Days
after receipt of any amounts in respect of any accounts previously written-off
for which no Applicable Percentage of Net Sales were paid to Assignee, remit to
Assignee the Applicable Percentage (such Applicable Percentage to be based upon
the Applicable Percentage at the time that such accounts were written-off) of
any such recoveries up to the amount by which prior payments to Assignee were
reduced pursuant to the second preceding sentence.
(e) If, for any Fiscal Year during the Revenue Interest Period, actual
Net Sales are less than *** of Projected Net Sales, then the Initial Applicable
Percentage for any such Fiscal Year shall be ***%.
(f) If, for any Fiscal Year during the Revenue Interest Period, actual
Net Sales are less than *** but greater than or equal to *** of Projected Net
Sales, then the Initial Applicable Percentage for any such Fiscal Year shall be
***%.
(g) If, for any Fiscal Year during the Revenue Interest Period, actual
Net Sales are greater than ***% of Projected Net Sales, then Assignee shall
remit to Assignor an amount equal to ***% of the product of (i) the excess of
Net Sales for such Fiscal Year over ***% of the Projected Net Sales and (ii) the
Weighted Average Applicable Percentage for such Fiscal Year.
(h) Any amounts payable pursuant to clauses (e), (f) or (g) of this
Section 2.02 shall be remitted by Assignor to Assignee (in the case of clauses
(e) or (f)) or by Assignee to Assignor (in the case of clause (g)) within sixty
(60) days after the end of the Fiscal Year.
(i) If, for any Fiscal Year during the Revenue Interest Period, (x) the
sum of (i) the aggregate Daily Amounts paid to Assignee, (ii) the aggregate
True-Up Amounts paid to Assignee, (iii) the aggregate Advance Payments paid to
Assignee and (iv) the aggregate amounts paid to Assignee pursuant to Sections
2.02(e) and (f) is less than (y) the sum of (i) the Weighted
-------------------
2 By way of example, if during the first fiscal quarter of the first Fiscal
Year:
(a) Assignee received $500,000 under Section 2.02(d)(i);
(b) the Weighted Average Applicable Percentage of Net Sales equaled $1
million; and
(c) Assignor earned a credit of $1.1 million under Section
2.02(c),
then Assignee would owe Assignor $600,000, of which $100,000 would be carried
forward to the next fiscal quarter.
23
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
Average Applicable Percentage of Net Sales and (ii) the aggregate amount paid to
Assignor pursuant to Sections 2.02(g), then Assignor shall pay Assignee an
amount equal to the excess of clause (y) over clause (x). If the amounts set
forth the preceding clause (x) exceed the amounts set forth in the preceding
clause (y) then Assignee shall pay Assignor an amount equal to such excess. Any
amounts payable pursuant to this subsection (i) shall be remitted within twenty
(20) days following the receipt of written notice, together with supporting
documentation with respect thereto (which notice shall be given no later than
one hundred twenty days (120) after the end of such Fiscal Year) that such
payment is due pursuant to this subsection.
(j) If Assignee receives Advance Payment Amounts for any Fiscal Year
pursuant to Section 2.02(a) that, in the aggregate, exceed the Weighted Average
Applicable Percentage of Net Sales for such Fiscal Year, then Assignee shall
rebate such excess amount to Assignor within sixty (60) days after the end of
such Fiscal Year, but only to the extent that Assignor does not notify Assignee
prior to such date that it is offsetting any amount due under this clause (j)
against amounts that Assignor owes to Assignee under clause (i) of this Section
2.02.
(k) Any payments to be made by Assignor to Assignee hereunder or under
any other Transaction Document shall be made by wire transfer of immediately
available funds.
(l) Within thirty (30) Business Days following delivery to Assignee by
Assignor of the Quarterly Report for the fourth fiscal quarter of each Fiscal
Year during the Revenue Interest Period, to the extent that either Assignee or
Assignor has determined that there is a discrepancy as to the amounts paid to
Assignee hereunder for such Fiscal Year, then the Person who has made such
determination may notify the other in writing of such discrepancy indicating in
reasonable detail its reasons for such determination (the "Discrepancy Notice").
In the event that either Assignee or Assignor delivers to the other party a
Discrepancy Notice, Assignee and Assignor shall meet within ten (10) Business
Days (or such other time as mutually agreed by the parties) after the receiving
party has received a Discrepancy Notice to resolve in good faith such
discrepancy. If the discrepancy has been resolved and, as a result thereof, it
is determined that a payment is owing by Assignee to Assignor or by Assignor to
Assignee, then the party owing such payment shall promptly pay such payment to
the other party. If, within forty-five (45) days after receipt of the
Discrepancy Notice, Assignor and Assignee cannot resolve any such discrepancies,
then Assignee and Assignor shall promptly instruct their respective firms of
independent certified public accountants to select, within five (5) Business
Days thereafter, a third nationally recognized accounting firm (the "Independent
Accountants"). After offering Assignor and its representatives and Assignee and
its representatives the opportunity to present their positions as to the
disputed items, which opportunity shall not extend for more than ten (10)
24
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
calendar days after the Independent Accountants have been selected, the
Independent Accountants shall review the disputed matters and the materials
submitted by Assignor and Assignee and, as promptly as practicable, deliver to
Assignor and Assignee a statement in writing setting forth its determination of
the proper treatment of the discrepancies as to which there was disagreement,
and that determination will be final and binding upon the parties hereto without
any further right of appeal. All charges of that accounting firm incurred in
making that determination will be borne one-half by Assignee and one-half by
Assignor.
Section 2.03 Purchase Price.
In full consideration for the assignment by the Assignor of the
Assigned Interests, and subject to the terms and conditions set forth herein,
Assignee shall pay to Assignor $5.0 million (five million dollars) for the
Assigned Interests acquired pursuant to Section 2.01 (the "Closing Purchase
Price Payment"). The Closing Purchase Price Payment shall be paid by wire
transfer of immediately available funds to the account designated by Assignor
(the "Assignor's Account") upon the Closing.
Section 2.04 No Assumed Obligations.
Notwithstanding any provision in this Agreement or any other writing to
the contrary, Assignee is acquiring only the Assigned Interests and is not
assuming any liability or obligation of Assignor or Orthovita of whatever
nature, whether presently in existence or arising or asserted hereafter, whether
under any Distribution Agreement, License Agreement and any other Transaction
Document or otherwise. All such liabilities and obligations shall be retained by
and remain obligations and liabilities of Assignor or Orthovita (the "Excluded
Liabilities and Obligations").
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ASSIGNOR AND ORTHOVITA
Assignor and Orthovita hereby jointly and severally represent and
warrant to Assignee as of the date hereof and as of the Closing Date the
following:
Section 3.01 Organization.
Orthovita, Vita Licensing and Assignor are corporations duly
incorporated, validly existing and in good standing under the laws of their
respective jurisdictions of incorporation,
25
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
and have all corporate powers and all licenses, authorizations, consents and
approvals required to carry on their respective businesses as now conducted and
as proposed to be conducted in connection with the transaction contemplated
hereby.
Section 3.02 Corporate Authorization.
Each of Assignor, Vita Licensing and Orthovita has all necessary power
and authority to enter into, execute and deliver this Agreement and the other
Transaction Documents to which it is a party and to perform all of the
obligations to be performed by it hereunder and thereunder and to consummate the
transactions contemplated hereunder and thereunder. This Agreement and the other
Transaction Documents have been duly authorized, executed and delivered by each
of Assignor and Orthovita (to the extent a party thereto) and each of this
Agreement and each other Transaction Document to which each of Assignor and
Orthovita is a party constitutes the valid and binding obligation of Assignor
and Orthovita, enforceable against Assignor and Orthovita in accordance with
their respective terms subject, as to enforcement of remedies, to bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally or general equitable principles.
Section 3.03 Governmental Authorization.
The execution and delivery by each of Assignor and Orthovita of this
Agreement and the other Transaction Documents to which it is a party, and the
performance by Assignor or Orthovita of its respective obligations hereunder and
thereunder, does not require any notice to, action or consent by, or in respect
of, or filing with, any Government Authority, except as set forth in Schedule
3.03 hereto.
Section 3.04 Ownership.
(a) Prior to the date hereof, subject to the terms of the Assignment
Documents, each of Orthovita and Vita Licensing has Transferred to Assignor all
of its rights, title and interest in and to the Intellectual Property, the
Proprietary Technology, and, subject to the terms of the Vita SPC Patent License
Agreement, Vita Licensing has agreed to pay the Royalty Interests to Assignor.
(b) Assignor, immediately prior to the assignment of the Assigned
Interests, owns, and is the sole holder of, all the Royalty Interests; and
except as set forth on Schedule 3.04, Assignor and/or Orthovita own, are the
sole holder of, and/or have and hold a valid, enforceable and subsisting license
to, all of those other assets that are required to produce or receive any
26
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
payments from any Distributor or payor under and pursuant to, and subject to the
terms of each of the Distribution Agreements, in each case free and clear of any
and all Liens, except those Liens created in favor of Assignee pursuant to the
Security Agreement and any other Transaction Document. Neither Orthovita nor
Assignor has transferred, sold, or otherwise disposed of, or agreed to transfer,
sell, or otherwise dispose of any portion of the Revenue Interests other than as
contemplated by this Agreement, the Assignment, the Vita License Agreement, the
Vita SPC Patent License Agreement or the applicable Distribution Agreement. No
Person other than Orthovita, Vita Licensing or Assignor has any right to receive
the payments payable under any Distribution Agreement other than (a) in respect
of the Assigned Interests, Assignee from and after the Closing Date and (b) as
set forth on Schedule 3.04. Assignor has the full right to sell, transfer,
convey and assign to Assignee all of Assignor's rights and interests in and to
the Assigned Interests being sold, transferred, conveyed and assigned to
Assignee pursuant to this Agreement without any requirement to obtain the
consent of any Person. By the delivery to Assignee of the executed Assignment,
Assignor shall transfer, convey and assign to Assignee all of Assignor's rights
and interests in and to the Assigned Interests being sold, transferred, conveyed
and assigned to Assignee pursuant to this Agreement, free and clear of any
Liens, except those Liens created in favor of Assignee pursuant to the Security
Agreement and any other Transaction Document. At the Closing, upon payment of
the Closing Purchase Price Payment by Assignee to Assignor, and upon the
delivery of the Assignment to Assignee by Assignor, Assignee shall have acquired
good and valid rights and interests of Assignor in and to the Assigned Interests
being sold, transferred, conveyed and assigned to Assignee pursuant to this
Agreement, free and clear of any and all Liens, except those Liens created in
favor of Assignee pursuant to the Security Agreement and any other Transaction
Document and other than as set forth on Schedule 3.04.
Section 3.05 Financial Statements.
The Financial Statements are complete and accurate in all material
respects, were prepared in conformity with GAAP and present fairly in all
material respects the financial position and the financial results of Orthovita
and its subsidiaries as of the dates and for the periods covered thereby. There
has been no Material Adverse Change since December 31, 2000.
Section 3.06 No Undisclosed Liabilities.
Except for those liabilities (a) reflected in the Financial Statements,
and (b) incurred by Orthovita or any of its subsidiaries in the ordinary course
of business since June 30, 2001, or (c) that may be incurred under this
Agreement or under any of the Transaction Documents, there
27
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
are no material liabilities of Orthovita and any of its subsidiaries or Assignor
separately of any kind whatsoever, whether accrued, contingent, absolute,
determined or determinable, and there is no condition, situation or set of
circumstances which would reasonably be expected to result in such a material
liability.
Section 3.07 Solvency.
None of Assignor, Vita Licensing nor Orthovita is Insolvent. Assuming
consummation of the transactions contemplated by this Agreement, (a) the present
fair saleable value of each of Assignor's and Orthovita's assets is greater than
the amount required to pay its debts as they become due, (b) neither Assignor
nor Orthovita has unreasonably small capital with which to engage in its
business, and (c) neither Assignor nor Orthovita has incurred, or has present
plans to or intends to, incur, debts or liabilities (other than debts or
liabilities incurred pursuant hereto and pursuant to the Transaction Documents)
beyond its ability to pay such debts or liabilities as they become absolute and
matured.
Section 3.08 Litigation.
(a) There is no (a) action, suit, arbitration proceeding, claim,
investigation or other proceeding pending or, to the Knowledge of each of
Assignor and Orthovita, threatened against either Assignor or Orthovita or (b)
governmental inquiry pending or, to the Knowledge of each of Assignor and
Orthovita, threatened against either Assignor or Orthovita, in each case with
respect to clauses (a) and (b) above, which, if adversely determined, would
question the validity of, or could materially and adversely affect or prevent
the consummation of, the transactions contemplated by this Agreement or any of
the other Transaction Documents or would reasonably be expected to have a
Material Adverse Effect. There is no action, suit, claim, proceeding or
investigation pending or, to the Knowledge of each of Assignor and Orthovita,
threatened against any other Person relating to the Products, any Existing
Distribution Agreement, any Existing License Agreement, the Intellectual
Property, the Revenue Interests or the Assigned Interests.
Section 3.09 Compliance with Laws.
Neither Assignor nor Orthovita (a) is in violation of, has violated, or
to the Knowledge of either Assignor or Orthovita, is under investigation with
respect to, and, (b) to the Knowledge of either Assignor or Orthovita, has been
threatened to be charged with or been given notice of any violation of, with
respect to clauses (a) and (b) above, any law, rule, ordinance or regulation,
judgment, order or decree entered by any Government Authority applicable to
either Assignor or Orthovita, the Assigned Interests, the Revenue Interests, any
Existing Distribution
28
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
Agreement or any Existing License Agreement which would reasonably be expected
to have a Material Adverse Effect.
Section 3.10 Conflicts.
(a) Neither the execution and delivery of this Agreement or any other
Transaction Document nor the performance or consummation of the transactions
contemplated hereby or thereby will: (i) contravene, conflict with, result in a
breach or violation of, constitute a default under, or accelerate the
performance provided by, in any material respect any provisions of: (A) any law,
rule or regulation of any Government Authority, or any judgment, order, writ,
decree, permit or license of any Government Authority, to which Assignor or
Orthovita or any of their respective assets or properties may be subject or
bound; or (B) any contract, agreement, commitment or instrument to which either
Assignor or Orthovita is a party or by which Assignor or Orthovita or any of
their respective assets or properties is bound or committed; (ii) contravene,
conflict with, result in a breach or violation of, constitute a default under,
or accelerate the performance provided by, in any respects any provisions of the
certificate of incorporation or by-laws (or other organizational or
constitutional documents) of Assignor or Orthovita; (iii) except for the filing
of the UCC-1 financing statements required hereunder or as set forth in Schedule
3.10(a) hereto, require any notification to, filing with, or consent of, any
Person (including, without limitation, any party to any Existing Distribution
Agreement, any Existing License Agreement or any licensor of any Intellectual
Property to Assignor or Orthovita, as applicable) or Government Authority; (iv)
constitute a breach of or default under any Existing Distribution Agreement or
any Existing License Agreement or give rise to any right of termination,
cancellation or acceleration of any right or obligation of Assignor, Orthovita
or any other Person or to a loss of any benefit relating to the Revenue
Interests or Assigned Interests; or (v) result in the creation or imposition of
any Lien on (A) the assets or properties of Assignor or Orthovita or (B) the
Assigned Interests, Revenue Interests, any of the Existing Distribution
Agreements, any Existing License Agreement, or any other Collateral, other than,
with respect to clauses (A) and (B) above, pursuant to the Security Agreement.
(b) Neither Assignor nor Orthovita has granted, and nor does there
exist, any Lien on the Revenue Interests, any Existing Distribution Agreements,
any Existing License Agreement, the Assigned Interests or any other Collateral
other than pursuant to the Security Agreement.
Section 3.11 Material Contracts.
Neither Assignor nor Orthovita is in breach of or in default under any
Material Contract, including, without limitation, any Distribution Agreement or
any License Agreement to
29
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
which Orthovita is a party, except for that which, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.
To the Knowledge of Orthovita and Assignor, nothing has occurred and no
condition exists that would permit any other party thereto to terminate any
Material Contract to which either Assignor or Orthovita is a party, and neither
Assignor nor Orthovita has received any notice or threat of termination of any
such Material Contract. To the knowledge of Assignor and Orthovita, no other
party to a Material Contract to which either Assignor or Orthovita is a party is
in breach of or in default under such Material Contract. All Material Contracts
to which either Assignor or Orthovita is a party are valid and binding and are
in full force and effect.
Section 3.12 Intellectual Property.
(a) Schedule 3.12(a) sets forth an accurate and complete list of all
(1) North American and European Patents and North American and European Patent
applications and (2) trade names, common law trademarks and service marks,
registrations and applications for registration with the U.S. Patent and
Trademark Office of service marks and trademarks and (3) copyright registrations
("Registered Intellectual Property"), which are necessary for, or actually used
in, the development, manufacture, commercialization, marketing or other use of
the Products by Assignor, Orthovita or their licensee(s), except as otherwise
disclosed therein and, which are owned by, licensed to, licensed by or otherwise
used by Assignor or Orthovita. For each listed Patent and Registered
Intellectual Property, Assignor has identified (i) the owner, (ii) the countries
in which such Patent or Registered Intellectual Property is patented or
registered or in which an application for patent or registration is pending,
(iii) the application number, (iv) the registration or patent number, and (v)
the expiration date thereof, as applicable, absent any patent term extensions
and the date on which any applicable maintenance fee is due or payable.***
(b) ***
(c) ***
30
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
(d) ***
(e) ***
(f) ***
(g) ***
(h) ***
(i) ***
(j) ***
31
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
(k)***
(l)***
(m)***
32
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
Section 3.13 Regulatory Approval.
(a) ***
(b) ***
(c) ***
33
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
Section 3.14 Transfer of Intellectual Property Rights.
Neither Assignor nor Orthovita is transferring to Assignee any interest
in any Patents, other patents or other Intellectual Property of either Assignor
or Orthovita.
Section 3.15 Subordination.
***
Section 3.16 Place of Business.
Assignor's principal place of business and chief executive office are
set forth on Schedule 3.16. Orthovita's principal place of business and chief
executive office are set forth on Schedule 3.16.
Section 3.17 Broker's Fees.
Neither Assignor nor Orthovita has taken any action which would entitle
any Person to any commission or broker's fee in connection with the transactions
contemplated by this Agreement.
Section 3.18 Other Information.
No written statement, information, report or materials prepared by or
on behalf of either Assignor or Orthovita and furnished to Assignee by or on
behalf of either Assignor or Orthovita in connection with this Agreement or any
Transaction Document or any transaction contemplated hereby or thereby, no
written representation, warranty or statement made by either Assignor or
Orthovita in any Transaction Document, and no schedule or exhibit hereto, in
each case with respect to any of the foregoing contains any untrue statement of
a material fact or omits any statement of material fact necessary in order to
make the statements made therein in light of the circumstances under which they
were made not misleading.
34
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
Section 3.19 Distribution Agreements and License Agreements.
The Existing Distribution Agreements and Existing License Agreements
are in full force and effect and there has been no correspondence or other
written communication sent by or on behalf of Assignor or Orthovita to, or
received by or on behalf of Assignor or Orthovita from, any Distributor or
Licensee, the subject matter of which would reasonably be expected to have a
Material Adverse Effect.
(a) With respect to the Existing Distribution Agreements and Existing
License Agreements:
(i) Except for that which, individually or in the
aggregate, would not reasonably be expected to have a
Material Adverse Effect, each such Existing
Distribution Agreement and Existing License
Agreement, as applicable, is in full force and effect
and has not been impaired, waived, altered or
modified in any respect, whether by way of any
sublicense, consent or otherwise and no licensee has
granted a sublicense under any Existing Distribution
Agreement or any Existing License Agreement.
(ii) Except for that which, individually or in the
aggregate, would not reasonably be expected to have a
Material Adverse Effect, the Distributor or Licensee
under each such Existing Distribution Agreement or
Existing License Agreement, as applicable, has not
been released, in whole or in part, from any of its
obligations under such Existing Distribution
Agreement or Existing License Agreement.
(iii) Neither Orthovita nor Assignor has received (A) any
notice of any Distributor's or any Licensee's
intention to terminate such Existing Distribution
Agreement or Existing License Agreement, as
applicable, in whole or in part or (B) any notice
requesting any amendment, alteration or modification
of such Existing Distribution Agreement, Existing
License Agreement or any sublicense or assignment
thereunder.
(iv) To the Knowledge of Orthovita and Assignor, nothing
has occurred and no condition exists that would
materially and adversely impact the right of either
Orthovita or Assignor to receive any payments payable
under
35
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
the Existing Distribution Agreement or Existing
License Agreement. None of Assignor, Orthovita or,
the Knowledge of Orthovita and Assignor, any
Distributor or Licensee, as applicable, has taken any
action or omitted to take any action, that would
materially and adversely impact the right of Assignee
to receive the Assigned Interests or the Applicable
Percentage of the Net Sales.
(v) All payments required to be made as of the Closing
Date under the terms of each Existing Distribution
Agreement and Existing License Agreement have been
made. To the Knowledge of Orthovita and Assignor, no
payment required to be made under the terms of any
Existing Distribution Agreement or Existing License
Agreement, as applicable, has been subject to any
claim pursuant to any right of rescission, set-off,
counterclaim or defense. The operation of any of the
terms of any Existing Distribution Agreement or
Existing License Agreement, or the exercise of any
rights thereunder, will not render such Existing
Distribution Agreement or Existing License Agreement,
as applicable, unenforceable, in whole or in part.
(vi) Except for that which, individually or in the
aggregate, would not reasonably be expected to have a
Material Adverse Effect, such Existing Distribution
Agreement or Existing License Agreement, as
applicable, has not been satisfied in full,
discharged, canceled, terminated, subordinated or
rescinded, in whole or in part. Such Distribution
Agreement or Existing License Agreement, as
applicable, is the entire agreement between Orthovita
and the Distributor or Licensee, as applicable, party
thereto relating to the subject matter thereof and
constitutes the only document, agreement or
instrument between Orthovita and such Distributor or
Licensee, as applicable, that relates to the sales of
the related Products.
(vii) Except for that which, individually or in the
aggregate, would not reasonably be expected to have a
Material Adverse Effect, such Existing Distribution
Agreement or Existing License Agreement, as
applicable, is the legal, valid and binding
obligation of Orthovita and the Distributor or
Licensee, as applicable, party thereto, enforceable
against Orthovita and such Distributor or Licensee,
as applicable, in
36
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
accordance with its terms, subject, as to enforcement
of remedies, to bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting
creditors' rights generally and general equitable
principles. The execution, delivery and performance
of such Existing Distribution Agreement or Existing
License Agreement was and is within the corporate
powers of Orthovita and, to the Knowledge of
Orthovita and Assignor, the Distributor or Licensee,
as applicable, party thereto. Such Existing
Distribution Agreement or Existing License Agreement
was duly authorized by all necessary action on the
part of, and validly executed and delivered by,
Orthovita and, to the Knowledge of Orthovita and
Assignor, the Distributor or Licensee, as applicable,
party thereto. There is no breach or default, or
event which upon notice or the passage of time, or
both, could give rise to any breach or default, in
the performance of such Existing Distribution
Agreement or Existing License Agreement by Orthovita
or, to the Knowledge of Orthovita and Assignor, the
Distributor or Licensee, as applicable, party
thereto.
(viii) Except for that which, individually or in the
aggregate, would not reasonably be expected to have a
Material Adverse Effect, the representations and
warranties made in each Existing Distribution
Agreement or Existing License Agreement by Assignor
were as of the date made true and correct in all
material respects.
Section 3.20 Insurance.
There is in full force and effect insurance policies maintained by
Orthovita with an insurance company rated not less than *** by ***, with
coverages and in amounts customary for companies of comparable size and
condition similarly situated in the same industry as Orthovita, including
without limitation product liability insurance, directors and officers insurance
and insurance against litigation liability, subject only to such exclusions and
deductible items as are usual and customary in insurance policies of such type.
A copy of Orthovita's insurance policy or insurance policies is attached hereto
as Schedule 3.20.
Section 3.21 Organizational Documents of Assignor.
Attached as Exhibits G and H are true and complete copies, each
certified by a senior officer of Assignor, of the Certificate of Incorporation
and By-Laws of Assignor, respectively.
37
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ASSIGNEE
Assignee represents and warrants to each of Assignor and Orthovita as
of the date hereof the following:
Section 4.01 Organization.
Assignee is a limited partnership duly formed, validly existing and in
good standing under the laws of the State of Delaware, and has all partnership
powers and all licenses, authorizations, consents and approvals required to
carry on its business as now conducted.
Section 4.02 Authorization.
Assignee has all necessary power and authority to enter into, execute
and deliver this Agreement and to perform all of the obligations to be performed
by it hereunder. This Agreement has been duly authorized, executed and delivered
by Assignee and constitutes its valid and binding obligation of Assignee,
enforceable against Assignee in accordance with its terms, subject, as to
enforcement of remedies, to bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors' rights generally and general equitable
principles.
Section 4.03 Broker's Fees.
Assignee has not taken any action which would entitle any Person to any
commission or broker's fee in connection with the transactions contemplated by
this Agreement.
Section 4.04 Conflicts.
Neither the execution and delivery of this Agreement or the other
Transaction Documents nor the performance or consummation of the transactions
contemplated hereby or thereby will: (i) contravene, conflict with, result in a
breach or violation of, constitute a default under, or accelerate the
performance provided by, in any material respects any provisions of: (A) any
law, rule or regulation of any Government Authority, or any judgment, order,
writ, decree, permit or license of any Government Authority, to which Assignee
or any of its assets or properties may be subject or bound; or (B) any material
contract, agreement, commitment or
38
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
instrument to which Assignee is a party or by which Assignee or any of its
assets or properties is bound or committed; (ii) contravene, conflict with,
result in a breach or violation of, constitute a default under, or accelerate
the performance provided by, in any respects any provisions of organizational or
constitutional documents of Assignee; or (iii) require any notification to,
filing with, or consent of, any Person or Government Authority.
Section 4.05 Consents.
The execution and delivery by Assignee of this Agreement and the other
Transaction Documents to which it is a party, and the performance by Assignee of
its obligations hereunder and thereunder, does not require any notice to, action
or consent by, or in respect of, or filing with, any Governmental Authority or
Person.
Section 4.06 No Short Position.
Assignee has no short position in Orthovita securities as of the
Closing Date.
ARTICLE V
COVENANTS
During the Term, each party hereto (as the case may be) agrees that:
Section 5.01 Consents and Waivers.
Each of Assignor and Orthovita shall use commercially reasonable
efforts to obtain any required consents, acknowledgements, certificates or
waivers so that the transactions contemplated by this Agreement or any other
Transaction Document may be consummated and shall not result in any default or
breach or termination of any of the Distribution Agreements or License
Agreements.
Section 5.02 Access; Books and Records.
(a) Promptly after receipt by either Assignor or Orthovita of notice of
any action, claim, investigation, proceeding (commenced or threatened),
certificate, offer, proposal, material correspondence or other material written
communication relating to the transactions
39
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
contemplated by this Agreement, any other Transaction Document, the Revenue
Interests, any Distribution Agreement or any License Agreement relating to the
sale of the Products in the Territories, which, in the case of an action, claim,
investigation or proceeding, if adversely determined, would reasonably be
expected to have a Material Adverse Effect, then, Assignor and/or Orthovita
shall inform Assignee of the receipt of such notice and the substance of such
action, claim, investigation, proceeding, certificate, offer, proposal,
correspondence or other written communication and, if in writing shall furnish
Assignee with a copy of such notice and any related materials with respect to
such action, claim, investigation, proceeding, certificate, offer, proposal,
correspondence or other written communication.
(b) Each of Assignor and Orthovita shall keep and maintain, or cause to
be kept and maintained, at all times accurate and complete books and records.
Orthovita and Assignor shall keep and maintain, or cause to be kept and
maintained, at all times full and accurate books of account and records adequate
to correctly reflect all payments paid and/or payable with respect to Revenue
Interests and Assigned Interests and all deposits made into the applicable
Deposit Accounts.
(c) Assignee and any of Assignee's Consultants shall have the right,
from time to time, to visit Orthovita's and/or Assignor's offices and properties
where Orthovita and/or Assignor keeps and maintains its books and records
relating or pertaining to the Revenue Interests, the Assigned Interests and the
other Collateral for purposes of conducting an audit of such books and records,
and to inspect, copy and audit such books and records, during normal business
hours, and, upon five (5) Business Days written notice given by Assignee to
Orthovita and/or Assignor, Orthovita and/or Assignor will provide Assignee and
any of Assignee's Consultants reasonable access to such books and records, and
shall permit Assignee and any Assignee's Consultants to discuss the business,
operations, properties and financial and other condition of Orthovita and/or
Assignor or any of their Affiliates relating or pertaining to the Revenue
Interests, the Assigned Interests and the other Collateral with officers of such
parties, and with their independent certified public accountants (to the extent
such independent certified accountants agree to discuss such matters with
Assignee). Assignee's visits to Orthovita's or Assignor's offices pursuant to
this subsection (c) shall occur not more than once for each company per fiscal
quarter; provided, however, that Assignee may so visit more frequently to the
extent that there has occurred an event a reasonably foreseeable consequence of
which is a Material Adverse Effect and Assignee's visit or visits to Orthovita's
or Assignor's offices in connection therewith are for purposes related to such
event. To the extent that Assignee elects to conduct audits of both Orthovita
and Assignor during the same fiscal quarter under this
40
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
subsection (c), Assignee shall use commercially reasonable efforts to conduct
any such audits simultaneously.
(d) In the event any audit of the books and records of Orthovita or
Assignor relating to the Revenue Interests, Assigned Interests, and the other
Collateral by Assignee and/or any of Assignee's Consultants reveals that the
amounts paid to Assignee hereunder for the period of such audit have been
understated by more than the greater of *** or *** of the amounts determined to
be due for the period subject to such audit, then the Audit Costs in respect of
such audit shall be borne by Orthovita or Assignor; and in all other cases, such
Audit Costs shall be borne by Assignee.
(e) Orthovita and/or Assignor has furnished to Assignee copies of all
Distribution Agreements and License Agreements to which either is currently a
Party. Orthovita and/or Assignor shall furnish or cause to be furnished, to
Assignee, copies of all Distribution Agreements or License Agreements to which
Orthovita or Assignor becomes a party, within ten (10) Business Days after the
execution of each such agreement.
(f) Provided that Assignee agrees to maintain the confidentiality of
materials described in this Section 5.02(f) and so long as the disclosure of
such materials would not compromise any of Orthovita's rights or protections
with respect to a Regulatory Agency, Orthovita shall: (i) within five (5)
business days of receipt thereof, provide Assignee with copies of the following
regulatory documentation that is either generated or received by Orthovita from
a Regulatory Agency in the Territories with respect to the Products: ***.
Section 5.03 Material Contracts.
Each of Assignor and Orthovita shall use its best commercially
practicable efforts to comply with all material terms and conditions of and
fulfill all of its obligations under all the Material Contracts including,
without limitation, any Distribution Agreement or any License Agreement to which
Orthovita is a party.
Section 5.04 Confidentiality; Public Announcement.
(a) All information furnished by Assignee to either Assignor or
Orthovita or by either Assignor or Orthovita to Assignee, including the
Confidential Information, in connection with this Agreement and any other
Transaction Document and the transactions contemplated hereby and thereby, as
well as the terms, conditions and provisions of this Agreement and any other
Transaction Document, shall be kept confidential by Assignor, Orthovita and
Assignee, and shall
41
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
be used by Assignor, Orthovita and Assignee only in connection with this
Agreement and any other Transaction Document and the transactions contemplated
hereby and thereby, except to the extent that such information (i) is already
known by the party to whom the information is disclosed or is already in the
public domain at the time the information is disclosed, (ii) thereafter becomes
lawfully obtainable from other sources, (iii) is required to be disclosed in any
document to be filed with any Government Authority, or (iv) is required to be
disclosed under securities laws, rules and regulations applicable to Assignor,
Orthovita or Assignee, as the case may be, or pursuant to the rules and
regulations of the Nasdaq Stock Market or any other stock exchange or stock
market on which securities of Orthovita or Assignor may be listed for trading.
Notwithstanding the foregoing, Assignor, Orthovita and Assignee may disclose
such information to their partners, directors, employees, managers, officers,
investors, bankers, advisors, trustees and representatives on a need-to-know
basis, provided that such Persons shall be informed of the confidential nature
of such information and shall be obligated to keep such information confidential
pursuant to the terms of this Section 5.04(a). Each of Assignor and Orthovita
will consult with Assignee, and Assignee will consult Assignor and Orthovita, on
the form, content and timing of any such disclosures of Confidential Information
including, without limitation, any disclosures made pursuant to applicable
securities laws or made to investment or other analysts.
(b) Except as required by law or the rules and regulations of any
securities exchange or trading system or the FDA or any Government Authority
with similar regulatory authority, or except with the prior written consent of
the other party (which consent shall not be unreasonably withheld), neither
party shall issue any press release or make any other public disclosure with
respect to the transactions contemplated by this Agreement or any other
Transaction Document. Assignor and Assignee shall jointly prepare a press
release for dissemination promptly following the Closing Date.
(c) Orthovita shall consult with Assignee and Assignee shall have
adequate opportunity to review and comment with respect to public disclosures or
filings to be made to the Securities and Exchange Commission or any other
Government Authority relating to the Transaction Documents or any terms thereof.
Section 5.05 Right of First Refusal.
(a) If Orthovita or any Affiliate of Orthovita at any time during the
Term proposes to Transfer (each, a "Proposed Transfer") any of the Revenue
Interests (other than: (i) as part of a transaction in which material rights in
the Products other than or in addition to Revenue Interests
42
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
(including, without limitation, the Transfer of Patents, trademarks and
Proprietary Technology) are Transferred; or (ii) a licensing of rights to
distribute RHAKOSS or use the Proprietary Technology related to RHAKOSS) (the
"Other Interests"), then Orthovita shall, at least twenty (20) days prior to the
closing of such Proposed Transfer, give written notice (the "Transfer Notice")
to Assignee setting forth (i) the Other Interests that are to be Transferred
pursuant to such Proposed Transfer (the "Offered Interests"), (ii) the
anticipated date of the closing of such Proposed Transfer, (iii) the names and
addresses of the proposed transferees, and (iv) the material terms of such
Proposed Transfer, including the cash and/or other consideration to be received
in respect of such Proposed Transfer. Notwithstanding anything contained herein
to the contrary, each of Assignor and Orthovita shall be permitted, from time to
time, to enter into agreements and transactions relating to the Proprietary
Technology, including, without limitation, License Agreements, Distribution
Agreements and accounts receivable financing, the granting of any security
interest subordinate to Assignee's or an agreement to effect a Change in
Control, none of which shall constitute a Proposed Transfer.
(b) Upon the receipt of any Transfer Notice, Assignee will have the
option, but not the obligation, to purchase all, but not less than all, of all
the Offered Interests, on the same terms as are specified in the Transfer
Notice, provided, that Assignee will have the right to substitute cash in the
amount of the Fair Market Value of any non-cash consideration proposed to be
received from the proposed transferee(s). Within twenty (20) days after
Assignee's receipt of the Transfer Notice, Assignee will give a written notice
(a "Notice of Election") to Orthovita stating whether it elects to exercise such
option.
(c) Failure by Assignee to give a Notice of Election within such time
period specified in subsection (b) of this Section 5.05 will be deemed an
election by Assignee not to exercise its option to purchase all the Offered
Interests. The closing of the purchase and sale of the Offered Interests to
Assignee will take place as soon as is reasonably practicable on such date and
at such time and place, in each case as Assignee may reasonably determine but
not later than twenty (20) days following Assignor's receipt of the Notice of
Election. If Assignee does not elect to purchase all of the Offered Interests
hereunder, Orthovita will thereafter be free for a period of one hundred five
(105) days after expiration of the twenty (20) day period referred to subsection
(b) of this Section 5.05 to consummate the Proposed Transfer described in the
Transfer Notice to the transferee(s) specified therein, at the price and on
substantially identical terms set forth therein. However, if such Proposed
Transfer is not consummated within such 105-day period, Orthovita will not
Transfer any of the Offered Interests as have not been purchased within such
period without again complying with all of the provisions of this Section 5.05.
43
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
Section 5.06 Quarterly Reports.
Orthovita shall, promptly after the end of each fiscal quarter of
Orthovita (but in no event later than (x) forty give (45) days following the end
of such quarter, or (y) 60 days following the end of such quarter if the
Quarterly Report includes information provided by Licensees), produce and
deliver to Assignee a Quarterly Report for such quarter, together with a
certificate of a senior officer of Orthovita, certifying that to the Knowledge
of each such officer (i) such Quarterly Report is a true and complete copy and
(ii) any statements and any data and information therein prepared by Orthovita
are true, correct and accurate in all material respects.
Section 5.07 Purchase Options.
(a) In the event that a Purchase Option Event shall occur during the
Term, the Assignee shall have the right, but not the obligation (the "Assignee
Option Repurchase"), exercisable within *** days of its receipt of written
notice from the Assignor of the Purchase Option Event (the "Purchase Option
Exercise Period"), to require the Assignor to repurchase from the Assignee the
Assigned Interests for a repurchase price equal to an amount such that the
amount of such repurchase price, together with all amounts paid to Assignee in
respect of the Assigned Interests (including, without limitation, amounts paid
under Section 5.07(d), Advance Payment Amounts, credits earned by the Assignor
pursuant to Section 2.02(c) and all amounts payable in respect of Net Sales) and
not repaid by Assignee to Assignor, discounted annually at the Applicable
Discount Rate to the date or dates on which the Aggregate Purchase Price or
installments thereof were paid to Assignor, equals the Aggregate Purchase Price
(the "Assignee Option Repurchase Price"); provided, however, that if the event
constituting a Purchase Option Event also constitutes a Call Option Event and
Assignor has exercised the Assignor Option Repurchase, the Purchase Option
Exercise Period shall be *** days from the day of receipt by the Assignee of
notice of Assignor's election to exercise the Assignor Option Repurchase. If
each of Assignee and Assignor exercise the Assignee Option Repurchase and the
Assignor Option Repurchase, respectively, within *** days of each other, the
repurchase price shall equal the average of the Assignor Option Repurchase Price
and the Assignee Option Repurchase Price. If the applicable repurchase price
payable under this Section 5.07(a) is equal to the Assignee Option Repurchase
Price, then Assignor shall, within *** days following the Assignor's receipt of
the Assignee's repurchase election notice, repurchase from the Assignee the
Assigned Interests at the Assignee Option Repurchase Price the payment of which
shall be made by wire transfer, in immediately available funds, to the
Assignee's Account designated by the Assignee in such election notice. If the
applicable repurchase price payable under this Section 5.07(a) is equal to the
average of the Assignee Option Repurchase Price and the Assignor Option
44
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
Repurchase Price, then the Assignor shall within *** days following the
consummation of the Purchase Option Event, repurchase from the Assignee the
Assigned Interests at a price equal to the average of the Assignee Option
Repurchase Price and the Assignor Option Repurchase Option.
(b) ***
(c) In the event that a Call Option Event shall occur, then Assignor
shall have the option ("Assignor Option Repurchase"), to repurchase the Assigned
Interests for a repurchase price ("Assignor Option Repurchase Price") equal to
*** less any amounts received by Assignee pursuant to Section 5.07(d), Advance
Payment Amounts for the Fiscal Year in which the Call Option Event occurs, and
any outstanding credits earned pursuant to Section 2.02(c); provided, however,
that if the event constituting a Call Option Event also constitutes a Purchase
Option Event, and each of Assignee and Assignor exercise the Assignee Option
Repurchase and the Assignor Option Repurchase, respectively, within *** days of
each other, the repurchase price shall equal the average of the Assignor Option
Repurchase Price and the Assignee Option Repurchase Price; provided, further,
that if (i) the Call Option Event that results in the Assignor exercising the
Assignor Option Repurchase occurs during the Purchase Option Exercise Period of
a separate, prior Purchase Option Event that did not also constitute the Call
Option Event at issue, and (ii) Assignee exercises its Assignee Option
Repurchase in respect thereof within *** days of receipt of notice of the
exercise by Assignor of the Assignor Option Repurchase, then, notwithstanding
anything contained in Section 5.07(a) to the contrary, the repurchase price
shall equal the greater of the Assignee Option Repurchase Price and the Assignor
Option Repurchase Price. In order to exercise the Assignor Option Repurchase,
Assignor must notify Assignee of its election to so repurchase the Assigned
Interests not less than *** days prior to the date of the Call Option Event.
Assignor shall, within *** days following the consummation of the Call Option
Event, repurchase from the Assignee the Assigned Interests at the Assignor
Option Repurchase Price, the Assignee Option Repurchase Price or the average of
the Assignee Option Repurchase Price and the Assignor Option Repurchase Price,
as applicable, payment of which shall be made by wire transfer of immediately
available funds to Assignee's Account designated by Assignee.
(d) In the event Assignor or Orthovita licenses a substantial majority
of their respective rights to distribute RHAKOSS or use the Proprietary
Technology related to RHAKOSS (other than a license for the use of the
Proprietary Technology related to RHAKOSS outside the Field of Use) in either
Europe or North America, or Transfers all or a substantial majority of any of
their respective rights in RHAKOSS in either Europe or North America, or
45
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
enters into a co-promotion arrangement that constitutes a Transfer or license of
a substantial majority of any of their respective rights in RHAKOSS in either
Europe or North America, (x) Assignor shall have the option (the "Assignor
RHAKOSS Repurchase Option") to repurchase Assignee's right to receive payments
hereunder in respect of Net Sales of RHAKOSS for a repurchase price equal to ***
and (y) Assignee shall have the option (the "Assignee RHAKOSS Repurchase Option)
to require the Assignor to repurchase Assignee's right to receive payments
hereunder in respect of Net Sales of RHAKOSS for a repurchase price equal to
***. Orthovita or Assignor, as applicable, shall provide Assignee with at least
20 days prior written notice of a proposed Transfer of all or a substantial
majority of its interest in RHAKOSS in *** (the "Proposed Transfer Notice,"
which notice shall be deemed "Confidential Information" if such proposed
Transfer has not been publicly disclosed by Orthovita). In order to exercise the
Assignee RHAKOSS Repurchase Option, Assignee must deliver notice of such
exercise to Orthovita within *** Business Days after receipt of the Proposed
Transfer Notice.
(e) In connection with the consummation of an Assignee Option
Repurchase, Assignor Option Repurchase, Assignor RHAKOSS Repurchase Option or
Assignee RHAKOSS Repurchase Option pursuant to subparagraphs (a), (c) or (d)
above (a "Repurchase Event"), Assignee agrees that it will (i) promptly execute
and deliver to Assignor such UCC termination statements and other documents as
may be necessary to release Assignee's Lien on the Collateral (provided that, in
the case of a Repurchase Event under Section 5.07(d), the Collateral released
will only relate to RHAKOSS and sales thereof) and otherwise give effect to such
Repurchase Event and (ii) take such other action or provide such other
assistance as may be necessary to give effect to the Repurchase Event.
(f) Assignee's failure to exercise the Assignee Option Repurchase under
Section 5.07(a) and/or (b) upon the occurrence of a Purchase Option Event or an
event described in Section 5.07(b) shall not preclude Assignee from exercising
the Assignee Option Repurchase under Section 5.07(a) and/or (b) upon the
occurrence of a subsequent Purchase Option Event or a subsequent event described
in Section 5.07(b).
Section 5.08 Security Agreements.
(a) Assignor shall at all times until the Obligations of Assignor are
paid and performed in full grant in favor of Assignee a valid, continuing, first
perfected lien on and security interest in the Royalty Interests, the Assigned
Interests, the Intellectual Property and the other Collateral described in the
Security Agreement.
46
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
(b) Assignor shall not grant a security interest in (x) the Assigned
Interests or Royalty Interests to any other party that in any way conflicts with
Assignee's security interest pursuant to Section 5.08(a)(i), the Security
Agreement or any of Assignee's rights under the Security Agreement including,
without limitation, the exercise of remedies thereunder or (y) except as
provided in Section 5.08(c), the other Collateral described in the Security
Agreement.
(c) Assignor and Assignee agree that, in the event Assignor grants to a
lender a security interest in or rights to any portion of collections from the
License Agreements and the Distribution Agreements which includes such
collections with respect to sales of the Products in the Territories, Assignee
agrees, and Assignor shall, under the terms of its agreements with such lender,
cause such lender to agree, that each of Assignee's and such lender's right to
enforce collections under such agreements shall be shared on a pari passu basis
based upon the rights granted to Assignee under the Security Agreement and the
right granted by Assignor to such lender.
Section 5.09 Best Efforts; Further Assurance.
(a) Subject to the terms and conditions of this Agreement, each party
hereto will use its best efforts to take, or cause to be taken, all actions and
to do, or cause to be done, all things necessary under applicable laws and
regulations to consummate the transactions contemplated by this Agreement and
any other Transaction Document. Assignee, Assignor and Orthovita agree to
execute and deliver such other documents, certificates, agreements and other
writings (including any financing statement filings requested by Assignee) and
to take such other actions as may be reasonably necessary in order to consummate
or implement expeditiously the transactions contemplated by this Agreement and
any other Transaction Document and to vest in Assignee good, valid and
marketable rights and interests in and to the Assigned Interests free and clear
of all Liens, except those Liens created in favor of Assignee pursuant to the
Security Agreement and any other Transaction Document.
(b) Each of the parties hereto shall execute and deliver such
additional documents, certificates and instruments, and to perform such
additional acts, as may be reasonably requested and necessary or appropriate to
carry out and effectuate all of the provisions of this Agreement and any other
Transaction Document and to consummate all of the transactions contemplated by
this Agreement and any other Transaction Document.
(c) Orthovita, Assignor and Assignee hereto shall cooperate and provide
assistance as reasonably requested by the other party in connection with any
litigation, arbitration or other
47
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
proceeding (whether threatened, existing, initiated, or contemplated prior to,
on or after the date hereof) to which any party hereto or any of its officers,
directors, shareholders, agents or employees is or may become a party or is or
may become otherwise directly or indirectly affected or as to which any such
Persons have a direct or indirect interests, in each case relating to this
Agreement, any other Transaction Document, the Assigned Interests or any other
Collateral, or the transactions described herein or therein.
Section 5.10 Remittance to Lockbox Account.
(a) Within sixty (60) days after the date of this Agreement, the
parties hereto shall enter into a Lockbox Agreement in form and substance
reasonably satisfactory to the parties hereto and the Lockbox Bank, which
Lockbox Agreement will provide for, among other things, the establishment and
maintenance of a Lockbox Account, a Joint Concentration Account, an Assignor
Concentration Account and an Assignee Concentration Account and an Orthovita
Concentration Account in accordance with the terms herein and therein. Any
Assignee Concentration Account shall be held solely for the benefit of Assignee,
but shall be subject to the terms and conditions of this Agreement, the Security
Agreement and the other Transaction Documents. Funds deposited into the Lockbox
Account shall be swept by the Lockbox Bank on a daily basis into the Joint
Concentration Account and immediately subsequent thereto, the Advance Payment
Amounts and the Daily Amount shall be swept into Assignee Concentration Account
and the Royalty Interests (less the Advance Payment Amounts and the Daily
Amount) shall be swept into the Assignor Concentration Account. Assignee shall
have immediate and full access to any funds held in the Assignee Concentration
Account not subject to any conditions or restrictions whatsoever. After the
Advance Payment Amounts and the Daily Amount is swept into the Assignee
Concentration Account and the amount of the Royalty Interests (less the Advance
Payment Amounts and the Daily Amount) is swept into the Assignor Concentration
Account, the amounts remaining in the Joint Concentration Account shall then be
swept, at the direction of Orthovita, into the Orthovita Concentration Account.
Each of Assignor and Orthovita shall have immediate and full access to any funds
held in the Assignor Concentration Account and the Orthovita Concentration
Account, respectively, not subject to any conditions or restrictions whatsoever.
(b) Upon execution of the Lockbox Agreement, Assignee shall receive an
opinion of counsel of Assignor as to the perfection of Assignee's security
interest in the Pledged Deposit Accounts (as defined in the Security Agreement).
48
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
(c) Orthovita shall pay for all fees, expenses and charges of the
Lockbox Bank by debiting the Orthovita Concentration Account.
(d) Each Distribution Agreement and License Agreement for sales of the
Products in the Territories entered into by Orthovita shall, within 60 days
after the date of Closing, be amended to contain a provision providing for all
payments in respect of sales of the Products and in respect of royalties
received from Licensees to be remitted directly by the applicable party into the
Lockbox Account and Assignor and Orthovita shall cause such payments to be
remitted directly by the applicable party into the Lockbox Account. Without in
any way limiting the foregoing, commencing on the Closing Date and thereafter,
any and all payments in respect of sales of the Products received by Assignor or
Orthovita shall be deposited into the Lockbox Account within five (5) Business
Days of Assignor's or Orthovita's receipt thereof.
(e) With respect to any Distribution Agreement or License Agreement
entered into by Assignor or Orthovita from and after the date hereof Assignor or
Orthovita shall (i) at the time of the execution and delivery of such agreement,
instruct any party thereto under such agreement to remit to the Lockbox Account
when due all applicable payments in respect of sales of the Products in the
Territories and in respect of royalties received from Licensees that are due and
payable to Assignor or Orthovita in respect of or derived from such agreement
during the Term and (ii) deliver to Assignee evidence of such instruction and of
such applicable party's agreement thereto.
(f) Neither Assignor nor Orthovita shall have any right to terminate
the Lockbox Bank during the Term without Assignee's prior written consent. Any
such consent, if Assignee desires to give, shall be subject to the satisfaction
of each of the following conditions to the satisfaction of Assignee:
(i) the successor Lockbox Bank shall be reasonably
acceptable to Assignee;
(ii) Assignee, Assignor, Orthovita and the successor
Lockbox Bank shall have entered into a lockbox
agreement substantially in the form of the Lockbox
Agreement initially entered into;
(iii) all funds and items in the accounts subject to the
Lockbox Agreement to be terminated shall be
transferred to the new accounts held at the successor
Lockbox Bank prior to the termination of the then
existing Lockbox Bank; and
49
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
(iv) Assignee shall have received evidence that all of the
applicable parties making payments in respect of
sales of the Products have been instructed to remit
all future payments in respect of sales of the
Products to the new accounts held at the successor
Lockbox Bank.
Section 5.11 Additional Covenants of Assignor and Orthovita.
(a) In the event that either Assignor or Orthovita becomes aware that
any Intellectual Property licensed by it to a Licensee or Distributor, as
applicable, under any of the Distribution Agreements or License Agreements
infringes or violates any third party Intellectual Property, Assignor shall
promptly use its best commercially practicable efforts to attempt to secure the
right to use such Intellectual Property on behalf of itself and the affected
Licensee or Distributor and shall pay all costs and amounts associated with
obtaining any such license, without any charge to the Licensee or Distributor or
any reduction in the Assigned Interests.
(b) Orthovita shall use its best commercially practicable efforts to
duly perform and observe all of Orthovita's covenants and obligations under each
Distribution Agreement and License Agreement in all material respects. Upon the
occurrence of a material breach of any of the Distribution Agreements or License
Agreements by any other party thereto, which is not cured as provided therein,
Orthovita thereto shall use its best commercially practicable efforts to seek to
enforce all of its rights and remedies thereunder.
(c) Neither Assignor nor Orthovita shall, without the prior written
consent of Assignee, which consent shall not be unreasonably withheld:
(i) Forgive, release or compromise any amount owed to
Assignor and relating to the Assigned Interests,
except that Assignor shall not be obligated to obtain
the consent of Assignee with respect to any action on
the part of Assignor that impacts the Assigned
Interests of Assignee in an amount not to exceed
$25,000;
(ii) Waive, amend, cancel or terminate, exercise or fail
to exercise, any of its material rights constituting
or relating to the Revenue Interests in a manner
which would reasonably be expected to materially
adversely affect the Assigned Interests;
(iii) Amend, modify, restate, cancel, supplement, terminate
or waive any provision of any Distribution Agreement
or License Agreement, or
50
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
grant any consent thereunder, or agree to do any of
the foregoing, including, without limitation,
entering into any agreement with the Distributor or
Licensee, as the case may be, under the provisions of
such Distribution Agreement or License Agreement in
each case which would reasonably be expected to have
a Material Adverse Effect; or
(iv) Create, incur, assume or suffer to exist any Lien, or
exercise any right of rescission, offset,
counterclaim or defense, upon or with respect to the
Assigned Interests or the other Collateral, or
agreeing to do or suffering to exist any of the
foregoing, except for ***.
(d) Assignor shall promptly upon receipt thereof provide to Assignee
copies of any material reports or other material information prepared by any
Distributor or Licensee it has received that has not been previously provided to
Assignee by either Assignor, Orthovita or any other Person.
(e) Either Assignor or Orthovita shall provide Assignee with written
notice as promptly as practicable (and in any event within five (5) Business
Days) after becoming aware of any of the following:
(i) the occurrence of a Bankruptcy Event;
(ii) any breach or default by either Assignor or Orthovita
of any material covenant, agreement or other
provision of this Agreement or any other Transaction
Document;
(iii) any representation or warranty made or deemed made by
either Assignor or Orthovita in any of the
Transaction Documents to which it is a party
51
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
or in any certificate delivered to Assignee pursuant
hereto shall prove to be untrue, inaccurate or
incomplete in any material respect on the date as of
which made or deemed made;
(iv) the occurrence of a Purchase Option Event (other than
a Termination Event);
(v) the occurrence of a Call Option Event;
(vi) any sublicense by a Licensee or Distributor, as the
case may be, of any rights licensed pursuant to any
Distribution Agreement or License Agreement; or
(vii) the resignation, death or removal of any Independent
Director of Assignor.
(f) Promptly (but in no event later than five (5) Business Days) after
(i) receiving written or oral notice from a Distributor or Licensee, as the case
may be, (A) terminating or expressing any intention to terminate the related
Distribution Agreement or License Agreement, (B) alleging any breach of or
default under such Distribution Agreement or License Agreement by Orthovita or
(C) asserting the existence of any facts, circumstances or events which alone or
together with other facts, circumstances or events would reasonably be expected
(with or without the giving of notice or passage of time or both) to give rise
to a breach of or default under or right to terminate such Distribution
Agreement or License Agreement or (ii) either Assignor or Orthovita otherwise
having Knowledge of any fact, circumstance or event which alone or together with
other facts, circumstances or events would reasonably be expected (with or
without the giving of notice or passage of time or both) to give rise to a
material breach of or default under such Distribution Agreement or License
Agreement by Orthovita or a right to terminate such Distribution Agreement or
License Agreement by such Distributor or Licensee, as the case may be, in each
case, either Assignor or Orthovita shall give a written notice to Assignee
describing in reasonable detail the relevant breach, default or termination
event, including a copy of any written notice received from such Distributor or
Licensee, as the case may be, and, in the case of any breach or default or
alleged breach or default by Orthovita, describing any corrective action
Orthovita proposes to take.
(g) Assignor or Orthovita shall, at their sole expense, either directly
or by causing the Licensee or Distributor, as the case may be, to do so, take
any and all actions and prepare, execute, deliver and file any and all
agreements, documents or instruments which are necessary
52
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
or, in the reasonable opinion of Orthovita or Assignor, as the case may be,
desirable to (A) diligently maintain the applicable licensed Intellectual
Property and the Patents and (B) diligently defend such licensed Intellectual
Property and such Patents against infringement or interference by any other
Persons, and against any claims of invalidity or unenforceability, in any
jurisdiction (including, without limitation, by bringing any legal action for
infringement or defending any counterclaim of invalidity or action of a third
party for declaratory judgment of non-infringement or non-interference).
Orthovita shall not, and shall use commercially reasonable efforts to cause the
applicable Licensee not to, disclaim or abandon, or fail to take any action
necessary or desirable to prevent the disclaimer or abandonment of, the
applicable Patents or other Intellectual Property.
(h) Orthovita shall use its best commercially practicable efforts to
secure and maintain, or, where a Distributor or Licensee, as the case may be, is
required to do so under any Distribution Agreement or License Agreement, use
commercially reasonable efforts to assist such Distributor or Licensee, as the
case may be, in securing and maintaining, all regulatory and other governmental
approvals, clearances, registrations and permits which may be required to
manufacture, market and/or sell any and all of the Products in the Territories.
(i) Orthovita shall, to the extent reasonably required by the
applicable Licensee, timely produce and deliver to the applicable Distributor
invoices for payments owing Assignor or Orthovita under the respective
Distribution Agreement.
(j) ***
(k) Orthovita and Assignor shall, in good faith, devote sufficient
resources to the development of the Products in order to meet the Projected Net
Sales, including using substantially all of the Closing Purchase Price Payment
and the Common Stock Purchase Price for (i) working capital purposes relating
to, (ii) marketing programs in support of and (iii) clinical development leading
to regulatory approvals for the distribution of each of RHAKOSS, VITOSS and
CORTOSS in the Territories. ***
(l) ***
53
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
(m) ***
(n) Orthovita and Assignor shall use its best efforts to comply with
all manufacturing guidelines and processes required or suggested by the FDA.
(o) During the Revenue Interest Period, Orthovita shall maintain
insurance policies with insurance companies rated not less than *** by *** with
coverages and in amounts each party believes to be customary for companies of
comparable size and condition similarly situated in the same industry as
Orthovita including without limitation, product liability insurance and
directors and officers insurance.
(p) Neither Assignor nor Orthovita will Transfer all or any part of its
interests in the Products (other than pursuant to any Distribution Agreements,
License Agreements or pursuant to Section 5.05) to a third party purchaser or
licensee, as applicable, unless such third party purchaser or licensee, as
applicable, assumes in writing all of the obligations of Assignor or Orthovita,
as applicable, hereunder, including the obligation to make all payments in
respect of the Assigned Interests to Assignee pursuant to a written assumption,
in a form reasonably satisfactory to Assignee; provided, however, for the
avoidance of doubt, in no event shall a party to a Distribution Agreement or
License Agreement be required to assume the Obligations of Orthovita and
Assignor shall remain liable for all such Obligations.
(q) During the Revenue Interest Period, neither Orthovita nor Assignor
will amend or permit to be amended, Orthovita shall not terminate, and Assignor
shall not waive any rights under (i) Articles Eleventh, Twelfth and Thirteenth
of the Certificate of Incorporation or (ii) the Vita SPC Patent License
Agreement (in each case, to the extent any amendment thereto or waiver
thereunder would adversely affect Assignee or its rights under this Agreement or
any other Transaction Document, provided, however, that Orthovita or Assignor
may amend or permit to be amended the definition of "Products" in the Vita SPC
Patent License Agreement to delete therefrom the Products that cease to be
Products within the meaning of this Agreement due to the Assigned Interests
relating to that Product being repurchased from Assignee pursuant to the terms
of this Agreement) without the prior written consent of Assignee, which consent
shall be granted or withheld in Assignee's sole discretion.
54
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
(r) Except as provided in Section 5.08(c), during the Revenue Interest
Period, Assignor will not pledge or otherwise assign or transfer any of the
Collateral without the prior written consent of Assignee, which consent shall be
granted or withheld in Assignee's sole discretion.
(s) Orthovita shall cause each Distributor or Licensee under any
Distribution Agreement or License Agreement, as applicable, to provide, promptly
following the end of each fiscal quarter, all information with respect to Net
Sales (including all components of information required to calculate Net Sales)
under each such agreement for inclusion in the Quarterly Report for such
quarter, and Orthovita shall cause such obligation to be included in every
Distribution Agreement and License Agreement it enters into.
(t) ***
(u) Assignor shall not engage in any business other than the
transactions contemplated in this Agreement and the Transaction Documents and
activities incidental thereto.
(v) Assignor shall not issue, incur, assume, guarantee or otherwise
become liable, directly or indirectly (i) for borrowed money whether or not
evidenced by bonds, debentures, notes or other instruments, (ii) for the
deferred purchase price of property or services (including trade obligations),
(iii) in respect of any acceptance facilities, (iv) in respect of any interest
rate or currency exchange agreement.
Section 5.12 Future Agreements.
(a) Orthovita shall provide Assignee, at least one (1) week prior to
the execution of a Distribution Agreement by Orthovita and any Distributor that
varies in any substantive and material respect from Distribution Agreements or
forms thereof previously supplied to Assignee, a copy of such form of
Distribution Agreement for review by Assignee.
(b) If Orthovita, at any time and from time to time during the Term of
this Agreement, proposes to materially change the form or forms of Distribution
Agreement or License Agreement it utilizes, or proposes in connection with any
transaction or transactions
55
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
with a Distributor or Licensee to materially vary the terms of the related
Distribution Agreement or License Agreement from those contained in the
prevailing form thereof, then Orthovita shall promptly provide to Assignee such
revised form of Distribution Agreement or Assignment or, at least three (3)
Business Days prior to the execution and delivery of any Distribution Agreement
or License Agreement that includes a material deviation from the terms of the
prevailing form thereof, give written notice to Assignee indicating that
Orthovita proposes to enter into such agreement and the anticipated date of
execution of such proposed agreement.
(c) In the event that any payments under any Distribution Agreement or
License Agreement are calculated upon a basis that is materially different than
the basis used under the Distribution Agreements in existence at such time, ***.
(d) To the extent Orthovita has the right to perform or cause to be
performed inspections or audits under any of the License Agreements regarding
payments payable and/or paid to Orthovita thereunder (each, a "License Party
Audit"), Orthovita shall, at the reasonable request of Assignee, cause such
License Party Audit to be promptly performed (it being understood that it shall
not be a reasonable request if, in the good faith belief of Orthovita, the
requested License Party Audit would impair Orthovita's commercial relationship
with the applicable Licensee). In conducting a License Party Audit, Orthovita
may engage its then retained nationally recognized independent public accounting
firm, or, if Orthovita elects otherwise, such other nationally recognized
independent public accounting firm reasonably acceptable to Assignee. Promptly
after completion of any License Party Audit (whether or not requested by
Assignee), Orthovita shall promptly deliver to Assignee an Audit Report in
respect of such License Party Audit. With respect to any License Agreement under
which Orthovita has a right to perform or cause to be performed a License Party
Audit, in the event Assignee requests Orthovita to perform a License Party Audit
and such License Party Audit is in fact performed by or on behalf of Orthovita,
then if the results thereof reveal that the amounts paid to Orthovita in respect
of North American and European sales of any licensed Product under such License
Agreement for the period of such License Party Audit have been understated by
more than the greater of *** or ***of the amounts payable to Orthovita with
respect to North American and European sales of any licensed Product and
determined to be due for the applicable period of such License Party Audit, then
the Audit Costs incurred by Orthovita in respect of such License Party Audit
shall be borne by Orthovita. In all other cases the Audit Costs incurred by
Orthovita in respect of a License Party Audit shall be borne by Assignee.
56
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
Section 5.13 Licensing Agreement.
Notwithstanding anything contained herein to the contrary, Orthovita
shall be permitted to enter into License Agreements; provided, however, that any
such agreement shall not constitute a sale of all or substantially all of the
assets relating to the Proprietary Technology.
Section 5.14 Guarantee.
(a) The Guarantee. Orthovita hereby unconditionally and irrevocably
guarantees the full and prompt payment of all amounts when due which may be
owing by Assignor under this Agreement and the other Transaction Documents and
the full and prompt performance of all of the Obligations of Assignor under this
Agreement and the other Transaction Documents (collectively, the "Guaranteed
Obligations"). Orthovita hereby agrees that (i) if Assignor shall fail to pay
when due or perform any of the Guaranteed Obligations, Orthovita will promptly
pay or perform the same, without any demand or notice whatsoever and (ii) this
is a guarantee of payment and performance, and not of collection only.
(b) Obligations Unconditional. The obligations of Orthovita under this
Section 5.14 are absolute, irrevocable and unconditional, irrespective of the
value, genuineness, validity, regularity or enforceability of the Obligations of
Assignor under this Agreement or any other Transaction Document or any other
agreement or instruments referred to herein or therein, or any substitution,
release or exchange of any other guarantee of or security for any of the
Guaranteed Obligations, and, to the fullest extent permitted by applicable law,
irrespective of any circumstance whatsoever that might otherwise constitute a
legal or equitable discharge or defense of a surety or Orthovita (except
fulfillment of the Obligations in full). Without limiting the generality of the
foregoing, it is agreed that the occurrence of any one or more of the following
shall not alter or impair the liability of Orthovita hereunder which shall
remain absolute, irrevocable and unconditional under any and all circumstances
as described above:
(i) at any time or from time to time, without notice to
Orthovita, the time for any performance of or
compliance with any of the Guaranteed Obligations
shall be extended, or such performance or compliance
shall be waived;
(ii) any of the acts mentioned in any of the provisions of
this Agreement or any other Transaction Document
referred to herein or therein shall be done or
omitted;
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[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
(iii) any of the Guaranteed Obligations shall be amended in
any respect, or any right under this Agreement or any
other Transaction Document shall be amended or waived
in any respect or any other guarantee of any of the
Guaranteed Obligations or any security therefor shall
be released or exchanged in whole or in part or
otherwise dealt with; or
(iv) any Lien or security interest granted to, or in favor
of, Assignee as security for any of the Guaranteed
Obligations shall fail to have the priority
contemplated in the Security Agreement.
Orthovita hereby expressly waives diligence, presentment, demand of
payments, protest and all other notices whatsoever, and any requirement that
Assignee exhaust any right, power, remedy or proceed against Assignor under this
Agreement or any other Transaction Document, or against any other Person under
any other guarantee of, or security for, any of the Guaranteed Obligations.
Orthovita waives any and all notice of the creation, renewal, extension, waiver,
termination or accrual of any of the Guaranteed Obligations and notice of or
proof of reliance by Assignee under this guarantee or acceptance of this
guarantee, and the Guaranteed Obligations, and any of them, shall be
conclusively be deemed to have been created, contracted or incurred in reliance
upon this guarantee, and all dealings by the Assignee shall be conclusively
presumed to have been had or consummated in reliance under this guarantee. This
guarantee shall be construed as a continuing, absolute, irrevocable and
unconditional guarantee of payment without regard to any right of offset with
respect to the Guaranteed Obligations at any time or from time held by Assignee
and the obligations and liabilities of Orthovita hereunder shall not be
conditioned or contingent upon the pursuit by Assignee at any time of any right
or remedy against Assignor or against any other Person which may be or become
liable in respect of all or any part of the Guaranteed Obligations or against
any collateral security or guarantee therefor or right of offset with respect
thereto. This guarantee shall remain in full force and effect and be binding in
accordance with and to the extent of its terms upon Orthovita and its successors
and assigns, and shall inure to the benefit of Assignee, and its successors and
assigns, notwithstanding that from time to time during the term of this
Agreement there may be no Guaranteed Obligations outstanding.
(c) Reinstatement. The obligations of Orthovita under this Section 5.14
shall be automatically reinstated if and to the extent that for any reason any
payment by or on behalf of Assignor in respect of the Guaranteed Obligations is
rescinded or must be otherwise restored by any holder of any of the Guaranteed
Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise. Orthovita agrees that it will indemnify Assignee on
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[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
demand for all reasonable costs and expenses (including reasonable fees of
counsel) incurred by Assignee in connection with such rescission or restoration,
including any such costs and expenses incurred in defending against any claim
alleging that such payment constituted a preference, fraudulent transfer or
similar payment under any bankruptcy, insolvency or similar law, other than any
costs or expenses resulting from the gross negligence or bad faith of such
Person.
(d) Subrogation; Subordination. Orthovita hereby agrees that until the
indefeasible payment and satisfaction in full of all Guaranteed Obligations and
the termination of this Agreement it shall not exercise any right or remedy
arising by reason of any performance by it of its guarantee in Section 5.14(a),
whether by subrogation or otherwise, against Assignor or any security for any of
the Guaranteed Obligations. The payment of any amounts due with respect to any
indebtedness of Assignor now or hereafter owing to Orthovita by reason of any
payment by Orthovita under the guarantee in this Section 5.14 is hereby
subordinated to the prior indefeasible payment in full of the Guaranteed
Obligations. Orthovita agrees that it will not demand, xxx for or otherwise
attempt to collect any such indebtedness of Assignor to Orthovita until the
Obligations shall have been indefeasibly paid in full. If, notwithstanding the
foregoing sentence, Orthovita shall prior to the indefeasible payment in full of
the Guaranteed Obligations collect, enforce or receive any amounts in respect of
such obligations, such amounts shall be collected, enforced and received by
Orthovita as trustee for Assignee and be paid over to Assignee on account of the
Guaranteed Obligations without affecting in any manner the liability of
Orthovita under the other provisions of the guarantee contained herein.
(e) Remedies. Orthovita agrees that, upon the occurrence of a
Termination Event, the obligations of Assignor under this Agreement may be
declared to be forthwith due and payable for purposes of Section 5.14 ,
notwithstanding any stay, injunction or other prohibition preventing such
declaration (or such obligations from becoming automatically due and payable) as
against Assignor and that, in the event of such declaration (or such obligations
being deemed to have become automatically due and payable), such obligations
(whether or not due and payable by Assignor) shall forthwith become due and
payable by Orthovita for purposes of Section 5.14.
(f) Instrument for the Payment of Money. Orthovita hereby acknowledges
that the guarantee in this Section 5.14 constitutes an instrument for the
payment of money, and consents and agrees that Assignee, at its sole option, in
the event of a dispute by Orthovita in the payment of any moneys due hereunder,
shall have the right to bring a motion-action under New York CPLR Section 3213.
59
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
(g) Continuing Guarantee. The guarantee in this Section 5.14 is a
continuing guarantee, and shall apply to all Guaranteed Obligations whenever
arising.
(h) General Limitation on Guaranteed Obligations. In any action or
proceeding involving any state corporate law, or any state, federal or foreign
bankruptcy, insolvency, reorganization or other law affecting the rights of
creditors generally, if the obligations of Orthovita under Section 5.14(a) would
otherwise be held or determined to be void, voidable, invalid or unenforceable,
or subordinated to the claims of any other creditors, on account of the amount
of its liability under Section 5.14(a), then, notwithstanding any other
provision to the contrary, the amount of such liability shall, without any
further action by Orthovita, Assignee or any other Person, be automatically
limited and reduced to the highest amount that is valid and enforceable and not
subordinated to the claims of other creditors as determined in such action or
proceeding.
Section 5.15 Financial Statements.
Orthovita shall maintain, and cause Assignor to maintain, a system of
accounting established and administered in accordance with sound business
practices to permit preparation of financial statements in conformity with GAAP.
Orthovita shall deliver to Assignee the following financial statements:
(a) Within sixty (60) days after the end of each fiscal quarter, copies
of (i) the unaudited consolidated financial statements of Orthovita and its
subsidiaries for the prior fiscal quarter and (ii) the unaudited financial
statements of Assignor for the prior fiscal quarter; and
(b) Within ninety (90) days after the end of each Fiscal Year, copies
of (i) the audited consolidated financial statements of Orthovita and its
subsidiaries for the prior Fiscal Year and (ii) the audited financial statements
of Assignor for the prior Fiscal Year.
Section 5.16 Special Purpose Entity
(a) During the term of this Agreement, each of Orthovita and Assignor
shall observe the applicable legal requirements for the recognition of each as a
legal entity separate and apart from each other and from its Affiliates,
including as follows:
(i) each of Orthovita and Assignor shall maintain
business records and books of account separate from each other and from those of
its Affiliates;
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[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
(ii) except as otherwise provided in this Agreement,
neither Orthovita nor Assignor shall commingle its assets and funds with those
of its Affiliates;
(iii) each of Orthovita and Assignor shall at all times
hold itself out to the public under its own name as a legal entity separate and
distinct from its Affiliates; and
(iv) all transactions and dealings between Orthovita and
its Affiliates, including Assignor, and all transactions and dealings between
Assignor and its Affiliates, will be conducted on an arm's-length basis.
(v) Assignor is not and shall not be involved in the
day-to-day or other management of any of its Affiliates;
(vi) Orthovita's financial statements shall reflect its
separate legal existence from any of its Affiliates;
(vii) each of Orthovita and Assignor shall maintain records
and books of account and shall not commingle such records and books of account
with the records and books of account of any Person; and
(viii) each of Orthovita and the Assignor shall act solely
in its own name and through duly authorized agents in the conduct of its
business, and shall conduct its business so as not to mislead others as to the
identity of the entity with which they are concerned.
(b) at all times, except in the case of a temporary vacancy, which
shall promptly be filled, Assignor shall have at least director who qualifies as
an "Independent Director" as such term is defined in Assignor's Certificate of
Incorporation.
Section 5.17 No Short Selling or Trading While in the Possession of
Material Non-Public Information
(a) Assignee agrees and acknowledges that, pursuant to the obligations
of Orthovita and Assignor under this Agreement and the other Transaction
Documents, it is entitled to receive Confidential Information relating to
Orthovita, Assignor and the Products. Assignee agrees to treat all such
Confidential Information in accordance with the provisions of Section 5.04 of
this Agreement, and to take or abstain from taking certain other actions
hereinafter set forth in Section 5.17(b).
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[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
(b) Assignee shall not trade or cause or encourage any third party to
trade, and shall instruct its partners, directors, officers, managers,
principals, employees, agents or advisors (including, without limitation,
attorneys, accountants, consultants, bankers and financial advisors)
(collectively "Representatives"), not to trade, and Assignee shall otherwise use
its commercially reasonable efforts to assure that none of its Representatives
will trade (or cause or encourage any third party to trade), in any securities
of Orthovita (or securities convertible into or exercisable for securities of
Orthovita) while in possession of any material non-public information including,
without limitation, the Confidential Information that may be disclosed by
Orthovita or Assignor hereunder or under any of the other Transaction Documents.
Section 5.18 Notification of Significant Discounts and Write-Offs
(a) Assignor shall promptly notify Assignee of cash, trade discounts
and rebates greater than or equal to 5% granted or paid to (i) any individual
customer that during the preceding calendar year accounted for gross sales of
the Products in the Territories of not less than $2.5 million or (ii) any
customers that during the preceding calendar year collectively accounted for
gross sales of the Products in the Territories of not less than $10 million,
which notification shall identify the customer and provide a description of the
terms of any such payment, trade discount or rebate.
(b) Assignor shall promptly notify Assignee of (i) any individual
write-off of uncollected accounts representing greater than $100,000 of gross
sales of the Products in the Territories, and (ii) if in any Fiscal Year
aggregate write-offs of uncollected accounts in respect of gross sales of the
Products in the Territories exceed 2.5% of the prior Fiscal Year's gross sales.
Section 5.19 Financial Covenants.
(a) Orthovita (on a consolidated basis) shall at all times maintain
cash and cash equivalents equal to or greater than ***
62
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
(b) Orthovita (on a consolidated basis) shall maintain total
shareholders equity not less than ***
ARTICLE VI
THE CLOSING; CONDITIONS TO CLOSING AND FUNDING
Section 6.01 Closings.
(a) Closing.
Subject to the closing conditions set forth in Sections 6.02 and 6.03,
the closing of the purchase and sale of the Assigned Interests (the "Closing")
shall take place at the offices of Xxxxxxxx & Xxxxxxxx LLP, New York, New York
USA, on the Closing Date. If all conditions are determined to be satisfied (or
any of such conditions are duly waived) at the Closing (whether or not delayed),
the Closing shall be consummated.
Section 6.02 Conditions Applicable to Assignee.
The obligations of Assignee to effect the Closing and the payment of
the Closing Purchase Price Payment shall be subject to the satisfaction of each
of the following conditions, any of which may be waived by Assignee in its sole
discretion:
(a) Accuracy of Representations and Warranties. The representations and
warranties of Assignor and Orthovita set forth in this Agreement and the other
Transaction Documents shall be true, correct and complete in all material
respects both on the date of this Agreement and as of the Closing Date (with the
same force and effect as if such representations and warranties were made anew
at and as of the Closing Date, except to the extent that any such
representations or warranties which by its terms is made as of a specified date,
in which case such representations
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[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
or warranties shall have been true, correct and complete in all material
respects as of such specified date).
(b) No Adverse Circumstances. There shall not have occurred or be
continuing any event or circumstance (including any development with respect to
the efficacy of the Products or the licensed Intellectual Property or the use or
expected future use of the same as opposed to competing products) which would
reasonably be expected to have a Material Adverse Effect.
(c) Litigation. No action, suit, litigation, proceeding or
investigation shall have been instituted, be pending or threatened (i)
challenging or seeking to make illegal, to delay or otherwise directly or
indirectly to restrain or prohibit the consummation of the transactions
contemplated by this Agreement, or seeking to obtain damages in connection with
the transactions contemplated by this Agreement, or (ii) seeking to restrain or
prohibit Assignee's acquisition or future receipt of the Assigned Interests.
There shall not have been in effect any injunction, order, judgment or decree
restricting, preventing or enjoining the consummation of the transactions
contemplated by this Agreement.
(d) Officer's Certificates.
(i) Assignee shall have received at the Closing a
certificate of the executive officer of Assignor pursuant to which such officer
certifies that the conditions set forth in Sections 6.02(a), (b), (c), (n), (o)
and (p) have been satisfied in all respects as of the Closing Date.
(ii) Assignee shall have received at the Closing a
certificate of the executive officer of Orthovita pursuant to which such officer
certifies that the conditions set forth in Sections 6.02(a), (b), (c), (m), (o)
and (p) have been satisfied in all respects as of the Closing Date.
(e) Legal Opinions.
(i) Assignee shall have received an opinion of Xxxxxx,
Xxxxx & Bockius LLP, counsel to Assignor, dated the
Closing Date, in form and substance satisfactory to
Assignee and its counsel, to the effect set forth in
Exhibit E(i).
(ii) Assignee shall have received an opinion of Xxxxxxxx
Xxxxxxxx LLP, patent counsel to Assignor, dated the
Closing Date, in form and
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[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
substance satisfactory to Assignee and its counsel,
to the effect set forth in Exhibit E(ii), covering,
but not limited to, the Assignor's right to practice
the basic Patents owned by Assignor; the completed
right to use search; and title to all of the patents,
including, but not limited to, the `872 patent.
(iii) Assignee shall have received an infringement opinion
of Xxxxxxxx Xxxxxxxx LLP, patent counsel to Assignor,
dated the Closing Date, in form and substance
satisfactory to Assignee and its counsel, to the
effect set forth in Exhibit E(iii).
(f) Assignment. An Assignment shall have been executed and delivered by
Assignor to Assignee and Assignee shall have received the same.
(g) Security Agreement. The Security Agreement shall have been duly
executed and delivered by all the parties thereto and shall be in form of
Exhibit D hereto, together with proper financing statements (including Form
UCC-1s) fully executed for filing under the UCC and/or any other applicable law,
rule, statute or regulation relating to the perfection of a security interest in
filing offices in the jurisdictions listed on Schedule 6.02(g).
(h) [RESERVED]
(i) Pledge Agreement. The Pledge Agreement shall have been duly
executed and delivered by all the parties thereto and shall be in form of
Exhibit I hereto, together with proper financing statements (including Form
UCC-1s) fully executed for filing under the UCC and/or any other applicable law,
rule, statute or regulation relating to the perfection of a security interest in
filing offices in the jurisdictions listed on Schedule 6.02(g).
(j) Stock Purchase Agreement. The Stock Purchase Agreement shall have
been duly executed and delivered by all the parties thereto and shall be in the
form of Exhibit F hereto.
(k) Assignment Documents. Each Assignment Document shall have been duly
executed and delivered by all the parties thereto and shall be in forms of
Exhibits X-X hereto.
(l) License Agreements. The Vita SPC Patent License Agreement and the
Vita SPC Trademark License Agreement shall have been duly executed and delivered
by all the parties thereto.
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[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
(m) Corporate Documents of Orthovita. Assignee shall have received on
the Closing Date, a certificate, dated the Closing Date, of a senior officer of
Orthovita (the statements made in which shall be true and correct on and as of
the Closing Date): (i) attaching copies, certified by such officer as true and
complete, of Orthovita's certificate of incorporation and by-laws or other
organizational documents (together with any and all amendments thereto)
certified by the appropriate Government Authority (other than the By-laws) as
being true, correct and complete copies; (ii) attaching copies, certified by
such officer as true and complete, of resolutions of the board of directors of
Orthovita authorizing and approving the execution, delivery and performance by
Orthovita of this Agreement, the other Transaction Documents and the
transactions contemplated herein and therein; (iii) setting forth the incumbency
of the officer or officers of Orthovita who have executed and delivered this
Agreement and the other Transaction Documents including therein a signature
specimen of each such officer or officers; and (iv) attaching copies, certified
by such officer as true and complete, of certificates of the appropriate
Government Authority of the jurisdiction of formation, stating that Orthovita is
in good standing under the laws of such jurisdiction or, if any such certificate
is not available from a Government Authority, a statement by such officer
containing an equivalent confirmation.
(n) Corporate Documents of Assignor. Assignee shall have received on
the Closing Date, a certificate, dated the Closing Date, of a senior officer of
Assignor (the statements made in which shall be true and correct on and as of
the Closing Date): (i) attaching copies, certified by such officer as true and
complete, of Assignor's certificate of formation or other organizational
documents (together with any and all amendments thereto) certified by the
appropriate Government Authority as being true, correct and complete copies;
(ii) attaching copies, certified by such officer as true and complete, of
resolutions of the board of directors of Assignor authorizing and approving the
execution, delivery and performance by Assignor of this Agreement, the other
Transaction Documents and the transactions contemplated herein and therein;
(iii) setting forth the incumbency of the officer or officers of Assignor who
have executed and delivered this Agreement and the other Transaction Documents
including therein a signature specimen of each such officer or officers; and
(iv) attaching copies, certified by such officer as true and complete, of
certificates of the appropriate Government Authority of the jurisdiction of
formation, stating that Assignor is in good standing under the laws of such
jurisdiction or, if any such certificate is not available from a Government
Authority, a statement by such officer containing an equivalent confirmation.
(o) Termination Event. There shall not have occurred a Termination
Event or a Purchase Option Event.
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[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
(p) Covenants. Each of Assignor and Orthovita shall have complied in
all material respects with their respective covenants as set forth in this
Agreement and each other Transaction Document.
Section 6.03 Conditions Applicable to Assignor.
The obligations of each of Assignor and Orthovita to effect the Closing
shall be subject to the satisfaction of each of the following conditions, any of
which may be waived by Assignor and Orthovita in their sole discretion:
(a) Accuracy of Representations and Warranties. The representations and
warranties of Assignee set forth in this Agreement shall have been true, correct
and complete in all material respects both on the date of this Agreement and as
of the Closing Date (with the same force and effect as if such representations
and warranties were made anew at and as of the Closing Date, except to the
extent that any such representations or warranties which by its terms is made as
of a specified date, in which case such representations or warranties shall have
been true, correct and complete in all respects on and as of such specified
date).
(b) Litigation. No action, suit, litigation, proceeding or
investigation shall have been formally instituted, be pending or threatened (i)
challenging or seeking to make illegal, to delay or otherwise directly or
indirectly to restrain or prohibit the consummation of the transactions
contemplated by this Agreement, or seeking to obtain damages in connection with
the transactions contemplated by this Agreement, or (ii) seeking to restrain or
prohibit Assignee's acquisition or future receipt of the Assigned Interests.
(c) Officer's Certificate. Assignor shall have received at the Closing
a certificate of an officer or member of the general partner of Assignee
certifying that the conditions set forth in Sections 6.03(a) and (b) have been
satisfied, in all respects as of the Closing Date.
(d) Full Payment. The Closing Purchase Price Payment due at Closing
shall have been tendered by Assignee to Assignor by wire transfer of immediately
available funds to Assignor's Account identified to Assignee on or prior to the
Closing.
(e) Stock Purchase Agreement. The Stock Purchase Agreement shall have
been duly executed and delivered by all the parties thereto and shall be in the
form of Exhibit F hereto.
(f) Security Agreement. The Security Agreement shall have been duly
executed and delivered by all the parties thereto and shall be in the form of
Exhibit D hereto.
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[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
(g) Pledge Agreement. The Pledge Agreement shall have been duly
executed and delivered by all the parties thereto and shall be in the form of
Exhibit I hereto.
(h) Covenants. Assignee shall have complied in all material respects
with its covenants as set forth in this Agreement and each other Transaction
Document.
Section 6.04 Termination Event.
If any Termination Event shall have occurred and be continuing,
Assignee may exercise any rights and remedies available to it, including,
without limitation, those rights and remedies available hereunder, under any
Transaction Document and/or at law or in equity.
ARTICLE VII
TERMINATION
Section 7.01 Termination Date.
This Agreement shall terminate on December 31, 2016; provided, however,
that if any payments are required to be made by one of the parties hereunder
after that date, this Agreement shall remain in full force and effect until any
and all such payments have been made in full, and solely for that purpose. In
addition, this Agreement shall sooner terminate if Assignee or Assignor shall
have exercised its right under Sections 5.07(a) or (c), respectively, with the
termination date in that event being the date on which Assignor completes the
repurchase of the Assigned Interests and pays in full in cash the (i) Assignee
Repurchase Price, (ii) Assignor Option Repurchase Price, or (iii) average of the
Assignee Repurchase Price and the Assignor Repurchase Price, as the case may be,
in accordance with the terms therein.
Section 7.02 Effect of Termination.
In the event of the termination of this Agreement pursuant to Section
7.01, this Agreement shall forthwith become void and have no effect without any
liability on the part of any party hereto or its Affiliates, directors, officers
or stockholders other than the provisions of this Section 7.02 and Sections
5.04, 8.01, and 8.06 hereof, and as provided in Section 2.02(c) hereof. Nothing
contained in this Section 7.02 shall relieve any party from liability for any
breach of this Agreement.
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[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
ARTICLE VIII
MISCELLANEOUS
Section 8.01 Survival.
(a) All representations and warranties made herein and in any other
Transaction Document, any certificates or in any other writing delivered
pursuant hereto or in connection herewith shall survive the execution and
delivery of this Agreement and the Closing and shall continue to survive until
the date that is the first anniversary of the last day of the Term.
Notwithstanding anything in this Agreement or implied by law to the contrary,
all the agreements contained in Sections 5.04, 8.02, 8.03, 8.06, 8.11 and 8.15,
and in the last sentence of Section 2.02(c), shall survive indefinitely
following the execution and delivery of this Agreement and the Closing and the
termination of this Agreement.
(b) Any investigation or other examination that may have been made or
may be made at any time by or on behalf of the party to whom representations and
warranties are made shall not limit, diminish or in any way affect the
representations and warranties in this Agreement and the other Transaction
Documents, and the parties may rely on the representations and warranties in
this Agreement and the other Transaction Documents irrespective of any
information obtained by them by any investigation, examination or otherwise.
Section 8.02 Specific Performance.
Each of the parties hereto acknowledges that the other party will have
no adequate remedy at law if it fails to perform any of its obligations under
this Agreement or any of the other Transaction Documents. In such event, each of
the parties agrees that the other party shall have the right, in addition to any
other rights it may have (whether at law or in equity), to specific performance
of this Agreement.
Section 8.03 Notices.
All notices, consents, waivers and communications hereunder given by
any party to the other shall be in writing (including facsimile transmission)
and delivered personally, by telegraph, telecopy, telex or facsimile, by a
recognized overnight courier, or by dispatching the same by certified or
registered mail, return receipt requested, with postage prepaid, in each case
addressed:
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omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
if to Assignee to:
c/o Xxxx Capital Management, L.L.C.
00 Xxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Chief Financial Officer
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxxxxxx, M.D.
Xxxx Capital Partners
00 Xxxx Xxxxxx, Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000
and
Xxxxxxxx & Xxxxxxxx LLP
1290 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
if to Assignor to:
Vita Special Purpose Corp.
Corporation Trust Center
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxxx, Xxxxx & Bockius LLP
0000 Xxxxxx Xxxxxx
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[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
if to Orthovita to:
Orthovita, Inc.
00 Xxxxx Xxxxxx Xxxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx, CEO
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxxx, Xxxxx & Xxxxxxx LLP
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
if or to such other address or addresses as Assignee, Assignor or Orthovita may
from time to time designate by notice as provided herein, except that notices of
changes of address shall be effective only upon receipt. All such notices
consents, waivers and communications shall: (a) when posted by certified or
registered mail, postage prepaid, return receipt requested, be effective three
(3) Business Days after dispatch, unless such communication is sent
trans-Atlantic, in which case shall be deemed effective five (5) Business Days
after dispatch, (b) when telegraphed, telecopied, telexed or facsimiled, be
effective as of (i) the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile number specified in this Section prior
to 6:30 p.m. (New York City time) on a Business Day, or (ii) the next Business
Day after the date of transmission, if such notice or communication is delivered
via facsimile at the facsimile number specified in this Section on a day that is
not a Business Day or later than 6:30 p.m. (New York City time) on any Business
Day, or (c) when delivered by a recognized overnight courier or in person, be
effective upon receipt when hand delivered.
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[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
Section 8.04 Schedules.
Prior to each of Assignor and Orthovita making any representation or
warranty under this Agreement, each of Assignor and Orthovita shall update its
disclosure schedules with respect to all such representations and warranties
made by either Assignor or Orthovita under this Agreement. In determining the
accuracy of the representations and warranties of each of Assignor and
Orthovita, the representations and warranties of each of Assignor and Orthovita
shall be evaluated taking into account the updated disclosure schedules;
provided, however, that if the matters described in such updated schedule has
had, or could be reasonably expected to have, a Material Adverse Effect, then
Assignee shall have the option not to consummate such Closing.
Section 8.05 Successors and Assigns.
The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
Neither Assignor nor Orthovita shall be entitled to assign any of its
obligations and rights hereunder or any other Transaction Documents without the
prior written consent of Assignee, other than any assignment to a successor
entity in connection with a Change of Control, in which case no such consent
shall be required. ***
Section 8.06 Indemnification.
(a) Each of Assignor and Orthovita hereby jointly and severally
indemnifies and holds Assignee and its Affiliates and any of their respective
partners, directors, managers, officers, employees and agents (each as "Assignee
Indemnified Party") harmless from and against any and all Losses incurred or
suffered by any Assignee Indemnified Party arising out of any breach of any
representation, warranty or certification made by either Assignor or Orthovita
in any of the Transaction Documents or certificates given by Assignor in writing
pursuant hereto or thereto or any breach of or default under any covenant or
agreement by either Assignor or Orthovita pursuant to this Agreement or any
Transaction Document, including any failure by either Assignor or Orthovita to
satisfy any of the Excluded Liabilities and Obligations.
(b) Assignee hereby indemnifies and holds Assignor, Orthovita, their
Affiliates and any of their partners, directors, managers, officers, employees
and agents (each a "Assignor Indemnified Party") harmless from and against any
and all Losses incurred or suffered by an Assignor Indemnified Party arising out
of any breach of any representation, warranty or certification made by Assignee
in any of the Transaction Documents or certificates given by
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omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
Assignee in writing pursuant hereto or thereto or any breach of or default under
any covenant or agreement by Assignee pursuant to this Agreement or any
Transaction Document.
(c) If any claim, demand, action or proceeding (including any
investigation by any Government Authority) shall be brought or alleged against
an indemnified party in respect of which indemnity is to be sought against an
indemnifying party pursuant to the preceding paragraphs, the indemnified party
shall, promptly after receipt of notice of the commencement of any such claim,
demand, action or proceeding, notify the indemnifying party in writing of the
commencement of such claim, demand, action or proceeding, enclosing a copy of
all papers served, if any; provided, that, the omission to so notify such
indemnifying party will not relieve the indemnifying party from any liability
that it may have to any indemnified party under the foregoing provisions of this
Section 8.06 unless, and only to the extent that, such omission results in the
forfeiture of , or have a material adverse effect on the exercise or prosecution
of, substantive rights or defenses by the indemnifying party. In case any such
action is brought against an indemnified party and it notifies the indemnifying
party of the commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party (who shall not, except
with the consent of the indemnified party, be counsel to the indemnifying
party), and after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party will
not be liable to such indemnified party under this Section 8.06 for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation. In any
such proceeding, an indemnified party shall have the right to retain its own
counsel, but the reasonable fees and expenses of such counsel shall be at the
expense of such indemnified party unless (i) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of such counsel,
(ii) the indemnifying party has assumed the defense of such proceeding and has
failed within a reasonable time to retain counsel reasonably satisfactory to
such indemnified party or (iii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential conflicts of interests between them
based on the advice of such counsel. It is agreed that the indemnifying party
shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more than one
separate law firm (in addition to local counsel where necessary) for all such
indemnified parties. The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to
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[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
indemnify the indemnified party from and against any Loss or liability by reason
of such settlement or judgment. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any pending
or threatened proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
Section 8.07 Expenses.
Each party hereto will pay all of its own fees and expenses in
connection with entering into and consummating the transactions contemplated by
this Agreement.
Section 8.08 Independent Nature of Relationship.
(a) The relationship between Assignor and Assignee is solely that of
seller and purchaser, and the relationship between Orthovita and Assignee is
solely that of independent contracting parties, and neither Orthovita and
Assignee, on the one hand, nor Assignor, on the other, has any fiduciary or
other special relationship with the other or any of their respective Affiliates.
Nothing contained herein or in any other Transaction Document shall be deemed to
constitute Orthovita and Assignee, or Assignor and Assignee, as a partnership,
an association, a joint venture or other kind of entity or legal form, nor shall
the Lockbox Account or Lockbox Agreement be deemed to constitute Orthovita and
Assignee, or Assignor and Assignee, a partnership, an association, a joint
venture or other kind of entity or legal form.
(b) No officer or employee of Assignee will be located at the premises
of Assignor, Orthovita or any of their Affiliates, except in connection with an
audit performed pursuant to Section 5.02. No officer or employee of Assignee
shall engage in any commercial activity with Assignor, Orthovita or any of their
Affiliates other than as contemplated herein and in the other Transaction
Documents.
(c) Assignor, Orthovita and/or any of its Affiliates shall not at any
time obligate Assignee, or impose on Assignee any obligation, in any manner or
respect to any Person not a party hereto other than obligations of Assignee's
partners, directors, employees, managers, officers, investors, bankers,
advisors, trustees or representatives under Sections 5.04 and 5.17.
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[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
Section 8.09 Entire Agreement.
This Agreement, together with the Exhibits and Schedules hereto (which
are incorporated herein by reference), and the other Transaction Documents
constitute the entire agreement between the parties with respect to the subject
matter hereof and supersede all prior agreements (including the Letter of
Intent), understandings and negotiations, both written and oral, between the
parties with respect to the subject matter of this Agreement. No representation,
inducement, promise, understanding, condition or warranty not set forth herein
has been made or relied upon by either party hereto. None of this Agreement, nor
any provision hereof, is intended to confer upon any Person other than the
parties hereto any rights or remedies hereunder.
Section 8.10 Amendments; No Waivers.
(a) This Agreement or any term or provision hereof may not be amended,
changed or modified except with the written consent of the parties hereto. No
waiver of any right hereunder shall be effective unless such waiver is signed in
writing by the party against whom such waiver is sought to be enforced.
(b) No failure or delay by either party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
Section 8.11 Interpretation.
When a reference is made in this Agreement to Articles, Sections,
Schedules or Exhibits, such reference shall be to an Article, Section, Schedule
or Exhibit to this Agreement unless otherwise indicated. The words "include,"
"includes" and "including" when used herein shall be deemed in each case to be
followed by the words "without limitation." Neither party hereto shall be or be
deemed to be the drafter of this Agreement for the purposes of construing this
Agreement against one party or the other.
Section 8.12 Headings and Captions.
The headings and captions in this Agreement are for convenience and
reference purposes only and shall not be considered a part of or affect the
construction or interpretation of any provision of this Agreement.
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[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
Section 8.13 Counterparts; Effectiveness.
This Agreement may be executed in two or more counterparts, each of
which shall be an original, but all of which together shall constitute one and
the same instrument. This Agreement shall become effective when each party
hereto shall have received a counterpart hereof signed by the other party
hereto.
Section 8.14 Severability.
If any provision of this Agreement is held to be invalid or
unenforceable, the remaining provisions shall nevertheless be given full force
and effect.
Section 8.15 Force Majeure.
(a) If either party to this Contract shall fail to perform any
obligation hereby imposed upon it, and such failure is caused by acts of God,
strikes, lockouts or other industrial disturbances, sabotage, wars, blockades,
insurrections, riots, epidemics, landslides, lightning, earthquakes, floods,
fires, civil disturbances, explosions, the order of any court or governmental
authority, or any other act or omission occasioned by any cause beyond the
control of the party invoking this Section 8.15, and being such that by the
exercise of due diligence such party could not have prevented such failure, that
failure shall not (x) constitute a Material Adverse Effect until the earlier of
(i) 120 days following the occurrence of such event enumerated above, and (ii)
the date by which such party, in the exercise of reasonable diligence, would
have restored its ability to carry out its obligations hereunder, nor (y) give
rise to any cause of action based on breach of the obligation of such party
hereunder, but such party shall use reasonable diligence to put itself again in
a position to carry out its obligations hereunder. Nothing contained herein
shall be construed to require either party to settle a strike or lockout or
other industrial disturbance by acceding against its judgment to the demands of
opposing parties.
(b) No such circumstance or occurrence affecting the performance of
this Agreement by any party shall continue to relieve the party affected thereby
from liability or to hold in abeyance a cause of action, after the expiration of
a reasonable period of time within which by the use of due diligence such party
could have remedied the situation preventing its performance, nor shall any such
circumstance or occurrence relieve any party from its obligation to make payment
of amounts then due hereunder nor shall any such circumstance or occurrence
affected thereby from liability or hold in abeyance a cause of action unless
such party shall give notice of such circumstance or occurrence in writing with
reasonable promptness; and like notice shall be given upon termination of such
circumstance or occurrence.
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[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
Section 8.16 Governing Law; Jurisdiction.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED, INTERPRETED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER TRANSACTION DOCUMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION IN XXX XXXXX, XXXXXX XXX XXXX XX XXX XXXX. BY EXECUTION
AND DELIVERY OF THIS AGREEMENT, EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS TO
AND ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY THE NON-EXCLUSIVE JURISDICTION OF SUCH COURTS. EACH PARTY HERETO
HEREBY FURTHER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT.
(c) EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS OUT OF ANY OF THE COURTS REFERRED TO IN SUBSECTION (b) ABOVE OF THIS
SECTION 8.15 IN ANY SUCH SUIT, ACTION OR PROCEEDING BY THE MAILING OF COPIES
THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT ITS ADDRESS
SET FORTH IN THIS AGREEMENT. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY
OBJECTION TO SUCH SERVICE OF PROCESS AND FURTHER IRREVOCABLY WAIVES AND AGREES
NOT TO PLEAD OR CLAIM IN ANY SUIT, ACTION OR PROCEEDING COMMENCED HEREUNDER OR
UNDER ANY OTHER TRANSACTION DOCUMENT THAT SERVICE OF PROCESS WAS IN ANY WAY
INVALID OR INEFFECTIVE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF A PARTY TO
SERVE PROCESS ON THE OTHER PARTY IN ANY OTHER MANNER PERMITTED BY LAW.
77
[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
Section 8.17 Intentionally omitted.
Section 8.18 Waiver of Jury Trial.
EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING, CLAIM OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR ANY OTHER TRANSACTION DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR ANY OTHER TRANSACTION
DOCUMENT.
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[***] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the Securities
and Exchange Commission.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the date first above
written.
ASSIGNOR: VITA SPECIAL PURPOSE CORP.
By: /s/ Xxxxxx X. Xxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President
ORTHOVITA: ORTHOVITA, INC
By: /s/ XXXXX XXXXXXX
-------------------------------------
Name: Xxxxx Xxxxxxx
Title: Chief Executive Officer
ASSIGNEE: XXXX CAPITAL ROYALTY ACQUISITION FUND, L.P.
By: Xxxx Capital Management, LLC,
its General Partner
By: /s/ XXXXXX XXXXXXXXXX, M.D.
-------------------------------------
Name: Xxxxxx Xxxxxxxxxx, M.D.
Title: Managing Member
[SIGNATURE PAGE TO REVENUE INTERESTS ASSIGNMENT AGREEMENT]
Exhibit A
Projected Net Sales
-------------------
***
