Exhibit 4.09
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STOCK SUBSCRIPTION AGREEMENT
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By and Between
HEMASURE INC.
and
COBE LABORATORIES, INC.
Dated May 3, 1999
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TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms........................................1
SECTION 1.02. Other Definitions............................................4
SECTION 1.03. Terms Generally..............................................5
ARTICLE II
SUBSCRIPTION AND SALE
SECTION 2.01. Subscription and Sale of the Shares..........................6
SECTION 2.02. Firm Share Purchase Price....................................6
SECTION 2.03. First Closing................................................6
SECTION 2.04. The Option; Option Purchase Price............................6
SECTION 2.05. The Option Closing...........................................7
SECTION 2.06. Closing Deliveries by the Company............................7
SECTION 2.07. Closing Deliveries by the Purchaser..........................8
SECTION 2.08. Other First Closing Deliveries...............................9
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.01. Organization, Authority and Qualification of the Company;
Subsidiaries.................................................9
SECTION 3.02. Capital Stock of the Company; Ownership of the Shares.......10
SECTION 3.03. No Conflict.................................................10
SECTION 3.04. Governmental Consents and Approvals.........................11
SECTION 3.05. SEC Filings; Financial Statements...........................11
SECTION 3.06. No Undisclosed Liabilities..................................12
SECTION 3.07. Conduct of the Business.....................................12
SECTION 3.08. Litigation..................................................12
SECTION 3.09. Compliance with Laws........................................12
SECTION 3.10. Material Contracts..........................................12
SECTION 3.11. Intellectual Property.......................................13
SECTION 3.12. Year 2000 Compliance........................................14
SECTION 3.13. Title to Properties; Absence of Encumbrances................14
SECTION 3.14. Employee Benefit Matters; Labor Matters.....................14
SECTION 3.15. Brokers.....................................................15
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SECTION 3.16. Limitations on Representations and Warranties...............15
SECTION 3.17. Disclosure Schedule.........................................16
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
SECTION 4.01. Organization and Authority of the Purchaser..................16
SECTION 4.02. No Conflict..................................................16
SECTION 4.03. Governmental Consents and Approvals..........................17
SECTION 4.04. Investment Purpose...........................................17
SECTION 4.05. Status of Shares; Limitations on Transfer
and Other Restrictions.......................................17
SECTION 4.06. Sophistication and Financial Condition of Purchaser..........17
SECTION 4.07. Year 2000 Compliance.........................................17
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Actions Regarding Market.....................................18
SECTION 5.02. Confidentiality..............................................18
SECTION 5.03. Public Announcements.........................................18
SECTION 5.04. Capital Increase.............................................18
SECTION 5.05. Further Action...............................................19
ARTICLE VI
INDEMNIFICATION
SECTION 6.01. Survival of Representations and Warranties....................19
SECTION 6.02. Indemnification...............................................19
SECTION 6.03. Limits on Indemnification.....................................21
ARTICLE VII
GENERAL PROVISIONS
SECTION 7.01. Waiver.......................................................21
SECTION 7.02. Expenses.....................................................22
SECTION 7.03. Notices......................................................22
SECTION 7.04. Headings.....................................................23
SECTION 7.05. Severability.................................................23
SECTION 7.06. Entire Agreement.............................................23
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SECTION 7.07. Assignment...................................................24
SECTION 7.08. No Third Party Beneficiaries.................................24
SECTION 7.09. Amendment....................................................24
SECTION 7.10. Governing Law................................................24
SECTION 7.11. Arbitration..................................................24
SECTION 7.12. Counterparts................................................ 25
SECTION 7.13. Specific Performance........................................ 25
EXHIBITS
2.06(d) Form of Opinion of the Company's Counsel
2.07(c)(i) Form of Opinion of Internal Counsel of the Purchaser
2.07(c)(ii) Form of Opinion of the Purchaser's Outside Counsel
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STOCK SUBSCRIPTION AGREEMENT, dated May 3, 1999, by and between
HEMASURE INC., a Delaware corporation (the "Company"), and COBE LABORATORIES,
INC., a Colorado corporation (the "Purchaser").
W I T N E S S E T H:
WHEREAS, the Company wishes to issue and sell to the Purchaser, and the
Purchaser wishes to purchase from the Company, up to $12,000,000 of common
stock, par value $.01 per share, of the Company ("Common Stock"), upon the terms
and subject to the conditions set forth herein. All shares of Common Stock which
may be purchased pursuant to this Agreement are collectively referred to as the
"Shares"; and
WHEREAS, simultaneously with the execution of this Agreement, the
parties hereto are executing the Stockholder's Agreement (as defined below) and
the Distribution Agreement (as defined below);
NOW, THEREFORE, in consideration of the premises and the mutual
agreements and covenants hereinafter set forth, the Purchaser and the Company
hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings:
"Action" means any claim, action, suit, arbitration, inquiry,
proceeding or investigation by or before any Governmental Authority.
"Affiliate" means, with respect to any specified Person, any other
Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person.
"Agreement" or "this Agreement" means this Stock Subscription
Agreement, dated May 3, 1999, by and between the Company and the Purchaser
(including the Exhibits hereto and the Disclosure Schedule) and all amendments
hereto made in accordance with the provisions of Section 7.09.
"Alliance Agreements" means this Agreement, the Stockholder's Agreement
and the Distribution Agreement.
"Business" means the business of the development and manufacture of
leukoreduction products.
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"Business Day" means any day that is not a Saturday, a Sunday or other
day on which banks are required or authorized by law to be closed in The City of
New York.
"Code" means the Internal Revenue Code of 1986, as amended through the
date hereof.
"Company Systems" shall mean all computer, hardware, software, systems
and equipment (including embedded microcontrollers in noncomputer equipment)
embedded within or required to operate the current products of the Company
(i.e., currently distributed, currently supported or subject to valid agreements
requiring the Company to provide support, maintenance, enhancement or bug
fixes), and/or material to or necessary for the Company to carry on the Business
as currently conducted.
"Control" (including the terms "controlled by" and "under common
control with"), with respect to the relationship between or among two or more
Persons, means the possession, directly or indirectly or as trustee or executor,
of the power to direct or cause the direction of the affairs or management of a
Person, whether through the ownership of voting securities, as trustee or
executor, by contract or otherwise, including, without limitation, the
ownership, directly or indirectly, of securities having the power to elect a
majority of the board of directors or similar body governing the affairs of such
Person.
"Disclosure Schedule" means the Disclosure Schedule delivered in
connection with this Agreement, dated as of the date hereof, and incorporated
herein by reference.
"Distribution Agreement" means the Amended and Restated Distribution
Agreement, dated the date hereof, between the Company and the Purchaser.
"Encumbrance" means any security interest, pledge, mortgage, lien
(including, without limitation, environmental and tax liens), charge,
encumbrance, adverse claim, preferential arrangement or restriction of any kind,
including, without limitation, any restriction on the use, voting, transfer,
receipt of income or other exercise of any attributes of ownership, but
excluding Permitted Encumbrances.
"Governmental Authority" means any United States federal, state, local,
supranational or any foreign government, governmental, regulatory or
administrative authority, agency or commission or any court, tribunal, or
judicial or arbitral body.
"Governmental Order" means any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with any Governmental
Authority.
"Intellectual Property" means (i) United States, international and
foreign patents, patent applications and statutory invention registrations, (ii)
trademarks, service marks, trade dress, logos, and other source identifiers,
including registrations and applications for registration
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thereof, (iii) copyrights, including registrations and applications for
registration thereof, (iv) confidential and proprietary information, including
trade secrets and know-how and (v) material computer software developed by or on
behalf of the Company, or manufactured, distributed, sold, licensed or marketed
by the Company.
"Law" means any federal, state, local or foreign statute, law,
ordinance, regulation, rule, code, order, other requirement or rule of law.
"Leased Real Property" means the real property leased by the Company,
as tenant, together with, to the extent leased by the Company, all buildings and
other structures, facilities or improvements currently or hereafter located
thereon, all fixtures, systems, equipment and items of personal property of the
Company attached or appurtenant thereto, and all easements, licenses, rights and
appurtenances relating to the foregoing.
"Liabilities" means any and all debts, liabilities and obligations,
whether accrued or fixed, absolute or contingent, matured or unmatured or
determined or determinable, including, without limitation, those arising under
any Law (including, without limitation, any Environmental Law), Action or
Governmental Order and those arising under any contract, agreement, arrangement,
commitment or undertaking.
"Material Adverse Effect" means any circumstance, change in, or effect
on the Business, the Company or any Subsidiary that, individually or in the
aggregate with any other circumstances, changes in, or effects on, the Business,
the Company or any Subsidiary is, or would be reasonably expected to be,
materially adverse to the Business, financial condition or results of operations
of the Company and the Subsidiaries, taken as a whole.
"Permitted Encumbrances" means such of the following as to which no
enforcement, collection, execution, levy or foreclosure proceeding shall have
been commenced: (a) liens for taxes, assessments and governmental charges or
levies not yet due and payable which are not in excess of the amount accrued
therefor on the Company Balance Sheet; (b) Encumbrances imposed by law, such as
materialmen's, mechanics', carriers', workmen's and repairmen's liens and other
similar liens arising in the ordinary course of business securing obligations
that (i) are not overdue for a period of more than 30 days and (ii) are not in
excess of $25,000 in the case of a single property or $100,000 in the aggregate
at any time; (c) pledges or deposits to secure obligations under workers'
compensation laws or similar legislation or to secure public or statutory
obligations; and (d) minor survey exceptions, reciprocal easement agreements and
other customary encumbrances on title to real property that (i) were not
incurred in connection with any indebtedness, (ii) do not render title to the
property encumbered thereby unmarketable and (iii) do not, individually or in
the aggregate, materially adversely affect the value or use of such property for
its current and anticipated purposes.
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"Person" means any individual, partnership, firm, corporation,
association, trust, unincorporated organization or other entity, as well as any
syndicate or group that would be deemed to be a person under Section 13(d)(3) of
the Exchange Act.
"Purchase Price Bank Account" means a bank account in the United
States to be designated by the Company in a written notice to the Purchaser at
least five Business Days before each Closing.
"Purchaser Systems" shall mean all computer, hardware, software,
systems and equipment (including embedded microcontrollers in noncomputer
equipment) embedded within or required to operate the current products of the
Purchaser (i.e., currently distributed, currently supported or subject to valid
agreements requiring the Purchaser to provide support, maintenance, enhancement
or bug fixes), and/or material to or necessary for the Purchaser to carry on its
business as currently conducted.
"SEC" means the United States Securities and Exchange Commission.
"Stockholder's Agreement" means the Stockholder's Agreement, dated the
date hereof, by and between the Company and the Purchaser.
"Subsidiaries" means HemaPharm Inc., a Delaware corporation, HemaSure
A/S, a company organized under the laws of the Kingdom of Denmark, and HemaSure
A/B, a company organized under the laws of the Kingdom of Sweden.
"Vendors" means any and all vendors who are unaffiliated with the
Company or the Purchaser, as the case may be, who supply raw materials,
components, spare parts, supplies, goods, merchandise or services to the Company
or the Purchaser, as the case may be.
"Year 2000 Compliant" means that the Company Systems or Purchaser
Systems, as the case may be, provide uninterrupted millennium functionality in
that the Company Systems or Purchaser Systems, as the case may be, will record,
store, process and present calendar dates falling on or after January 1, 2000,
in the same manner and with the same functionality as the Company Systems or
Purchaser Systems, as the case may be, record, store, process and present
calendar dates falling on or before December 31, 1999.
SECTION 1.02. Other Definitions. The meanings of the following terms
can be found in the Sections of this Agreement indicated below:
Term Section
---- -------
Capital Increase......................Section 2.04(b)
Closing...............................Section 2.05
Closing Date..........................Section 2.05
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COBE..................................Section 3.01(a)
Common Stock..........................Recitals
Company...............................Preamble
Company Balance Sheet.................Section 3.05(b)
Company Benefit Plans.................Section 3.14
Company Loss..........................Section 6.02(b)
Company SEC Reports...................Section 3.05(a)
Confidentiality Agreement.............Section 5.02
ERISA.................................Section 3.14(a)
Exchange Act..........................Section 3.04
Exercise Date.........................Section 2.04(a)
FDA...................................Section 3.09(a)
Firm Shares...........................Section 2.01
First Closing.........................Section 2.03
First Closing Date....................Section 2.03
First Purchase Price..................Section 2.02
Indemnified Party.....................Section 6.02(c)
Indemnifying Party....................Section 6.02(c)
IRS...................................Section 3.14(d)
Licensed Intellectual Property........Section 3.11(a)
Loss..................................Section 6.02(b)
Material Contracts....................Section 3.10(a)
Multiemployer Plan....................Section 3.14(b)
Multiple Employer Plan................Section 3.14(b)
Option................................Section 2.04(a)
Option Closing........................Section 2.05
Option Closing Date...................Section 2.05
Option Purchase Price.................Section 2.04(a)
Option Shares.........................Section 2.04(a)
Owned Intellectual Property...........Section 3.11 (a)
Per Share Option Purchase Price.......Section 2.04(a)
Preferred Stock.......................Section 3.02
Purchase Price........................Section 2.04(a)
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Purchaser.............................Preamble
Purchaser Loss........................Section 6.02(a)
Regulated Products....................Section 3.09(a)
Securities Act........................Section 3.05(a)
Sepracor..............................Section 2.08
Shares................................Recitals
Third Party Claims....................Section 6.02(c)
SECTION 1.03. Terms Generally. References in this Agreement to
articles, sections, paragraphs, clauses, schedules and exhibits are to articles,
sections, paragraphs, clauses,
schedules and exhibits in or to this Agreement unless otherwise indicated.
Whenever the context may require, any pronoun includes the corresponding
masculine, feminine and neuter forms. Any term defined by reference to any
agreement, instrument or document has the meaning assigned to it whether or not
such agreement, instrument or document is in effect. The words "include",
"includes" and "including" are deemed to be followed by the phrase "without
limitation". Unless the context otherwise requires, any agreement, instrument or
other document defined or referred to herein refers to such agreement,
instrument or other document as from time to time amended, supplemented or
otherwise modified from time to time. Unless the context otherwise requires,
references herein to any Person include its successors and assigns. The words
"shall" and "will" have the same meaning and effect.
ARTICLE II
SUBSCRIPTION AND SALE
SECTION 2.01. Subscription and Sale of the Shares. On the date hereof,
the Company shall sell to the Purchaser, and the Purchaser shall purchase from
the Company, 4,500,000 shares of Common Stock (the "Firm Shares").
SECTION 2.02. Firm Share Purchase Price. The aggregate purchase price
to be paid by the Purchaser to the Company for the Firm Shares is $9,000,000,
payable at the First Closing (as defined below) by wire transfer in immediately
available funds (the "First Purchase Price").
SECTION 2.03. First Closing. The subscription and purchase of the Firm
Shares contemplated by this Agreement is taking place at a closing (the "First
Closing") being held at the offices of Shearman & Sterling, ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ on the date hereof ("First Closing Date").
SECTION 2.04. The Option; Option Purchase Price. (a) Subject to Section
2.04(b) below, the Company hereby grants to the Purchaser the right and option
(the "Option") to purchase, at the election of the Purchaser, $3,000,000 (the
"Option Purchase Price") in aggregate value of Common Stock ("Option Shares")
for a price per share equal to the Per Share Option Purchase Price. The Option
may be exercised by the Purchaser on one occasion at any time during the period
commencing 90 days after the First Closing and expiring on the first year
anniversary date of the First Closing, and the Option must be exercised in its
entirety, if at all. The "Per Share Option Purchase Price" shall be equal to the
average closing price of each share of the Common Stock as quoted on the OTC
bulletin board during the 30 trading days immediately prior to the date (the
"Exercise Date") the Purchaser shall provide irrevocable written notice to the
Company of its intent and agreement to exercise the Option, which notice shall
include the Purchaser's calculation of the number of Option Shares the Purchaser
elects to purchase and the Purchaser's calculation of the Per Share Option
Purchase Price. The Option Purchase Price shall
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be payable at the Option Closing (as defined below), if any, by wire transfer in
immediately available funds. Each of the First Purchase Price and the Option
Purchase Price is individually referred to as a "Purchase Price." For so long as
the Option shall remain unexercised without the exercise period of the Option
having expired, the Company shall reserve from time to time, as is reasonably
practicable, such number of shares of its authorized but unissued Common Stock
as shall enable the Company to issue Option Shares to the Purchaser.
(b) Notwithstanding anything herein to the contrary, the Option shall
not be deemed granted, nor may it be exercised, until such time as the
stockholders of the Company duly approve an amendment to the certificate of
incorporation of the Company increasing the number of authorized shares of
Common Stock from 20,000,000 shares to 35,000,000 shares (the "Capital
Increase"), and such amended certificate of incorporation is filed with the
Secretary of State of Delaware.
SECTION 2.05. The Option Closing. The purchase of the Option Shares
pursuant to the Option shall take place at a closing (the "Option Closing" and
each of the First Closing and the Option Closing is referred to individually as
a "Closing") to be held at the offices of Shearman & Sterling, ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ at 10:00 A.M. New York time on the tenth Business Day
after the Exercise Date or at such other place or at such other time or on such
other date as the Company and the Purchaser may mutually agree upon in writing
(the day on which the Option Closing takes place being the "Option Closing Date"
and each of the First Closing Date and the Option Closing Date being referred to
individually as a "Closing Date").
SECTION 2.06. Closing Deliveries by the Company. At each Closing, the
Company shall deliver or cause to be delivered to the Purchaser:
(a) a newly issued stock certificate, issued to the Purchaser and
evidencing the Shares being purchased at such Closing;
(b) a receipt for the applicable Purchase Price;
(c) for the First Closing only, a true and complete copy, certified by
the Secretary or an Assistant Secretary of the Company, of the resolutions
duly and validly adopted by the board of directors of the Company evidencing
(i) its authorization of the execution and delivery of the Alliance
Agreements and the consummation of the transactions contemplated hereby and
thereby, including the issuance of the Firm Shares and the Option Shares
(upon exercise of the Option), (ii) the expansion of the board of directors
of the Company from five to seven directors and the election of the
individuals designated by the Purchaser in writing to the board of directors
(which designees shall be to the reasonable satisfaction of the Company),
each to serve until the next annual meeting of the Company's stockholders
and (iii) the appointment of at least one of the Purchaser's designees to
each committee of the board of directors;
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(d) from Battle ▇▇▇▇▇▇ LLP, a legal opinion, addressed to the Purchaser
and dated such Closing Date, substantially in the form of Exhibit 2.06(d)
(except that with respect to the Option Closing Battle ▇▇▇▇▇▇ LLP will only
be required to deliver the opinion in Paragraph 6 of Exhibit 2.06(b));
(e) for the First Closing only, a copy of (i) the certificate of
incorporation, as amended, of the Company, certified by the Secretary of
State of Delaware, as of a date not earlier than five Business Days prior to
the applicable Closing Date and accompanied by a certificate of the
Secretary or Assistant Secretary of the Company, dated as of the applicable
Closing Date, stating that no amendments have been made to such certificate
of incorporation since such date, and (ii) the by-laws of the Company,
certified by the Secretary or Assistant Secretary of the Company;
(f) for the First Closing only, good standing certificates for the
Company from the Secretary of State of Delaware dated as of a date not
earlier than five Business Days prior to such Closing Date; and
(g) for the First Closing only, a certificate of the registrar and
transfer agent of the Company, certifying the number of outstanding shares
of Common Stock of the Company as of a date not more than two Business Days
prior to such Closing Date.
SECTION 2.07. Closing Deliveries by the Purchaser. At each Closing, the
Purchaser shall deliver to the Company:
(a) the applicable Purchase Price to the Purchase Price Bank Account;
(b) a receipt acknowledging delivery of the stock certificate specified
in Section 2.06(a);
(c) for the First Closing only, a legal opinion addressed to the
Company and dated such Closing Date from (i) internal counsel for the
Purchaser, substantially in the form of Exhibit 2.07(c)(i) hereto, and (ii)
Shearman & Sterling, as outside counsel to the Purchaser, substantially in
the form of Exhibit 2.07(c)(ii) hereto;
(d) for the First Closing only, a true and complete copy, certified by
the Secretary or Assistant Secretary of the Purchaser, of the resolutions
duly and validly adopted by the board of directors of the Purchaser
evidencing its authorization of the execution and delivery of the Alliance
Agreements and the consummation of the transactions contemplated hereby and
thereby;
(e) for the First Closing only, a copy of (i) the certificate of
incorporation, as amended, of the Purchaser, certified by the Secretary of
State of Colorado, as of a date not earlier than five Business Days prior to
the applicable Closing Date and accompanied
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by a certificate of the Secretary or Assistant Secretary of the Purchaser,
dated as of the applicable Closing Date, stating that no amendments have
been made to such certificate of incorporation since such date, and (ii) the
by-laws of the Purchaser, certified by the Secretary or Assistant Secretary
of the Purchaser; and
(f) for the First Closing only, a good standing certificate for the
Purchaser from the Secretary of State of Colorado as of a date not earlier
than five Business Days prior to such Closing Date.
SECTION 2.08. Other First Closing Deliveries. At the First Closing, the
Company shall cause to be delivered to the Purchaser a side letter agreement
from Sepracor, Inc., a Delaware company ("Sepracor"), addressed to the Company
to the effect that Sepracor will vote its shares of Common Stock beneficially
owned by it in favor of the Capital Increase.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As an inducement to the Purchaser to enter into this Agreement, the
Company hereby represents and warrants to the Purchaser as follows:
SECTION 3.01. Organization, Authority and Qualification of the Company;
Subsidiaries. (a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and the Company has
all necessary corporate power and authority to enter into each of this Agreement
and the other Alliance Agreements, to carry out its obligations hereunder and
thereunder and to consummate the transactions contemplated hereby and thereby.
The Company is duly qualified to do business and is in good standing in each
jurisdiction in which the properties owned or leased by it or the operation of
its Business makes such qualification necessary, except to the extent that the
failure to be so qualified would not, individually or in the aggregate, have a
Material Adverse Effect. The execution and delivery of this Agreement and the
other Alliance Agreements by the Company, the performance by the Company of its
obligations hereunder and thereunder and the consummation by the Company of the
transactions contemplated hereby and thereby have been duly authorized by all
requisite action on the part of the Company other than, with respect to the
Capital Increase, the approval of the Capital Increase by the stockholders of
the Company and the filing with the Secretary of State of Delaware of an amended
certificate of incorporation of the Company relating to the Capital Increase.
Each of the Alliance Agreements has been duly executed and delivered by the
Company, and (assuming due authorization, execution and delivery by the
Purchaser and COBE BCT, Inc. ("COBE"), as the case may be) each of the Alliance
Agreements constitutes a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights and general
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principles of equity. The Company is not in violation of any of the provisions
of its certificate of incorporation or by-laws.
(b) The Subsidiaries are the only Persons in which the Company
beneficially owns a 10% or greater equity interest (directly or indirectly),
except as disclosed in Section 3.01(b) of the Disclosure Schedule, no Subsidiary
has any material assets, Liabilities or business activities, and no Subsidiary,
currently or at any time in the past, has owned or leased any real property.
SECTION 3.02. Capital Stock of the Company; Ownership of the Shares. As
of the date hereof and without giving effect to the consummation of the
transactions contemplated hereby, the authorized capital stock of the Company
consists of 20,000,000 shares of Common Stock and 1,000 shares of preferred
stock, par value $.0l per share, of the Company ("Preferred Stock"). As of the
date hereof, (a) (i) 10,421,071 shares of Common Stock are issued and
outstanding, all of which are validly issued, fully paid and nonassessable, (ii)
no shares of Common Stock are held in the treasury of the Company, and (iii)
6,788,028 shares of Common Stock are reserved for issuance pursuant to the
exercise of any rights to purchase, or options, warrants or other securities
convertible into or exchangeable for, Common Stock, including the Option
(assuming a $2.00 Per Share Option Purchase Price), (b) no shares of Preferred
Stock have been issued and are outstanding and (c) 219,860 shares of Common
Stock are authorized for issuance pursuant to the Company Benefit Plans. None of
the issued and outstanding shares of Common Stock was issued in violation of any
preemptive rights. Except for the Company Benefit Plans and the warrants
described above, there are no options, warrants, convertible securities or other
rights, agreements, arrangements or commitments relating to the capital stock of
the Company or obligating the Company to issue or sell any shares of capital
stock of, or any other equity interest in, the Company. There are no outstanding
contractual obligations of the Company to repurchase, redeem or otherwise
acquire any shares of Common Stock or to provide funds to, or make any
investment (in the form of a loan, capital contribution or otherwise) in, any
other Person. Upon consummation of the First Closing as contemplated hereby,
including receipt by the Company of the First Purchase Price, the Firm Shares
owned by Purchaser will be fully paid and nonassessable. Upon consummation of
the Option Closing as contemplated hereby, including receipt by the Company of
the Option Purchase Price, the Option Shares owned by the Purchaser will be
fully paid and nonassessable.
SECTION 3.03. No Conflict. The execution, delivery and performance of
the Alliance Agreements by the Company do not and will not (a) violate, conflict
with or result in the breach of any provision of the charter or by-laws of the
Company, (b) conflict with or violate any Law or Governmental Order applicable
to the Company or any of its assets, properties or businesses, including,
without limitation, the Business, or (c) except as disclosed in Section 3.03 of
the Disclosure Schedule, conflict with, result in any breach of, constitute a
default (or event which with the giving of notice or lapse of time, or both,
would become a default) under, require any consent under, or give to others any
rights of termination, amendment, acceleration, suspension, revocation or
cancellation of, or result in the creation of any Encumbrance on any of
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the assets or properties of the Company pursuant to, any note, bond, mortgage or
indenture, contract, agreement, lease, sublease, license, permit, franchise or
other instrument, obligation or arrangement to which the Company is a party or
by which any of its assets or properties is bound or affected, except, with
respect to clauses (b) and (c), as would not, individually or in the aggregate,
have a Material Adverse Effect.
SECTION 3.04. Governmental Consents and Approvals. The execution,
delivery and performance of the Alliance Agreements by the Company do not and
will not require any consent, approval, authorization or other order of, action
by, filing with or notification to any Governmental Authority, except for the
applicable requirements, if any, of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and except as disclosed in Section 3.04 of the
Disclosure Schedule.
SECTION 3.05. SEC Filings; Financial Statements. (a) Except as set
forth in Section 3.10(a) of the Disclosure Schedule, the Company has filed all
forms, reports and documents required to be filed by it with the SEC since
January 1, 1998 (collectively, the "Company SEC Reports"). As of the respective
dates on which they were filed, (i) the Company SEC Reports complied in all
material respects with the requirements of the Securities Act of 1933, as
amended (together with the rules and regulations promulgated thereunder, the
"Securities Act"), and the Exchange Act, as the case may be, and (ii) none of
the Company SEC Reports contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading.
(b) Each of the consolidated financial statements (including, in each
case, any notes thereto) contained in the Company SEC Reports was prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods indicated (except as may be indicated in the notes
thereto or, in the case of unaudited statements, as permitted by Form 10-Q and
Regulation S-X of the SEC), and each presented fairly, in all material respects,
the consolidated financial position, results of operations and cash flows of the
Company as at the respective dates thereof and for the respective periods
indicated therein, except as otherwise noted therein (subject, in the case of
unaudited statements, to normal and recurring year-end adjustments that could
not be reasonably expected to, individually or in the aggregate, have a Material
Adverse Effect). The balance sheet of the Company contained in the Company SEC
Reports as of December 31, 1998 is hereinafter referred to as the "Company
Balance Sheet."
(c) The Company has no current intention of filing with the SEC any
amendments or modifications on Exchange Act Form 10K-A and is not currently
obligated to file any report on Exchange Act Form 8-K (except as may be required
with respect to the transactions contemplated hereby), pursuant to the
Securities Act or the Exchange Act.
SECTION 3.06. No Undisclosed Liabilities. There are no Liabilities of
the Company which would be required to be reflected on a balance sheet, or the
notes thereto,
837579.1
12
prepared in accordance with generally accepted accounting principles, other than
Liabilities (i) reflected or reserved against on the Company Balance Sheet, (ii)
disclosed in Section 3.06 of the Disclosure Schedule or (iii) incurred since the
date of the Company Balance Sheet in the ordinary course of the business,
consistent with the past practices, of the Company and which are not reasonably
likely, individually or in the aggregate, to have a Material Adverse Effect.
SECTION 3.07. Conduct of the Business. Since December 31, 1998, except
as contemplated by, or disclosed pursuant to, this Agreement or disclosed in any
SEC Report filed after December 31, 1998, the Company has conducted the Business
only in the ordinary course and in a manner consistent with past practices.
SECTION 3.08. Litigation. Except as disclosed in Section 3.08 of the
Disclosure Schedule or as disclosed in the SEC Reports filed prior to the date
of this Agreement, there are no Actions by or against the Company or any
Affiliate thereof (and relating to the Business or the Company), or affecting
any of the assets of the Company, pending before any Governmental Authority or,
to the knowledge of the Company threatened to be brought by or before any
Governmental Authority. Except as disclosed in Section 3.08 of the Disclosure
Schedule, neither the Company nor any of the assets of the Company is subject to
any Governmental Order (nor, to the knowledge of the Company, are there any such
Governmental Orders threatened to be imposed by any Governmental Authority)
which has or has had, individually or in the aggregate, a Material Adverse
Effect.
SECTION 3.09. Compliance with Laws. Except as disclosed in Section 3.09
of the Disclosure Schedule, the Company is not in default or violation of any
Law or Governmental Order (including, but not limited to, those of the Food and
Drug Administration (the "FDA") or any nongovernmental self-regulatory agency
and including environmental laws or regulations), except for such defaults or
violations that would not, individually or in the aggregate, have a Material
Adverse Effect. The Company has timely filed or otherwise provided all
registrations, reports, data, and other information and applications with
respect to its medical device, pharmaceutical, consumer, health care and other
governmentally regulated products (the "Regulated Products") required to be
filed with or otherwise provided to the FDA or any Governmental Authority with
jurisdiction over the manufacture, use or sale of the Regulated Products, and
all regulatory licenses or approvals in respect thereof are in full force and
effect, except where the failure to file timely such registrations, reports,
data, information and applications or the failure to have such licenses and
approvals in full force and effect would not, individually or in the aggregate,
have a Material Adverse Effect.
SECTION 3.10. Material Contracts. (a) Except as set forth in Section
3.10(a) of the Disclosure Schedule, other than as filed as Exhibits to the SEC
Reports, there are no contracts, agreements, leases, licenses or commitments to
which the Company is a party that are material to the Company ("Material
Contracts").
837579.1
13
(b) Except as disclosed in Section 3.10(b) of the Disclosure Schedule,
each Material Contract is valid and binding on the Company and is in full force
and effect. The Company is not in material breach of, or default under, any
Material Contract.
(c) Except as disclosed in Section 3.10(c) of the Disclosure Schedule,
to the knowledge of the Company, no other party to any Material Contract is in
breach thereof or default thereunder.
SECTION 3.11. Intellectual Property. (a) Section 3.11(a) of the
Disclosure Schedule sets forth a true and complete list of all (i) material
patents and patent applications and other material Intellectual Property, in
each case owned by the Company ("Owned Intellectual Property"), and (ii)
licenses of Intellectual Property to the Company or by the Company to a third
party, in each case that are material to the Business ("Licensed Intellectual
Property"), other than (A) any end-user operating system obtained with the
purchase or license of equipment and (B) any end-user application software, in
each case, that is commonly available.
(b) The Company is the exclusive owner of the entire and unencumbered
right, title and interest in and to each item of Owned Intellectual Property.
(c) The Owned Intellectual Property of the Company is subsisting and
has not been adjudged invalid or unenforceable in whole or part.
(d) Except as disclosed in Section 3.11(d) of the Disclosure Schedule,
no claims have been asserted, or are pending or, to the knowledge of the
Company, threatened against the Company (i) based upon or challenging or seeking
to deny or restrict the use by the Company of any of the Owned Intellectual
Property or Licensed Intellectual Property, (ii) alleging that any services
provided by, processes used by or products manufactured or sold by the Company
or that the use of Owned Intellectual Property or Licensed Intellectual Property
in the ordinary course of business of the Company infringes upon or
misappropriates any Intellectual Property right of any third party or (iii)
alleging that any Intellectual Property licensed pursuant to the Licensed
Intellectual Property infringes upon any Intellectual Property right of any
third party or is being licensed or sublicensed in conflict with the terms of
any license or other agreement.
(e) Except as disclosed in Section 3.11(e) of the Disclosure Schedule,
the Company has not granted any license or other right to any third party with
respect to the Owned Intellectual Property or Licensed Intellectual Property,
except to the customers of the Company pursuant to written license agreements
entered into in the ordinary course of business.
(f) To the knowledge of the Company (i) there has been no
misappropriation of any material trade secrets or other material confidential
Intellectual Property of the Company by any person, (ii) neither the Company nor
any employee, independent contractor or agent of the Company has misappropriated
any trade secrets or software of any other person in the course of such
performance as an employee, independent contractor or agent, and (iii) no
employee,
837579.1
14
independent contractor or agent of the Company is in default or breach of any
term of any employment agreement, nondisclosure agreement,
assignment-of-invention agreement or similar agreement or contract relating in
any way to the protection, ownership, development, use or transfer of
Intellectual Property.
SECTION 3.12. Year 2000 Compliance. The Company has (i) undertaken an
assessment of those Company Systems that could be adversely affected by a
failure to be Year 2000 Compliant and (ii) developed a plan and time line for
rendering such Company Systems Year 2000 Compliant. The Company has made
available for review to the Purchaser copies of all material documents related
to such assessment and plan implementation efforts, including communications to
and from customers and material Vendors and suppliers and all plans, time lines
and cost estimates for rendering the Company Systems Year 2000 Compliant. Based
on such review and assessment, all Company Systems are Year 2000 Compliant or
will be Year 2000 Compliant as required to avoid having a Material Adverse
Effect.
SECTION 3.13. Title to Properties; Absence of Encumbrances. (a) Other
than the leaseholds created under the Leased Real Property identified in Section
3.13(a) of the Disclosure Schedule, the Company has no ownership or leasehold
interest in any real property.
(b) The Company has good and valid title to, or, in the case of leased
properties and assets, valid leasehold interests in, all of the tangible
properties and assets, real, personal and mixed, used or held for use in, or
which are necessary to conduct, the Business as currently conducted, free and
clear of any Encumbrances except for Permitted Encumbrances.
SECTION 3.14. Employee Benefit Matters; Labor Matters. (a) For purposes
of this Agreement, "Company Benefit Plans" means (i) all employee benefit plans
(as defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")) and all bonus, stock option, stock purchase,
restricted stock, incentive, deferred compensation, retiree medical or life
insurance, supplemental retirement, severance or other benefit plans, programs
or arrangements, and all employment, termination, severance or other contracts
or agreements, whether legally enforceable or not, to which the Company is a
party, with respect to which the Company has any obligation or which are
maintained, contributed to or sponsored by the Company for the benefit of any
current or former employee, officer or director of the Company, (ii) each
employee benefit plan for which the Company could incur liability under Section
4069 of ERISA in the event such plan has been or was to be terminated, (iii) any
plan in respect of which the Company could incur liability under Section 4212(c)
of ERISA and (iv) any contracts or arrangements between the Company or any of
its Affiliates and any employee of the Company including, without limitation,
any contracts or arrangements relating to a sale of the Company.
(b) Except for the Company Benefit Plans listed in the Disclosure
Schedule, none of the Company Benefit Plans provides for the payment of
separation, severance, termination or similar-type benefits to any person or
obligates the Company to pay separation,
837579.1
15
severance, termination or similar-type benefits solely or partially as a result
of any transaction contemplated by this Agreement and the other Alliance
Agreements.
(c) Each Company Benefit Plan is now and always has been operated in
accordance with its terms and the requirements of all applicable Laws,
including, without limitation, ERISA and the Code, except where such failure
would not, individually or in the aggregate, have a Material Adverse Effect. The
Company has performed all obligations required to be performed by it under, is
not in any respect in default under or in violation of, and has no knowledge of
any default or violation by any party to, any Company Benefit Plan, except where
such failure to perform obligations, default or violation would not,
individually or in the aggregate, have a Material Adverse Effect. No action,
claim or proceeding is pending or, to the knowledge of the Company, threatened
with respect to any Company Benefit Plan (other than claims for benefits in the
ordinary course) and, to the knowledge of the Company, no fact or event exists
that could give rise to any material action, claim or proceeding.
(d) Each Company Benefit Plan that is intended to be qualified under
Section 401(a) of the Code has received a favorable determination letter from
the Internal Revenue Service ("IRS") and each trust established in connection
with any Company Benefit Plan which is intended to be exempt from federal income
taxation under Section 501(a) of the Code has received a determination letter
from the IRS that it is so exempt.
(e) The Company has not incurred any Liability under, arising out of or
by operation of Title IV of ERISA (other than liability for premiums to the
Pension Benefit Guaranty Corporation arising in the ordinary course), including,
without limitation, any Liability in connection with (i) the termination or
reorganization of any employee benefit plan subject to Title IV of ERISA or (ii)
the withdrawal from any Multiemployer Plan or Multiple Employer Plan, and no
fact or event exists which could give rise to any such Liability.
SECTION 3.15. Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Company.
SECTION 3.16. Limitations on Representations and Warranties. Except for
the representations and warranties expressly contained in this Agreement and the
other Alliance Agreements, neither the Company nor any other person or entity
makes any representation or warranty to the Purchaser, express or implied, and
the Company hereby disclaims any such representation or warranty, whether by the
Company or any of its agents, brokers or representatives or any other person or
entity, notwithstanding the delivery or disclosure to the Purchaser or any of
its officers, directors, employees, agents or representatives or any other
person or entity of any document or other information by the Company or any of
its agents, brokers or representatives or any other person or entity. In
addition, if, to the Purchaser's actual knowledge, any of the representations
and warranties set forth in this Agreement are not true as
837579.1
16
of any Closing, and the Purchaser elects nonetheless to close, the Purchaser
shall be deemed to have waived any claim for breach of such representation and
warranty.
SECTION 3.17. Disclosure Schedule. Any event, fact or circumstance
described in any section of the Disclosure Schedule shall be deemed a disclosure
for purposes of all other portions of the Disclosure Schedule, provided the
relevance of the disclosure to such other portions can be reasonably discerned
from the applicable section of the Disclosure Schedule.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
As an inducement to the Company to enter into this Agreement, the
Purchaser hereby represents and warrants to the Company as follows:
SECTION 4.01. Organization and Authority of the Purchaser. The
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of the State of Colorado. The Purchaser has all necessary
corporate power and authority to enter into this Agreement and the other
Alliance Agreements to which it is a party, to carry out its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement and the other Alliance
Agreements by the Purchaser, the performance by the Purchaser of its obligations
hereunder and thereunder and the consummation by the Purchaser of the
transactions contemplated hereby and thereby have been duly authorized by all
requisite action on the part of the Purchaser. This Agreement and the other
Alliance Agreements have been duly executed and delivered by the Purchaser, and
(assuming due authorization, execution and delivery by the Company) constitute
legal, valid and binding obligations of the Purchaser enforceable against the
Purchaser in accordance with their terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights and general principles of
equity.
SECTION 4.02. No Conflict. Assuming the making and obtaining of all
filings, notifications, consents, approvals, authorizations and other actions
referred to in Section 4.03, except as may result from any facts or
circumstances relating solely to the Company, the execution, delivery and
performance of the Alliance Agreements by the Purchaser does not and will not
(a) violate, conflict with or result in the breach of any provision of the
certificate of incorporation or by-laws of the Purchaser, (b) conflict with or
violate any Law or Governmental Order applicable to the Purchaser or (c)
conflict with, or result in any breach of, constitute a default (or event which
with the giving of notice or lapse or time, or both, would become a default)
under, require any consent under, or give to others any rights of termination,
amendment, acceleration, suspension, revocation, or cancellation of, or result
in the creation of any Encumbrance on any of the assets or properties of the
Purchaser pursuant to, any note, bond, mortgage or indenture, contract,
agreement, lease, sublease, license, permit, franchise or other
837579.1
17
instrument or arrangement to which the Purchaser is a party or by which any of
such assets or properties are bound or affected which, with respect to clauses
(b) and (c) above would have a material adverse effect on the ability of the
Purchaser to consummate the transactions contemplated by the Alliance
Agreements.
SECTION 4.03. Governmental Consents and Approvals. The execution,
delivery and performance of the Alliance Agreements by the Purchaser do not and
will not require any consent, approval, authorization or other order of, action
by, filing with, or notification to, any Governmental Authority.
SECTION 4.04. Investment Purpose. The Purchaser is acquiring the Shares
for its own account solely for the purpose of investment and not with a view to,
or for offer or sale in connection with, any distribution thereof.
SECTION 4.05. Status of Shares; Limitations on Transfer and Other
Restrictions. The Purchaser understands that the Shares have not been and will
not be registered under the Securities Act or under any state securities laws
(other than in accordance with the Stockholder's Agreement) and are being
offered and sold in reliance upon federal and state exemptions for transactions
not involving any public offering and that the Shares have not been approved or
disapproved by the SEC or by any other federal or state agency. The Purchaser
further understands that such exemption depends in part upon, and such Shares
are being sold in reliance on, the representations and warranties set forth in
this Article IV. The Purchaser understands that (i) none of the Shares may be
sold, transferred or assigned unless registered by the Company pursuant to the
Securities Act and any applicable state securities laws, or unless an exemption
therefrom is available, and, accordingly, it may not be possible for the
Purchaser to liquidate its investment in the Shares, and it agrees not to sell,
assign or otherwise transfer or dispose of any Shares unless such Shares have
been so registered or an exemption from registration is available, and (ii) the
Shares are subject to certain restrictions on transfer and voting, as set forth
in the Stockholder's Agreement.
SECTION 4.06. Sophistication and Financial Condition of Purchaser. The
Purchaser represents and warrants to the Company that it is an "Accredited
Investor" as defined in Regulation D under the Securities Act and that it
considers itself to be an experienced and sophisticated investor and to have
such knowledge and experience in financial and business matters as are necessary
to evaluate the merits and risks of an investment in the Shares. The Purchaser
also represents it has not been organized for the sole purpose of acquiring the
Shares. The Purchaser has been furnished access to such information and
documents as it has requested and has been afforded an opportunity to ask
questions of and receive answers from representatives of the Company concerning
the terms and conditions of this Agreement and the purchase of the Shares
contemplated hereby.
SECTION 4.07. Year 2000 Compliance. The Purchaser has (i) undertaken an
assessment of those Purchaser Systems that could be adversely affected by a
failure to be Year
837579.1
18
2000 Compliant and (ii) developed a plan and time line for rendering such
Purchaser Systems Year 2000 Compliant. The Purchaser has made available for
review to the Company copies of all material documents related to such
assessment and plan implementation efforts, including communications to and from
customers and material Vendors and suppliers and all plans, time lines and cost
estimates for rendering the Purchaser Systems Year 2000 Compliant. Based on such
review and assessment, all Purchaser Systems are Year 2000 Compliant or will be
Year 2000 Compliant as required to avoid having a material adverse effect on the
Purchaser's ability to perform any of its obligations under the Alliance
Agreements.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Actions Regarding Market. Prior to the exercise of the
Option, the Company shall not take any action outside the ordinary course of
business which would reasonably be expected to cause or result in stabilization
or to influence the price of any security of the Company in connection with the
sale of the Shares, except as may be approved by the board of directors of the
Company.
SECTION 5.02. Confidentiality. Notwithstanding anything herein to the
contrary, the Confidentiality Agreement dated November 12, 1997, as amended (the
"Confidentiality Agreement"), between the Company and COBE shall remain in full
force and effect in accordance with its terms.
SECTION 5.03. Public Announcements. The initial press release relating
to this Agreement shall be a joint press release the text of which has been
agreed to by each of the Purchaser and the Company. Thereafter, unless otherwise
required by applicable Law, each of the Purchaser and the Company shall use
commercially reasonable efforts to consult with the other before issuing any
press release or otherwise making any organized, pre-arranged or pre-scheduled
public statements with respect to any of the Alliance Agreements or any of the
other transactions hereby or thereby.
SECTION 5.04. Capital Increase. The Company shall use its best efforts
and take all actions permitted by Law to (a) call and hold an annual meeting of
the stockholders of the Company as expeditiously as possible for the purpose of
voting upon the Capital Increase; (b) cause the board of directors of the
Company to recommend, and not withdraw its recommendation, to the stockholders
to vote in favor of the Capital Increase; and (c) upon any approval by the
stockholders of the Company of the Capital Increase, expeditiously file an
amended certificate of incorporation of the Company relating to the Capital
Increase with the Secretary of State of Delaware.
837579.1
19
SECTION 5.05. Further Action. Each of the parties hereto shall use all
reasonable efforts to take, or cause to be taken, all appropriate action, do or
cause to be done all things necessary, proper or advisable under applicable Law,
and execute and deliver such documents and other papers, as may be required to
carry out the provisions of the Alliance Agreements and consummate and make
effective the transactions contemplated by the Alliance Agreements.
ARTICLE VI
INDEMNIFICATION
SECTION 6.01. Survival of Representations and Warranties. The
representations and warranties of the respective parties contained in this
Agreement and all statements contained in this Agreement and the Disclosure
Schedule shall survive until May 15, 2000. If written notice of a claim has been
given prior to the expiration of the applicable representations and warranties
by either party, then the relevant representations and warranties of the other
party shall survive as to such claim, until such claim has been finally
resolved.
SECTION 6.02. Indemnification. (a) The Purchaser, its Affiliates and
its successors and assigns and the officers, directors, employees and agents of
the Purchaser, its Affiliates and its successors and assigns shall be
indemnified and held harmless by the Company for any and all Liabilities,
losses, damages, claims, costs and expenses, interest, awards, judgments and
penalties (including, without limitation, reasonable attorneys' fees and
expenses) actually suffered or incurred by them (including, without limitation,
any Action brought or otherwise initiated by any of them) (hereinafter a
"Purchaser Loss"), arising out of or resulting from:
(i) the breach of any representation or warranty made by the Company
contained in this Agreement; or
(ii) the breach of any covenant or agreement by the Company contained
in this Agreement.
To the extent that the Company's undertakings set forth in this Section 6.02(a)
may be unenforceable, the Company shall contribute the maximum amount that it is
permitted to contribute under applicable Law to the payment and satisfaction of
all Purchaser Losses incurred by the Purchaser.
(b) The Company, its Affiliates and its successors and assigns and the
officers, directors, employees and agents of the Company, its Affiliates and its
successors and assigns shall be indemnified and held harmless by the Purchaser
for any and all Liabilities, losses, damages, claims, costs and expenses,
interest, awards, judgments and penalties (including, without limitation,
reasonable attorneys' fees and expenses) actually suffered or incurred by them
837579.1
20
(including, without limitation, any Action brought or otherwise initiated by any
of them) (hereinafter a "Company Loss"; and each of a Company Loss and Purchaser
Loss is hereinafter referred to as a "Loss" with respect to such party), arising
out of or resulting from:
(i) the breach of any representation or warranty made by the Purchaser
contained in this Agreement; or
(ii) the breach of any covenant or agreement by the Purchaser contained
in this Agreement.
To the extent that the Purchaser's undertakings set forth in this Section
6.02(b) may be unenforceable, the Purchaser shall contribute the maximum amount
that it is permitted to contribute under applicable Law to the payment and
satisfaction of all Company Losses incurred by the Company.
(c) Whenever a claim shall arise for indemnification under this Article
VI, the party entitled to indemnification (the "Indemnified Party") shall give
notice to the other party (the "Indemnifying Party") of any matter that the
Indemnified Party has determined has given or could give rise to a right of
indemnification under this Agreement promptly, but in no event later than 30
days, except with respect to any claim exceeding, or potential Loss reasonably
likely to exceed, $250,000, in which cases such notice shall not be later than
10 days, stating the amount of the Loss, if known, and method of computation
thereof, and containing a reference to the provisions of this Agreement in
respect of which such right of indemnification is claimed or arises. The
obligations and Liabilities of the Indemnifying Party under this Article VI with
respect to Losses arising from claims of any third party which are subject to
the indemnification provided for in this Article VI ("Third Party Claims") shall
be governed by and contingent upon the following additional terms and
conditions: if an Indemnified Party shall receive notice of any Third Party
Claim, the Indemnified Party shall give the Indemnifying Party notice of such
Third Party Claim following receipt by the Indemnified Party of such notice in
the time frame provided above; provided, however, that the failure to provide
such notice shall not release the Indemnifying Party from any of its obligations
under this Article VI except to the extent the Indemnifying Party is materially
prejudiced by such failure and shall not relieve the Indemnifying Party from any
other obligation or Liability that it may have to any Indemnified Party
otherwise than under this Article VI. If the Indemnifying Party acknowledges in
writing its obligation to indemnify the Indemnified Party hereunder against any
Losses that may result from such Third Party Claim, then the Indemnifying Party
shall be entitled to assume and control the defense of such Third Party Claim at
its expense and through counsel of its choice if it gives notice of its
intention to do so to the Indemnified Party within ten days of the receipt of
such notice from the Indemnified Party; provided, however, that if there exists
or is reasonably likely to exist a conflict of interest that would make it
inappropriate in the judgment of the Indemnified Party, in its reasonable
discretion, for the same counsel to represent both the Indemnified Party and the
Indemnifying Party, then the Indemnified Party shall be entitled to retain its
own counsel at the expense of the Indemnifying Party. In the event the
Indemnifying Party exercises the right to undertake any such defense
837579.1
21
against any such Third Party Claim as provided above, the Indemnified Party
shall cooperate with the Indemnifying Party in such defense and make available
to the Indemnifying Party, at the Indemnifying Party's expense, all witnesses,
pertinent records, materials and information in the Indemnified Party's
possession or under the Indemnified Party's control relating thereto as is
reasonably required by the Indemnifying Party. Similarly, in the event the
Indemnified Party is, directly or indirectly, conducting the defense against any
such Third Party Claim, the Indemnifying Party shall cooperate with the
Indemnified Party in such defense and make available to the Indemnified Party,
at the Indemnifying Party's expense, all such witnesses, records, materials and
information in the Indemnifying Party's possession or under the Indemnifying
Party's control relating thereto as is reasonably required by the Indemnified
Party. No such Third Party Claim may be settled by the Indemnifying Party
without the prior written consent of the Indemnified Party, which consent shall
not be unreasonably withheld or delayed.
SECTION 6.03. Limits on Indemnification. (a) Notwithstanding anything
to the contrary contained in this Agreement, the maximum amount of indemnifiable
Losses which may be recovered from the Company arising out of or resulting from
the causes enumerated in Section 6.02(a) shall be (x) prior to the Option
Closing, if any, $4,500,000 and (y) following the Option Closing, if any
$6,000,000. Notwithstanding any provision of this Agreement, for the avoidance
of doubt, the parties expressly acknowledge and agree that the indemnification
provisions set forth in the Distribution Agreement are not affected in any way
by this Agreement, including, without limitation, by any provision of this
Article VI, and remain in full force and effect in accordance with the terms of
the Distribution Agreement.
(b) Notwithstanding anything herein to the contrary, in no event shall
the Company or the Purchaser indemnify hereunder the other from and against any
facts or circumstances relating to their respective performance of any of their
respective obligations under the Distribution Agreement or otherwise in respect
of matters, directly or indirectly, relating to the Distribution Agreement.
(c) Notwithstanding anything to the contrary elsewhere in this
Agreement, Losses shall not include, and no Indemnifying Party shall, in any
event, be liable to any other party for, any consequential, punitive or special
damages (including, but not limited to, damages for lost profits).
ARTICLE VII
GENERAL PROVISIONS
SECTION 7.01. Waiver. The Company and the Purchaser may (a) extend the
time for the performance of any of the obligations or other acts of the other
party, (b) waive any inaccuracies in the representations and warranties of the
other party contained herein or in any document delivered by the other party
pursuant hereto or (c) waive compliance with any of the
837579.1
22
agreements or conditions of the other party contained herein. Any such extension
or waiver shall be valid only if set forth in an instrument in writing signed by
the party to be bound thereby. Any waiver of any term or condition shall not be
construed as a waiver of any subsequent breach or a subsequent waiver of the
same term or condition, or a waiver of any other term or condition, of this
Agreement. The failure of any party to assert any of its rights hereunder shall
not constitute a waiver of any of such rights.
SECTION 7.02. Expenses. Except as otherwise specified in this
Agreement, all costs and expenses, including, without limitation, fees and
disbursements of counsel, financial advisors and accountants, incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such costs and expenses.
SECTION 7.03. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery in
person, by courier service, by cable, by telecopy, by telegram, by telex or by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the following addresses (or at such other address for a
party as shall be specified in a notice given in accordance with this Section
7.03):
(a) if to the Company:
HemaSure Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attention: President and Chief Executive Officer
with a copy to:
Battle ▇▇▇▇▇▇ LLP
Park Avenue Tower
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, III, Esq.
837579.1
23
(b) if to the Purchaser:
COBE Laboratories, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇
with a copy to:
Legal Department
COBE Laboratories, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
and
Shearman & Sterling
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: 212-848-7179
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq. and ▇▇▇▇▇▇▇ A, Gerasimovich, Esq.
SECTION 7.04. Headings. The descriptive headings contained in this
Agreement are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
SECTION 7.05. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any Law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner in order that the transactions contemplated hereby are consummated as
originally contemplated to the greatest extent possible.
SECTION 7.06. Entire Agreement. This Agreement and the other Alliance
Agreements constitute the entire agreement of the parties hereto with respect to
the subject matter hereof and thereof and supersedes all prior agreements and
undertakings, both written and
837579.1
24
oral, between the Company and the Purchaser with respect to the subject matter
hereof and thereof.
SECTION 7.07. Assignment. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties; provided,
however, neither party hereto shall assign or delegate any of the rights or
obligations created under this Agreement without the prior written consent of
the other party.
SECTION 7.08. No Third Party Beneficiaries. Except for the provisions
of Article VI relating to Indemnified Parties, this Agreement shall be binding
upon and inure solely to the benefit of the parties hereto and their permitted
assigns and nothing herein, express or implied, is intended to or shall confer
upon any other Person any legal or equitable right, benefit or remedy of any
nature whatsoever under or by reason of this Agreement.
SECTION 7.09. Amendment. This Agreement may not be amended or modified
except (a) by an instrument in writing signed by, or on behalf of, the Company
and the Purchaser or (b) by a waiver in accordance with Section 7.01.
SECTION 7.10. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, excluding (to
the greatest extent permissible by law) any rule of law that would cause the
application of the laws of any jurisdiction other than the State of New York,
without regard to principles of conflict of law.
SECTION 7.11. Arbitration. (a) If a dispute arises from or relates to
this Agreement or the breach thereof, whether of law or fact, of any nature
whatsoever, and such dispute cannot be settled through direct discussions
between the parties, the parties agree to endeavor first to settle the dispute
in an amicable manner by mediation administered by the American Arbitration
Association under its Commercial Mediation Rules before resorting to litigation.
Mediation shall take place in New York, New York. If the dispute cannot be
resolved within 60 days of the initiation thereof by such party, any party may
initiate arbitration in accordance with the provisions of Section 7.11(b) below.
(b) All disputes arising under this Agreement that cannot be amicably
resolved under Section 7.11(a) above, shall be settled by binding arbitration.
Judgment upon the award rendered may be entered in any court in the New York,
New York metropolitan area. Each party agrees to the following arbitration
procedures:
(i) Any party requesting arbitration shall serve a written demand for
arbitration on another party. The demand shall set forth in reasonable
detail a statement of the nature of the dispute, the amount involved and the
remedies sought. No later than 20 calendar days after a demand for
arbitration is served, the parties shall jointly select and appoint a
retired judge of the Courts of the State of New York to act as the
arbitrator. In the event that the parties do not agree on the selection of
an arbitrator, the party seeking
837579.1
25
arbitration shall apply to the United States District Court for the Southern
District of New York for appointment of a retired judge to serve as
arbitrator.
(ii) No later than ten calendar days after appointment of an
arbitrator, the parties shall jointly prepare and submit to the arbitrator a
set of rules for the arbitration. In the event that the parties cannot agree
on the rules for the arbitration, the arbitrator shall establish the rules.
No later than ten calendar days after the arbitrator is appointed, such
arbitrator shall arrange for a hearing to commence on a mutually convenient
date. The hearing shall commence no later than 120 calendar days after the
arbitrator is appointed and shall continue from day to day until completed.
(iii) The arbitrator shall issue his or her award in writing no later
than 20 calendar days after the conclusion of the hearing. The arbitration
award shall be final and binding regardless of whether any party fails or
refuses to participate in the arbitration. The arbitrator is empowered to
hear and determine all disputes between the parties hereto concerning the
subject matter of this Agreement, and the arbitrator may award money damages
(but specifically not punitive damages), injunctive relief, rescission,
restitution, costs, and attorneys' fees. The arbitrator shall not have the
power to amend this Agreement in any, respect.
(iv) In the event that any party serves a proper demand for arbitration
under this Agreement, all parties may pursue discovery in accordance with
the Rules of Civil Procedure of the State of New York the provisions of
which are incorporated herein by reference, with the following exceptions:
(A) the parties hereto may conduct all discovery, including depositions for
discovery purposes, without leave of the arbitrator; and (B) all discovery
shall be completed no later than the commencement of the arbitration hearing
or 120 calendar days after the date that a proper demand for arbitration is
served, whichever occurs earlier, unless upon a showing of good cause the
arbitrator extends or shortens that period.
SECTION 7.12. Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
SECTION 7.13. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity.
837579.1
IN WITNESS WHEREOF, the Company and the Purchaser have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
HEMASURE INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and Chief
Executive Officer
COBE LABORATORIES, INC,
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
Title: Vice President
837579.1