<PAGE>
EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
AMONG
UNIVERSITY OF ALABAMA HEALTH SERVICES FOUNDATION, P.C.
AND
ALABAMA TISSUE CENTER, INC.
AND
REGENERATION TECHNOLOGIES, INC.
DATED AS OF APRIL 27, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
------- ----
<S> <C> <C>
1. Purchase and Sale of Assets.......................................................1
1.1 Assets Conveyed..........................................................1
1.2 Excluded Assets..........................................................3
2. Payment of the Purchase Price and Assumption of Liabilities.......................3
2.1 Purchase Price...........................................................3
2.2 Liabilities Assumed by the Purchaser.....................................4
2.3 Liabilities Retained by the Seller.......................................4
2.4 Instruments of Conveyance and Transfer of Books and Records..............5
3. Representations and Warranties of the Seller......................................5
3.1 Organization, Authorization, Etc.........................................5
3.2 Ownership of Assets......................................................6
3.3 Authority and No Conflict................................................6
3.4 Products and Inventory...................................................6
3.5 Property to Operate Business.............................................7
3.6 Intellectual Property....................................................7
3.7 Litigation...............................................................8
3.8 Compliance with Laws; Environmental Matters..............................8
3.9 Contracts................................................................9
3.10 Employee and Labor Matters..............................................10
3.11 Insurance Policies......................................................11
3.12 Financial Statements....................................................12
3.13 Absence of Changes......................................................12
3.14 Suppliers and Providers of Services.....................................13
3.15 Licenses................................................................13
3.16 Taxes...................................................................13
3.17 [Omitted.]..............................................................14
3.18 Investment Representations..............................................14
3.19 Year 2000...............................................................14
3.20 Food and Drug...........................................................15
3.21 No Misleading Statements................................................15
3.22 No Broker...............................................................15
4. Representations and Warranties of the Purchaser and the Parent...................15
4.1 Organization............................................................15
4.2 Authority and No Conflict...............................................16
4.3 Defaults, Consents, Etc.................................................16
4.4 No Broker...............................................................16
4.5 Capitalization..........................................................16
4.6 Financial Statement.....................................................17
4.7 No Misleading Statements................................................17
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
SECTION PAGE
------- ----
<S> <C> <C>
5. Obligations Before and After Closing................................................17
5.1(a) Access to Premises and Information.........................................17
5.1(b) Conduct of Business in Ordinary Course.....................................17
5.1(c) Securities Filings, Rule 144(c) Compliance.................................18
5.1(d) Representations and Warranties True at Closing; Delivery of
Disclosure Statement; Updating of Disclosure Statement....................19
5.1(e) Further Authorization......................................................19
5.1(f) No Shopping................................................................19
5.1(g) Purchaser's and Parent's Noncompetition; Nonsolicitation...................19
5.1(h) Seller's Noncompetition; Nonsolicitation...................................20
5.1(i) Seller's Cooperation: Licenses and Approvals...............................20
5.2(a) Consents...................................................................20
5.2(b) Public Announcements.......................................................20
5.2(c) Confidentiality Obligations of the Parties.................................21
5.3(a) Representations and Warranties True at Closing.............................21
5.3(b) Further Authorization......................................................21
5.3(c) Bulk Sales Law.............................................................21
5.3(d) New Facility...............................................................21
6. Conditions Precedent to the Performance of the Parent and the Purchaser.............21
6.1 Accuracy of Representations and Warranties.................................21
6.2 Performance................................................................21
6.3 No Material Adverse Change.................................................21
6.4 Certification by the Seller................................................22
6.5 Absence of Litigation......................................................22
6.6 Legal Prohibition..........................................................22
6.7 Consents, Approvals, Permits, Licenses, etc................................22
6.8 Management Services Agreement..............................................22
6.9 [Omitted.].................................................................22
6.10 Lease of Current Facility..................................................22
6.11 Consulting Agreements......................................................23
6.12 Closing Matters............................................................23
6.13 Supplemental Disclosure....................................................23
6.14 Risk of Loss...............................................................23
6.15 Initial Public Offering....................................................23
6.16 Registration Rights Agreement..............................................23
6.17 License Agreement..........................................................23
7. Conditions Precedent to the Seller's Performance....................................23
7.1 Accuracy of Representations and Warranties of the Parent and the
Purchaser.................................................................23
7.2 Performance; Authorization.................................................24
7.3 Material Adverse Change....................................................24
7.4 Certificates...............................................................24
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
SECTION PAGE
------- ----
<S> <C> <C>
7.5 Absence of Litigation......................................................24
7.6 Consents...................................................................24
7.7 Management Services Agreement..............................................24
7.8 [Omitted.].................................................................24
7.9 Consulting Agreements......................................................24
7.10 Opinion of Parent and Purchaser's Counsel..................................24
7.11 Closing Matters............................................................25
7.12 Initial Public Offering....................................................25
7.13 Listing....................................................................25
7.14 Registration Rights Agreement..............................................25
7.15 Delivery of Share..........................................................25
8. Joint Covenants.....................................................................25
8.1 Post-Closing Access to Information.........................................25
8.2 Allocation of Purchase Price...............................................25
8.3 Compliance With Law........................................................26
8.4 Accounts Receivable........................................................26
8.5 Medical Advisory Board and Medical Director................................26
8.6 Alabama Distribution; Pricing..............................................26
9. Certain Actions After the Closing...................................................27
9.1 The Purchaser to Act as Agent for the Seller...............................27
9.2 Subrogation of the Purchaser...............................................27
9.3 Payment of Liabilities.....................................................27
9.4 Research...................................................................27
9.5 Subsequent Liability.......................................................27
10. The Closing.........................................................................28
11. Survival of Representations; Indemnification........................................28
11.1 Survival of Representations, Etc...........................................28
11.2 Indemnification by the Seller..............................................28
11.3 Indemnification by the Purchaser...........................................29
11.4 Procedure for Indemnification..............................................29
11.5 Limitations on Indemnification Rights......................................30
12. Entire Agreement; Modification; Waiver..............................................30
13. Knowledge...........................................................................30
14. Third Party Beneficiaries...........................................................30
15. Expenses............................................................................31
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
SECTION PAGE
------- ----
<S> <C>
16. Further Assurances................................................................31
17. Successors and Assigns; Assignment................................................31
18. Notices...........................................................................31
19. Governing Law.....................................................................32
20. Guarantee of Performance..........................................................32
21. No Obligation of UAB..............................................................32
22. Delaware Reincorporation..........................................................32
</TABLE>
iv
<PAGE>
ASSET PURCHASE AGREEMENT
AGREEMENT, made as of the 27th day of April, 2000, by and among (i)
Regeneration Technologies, Inc., a Florida corporation (the "PARENT"), (ii)
Alabama Tissue Center, Inc., an Alabama for-profit corporation ("ATC" or, the
"PURCHASER") and wholly-owned subsidiary of the Parent, and (iii) University of
Alabama Health Services Foundation, P.C., an Alabama not-for profit professional
corporation (the "SELLER").
W I T N E S S E T H :
WHEREAS, the Seller is in the business of, among other things,
developing and using heart valve technology, vein technology and
cryopreservation technology of those tissues (the "BUSINESS"); and
WHEREAS, the Seller has determined that Parent and Purchaser have
technological capabilities and quality control mechanisms that will enhance the
supply of tissue available for transplant to the community served by Seller; and
WHEREAS, the Purchaser desires to purchase and the Seller desires to
sell certain of the assets and technology used by the Seller in the operation of
the Business;
NOW, THEREFORE, in consideration of the mutual promises and agreements
hereinafter contained, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows subject to all provisions of the Disclosure Statement delivered
herewith and made a part hereof:
1. PURCHASE AND SALE OF ASSETS.
1.1 ASSETS CONVEYED. At the closing of the transactions contemplated
hereby (the "CLOSING") on the Closing Date (as hereinafter defined), and upon
the basis of the representations, warranties, covenants and agreements contained
herein, the Seller shall sell, transfer, assign, convey and deliver to the
Purchaser, and the Purchaser shall purchase, on the terms set forth herein, all
of the Seller's right, title and interest in and to the Assets (as hereinafter
defined) free and clear of all liens, charges, claims, pledges, security
interests, equities and encumbrances of any nature whatsoever (collectively,
"LIENS"), except for those Liens created by the Purchaser and except for
Permitted Encumbrances. "PERMITTED ENCUMBRANCES" shall mean (a) easements,
rights of way, servitudes, restrictions and other matters which, in the
aggregate, do not materially and adversely affect the value of the Assets for
use in the Business and (b) those Liens described in Section 3.2 of the
Disclosure Statement. The "ASSETS" shall mean only those personal, tangible and
intangible properties of the Seller used in connection with the operation of the
Business including, without limitation, the Seller's heart valve, vein and
cryopreservation technologies and those items that are set forth below, and
shall specifically exclude the Excluded Assets (as defined below).
(a) CONTRACTUAL RIGHTS: all rights and benefits of the Seller under
all contracts relating to the operation of the Business that are listed on
Section 1.1.1 of the Disclosure Statement
<PAGE>
hereto (which also recites those contracts, the assignment of which by their
terms requires third party consent) (the "ASSUMED CONTRACTS");
(b) LICENSES AND PERMITS: to the extent permitted by applicable law
and regulation, all licenses and permits held or used by the Seller in
connection with the ownership of the Assets and the conduct of the operations of
the Business that are listed in Section 1.1.2 of the Disclosure Statement;
(c) EQUIPMENT: all human tissue processing equipment, machinery,
computers, computer hardware, software (but not source codes and object codes),
tools, supplies, furniture, vehicles, other equipment and other tangible
personal property, fixed and non-fixed assets owned by the Seller related to the
Business that is listed in Section 1.1.3 of the Disclosure Statement;
(d) LEASES: all the interest of and the rights and benefits
accruing to the Seller as lessee under the leases or rental agreements covering
human tissue processing equipment, machinery, computers, computer hardware,
software, tools, furniture, vehicles, other equipment and other tangible
personal property related to the Business that is described in Section 1.1.4 of
the Disclosure Statement;
(e) NAMES, ETC.: all right, title and interest the Seller has to use
the name "Alabama Tissue Center" and any variation thereof, and the trade names,
trademarks, service marks, copyrights, patents and the like set forth in
Section 1.1.5 of the Disclosure Statement;
(f) RECORDS: all operating data and records of the Seller relating
to the Business and the Assets, including without limitation, client lists and
records, medical records relating to the inventory being transferred, research
and development reports and records owned by Seller, if any, production reports
and records, equipment logs, operating guides and manuals, projections, a copy
of financial, accounting and personnel records, correspondence and other similar
documents and records except as to medical records, if any, which are prohibited
by law to be transferred and assigned;
(g) OTHER INTELLECTUAL PROPERTY: all of the intangible and
intellectual property of the Seller used in the operation of the Business,
including all knowledge, information, formulae, patents, patent applications,
patent rights, designs, plans, drawings, manufacturing and quality control
documentation, standard operating procedures (including heart valve, vein and
cryopreservation standard operating procedures), know-how, processes, software
(but not any source codes and object codes), products, and product development
records, research and development owned by Seller, if any, trade secrets,
marketing plans and strategies, forecasts, trademark applications, service mark
applications, operating rights, permits and other similar intangible property
and rights related to the Business including, without limitation, those listed
in Section 1.1.6 of the Disclosure Statement;
(h) PRODUCTS: all of the Seller's rights to the products set forth
on Section 1.1.7 of the Disclosure Statement (the "PRODUCTS"); and
2
<PAGE>
(i) INVENTORY: all of the Seller's inventories as of the Closing
Date relating to the Products, including all raw materials, finished goods, work
in progress, marketing materials and production, and shipping and packaging
supplies (the "INVENTORY").
1.2 EXCLUDED ASSETS. Anything to the contrary in Section 1.1
notwithstanding, the Assets shall exclude and the Purchaser shall not purchase
(collectively, the "EXCLUDED ASSETS") those other items specifically set forth
on Section 1.2 of the Disclosure Statement, which shall remain with the Seller.
2. PAYMENT OF THE PURCHASE PRICE AND ASSUMPTION OF LIABILITIES.
2.1 PURCHASE PRICE.
(a) The aggregate consideration to be paid to the Seller on the
Closing Date (the "CLOSING CONSIDERATION") shall consist of $250,000 in cash and
such number of shares (the "SHARES") of the Parent's common stock, $.0001 par
value per share (the "COMMON STOCK") having an Aggregate Stated Value of
$3,500,000 (hereinafter, the "AGGREGATE STATED VALUE").
(b) As additional consideration (the "CONTINGENT CONSIDERATION"),
there shall be paid to Seller an additional cash amount of $250,000 on the 60th
day following achievement of the Milestone.
(c) The number of shares of Common Stock payable to Seller as part of
the Closing Consideration shall be determined by dividing the Aggregate Stated
Value by the Stated Share Value. The "STATED SHARE VALUE" shall be the price per
share of the Common Stock of Parent at which such shares are offered to the
public in an initial public offering of Common Stock of Parent.
(d) The "MILESTONE" shall be achieved on the date on which Purchaser
shall have exceeded $250,000 in annual operating income, PROVIDED THAT such
Milestone shall have been reached no later than December 31, 2004. "OPERATING
INCOME" shall mean the earnings after actual operating expenses but before
interest, taxes, intercompany loans and transfers, and dividends of Purchaser
determined on a calendar-year basis based on generally accepted accounting
principles and certified by the Chief Financial Officer of Parent and Purchaser.
During the period from the Closing Date to December 31, 2004, the Purchaser
shall provide to the Seller, at the Purchaser's expense, a quarterly written
report summarizing the earnings before interest, taxes, interest, intercompany
loans and transfers, and dividends of the Purchaser (which report shall include,
but not be limited to, a summary of the revenues and expenses of the Purchaser
during such period) (the "QUARTERLY SUMMARY"). Not later than March 31, 2001,
2002, 2003, 2004 and 2005, the Purchaser shall provide to the Seller, at the
Purchaser's expense, a written report summarizing the earnings before interest
and taxes of the Purchaser for the preceding calendar year (which report shall
include, but not be limited to, a summary of the revenues and expenses of the
Purchaser during such period) (the "ANNUAL SUMMARY"). The Purchaser acknowledges
and agrees that the Seller and its represen tatives, agents and designees shall
have the right, upon reasonable notice and during ordinary business hours, to
review the Purchaser's records, at Seller's own expense, in connection with the
Quarterly Summary and the Annual Summary. In the event that the Purchaser and
the Seller disagree on the
3
<PAGE>
amounts set forth in any Quarterly Summary or Annual Summary they shall appoint
a mutually acceptable certified public accountant who shall make a determination
which shall be binding on the parties. The costs of the certified public
accountant shall be borne equally by the parties. The Purchaser and Parent
further acknowledge, covenant and agree that until the Contingent Consideration
is paid, the Business shall be conducted only through the Purchaser.
2.2 LIABILITIES ASSUMED BY THE PURCHASER. (a) In further consideration for
the sale of the Assets, on and as of the Closing Date, the Purchaser shall
assume and agree to pay, perform and discharge the Assumed Liabilities. For
purposes of this Agreement, the term "ASSUMED LIABILITIES" shall consist of, and
shall be limited solely to, subject to Section 2.3(a), (i) all of the Seller's
obligations arising after the Closing Date under the Assumed Contracts and
operating leases of the Seller relating to the operation of the Business, which
contracts and leases are set forth on Schedules 1.1.1 and/or 1.1.4, (ii) the
accrued vacation and sick leave of the Employees (as hereinafter defined)
identified in Section 3.10 of the Disclosure Statement, (iii) credit to such
Employees under all employee benefits plans of Purchaser, Parent and their
affiliates, for the years of service with the Seller, identified in Section 3.10
of the Disclosure Statement, and (iv) annual salary and bonus at least at the
rate described in Section 3.10 of the Disclosure Statement hereof, for at least
twelve (12) months.
(b) The Purchaser further agrees that at Closing it will reimburse
the Seller for the prepaid items set forth on Section 2.2.2 of the Disclosure
Statement.
2.3 LIABILITIES RETAINED BY THE SELLER. Notwithstanding anything to the
contrary contained herein, the Purchaser shall not assume any debts, obligations
or liabilities of the Seller not expressly assumed pursuant to Section 2.2
hereof and the Seller shall continue to be obligated to pay, perform and
discharge such debts, obligations and liabilities and hold the Purchaser
harmless from any such liabilities ("EXCLUDED LIABILITIES"), including without
limitation:
(a) any and all actual or contingent liabilities, debts or obligations
of or demands upon the Seller arising from operations of the Business or
otherwise relating to acts or omissions (actual or alleged) prior to the Closing
Date, including liabilities or obligations for trade accounts payable, payroll
costs or other obligations for monies owed, or arising from breach or failure to
perform by the Seller of any Assumed Contract;
(b) any liabilities now existing or which may hereafter exist by
reason of any alleged violation or law or governmental regulation or any other
claims arising out of any act or omission of the Seller prior to the Closing
Date;
(c) all liabilities arising out of or in connection with the existence
of Hazardous Materials (as defined in Section 3.8(d)) prior to the Closing Date;
(d) any liability or obligation to any broker, finder, investment
banker or other intermediary engaged by the Seller in connection with the sale
of the Assets and transfer of the technologies related to the Business,
including, without limitation, the transactions contemplated by this Agreement;
4
<PAGE>
(e) the Seller's obligations and liabilities arising under this
Agreement;
(f) federal, state and local income taxes, if any, payable with
respect to the operation of the Business through the Closing Date;
(g) sales and other taxes (including, without limitation, use taxes)
payable with respect to the operation of the Business through the Closing Date
or imposed on Seller in connection with the transactions contemplated hereby;
and
(h) any liability for benefits or otherwise that has arisen or may
arise under any Benefit Arrangement (as defined in Section 3.10(a)), including
any extended sick time liability, but not including those certain accrued
benefits more fully described in Section 2.2 hereof.
2.4 INSTRUMENTS OF CONVEYANCE AND TRANSFER OF BOOKS AND RECORDS.
(a) At the Closing, the Seller shall deliver to the Purchaser such
deeds, bills of sale, endorsements, assignments and other instruments of sale,
conveyance, transfer and assignment, satisfactory in form and substance to the
Purchaser and its counsel, as may be reasonably requested by the Purchaser, in
order to convey to the Purchaser good and marketable title to the Assets, free
and clear of all Liens except Permitted Encumbrances. The Purchaser shall pay
all sales, transfer or stamp taxes, or similar charges, payable by reason of the
sale hereunder.
(b) At the Closing, the Seller shall use its reasonable best efforts
to deliver to the Purchaser all written consents which are required under any
Assumed Contract being assigned to the Purchaser hereunder; PROVIDED, HOWEVER,
that as to any Assumed Contract the assignment of which by its terms requires
prior consent of the parties thereto, if such consent is not obtained prior to
or on the Closing Date and the Purchaser agrees in writing to waive the
provisions of Section 6.8 with respect to such consent, the Seller shall deliver
to the Purchaser written documentation setting forth arrangements for the
transfer of the economic benefit of such Assumed Contracts to the Purchaser as
of the Closing Date under terms and conditions acceptable to all the parties
hereto, in accordance with the terms of Section 7.6 hereof.
3. REPRESENTATIONS AND WARRANTIES OF THE SELLER.
In order to induce the Purchaser to enter into and perform this Agreement,
the Seller represents, warrants and agrees as follows:
3.1 ORGANIZATION, AUTHORIZATION, ETC. The Seller is a not-for-profit
Alabama professional corporation, and is validly existing under the laws of the
jurisdiction of its organization, and has all requisite power and authority to
execute and deliver and, subject to applicable law, perform this Agreement and
to consummate the transactions contemplated hereby. Section 3.1 of the
Disclosure Statement contains all resolutions adopted by the Board of Directors
of the Seller approving the matters covered or contemplated by this Agreement.
5
<PAGE>
3.2 OWNERSHIP OF ASSETS. Except as set forth on Section 3.2 of the
Disclosure Statement hereto, the Seller is the legal and beneficial owner of the
Assets described in Section 1.1 hereto, free and clear of any Liens other than
the Permitted Encumbrances set forth on Section 3.2 of the Disclosure Statement,
and the Seller has full right, power and authority subject to applicable law to
sell, transfer, assign, convey and deliver all of the Assets to be sold by it
hereunder and delivery thereof will convey to the Purchaser good and marketable
title to said Assets, free and clear of any Liens other than Liens created by
the Purchaser and Permitted Encumbrances.
3.3 AUTHORITY AND NO CONFLICT.
(a) the Seller has full corporate right, power and authority to
execute, deliver and carry out the terms of this Agreement and all documents and
agreements necessary to give effect to the provisions of this Agreement, and
this Agreement has been duly authorized, executed and delivered by the Seller.
The execution and delivery of this Agreement by the Seller does not, and subject
to the receipt of all regulatory approvals and compliance with other
requirements of law consummation of the transactions contemplated hereby will
not (a) conflict with, or result in any violation of or default or loss of any
benefit under, any provision of the Seller's governing instruments; (b) conflict
with, or result in any violation of or default or loss of any material benefit
under, any permit, concession, grant, franchise, law, rule or regulation, or any
judgment, decree or order of any court or other governmental agency or
instrumentality to which the Seller is a party or to which the Business is
subject; (c) except for undelivered consents to assignment of assumed contracts
or leases, conflict with, or result in a breach or violation of or default or
loss of any material benefit under, or accelerate the performance required by,
the terms of any agreement, contract, indenture or other instrument to which the
Seller is a party or to which the Business is subject, or constitute a default
or loss of any right thereunder or an event which, with the lapse of time or
notice or both, might result in a default or loss of any right thereunder or the
creation of any Lien upon the Business; or (d) result in any suspension,
revocation, impairment, forfeiture or nonrenewal of (i) any material License (as
defined in Section 3.15) relating to the operation of the Business or (ii) any
other material License. All action and other authorizations on the part of the
Seller (except for third party consents) prerequisite to the execution of this
Agreement and the consummation of the transactions contemplated by this
Agreement have been taken or obtained by the Seller. This is a valid and binding
agreement of the Seller enforceable in accordance with its terms.
(b) Other than any consents or notices required to transfer the
licenses listed in Section 1.1.2 of the Disclosure Statement, the execution,
delivery and performance by the Seller of this Agreement, and the performance of
the transactions contemplated by this Agreement, do not require the
authorization, consent, approval, certification, license or order of, or any
filing with, any court or governmental agency of such a nature that the failure
to obtain the same would have a material adverse affect on the Assets.
3.4 PRODUCTS AND INVENTORY. The Company represents and warrants that all
Products and Inventory have been recovered, processed and stored in accordance
with all applicable local, state, and federal rules and regulations and American
Association of Tissue Bank guidelines. Section 3.4 of the Disclosure Statement
sets forth (a) the valuation assigned to each Product and each item of Inventory
and Products, (b) the product code of each Product and each item of Inventory,
and (c) the expiration date for each Product in Inventory as of April 10, 2000.
6
<PAGE>
3.5 PROPERTY TO OPERATE BUSINESS.
(a) The Assets (other than the Excluded Assets and the facility lease)
constitute, in the aggregate, all the tangible personal property necessary for
the conduct of the Business as currently conducted. All tangible personal
property is in good operating condition and repair, reasonable wear and tear
excepted, and is suitable for use in the ordinary conduct of the operations of
the Business, and no maintenance, repair or replacement has knowingly been
deferred. SCHEDULE 1.1.4 hereto includes a true, correct and complete list of
all personal property leases under which the Seller is a lessee with respect to
the Business. All such leases are valid and enforceable in accordance with their
respective terms, are in full force and effect, and there is not under any such
lease any default by the Seller or to the knowledge of the Seller, by any lessor
under any such lease, or any condition, event or act which, with the giving of
notice or lapse of time, or both, would constitute such a default.
(b) The Seller does not own any real property that is used solely in
connection with the Business. Section 3.5 of the Disclosure Statement contains a
list of all real property leased or subleased to the Seller and used in the
Business ("LEASED REAL PROPERTY"). All leases and subleases with respect to such
Leased Real Property (the "REAL PROPERTY LEASES") are subject to no Liens except
Permitted Liens. True and complete copies of the Real Property Leases have been
made available to the Purchaser by the Seller. The Leased Real Property and all
present uses and operations of the Leased Real Property comply with all
applicable laws, including, without limitation, applicable zoning, building
code, use and occupancy restrictions, and the Seller has not received any notice
of any violation of any such restriction, or any condemnation action or
proceeding with respect the Leased Real Property.
3.6 INTELLECTUAL PROPERTY. Section 1.1.6 of the Disclosure Statement
contains a schedule of all intangible and intellectual property, including the
specific items more particularly described in Section 1.1(g) ("INTELLECTUAL
PROPERTY") of the Seller used in the operation of the Business. All of the
Company's registered patents, copyrights, trademarks, and service marks are in
full force and effect and are not subject to any taxes or maintenance fees and
the Company has the right to bring infringement Proceedings (as hereinafter
defined) with respect thereto. The Seller has not infringed, and is not now
infringing, any Intellectual Property belonging to a third party and the Seller
has not received any notice of infringement upon or conflict with the asserted
rights of others. Except as set forth on Section 1.1.6 of the Disclosure
Statement hereto, none of such items of Intellectual Property are registered
with the United States Patent and Trademark Office or the United States
Copyright Office. There are no items of Intellectual Property other than those
listed on Section 1.1.6 of the Disclosure Statement which are necessary for the
conduct of the Business as now being conducted, the loss of which could
materially and adversely affect the prospects, operations or condition,
financial or otherwise, of the Business. No director, officer, or employee of
the Seller or any prede cessor has any interest in any of the foregoing rights.
3.7 LITIGATION. Except as set forth on Section 3.7 of the Disclosure
Statement hereto, there is no action, suit, arbitration, proceeding or
investigation pending or, to the knowledge of the Seller, threatened in writing
against or affecting the Business by or before any foreign or domestic
7
<PAGE>
court, administrative agency or commission or other governmental authority or
instrumentality (a "GOVERNMENTAL ENTITY"), or any basis in fact therefor known
to the Seller, against or involving the Business or any Employee (as hereinafter
defined), whether at law or in equity.
3.8 COMPLIANCE WITH LAWS; ENVIRONMENTAL MATTERS.
(a) The Business is in compliance with all applicable laws, rules or
regulations relating to or affecting the operation, conduct or ownership of its
properties or business (including without limitation any that relate to the
ownership and operation of human tissue processing facilities, consumer
protection, health and safety, products and services, proprietary rights,
collective bargaining, equal opportunity and improper payments), except for
violations that individually or in the aggregate would not have a material
adverse effect on the condition, financial or otherwise, of the Business. None
of the Seller or any director, officer, consultant or employee of the Seller, is
in default with respect to any order, writ, injunction or decree, known to, or
served upon, the Seller, of any Governmental Entity. There is no existing law,
rule, regulation or order, whether Federal, state or local, which would prohibit
or materially restrict the Business from conducting its business in any
jurisdiction in which it is now conducting business.
(b) The Seller has not received any notice of any uncured claim,
requirement or demand of any Governmental Entity having or claiming any
licensing, certifying, supervising, evaluating or accrediting authority over the
Business or their business to rework or redesign the Business, professional
staff or professional services, procedures or practices in any material respect
or to provide additional furniture, fixtures, equipment or inventory so as to
make such Business conform to or comply with applicable law.
(c) (i) Specifically, without limiting the representations contained
in subsection 3.8(a) hereof, the Seller has obtained for the Business all
material permits, licenses and other authorizations which are required to
conduct the business of the Business under all Federal, state, county and local
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
concessions, grants, franchises, agreements or governmental restrictions
relating to the environment or the general treatment, storage, recycling,
transportation, release or disposal of any Hazardous Materials (as defined
below) into the environment (collectively, "ENVIRONMENTAL LAWS"). The Business
is in material compliance (1) with the terms and conditions of all such permits,
licenses and authorizations and (2) with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules and
timetables contained in any Environmental Law applicable to it in connection
with the conduct of the Business or in any regulation, code, plan, order,
decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved under any Environmental Law. In addition, no notice,
notification, demand, request for information, citation, summons or order has
been issued, no complaint has been filed, no penalty has been assessed and no
investigation or review is pending or, to the knowledge of the Seller,
threatened by any Governmental Entity or any executive, legislative, judicial,
regulatory or administrative entity with respect to any alleged failure by the
Seller to have any permit, license or authorization required in connection with
the generation, treatment, storage, recycling, transportation, release or
disposal of any pollutant, toxic or hazardous material, hazardous substance,
hazardous constituent or waste of any kind as defined under any Environmental
Laws (collectively "HAZARDOUS MATERIALS") generated by or relating to the
8
<PAGE>
Business (or any predecessor to the Business) whether or not occurring at or on
property owned, leased or operated by the Seller. The Business is not, nor are
any of the properties where its operations are conducted, subject to, any
material liability, contingent or otherwise, arising out of or resulting from
the release, leakage, pouring, emission, emptying, injection, pumping, escaping,
leaching, dumping, discharge, spillage, storage, burying or other disposal,
whether on its own premises or through other persons, of any Hazardous
Materials. Except as disclosed in Section 3.8 of the Disclosure Statement, there
are no Hazardous Substances (as such term is defined in the Comprehensive
Environment Response, Compensation and Liability Act of 1980 ("CERCLA") and
equivalent state laws) upon, beneath or migrating or threatening to migrate from
the property or properties where the Business conducts its operations, and
except as set forth in Section 3.8 of the Disclosure Statement hereto, there are
no underground storage tanks for Hazardous Substances, active or abandoned, at
any property now or previously owned or leased by the Seller with respect to the
Business, and there are no encumbrances in favor of any Governmental Entity for
(A) any liability under Environmental Laws or (B) damages arising from or costs
incurred by such Governmental Entity in response to a release or threatened
release of Hazardous Substances into the environment (collectively,
"ENVIRONMENTAL ENCUMBRANCES") arising under or pursuant to any Environmental
Laws, and no governmental actions have been taken or are in process which could
reasonably be anticipated to subject the Business to such Environmental
Encumbrances.
3.9 CONTRACTS.
(a) In connection with the operation of the Business, except as set
forth in Section 1.1.1 or Section 3.10 of the Disclosure Statement, the Seller
has no existing contract, obligation or commitment (written or oral) (other than
such other contracts which individually involve the annual expenditure of
$10,000 or less and in the aggregate do not require annual expenditures in
excess of $100,000) of any nature, including without limitation the following:
(a) employment, bonus, severance or consulting agreements, retirement or similar
plans; (b) loan or other agreements, notes, indentures, instruments or guaranty
relating to or evidencing indebtedness for borrowed money or mortgaging,
pledging or granting or creating a lien or security interest or other
encumbrance on any of the assets of the Seller with respect to the Business; (c)
agreements with any labor union or collective bargaining organization or other
labor agreements; (d) any contract or series of contracts with the same person
for the furnishing or purchase of equipment, goods or services; (e) any joint
venture contract or arrangement or other agreement involving a sharing of
profits or expenses to which the Seller, with respect to the Business, is a
party or by it is bound; (f) agreements which would, after the Closing Date,
limit the freedom of the Purchaser to compete in any line of business or in any
geographic area or with any person; (g) agreements providing for acquisition or
disposition of the assets, businesses or a direct or indirect ownership interest
in any of the assets or technologies comprising the Business; (h) other than
lease of space for the Business, any lease under which the Seller, with respect
to the Business, is either lessor or lessee; (i) any contract, commitment or
arrangement not made in the ordinary course of business of the Seller, including
without limitation, any powers-of-attorney giving any person authority to act on
behalf of the Seller; (j) any license, agreement, or arrangement, whether as
licensor, licensee, or otherwise, with respect to any trade name, trademark,
service mark, copyright, patent or trade secret; (k) any contract or series of
contracts, commitments or binding arrangement relating to the provision of goods
or services by any person who is related to, or an affiliate of, the Seller or
any officer or director of the Seller, and any
9
<PAGE>
contract or series of contracts, commitments or arrangement relating to the
provision of goods or services by any person the terms of which were not
determined on an arms' length basis; or (l) agreements with any Governmental
Entity.
(b) True and correct copies of all written contracts, agreements,
arrangements and similar instruments set forth in Section 1.1.1 of the
Disclosure Statement have been provided to the Purchaser except as otherwise
indicated thereon. Each contract, agreement, arrangement, plan, lease or similar
instrument relating to the Business to which the Seller is a party, whether or
not listed in Section 1.1.1 of the Disclosure Statement (collectively, the
"SELLER CONTRACTS"), is a valid and binding obligation of the Seller and, to the
knowledge of the Seller, the other parties thereto, enforceable in accordance
with its terms (except as the enforceability thereof may be limited by any
applicable bankruptcy, insolvency or other laws affecting creditors' rights
generally or by general principles of equity, regardless of whether such
enforceability is considered in equity or at law), and is in full force and
effect, and the Seller is not nor, to the knowledge of the Seller, is any other
party thereto in breach of any material provision of, nor is in default in any
material respect under the terms of (and, to the knowledge of the Seller, no
condition exists which, with the passage of time, the giving of notice, or both
(including consummation of the transactions contemplated hereby), would result
in a material default under the terms of), any of the Seller Contracts.
(c) Except as listed on Section 1.1.1 of the Disclosure Statement,
(i) no purchase contracts or commitments of the Seller as they relate to the
Business continue for a period of more than 12 months or are in quantities or
amounts in excess of the normal, ordinary, usual and current requirements of the
Business or in excess of market prices generally available to purchasers of
similar quantities; (ii) no Seller Contract requires the Business to provide
services at a fixed price; (iii) the Seller does not have, as it relates to the
Busines, outstanding any bid, contract, commitment or proposal either (x)
continuing for a period of more than 12 months or (y) quoting prices which will
not result in profits consistent with past experience; and (2) none of such the
Seller Contracts obligates the Business to perform services which the Seller
knows or has reason to believe are pursuant to terms or conditions the Business
cannot reasonably expect to satisfy or fulfill in its entirety.
3.10 EMPLOYEE AND LABOR MATTERS.
(a) Section 3.10 of the Disclosure Statement comprises a complete and
correct list of the (a) names, (b) titles, (c) length of employment or service,
(d) current annual salary rates and all other compensation and fringe benefits,
and (e) accrued salary, benefits and vacation time, of each of the employees of
the Seller whose duties include involvement with the Business transferred to
Purchaser (the "EMPLOYEES"). Except as set forth in Section 3.10 of the
Disclosure Statement, none of such personnel is a party or subject to any oral
or written employment bonus, pension, profit-sharing, deferred compensation,
employee benefit (including, without limitation, medical disability, life
insurance and other welfare benefit plans), incentive, pension or retirement
plans, fringe benefit or termination or severance agreements, plans or
commitments (collectively, "BENEFIT ARRANGEMENTS"). Except as more fully
described in Section 2.2 hereof, the Purchaser is not assuming the Benefit
Arrangements and the Seller shall remain responsible for all Benefit
Arrangements up to and including the Closing Date. The Seller is not in material
default with respect
10
<PAGE>
to any of the foregoing obligations and will bear full responsibility for any
such obligation outstanding, or due, owing as of the Closing Date. The Seller
has not instituted any "freeze" of, or delayed or deferred the grant of, any
cost-of-living or other salary adjustments for any of the Employees except in
accordance with the normal course of business and past practice. [Purchaser
hereby covenants that at the time it employs the Employees, it shall offer to
the Employees health insurance on an open enrollment basis, without any waiting
periods for eligibility and without any waiting periods, exclusions or
limitations on coverage for pre-existing conditions.] The Seller is not in
material default with respect to any withholding or other employment taxes or
payments with respect to accrued vacation or severance pay on behalf of any
Employees for which it is obligated on the date hereof, and will maintain and
continue to make all such necessary payments or adjustments arising through the
Closing Date. There are not in existence or threatened any (a) work stoppages
respecting Employees of the Seller or (b) unfair labor practice complaints
against the Seller and none has occurred since January 1, 1997. No
representation question exists respecting the Employees and no collective
bargaining agreement is currently being negotiated by the Seller covering the
Employees, nor is any grievance procedure or arbitration proceeding pending
under any collective bargaining agreement and no claim therefor has been
asserted. The Seller has not received notice from any union or Employees setting
forth demands for representation, elections or for present or future changes in
wages, terms of employment or working conditions. There have been no audits of
the equal employment opportunity practices of the Business and, to the knowledge
of the Seller, no basis for such claim exists.
(b) The consummation of this Agreement (and the employment by the
Purchaser of any of the Employees) will not result in any carryover liability to
the Purchaser for taxes, penalties, interest or any other claims resulting from
any employee pension plan, employee welfare benefit plan, or other employee
benefit agreement or arrangement maintained for the benefit of the Employees or
former employees (or beneficiaries of them) of the Seller.
(c) The parties agree that the Purchaser does not and will not assume
the sponsorship of, or the responsibility for contributions to, or any liability
in connection with, any employee pension benefit plan, any employee welfare
benefit plan, or other employee benefit agreement or arrangement maintained by
the Seller for its employees, former employees, retirees, their beneficiaries or
any other person. In addition and not as a limitation of the foregoing covenant,
the parties agree that the Seller shall be liable for any continuation coverage
(including any penalties, excise taxes or interest resulting from the failure to
provide continuation coverage) required by Section 4980B of the Internal Revenue
Code of 1986 (the "Code") due to qualifying events which occur on or before the
Closing Date.
3.11 INSURANCE POLICIES. Seller is self-funded for professional liability
in the minimum amounts of One Million and No/100 Dollars ($1,000,000.00) per
occurrence and Three Million and No/100 Dollars ($3,000,000.00) annual
aggregate, which is on an occurrence basis with respect to the Employees and the
Seller. At Closing, Seller will provide the Purchaser with a certificate
evidencing such coverage.
3.12 FINANCIAL STATEMENTS. Section 3.12 of the Disclosure Statement
includes (a) true, complete and correct copies of the Business' financial
statements as of and for the 12 months ended September 30, 1999 (the "FINANCIAL
STATEMENTS"). The Financial Statements have been prepared
11
<PAGE>
from the books and records of the Seller and present fairly the financial
condition and results of operations as of and for the periods presented. Since
the dates of the Financial Statements, there have been no material changes in
the Seller's accounting policies. Except as disclosed in the Financial
Statements the Seller has no undisclosed liabilities. Section 3.12 of the
Disclosure Statement shall also include a complete budget for the Business for
2000, including proposals for salary and marketing expenditures, and for
financing plans.
3.13 ABSENCE OF CHANGES. Since December 31, 1999 the Seller has conducted
the Business in the ordinary course, and there has not been:
(i) any changes, by itself or together with other changes, that
has materially affected adversely, or is likely to materially affect
adversely, the Business;
(ii) any damage, destruction or loss (whether or not covered by
insurance) materially adversely affecting the Business;
(iii) writing down or writing up the value of any Inventory other
than in the ordinary course of business;
(iv) any increase in the compensation, bonus, sales commission or
fee arrangements payable or to become payable by the Seller to any of
the Employees, except for ordinary and customary bonuses and salary
increase in accordance with past practice;
(v) any material change in the customary methods used in
operating the Business (including its marketing, selling and pricing
practices and policies);
(vi) any transaction, contract, commitment, obligation by the
Seller relating to the Business (including the acquisition or
disposition of any assets), other than in the ordinary course of
business or as contemplated by the Agreement;
(vii) any waiver of any material rights or claims of the Seller
with respect to the Business;
(viii) any change in accounting methods or practices (including
any change in depreciation or amortization policies or rates) by the
Seller or the revaluation by the Seller of any of the assets or
technologies comprising the Business; or
(ix) negotiation or agreement by the Seller or any officer or
Employee thereof to do any of the things described in the preceding
clauses (a) through (h) (other than negotiations with the Purchaser
and its representatives regarding the transactions contemplated by
this Agreement).
12
<PAGE>
3.14 SUPPLIERS AND PROVIDERS OF SERVICES.
(a) Section 3.14 of the Disclosure Statement lists all suppliers of
human tissue to the Business (collectively, "Suppliers") to which the Seller or
the Business made payments during the twelve months ended September 30, 1999, in
excess of five percent of the operating expenses of the Business.
(b) To the knowledge of the Seller, (i) none of the Suppliers listed
in Section 3.14 of the Disclosure Statement intends to cease dealing with the
Business, nor (ii) does any such Supplier intend to alter in any material
respect the extent of dealings with the Purchaser, nor (iii) does any such
Supplier intend to alter in any material respect the dealings in the event of
the consummation of the transactions contemplated hereby.
3.15 LICENSES. The Seller and its respective officers, directors and
employees possess all governmental registrations, certificates of need,
consents, qualifications and accreditations relating to the operation of the
Business, and other material licenses, permits, authorizations and approvals
that are required by all applicable Governmental Entities for the conduct of the
Business and the use of its properties as presently conducted or used
(collectively, "LICENSES"). Section 3.15 of the Disclosure Statement contains a
true and complete list of the Licenses, exclusive of any Licenses with respect
to state or local sales, use or other Taxes (as defined in Section 3.16). All of
the Licenses are in full force and effect and no action or claim is pending nor,
to the knowledge of the Seller, is threatened to revoke or terminate any License
or declare any License invalid in any material respect. Neither the Seller nor
any of its officers or directors or, to the knowledge of the Seller, Employees
is in default in any material respect under any of such Licenses and, to the
knowledge of the Seller, no event has occurred and no condition exists which,
with the giving of notice, the passage of time, or both, would constitute a
default thereunder, which default could reasonably be expected to have a
material adverse effect on the Business.
3.16 TAXES.
(a) There are no pending or, to the Seller's knowledge, threatened
actions or proceedings, assessments or collections of income, unrelated business
taxable income, capital gains, gross income, gross receipts, transfer, value
added, sales, use, service, ad valorem, franchise, profits, license,
withholding, payroll, employment, social security, unemployment compensation,
utility, excise, production, severance, stamp, occupation, premium, real or
personal property, alternative minimum, environmental, customs duties, or other
taxes, fees, levies, assessments, imposts or changes of any kind whatsoever
imposed by any governmental authority responsible for the imposition of such tax
(domestic or foreign), together with any interest and penalties, additions to
tax, or additional amounts imposed by any taxing authority (collectively,
"TAXES"), with respect to the Business that could subject the Purchaser to any
liability for such Taxes for the period prior to the Closing Date or could
impair any of the Seller's properties or assets (collectively, "TAX ACTIONS OR
PROCEEDINGS") nor is there a basis for any Tax Actions or Proceedings.
(b) The Seller is not, and has not been at any time, a "United States
real property holding corporation" within the meaning of Section 897(c)(2) of
the Code.
13
<PAGE>
3.17 [Omitted.]
3.18 INVESTMENT REPRESENTATIONS.
(a) The Seller understands that as of the date when the Shares are
issued to the Seller, such shares will not have been registered under the
Securities Act of 1933 (the "SECURITIES ACT") or qualified under any applicable
state securities laws, on the ground that the transfer of the Shares to the
Seller is exempt from the registration and prospectus delivery requirements of
the Securities Act and from qualification under any applicable state securities
laws, and that such exemptions are based in part on the Seller's representations
and warranties made herein. The Seller is acquiring any Common Stock issued
pursuant to this Agreement for its own account and not for that of any other
persons, and without a view to or in connection with any distribution thereof
which is proscribed by the Securities Act or in violation of any applicable
state securities laws. The Seller hereby represents and warrants that it (a) is
an "Accredited Investor" within the meaning of Rule 501 of Regulation D under
the Securities Act, (b) has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of its
investment in the Shares, (c) is able to bear the complete loss of its
investment in the Shares and (d) has been afforded the opportunity to ask
questions and receive answers concerning the terms and conditions of the
offering of Shares pursuant to this Agreement and to obtain any additional
information that the Parent possesses or can acquire without unreasonable effort
or expense that is necessary to evaluation an investment in the Shares.
(b) The Seller shall not offer, sell or otherwise dispose of the
Shares except in conformity with Rule 144 under the Securities Act or pursuant
to a registration statement under the Securities Act and qualification under
applicable state securities laws or pursuant to an opinion of counsel
satisfactory to the Parent that such registration and qualification is not
required. The Seller acknowledges and agrees that the Common Stock certificate
or certificates acquired by it pursuant to this Agreement shall be endorsed with
the following legend or one substantially similar thereto:
"The shares evidenced by this certificate have not been registered under
the Securities Act of 1933, as amended, or any state securities laws. They
may not be sold, offered for sale or otherwise disposed of in the absence
of an effective registration statement as to such shares under the
Securities Act and qualification under applicable state securities laws, or
an opinion of counsel satisfactory to the issuer that such registration is
not required."
The Parent, if so advised by counsel, may require as a condition precedent
to any proposed offer, sale, transfer, pledge, hypothecation or other
disposition of the Shares by the Seller other than in conformity with Rule 144
or pursuant to a registration statement under the Securities Act that the
proposed transferee first sign, seal and deliver to the Parent an investment
agreement with respect to the shares to be offered, sold, transferred, pledged,
hypothecated or otherwise disposed of containing substantially the agreements,
representations and warranties set forth in this Section 3.19.
3.19 YEAR 2000. The computer software operated by the Seller which is
material to the conduct of the Business is capable of providing uninterrupted
millennium functionality to record,
14
<PAGE>
store, process and present calendar dates falling on or after January 1, 2000 in
substantially the same manner and with the same functionality as such software
records, stores, processes and presents such calendar dates falling on or before
December 31, 1999.
3.20 FOOD AND DRUG. Wherever applicable, the Seller and all of its
products have been at all times and continue to be in compliance with the Food,
Drug and Cosmetic Act (the "FDC ACT") and the Public Health Service Act ("PHS
ACT") and all regulations promulgated thereunder by the United States Food and
Drug Administration ("FDA") and equivalent foreign agencies except to the extent
that noncompliance would not have a material adverse effect upon the Business.
Without limitation on the foregoing representation and warranty, the Seller
further represents and warrants as follows:
(i) The Seller is registered with the FDA, to the extent such
registration is required by any FDA regulations. Purchaser, following due
investigation, has assured itself that all exceptions and "grandfathering"
from such registration and regulations currently available to Seller will
be transferrable to Purchaser, and that Purchaser will not be required to
seek or obtain any additional FDA registrations or approvals in order to
operate the Business substantially in the manner operated by Seller as a
result of the consummation of the transactions contemplated by this
Agreement; and
(ii) To the Seller's knowledge, the Seller's products have not (A)
caused or contributed to a death or serious injury, or (B) been adulterated
or misbranded such that the product would be likely to cause or contribute
to a death or serious injury.
3.21 NO MISLEADING STATEMENTS. This Agreement and the information referred
to herein do not include any untrue statement of a material fact and do not omit
to state any material fact necessary to make the statements contained herein or
therein, in light of the circumstances under which they were made, not
misleading. There is no fact known to the Seller which materially and adversely
affects or in the future may (so far as the Seller can now reasonably foresee)
materially and adversely affect the business, condition (financial or
otherwise), property or assets of the Business which has not been set forth
herein other than those of general applicability to the business in which the
Business is engaged.
3.22 NO BROKER. The Seller represents and warrants that it has not dealt
with any broker or finder in connection with any of the transactions
contemplated by this Agreement.
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND THE PARENT.
In order to induce the Seller to enter into and perform this Agreement, the
Purchaser and the Parent, jointly and severally, represent and warrant as
follows:
4.1 ORGANIZATION. Each of the Parent and the Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, and has all requisite power and authority to
execute, deliver and perform this Agreement and to consummate the transactions
contemplated hereby. Each of the Parent and the Purchaser is duly qualified to
transact
15
<PAGE>
business as a foreign corporation in each state in which the nature of the
business conducted by it or its ownership or leasing of property make such
qualification necessary.
4.2 AUTHORITY AND NO CONFLICT. Each of the Parent and the Purchaser has
the corporate full power and authority to execute, deliver and carry out its
obligations under this Agreement and all documents and agreements necessary to
give effect to the provisions of this Agreement. This Agreement has been duly
authorized, executed and delivered by each of the Parent and the Purchaser, and
the execution of this Agreement and the consummation of the transactions
contemplated hereby will not result in any conflict, breach or violation of, or
default under, any statute, judgment, order, decree, mortgage, agreement, deed
of trust, indenture or other instrument to which the Parent or the Purchaser is
a party or by which either of them or their properties is bound. All action and
other authorizations prerequisite to the execution of this Agreement and the
consummation of the trans actions contemplated by this Agreement have been taken
or prior to the Closing Date will have been obtained by the Parent and the
Purchaser. This is a valid and binding agreement of the Parent and the Purchaser
enforceable against each of them, respectively, in accordance with its terms.
4.3 DEFAULTS, CONSENTS, ETC. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby will not result in
a material violation by the Parent or the Purchaser of, or constitute a default
by the Parent or the Purchaser under, any material contractual obligation of the
Parent or the Purchaser or any legal requirement applicable to the Parent or the
Purchaser. No approval, consent, authorization or other order of, and no
declaration, filing, registration, qualification or recording with, any
governmental authority or any other person, including, without limitation, any
party to any contractual obligation of the Parent or the Purchaser, is required
to be made by or on behalf of the Parent or the Purchaser for the execution,
delivery or performance of this Agreement by the Parent and the Purchaser except
for those contemplated hereby or which have been or will be obtained or for
which waivers will be obtained prior to the Closing.
4.4 NO BROKER. Except as disclosed in writing by the Parent to the
Purchaser, the Parent and the Purchaser represent and warrant that neither of
them has dealt with any broker or finder in connection with any of the
transactions contemplated by this Agreement and, insofar as they know, except as
disclosed by the Parent to the Purchaser no broker or other person is entitled
to any commission or finder's fee in connection with any of such transactions.
4.5 CAPITALIZATION.
(a) The authorized capital stock of the Parent consists of 1,777,348
shares of A Preferred Stock, $.001 par value, of which 1,777,348 shares are
outstanding; 748,152 shares of B Preferred Stock, $.001 par value, of which
748,152 shares are outstanding; 368,990 shares of C Preferred Stock, $.001 par
value, of which 368,990 are outstanding; 4,000,000 shares of Common Stock, of
which 779,977 shares are outstanding and 3,252,816 shares are reserved for
issuance.
(b) All outstanding shares of capital stock are, and the Shares to be
issued pursuant to this Agreement, when issued in accordance with the terms of
this Agreement will be, duly authorized, validly issued, fully paid and
nonassessable and free of any preemptive or similar rights in respect thereto.
16
<PAGE>
4.6 FINANCIAL STATEMENTS. Parent has provided to Seller the following
financial statements (collectively the "FINANCIAL STATEMENTS"): (a) Audited
financial statements of Parent as of and for the period from February 12, 1998
(date operations began) to December 31, 1998; (b) audited financial statements
for the Parent and consolidated companies for the twelve (12) months ended
December 31, 1999. The Financial Statements fairly present in all material
respects the financial condition and results of operations, changes in
stockholders's equity, and cash flow of Parent at the respective dates of and
for the periods referred to in such Financial Statements, all in accordance with
GAAP. The Financial Statements reflect the consistent application of accounting
principles throughout the periods involved, except as disclosed in the notes to
such Financial Statements.
4.7 NO MISLEADING STATEMENTS. Parent has provided Seller with a draft of
its Registration Statement on Form S-1. The Registration Statement is not an
offering document; the securities sold pursuant to this Agreement were not
registered thereunder and it is provided only for the information of the Seller.
Although the information contained therein is subject to change prior to filing
with the Securities and Exchange Commission and prior to its effectiveness, the
draft of the Registration Statement provided to the Seller, as of the date
hereof does not, and the Registration Statement as of the time of its
effectiveness and as of the Closing Date will not, include any untrue statement
of a material fact or omit to state any material fact necessary to make the
statements contained herein or therein, in light of the circumstances under
which they were made, not misleading.
5. OBLIGATIONS BEFORE AND AFTER CLOSING.
5.1 From and after the date hereof, the Seller, Purchaser and the Parent
agree that:
(a) ACCESS TO PREMISES AND INFORMATION. The Purchaser, the Parent and
their counsel, accountants, and other representatives will have reasonable
access during normal business hours to the Business and to all properties,
books, accounts and records, contracts and documents of or relating to the
business of the Business, PROVIDED THAT such access shall not interfere with the
operation of the Business. The Seller will furnish or cause to be furnished to
the Purchaser, the Parent and their representatives all data and information
within the Seller's possession or control concerning the business, finances, and
properties of the Seller and the Business that may reasonably be requested.
(b) CONDUCT OF BUSINESS IN ORDINARY COURSE. The Seller will conduct
the Business diligently, in the ordinary course and in substantially the same
manner as such business has previously been conducted, and will not make or
institute any unusual or novel purchase, sale, lease, management, accounting
policy or operation that will vary materially from those methods used by it
during the 12-month period ending on the date of this Agreement. Without
limiting the foregoing, from the date hereof until the Closing Date, as it
relates to the Business and its operation, the Seller will (i) not increase any
compensation payable to any Employees or consultants of the Business (except in
the ordinary course of business); (ii) not enter into, amend or terminate any
material contract, agreement, permit or lease without the prior written consent
of the Purchaser; (iii) not enter into any commitment to borrow money, mortgage,
pledge, or subject to lien, charge or encumbrance any of the Assets except in
the ordinary course of business or as contemplated hereunder; (iv) not sell or
transfer any of the assets or technology comprising the Business or cancel any
claim applicable to the Business except in the ordinary course of conduct of the
Business or as contemplated hereunder;
17
<PAGE>
(v) keep in full force and effect all insurance relating to the Business,
comparable in amount and scope of coverage to that now maintained; (vi) perform
all material obligations under Licenses, the Seller Contracts and other
documents relating to or affecting the Business, all in the same manner as
heretofore performed; (vii) use commercially reasonable efforts to maintain and
preserve the Business, the good will and relationships with the Employees,
Suppliers, professional staff and others having a business relationship with the
Business, and maintain all Licenses requisite to the conduct of the Business as
now conducted; and (viii) maintain in working condition all equipment, and other
personal property, reasonable wear and tear excepted.
(c) SECURITIES FILINGS, RULE 144(c) COMPLIANCE.
(i) At the Closing Parent will provide Seller with a copy of the
final Prospectus included in its Registration Statement.
(ii) With a view to making available to the Seller the benefits of
certain rules and regulations of the Securities and Exchange Commission
which may permit the sale of the Shares to the public without registration,
after such time as a public market exists for the Common Stock of the
Parent, the Parent agrees to use its best efforts to:
i. Make and keep public information available, as those
terms are understood and defined in Rule 144 under the
Securities Act of 1933 (the "Securities Act"), at all
times after the date that the Parent becomes subject to
the reporting requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act").
ii. Use its best efforts to file with the Securities and
Exchange Commission in a timely manner all reports and
other documents required of the Parent under the
Securities Act and the Exchange Act (at any time after
it has become subject to such reporting requirements);
and
iii. So long as Seller owns any of the Shares, furnish to
the Seller forthwith upon request a written statement
by the Parent as to its compliance with the reporting
requirements of Rule 144, and of the Securities Act and
the Exchange Act (at any time after it has become
subject to such reporting requirements), a copy of the
most recent annual or quarterly report of the Parent
filed with the Securities and Exchange Commission, and
such other reports and documents of the Parent and
other information in the possession of or reasonably
obtainable by the Parent as Seller may reasonably
request in availing itself of any rule or regulation of
the Securities and Exchange Commission allowing Seller
to sell any such securities without registration.
18
<PAGE>
(d) REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING; DELIVERY OF
DISCLOSURE STATEMENT; UPDATING OF DISCLOSURE STATEMENT. All representations and
warranties of the Seller, Purchaser and Parent set forth in this Agreement will
also be true and correct as of the Closing Date as if made on that date in all
material respects (without giving effect to materiality thresholds in such
representations and warranties). The Seller, Purchaser and Parent undertake to
deliver the Disclosure Statement within 10 days hereof. To the extent any matter
contained therein is not acceptable to Purchaser or Seller, Purchaser or Seller
may terminate this Agreement without liability of any person hereunder.
Purchaser, Parent and Seller shall indicate their acceptance of such Schedules
by initialing such Disclosure Statement. After the initial delivery of the
Disclosure Statement, the Seller, Purchaser and Parent undertake to revise and
update the Disclosure Statement hereto as may be necessary from the date hereof
until the Closing Date. No such Disclosure Statement provided and revisions made
to such Disclosure Statement pursuant to this Section shall be deemed to be
accepted by the Seller or Purchaser, nor cure any breach of any representation
or warranty made in this Agreement unless the Purchaser specifically agrees
thereto in writing or by initialing such Disclosure Statement, nor shall any
such Disclosure Statement or revision thereto be considered to constitute or
give rise to a waiver by the Purchaser of any condition set forth in this
Agreement.
(e) FURTHER AUTHORIZATION. The Seller will take, or cause to be taken,
all such further actions as may be necessary or appropriate to authorize the
execution, delivery and performance of this Agreement by it.
(f) NO SHOPPING. From the date of this Agreement until the termination
hereof, neither the Seller nor any of its agents or representatives shall
provide information to, solicit any indications of interest from, or negotiate
with, any third party with respect to any possible sale of stock or assets,
merger or other business combination or similar transaction involving the
Business until the termination of this Agreement in accordance with the terms
hereof.
(g) PURCHASER'S AND PARENT'S NONCOMPETITION; NONSOLICITATION. The
Purchaser and Parent agree that they will not build, invest in, assist in the
development of, own, operate or have any management role in another healthcare
facility or business that competes with Seller in the procurement of tissues in
Alabama for preservation and implantation within five years of the Closing Date
without the prior consent of the Seller, PROVIDED, HOWEVER, that the Purchaser
and the Parent may, in the aggregate, purchase or otherwise acquire up to (but
not more than) five percent (5%) of any class of securities of any enterprise if
such securities are listed on any national or regional securities exchange or
have been registered under Section 12(g) of the Securities Exchange Act of 1934.
In addition, the Purchaser and Parent agree that, except as otherwise provided
in this Agreement, they will not (i) solicit for employment any employee of the
Seller or of UAB or any of their affiliates, or (ii) interfere with, disrupt or
attempt to disrupt the relationship between Seller, UAB or any of their
affiliates and any of their respective lessors, lessees, licensors, customers or
suppliers. If any court of competent jurisdiction determines that any of the
restrictive covenants set forth in this Section 5.1(g), or any part of such
covenants, is unenforceable because of the duration of such provision or the
area covered thereby, such court shall have the power to reduce the duration or
area of such provision and, in its reduced form, such provision shall then be
enforceable and shall be enforced.
19
<PAGE>
(h) SELLER'S NONCOMPETITION; NONSOLICITATION. The Seller agrees that
the Seller will not build, invest in, assist in the development of, or have any
management role in another healthcare facility that competes with the Parent in
processing and distributing heart valves, veins and in cryopreservation of those
tissues within five (5) years of the Closing Date without the prior written
consent of the Parent. In addition, the Seller agrees that it will not (i)
solicit for employment any employee of the Parent or the Purchaser or any of
their affiliates, or (ii) interfere with, disrupt or attempt to disrupt the
relationship between the licensors, licensees, customers or suppliers. If any
court determines that any of the restrictive covenants set forth in this
Section 5.1(g), or any part of such covenants, is unenforceable because of the
duration of such provision or the area covered thereby, such court shall have
the power to reduce the duration or area of such provision and, in its reduced
form, such provision shall then be enforceable and shall be enforced, PROVIDED,
HOWEVER, that Seller may purchase or otherwise acquire up to (but not more than)
five percent (5%) of any class of securities of any enterprise if such
securities are listed on any national or regional securities exchange or have
been registered under Section 12(g) of the Securities Exchange Act of 1934.
(i) SELLER'S COOPERATION: LICENSES AND APPROVALS. Seller shall
cooperate with Purchaser in obtaining all necessary licenses and approvals to
operate the Business of Seller, including succeeding to the "grandfathering" of
exceptions from FDA registration and regulations.
5.2 The Seller and the Purchaser agree that:
(a) CONSENTS. The Seller and the Purchaser, as promptly as
practicable, (i) will make, or cause to be made, all filings and submissions
under laws, rules and regulations applicable to it, or to its subsidiaries and
affiliates, as may be required for any party hereto to consummate the
transactions contemplated hereby; (ii) will use their reasonable efforts to
obtain, or cause to be obtained, all authorizations, approvals, consents and
waivers from all persons and Governmental Entities necessary to be obtained by
it, or any subsidiaries or affiliates, in order for it so to consummate such
transactions; and (iii) will use reasonable efforts to take, or cause to be
taken, all other actions necessary, proper or advisable in order to fulfill
their obligations hereunder. In particular, the Purchaser shall seek and use its
reasonable best efforts to obtain all consents necessary (i) from all
governmental entities, and (ii) to any assignment to the Purchaser of Assumed
Contracts, leases or Licenses necessary to operate the Business. The Seller and
the Purchaser will coordinate and cooperate with one another in exchanging
information and supplying such reasonable assistance as may be reasonably
requested by each in connection with the foregoing.
(b) PUBLIC ANNOUNCEMENTS. Until the Closing of the transaction
contemplated hereby, unless and to the extent required by law, each party hereto
will agree in advance prior to the issuance by either of any press release or
the making of any public statement made on behalf of such party with respect to
this Agreement and the transactions contemplated hereby and shall not issue any
such press release or make any such public statement made on behalf of such
party without the agreement of the other party, provided Parent will describe
the transaction contemplated hereby and the operations of Seller in its
Registration Statement on Form S-1 relating to its Initial Public Offering and
file this Agreement as an exhibit. In the event that either party is required to
issue a press release or make a public statement by law, it will use its
reasonable efforts to notify the other party of the contents thereof in advance
of the issuance or making thereof.
20
<PAGE>
(c) CONFIDENTIALITY OBLIGATIONS OF THE PARTIES. The confidentiality
obligations of the parties from the time of the execution of this Agreement are
contained in EXHIBIT A.
5.3 The Purchaser and the Parent agree that:
(a) REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. All
representations and warranties of the Purchaser and the Parent set forth in this
Agreement will also be true and correct in all material respects (without giving
effect to materiality thresholds in such representations and warranties) as of
the Closing Date as if made on that date.
(b) FURTHER AUTHORIZATION. The Purchaser and the Parent will take, or
cause to be taken, such further actions as may be necessary or appropriate to
authorize the execution, delivery and performance of this Agreement by them.
(c) BULK SALES LAW. The Purchaser hereby waives compliance by the
Seller with all applicable bulk sales laws; PROVIDED, HOWEVER, that this waiver
shall not relieve the Seller of its indemnification obligations to the Parent
and the Purchaser pursuant to Section 11.2 hereof as a result of the Seller's
non-compliance with any applicable bulk sales or similar laws.
(d) NEW FACILITY. The Purchaser will grant the right to the Seller and
the University of Alabama to present a proposal to Purchaser for the use of, and
for joint development for a new facility for the Business in close proximity to
the University of Alabama campus at such time as such new facility is
considered.
6. CONDITIONS PRECEDENT TO THE PERFORMANCE OF THE PARENT AND THE PURCHASER.
The obligations of the Parent and the Purchaser under this Agreement are
subject to the satisfaction, at or before the Closing, of all the conditions set
out below. The Parent and the Purchaser may waive any or all of these conditions
in whole or in part without prior notice; PROVIDED, HOWEVER, that no such waiver
of a condition shall constitute a waiver by the Parent or the Purchaser of any
of their other rights or remedies, at law or in equity, if the Seller is in
default of any of the representations, warranties, or covenants contained in
this Agreement, except to the extent that such defaults are expressly waived.
6.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties by the Seller in this Agreement or in any agreement or in any written
statement that is delivered to the Parent or the Purchaser pursuant to this
Agreement will be true and correct in all material respects on and as of the
Closing Date as though made on that date.
6.2 PERFORMANCE. The Seller will have performed, satisfied, and complied
with all covenants, agreements, and conditions required by this Agreement to be
performed or complied with by it on or before the Closing Date.
6.3 NO MATERIAL ADVERSE CHANGE. There shall have been no material adverse
change in the Assets, tangible property, condition, results of operations or
prospects of the Business since the date of this Agreement.
21
<PAGE>
6.4 CERTIFICATION BY THE SELLER. The Parent and the Purchaser will have
received certificates, dated the Closing Date, signed by the Chairman of the
Board of the Seller, on behalf of the Seller, certifying, in such detail as the
Parent and the Purchaser and their counsel may reasonably request, that the
conditions specified in Sections 6.1, 6.2 and 6.3 hereof have been fulfilled in
all respects, including, but not limited to, certified copies of all
documentation of the Seller pertaining to authorization of the execution,
delivery and performance of this Agreement.
6.5 ABSENCE OF LITIGATION. No action, suit, or proceeding before any court
or any Governmental Entity, pertaining to the transactions contemplated by this
Agreement or to their consummation, will have been instituted or threatened on
or before the Closing Date.
6.6 LEGAL PROHIBITION. On the Closing Date, no injunction or order shall
be in effect prohibiting consummation of the transactions contemplated hereby or
which would make the consummation of such transactions unlawful and no action or
proceeding shall have been instituted and remain pending before a Governmental
Entity to restrain or prohibit the transactions contem plated by this Agreement
and no adverse decision shall have been made by any such Governmental Entity
which could materially and adversely affect the Business. No federal, state or
local statute, rule or regulation shall have been enacted the effect of which
would be to prohibit, restrict, impair or delay the consummation of the
transactions contemplated hereby or restrict or impair the ability of the
Purchaser to own or conduct the business of the Business.
6.7 CONSENTS, APPROVALS, PERMITS, LICENSES, ETC. All material
authorizations, consents, waivers, approvals, orders, registrations,
qualifications, designations, declarations, filings or other action required
with or from any Governmental Entity (including without limitation receipt of
licenses to own and operate the Business as currently conducted) or third party
(including without limitation all parties to each of the Assumed Contracts) and
all other requirements of law in connection with the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby shall have been duly obtained and shall be reasonably
satisfactory to the Parent and the Purchaser and their counsel. No such consent
or approval (a) shall be conditioned on the modification, cancellation or
termination of any Assumed Contract, or (b) shall impose on the Parent or the
Purchaser any material condition or provision or requirement with respect to the
Business or their operation that is more restrictive than or different from the
conditions imposed upon such operation prior to Closing, unless the Parent and
the Purchaser give their prior written approval.
6.8 MANAGEMENT SERVICES AGREEMENT. The Purchaser and Seller shall have
entered into a Management Services Agreement substantially in the form attached
hereto as EXHIBIT B.
6.9 [Omitted.]
6.10 LEASE OF CURRENT FACILITY. University of Alabama at Birmingham
("UAB") shall enter into a lease of the current facility with Purchaser upon
substantially the terms of the existing lease to Alabama Tissue Center.
6.11 CONSULTING AGREEMENTS. The Purchaser shall have entered into two
mutually agreed- upon Consulting Agreements with the Seller for the services of
Arnold G. Diethelm, M.D. and Sandra
22
<PAGE>
J. Phillips. UAB and the Seller shall have entered into a mutually agreed upon
Consulting Agreement for the services of Anthony Thompson, Ph.D.
6.12 CLOSING MATTERS. All proceedings to be taken by the Seller in
connection with the consummation of the transactions contemplated hereby and all
certificates, opinions, instruments and other documents required to effect the
transactions contemplated hereby shall be reasonably satisfactory in form and
substance to the Parent and the Purchaser and their counsel.
6.13 SUPPLEMENTAL DISCLOSURE. If the Seller shall have delivered,
supplemented or amended any Schedule pursuant to its obligations set forth in
Section 5.1(c) hereof, the Parent and Purchaser shall not have determined to
terminate the Agreement as a result of information provided to the Parent and
the Purchaser in connection with any or all of such amendments or supplements.
6.14 RISK OF LOSS. The risk of loss or damage to any of the Assets shall
remain with the Seller until the Closing and the Seller shall maintain its
insurance policies covering the Assets through the Closing. All insurance
proceeds attributable to the damage, destruction, or casualty loss of any of the
Assets prior to the Closing Date shall be assigned by the Seller to the
Purchaser at the Closing.
6.15 INITIAL PUBLIC OFFERING. The Parent shall have completed an initial
public offering of its Common Stock resulting in gross proceeds of not less than
$50,000,000.
6.16 REGISTRATION RIGHTS AGREEMENT. The Parent and the Seller shall have
entered into a Registration Rights Agreement substantially in the form attached
as EXHIBIT C.
6.17 LICENSE AGREEMENT. Seller and the Purchaser shall have entered into a
mutually agreed upon royalty-free License Agreement with respect to access to
software currently used by Seller for inventory management and donor tissue
tracking which grants Purchaser the right to make all changes thereto as it
determines in its sole discretion at Purchaser's sole cost and expense.
7. CONDITIONS PRECEDENT TO THE SELLER'S PERFORMANCE.
The obligations of the Seller under this Agreement are subject to the
satisfaction, at or before the Closing, of all the following conditions. The
Seller may waive any or all of these conditions in whole of in part without
prior notice; PROVIDED, HOWEVER, that no such waiver of a condition shall
constitute a waiver of any of the Seller's other rights or remedies, at law or
in equity, if the Parent or the Purchaser is in default of any of the
representations, warranties or covenants contained in this Agreement, except to
the extent that such defaults are expressly waived.
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES OF THE PARENT AND THE
PURCHASER. All representations and warranties by the Parent and the Purchaser
contained in this Agreement or in any written statement delivered by the Parent
and the Purchaser under this Agreement will be true in all material respects on
and as of the Closing Date as though such representations and warranties were
made on and as of that date.
23
<PAGE>
7.2 PERFORMANCE; AUTHORIZATION. The Parent and the Purchaser will have
performed, satisfied and complied with all covenants, agreements and conditions
required by this Agreement to be performed or complied with by it on or before
the Closing Date.
7.3 MATERIAL ADVERSE CHANGE. The Parent shall have conducted its business
in the ordinary course since the date of this letter, and no material adverse
changes in the operations, condition of the real or personal property or
financial condition or prospects of the Parent between the date of this
agreement and the Closing Date shall have occurred.
7.4 CERTIFICATES. The Seller will have received certificates, dated the
Closing Date, signed by the president or vice president and secretary or
assistant secretary of the Parent and the Purchaser certifying, in such detail
as the Seller may reasonably request, that the conditions specified in
Sections 7.1, 7.2 and 7.3 hereof have been fulfilled in all material respects.
7.5 ABSENCE OF LITIGATION. No action, suit, or proceeding before any court
or any governmental body or authority pertaining to the transactions
contemplated by this Agreement or to their consummation, will have been
instituted or threatened on or before the Closing Date.
7.6 CONSENTS. All agreements, consents, regulatory approvals and
compliance with other applicable provisions of law, necessary to permit the
consummation by the Seller, the Parent and the Purchaser of the transactions
contemplated by this Agreement, shall have been obtained by the Seller, the
Parent and the Purchaser, respectively, and delivered to the Seller, the Parent
and the Purchaser, respectively, and no Governmental Entity having jurisdiction
over the transactions contemplated hereby shall have taken any action to enjoin
or prevent the consummation of such transactions. As to any Assumed Contract the
assignment of which by its terms requires prior consent of the parties thereto,
if such consent is not obtained prior to or on the Closing Date and the
Purchaser has agreed in writing to waive the provisions of Section 6.8 with
respect to such consent, the Seller shall deliver to the Parent and the
Purchaser written documentation setting forth arrangements for the transfer of
the economic benefit of such Assumed Contracts to the Parent and the Purchaser
as of the Closing Date under terms and conditions acceptable to all the parties
hereto.
7.7 MANAGEMENT SERVICES AGREEMENT. The Purchaser and the Seller shall have
entered into a Management Services Agreement substantially in the form attached
hereto as EXHIBIT B.
7.8 [Omitted.]
7.9 CONSULTING AGREEMENTS. The Purchaser shall have entered into mutually
agreed upon Consulting Agreements with the Seller for the services of Arnold G.
Diethelm, M.D. and Sandra J. Phillips. UAB and the Seller shall have entered
into a mutually agreed upon Consulting Agreement for the services of Tony
Thompson, Ph.D.
7.10 OPINION OF PARENT AND PURCHASER'S COUNSEL. The Seller shall have
received from counsel to the Parent and the Purchaser's counsel, an opinion,
dated the Closing Date, in form and substance reasonably satisfactory to the
Seller regarding existence and good standing of Parent and Purchaser and the due
and valid authorization and issuance of the shares of Common Stock of Parent to
be issued to Seller.
24
<PAGE>
7.11 CLOSING MATTERS. All proceedings to be taken by the Purchaser and the
Parent in connection with the consummation of the transactions contemplated
hereby and all certificates, opinions, instruments and other documents required
to effect the transactions contemplated hereby shall be reasonably satisfactory
in form and substance to the Seller and its counsel.
7.12 INITIAL PUBLIC OFFERING. The Parent shall have completed an initial
public offering of its Common Stock resulting in gross proceeds of not less than
$50,000,000.
7.13 LISTING. The Shares will be listed for trading on the NASDAQ National
Market.
7.14 REGISTRATION RIGHTS AGREEMENT. The Parent and the Seller shall have
entered into a Registration Rights Agreement, substantially in the form attached
hereto as EXHIBIT C.
7.15 DELIVERY OF SHARES. The Purchaser and the Parent shall have delivered
to the Seller one or more stock certificates evidencing the Shares, which stock
certificates shall be appropriately completed to reflect the issuance to Seller
of the number of shares of Common Stock contemplated by Section 2.1 hereof.
8. JOINT COVENANTS.
8.1 POST-CLOSING ACCESS TO INFORMATION. The Seller and the Purchaser
acknowledge that subsequent to Closing, each party may need access to
information or documents in the control or possession of the other party (or
their affiliates) for the purposes of concluding the transactions set forth
herein, audits, compliance with governmental requirements and regulations, and
the prosecution or defense of third-party claims. Accordingly, the Seller and
the Purchaser agree that for a period of five (5) years after Closing each will,
at the expense of the requesting party and upon written request, make available
during normal business hours to the other's agents, independent auditors and/or
governmental agencies such documents and information as may be available
relating to the Business for periods prior and subsequent to Closing to the
extent necessary to facilitate concluding the transactions set forth herein,
audits, compliance with governmental requirements and regulations and the
prosecution or defense of claims.
8.2 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated in
its entirety among the Assets and the non-competition provisions of
Section 5.1(f) hereof in accordance with Section 8.2 of the Disclosure Statement
hereto and as required by Section 1060 of the Code and Treasury Regulations
promulgated thereunder. The Seller, the Parent and the Purchaser shall file all
required information and tax returns (and any amendments thereto) in a manner
consistent with this Section 8.2 and comply with the applicable information
reporting requirements of Section 1060 of the Code and Treasury Regulations
promulgated thereunder. If, contrary to the intent of the parties hereto as
expressed in this Section 8.2, any taxing authority makes or proposes an
allocation different from that contained in this Section 8.2, the Seller and the
Purchaser shall cooperate with each other in good faith to contest such taxing
authority's allocation (or proposed allocation), PROVIDED, HOWEVER, that, after
consultation with the party adversely affected by such allocation (or proposed
allocation), another party hereto may file such protective claims or returns as
may reasonably be required to protect its interests.
25
<PAGE>
8.3 COMPLIANCE WITH LAW. The Purchaser and the Parent covenant and agree
that they shall operate the Business in compliance with all applicable Federal,
state and local laws and regulations (including, but not limited to, those
certain sections of the Code of Alabama governing the acquisition and
transportation of donor organs, bones and tissues, and any subsequent amendments
or successors thereto). The Purchaser and the Parent further acknowledge and
agree that, in the operation of the Business, they will strictly adhere to and
follow the established quality assurance standards of proficiency and fitness
and measures and procedures as established by the Chairman of the Department of
Surgery of the School of Medicine at the University of Alabama at Birmingham
(the "UAB SCHOOL OF MEDICINE") pursuant to section 22-19-122 of the Code of
Alabama, and any subsequent amendments or successors thereto.
8.4 ACCOUNTS RECEIVABLE. The Purchaser and the Parent covenant and agree
that in the event they receive payment on any of the accounts receivable of the
Seller or any correspondence related thereto, they shall immediately forward
such payment or correspondence directly to the Seller at the address provided in
Section 16 hereof.
8.5 MEDICAL ADVISORY BOARD AND MEDICAL DIRECTOR. The Purchaser and Parent
covenant and agree as follows: (i) that they shall cause Purchaser to maintain
at all times a Medical Scientific Advisory Board (the "MSAB"); (ii)that Anthony
Thompson, Ph.D., an employee of UAB, shall be offered the position of Director
of the MSAB, and that in such position he will report to the Medical Director of
Purchaser;(iii) that Purchaser and Parent shall cause a Managing Director of
Purchaser to be appointed, who shall report to the President of the Purchaser
and initially the Managing Director shall be Louis Barnes. In the event of any
proposed change in the Medical Director, Purchaser shall notify the Chairman of
the Department of Surgery at UAB School of Medicine. The Chairman will recommend
the person for such appointment, which shall be approved by the President and
CEO of the Purchaser in his sole discretion. In the event such person is not
approved, the Chairman shall recommend another person for such appointment
subject to such approval.
8.6 ALABAMA DISTRIBUTION; PRICING.
(a) The Purchaser and Parent hereby covenant and agree that Parent
shall, or shall cause Purchaser, to provide bone, soft tissue and heart valves
to Seller and The University of Alabama Hospital ("UNIVERSITY HOSPITAL") on a
preferred basis, with precedence over all other clients, up to the volume of
such tissue which has been recovered by ATC in Alabama.
(b) They further covenant and agree that for a period of twelve months
after the Closing Date University Hospital and Seller shall be sold such
products at a price [*****] and thereafter until December 31, 2004 at a price
[*****].
(c) The parties hereto further covenant and agree that Seller shall
have the option to have the right of Purchaser and Parent to recover, process
and distribute allograft tissue, including the transfer of the right to process
heart valves, [*****]
26
<PAGE>
[*****] in place at the time of Closing in areas where tissue is currently
distributed by Seller. If Seller desires to exercise this option, Seller
shall give written notice to Purchaser or Parent setting forth the complaints
and in the event that Purchaser or Parent fails to return the levels within
ninety (90) days, Seller may without further notice terminate the aforesaid
rights. In the event Seller so chooses, then Seller shall forthwith return to
Purchaser or Parent the amounts paid to Seller pursuant to Section 2.1
hereof, whether in cash or in stock of Parent. In the event Seller has by
that time disposed of the Parent's stock, it shall reimburse Parent the
amount of the proceeds Seller received from the disposition of the said stock.
9. CERTAIN ACTIONS AFTER THE CLOSING.
9.1 THE PURCHASER TO ACT AS AGENT FOR THE SELLER. This Agreement shall not
constitute an agreement to assign any contract right included among the Assets
if any attempted assignment of the same without the consent of the other party
thereto would constitute a breach thereof or in any way adversely affect the
rights of the Seller thereunder. If such consent is not obtained or if any
attempted assignment would be ineffective or would adversely affect the Seller's
rights thereunder so that the Purchaser would not in fact receive all such
rights, then the Purchaser shall act as the agent for the Seller in order to
obtain for the Purchaser the benefits thereunder and Purchaser and Parent,
jointly and severally, shall indemnify Seller for the obligations under such
contract. Nothing herein shall be deemed to make the Purchaser the Seller's
agent in respect of the Excluded Assets.
9.2 SUBROGATION OF THE PURCHASER. In the event the Purchaser shall become
liable for or suffer any damage with respect to any matter which was covered by
insurance maintained by the Seller on or prior to the Closing Date, the Seller
agrees that the Purchaser shall be and hereby is, to the extent permitted under
such policies and to the extent consistent with Section 11 hereof, subrogated to
any rights of the Seller under such insurance coverage, and, in addition, the
Seller agrees to promptly remit to the Purchaser any insurance proceeds which
they may receive on account of any such liability or damage.
9.3 PAYMENT OF LIABILITIES. Following the Closing Date each of the
Purchaser and the Seller agrees to discharge in accordance with their terms the
Assumed Liabilities and the Excluded Liabilities, respectively.
9.4 RESEARCH. Purchaser and Seller agree that they shall cooperate in
research and development efforts for the Business with funding for and ownership
of such research to be considered on a case-by-case basis.
9.5 SUBSEQUENT LIABILITY. If, subsequent to the Closing Date, any
liability for Taxes is imposed on the Purchaser with respect to the Assets or
the Business in connection with any period prior to and through the Closing
Date which has not otherwise been assumed by the Purchaser pursuant to this
Agreement, then the Seller shall indemnify and hold the Purchaser harmless,
from and against, and shall pay, the full amount of such Tax liability,
including any interest, additions to tax and penalties thereon, together with
interest on such additions to tax or penalties (as well as reasonable
attorneys' or other fees and disbursements of the Purchaser incurred in
determination thereof or in connection therewith), or the Seller shall, at
its sole expense and in its reasonable discretion, either
27
<PAGE>
settle any Tax claim that may be the subject of indemnification under this
Section 9.5 at such time and on such terms as they shall deem appropriate or
assume the entire defense thereof, PROVIDED, HOWEVER, that the Seller shall not
in any event take any position in such settlement or defense that subjects the
Purchaser to any civil fraud or any civil or criminal penalty. Notwithstanding
the foregoing, the Seller shall not consent, without the prior written consent
of the Purchaser, which prior written consent shall not be unreasonably
withheld, to any change in the treatment of any item which would, in any manner
whatsoever, affect the tax liability of the Purchaser for a period subsequent to
the Closing Date.
10. THE CLOSING. Assuming the satisfaction or the waiver of satisfaction of the
conditions contained herein, the Closing will take place at the offices of
Bradley Arent Rose & White LLP, 2001 Park Place, Suite 1400, Birmingham,
Alabama, within ten (10) business days of the date on which all conditions
specified in Sections 6 and 7 hereof have been satisfied or waived or at such
other time and place as the parties hereto may mutually agree but in no event
later than 120 days from the date hereof subject to extension at the option of
the Purchaser for a period not exceeding sixty (60) days, in the event all
required regulatory approvals have not been received by such date through no
fault of the Purchaser despite reasonable efforts. This date is the "Closing
Date." If the Closing has not occurred within the above time period, this
Agreement shall terminate.
11. SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION.
11.1 SURVIVAL OF REPRESENTATIONS, ETC. All representations and warranties
contained in this Agreement shall survive the Closing and shall remain in full
force and effect until the expiration of three years from the Closing Date, and,
thereafter, in any case, to the extent a claim is made prior to such expiration
with respect to any breach of such representation or warranty until such claim
is finally determined or settled; PROVIDED, HOWEVER, that the representations
and warranties of the Seller contained in Sections 3.8, 3.10, 3.16 and 3.23
hereof, and the representations and warranties of the Parent and the Purchaser
contained in Section 4.4 and 4.5 hereof, shall remain in full force and effect
until the expiration of the applicable statute of limitations.
11.2 INDEMNIFICATION BY THE SELLER. The Seller shall defend and indemnify
the Parent and the Purchaser and hold the Parent and the Purchaser wholly
harmless from and against any and all losses, liabilities, damages, costs
(including, without limitation, court costs and costs of appeal) and expenses
(including, without limitation, reasonable attorneys' fees) that the Parent and
the Purchaser incur as a result of, or with respect to:
(i) any inaccuracy in or breach of any representation or warranty
of the Seller contained in this Agreement to the extent the Parent and/or
the Purchaser suffer damage by reason of such breach;
(ii) except as expressly assumed by the Purchaser under this
Agreement, any claim or cause of action against or liability or obligation
(actual or alleged), of any nature whatsoever of the Seller arising out of
or relating to the use or operation of the Business or any other business
of the Seller prior to the Closing Date, or any act or omission of the
Seller, or any of its agents, employees, or officers, occurring prior to
the Closing Date, including, without limitation, any claim or cause of
action arising out of or relating to any act of negligence occurring prior
to or on the Closing Date.
28
<PAGE>
11.3 INDEMNIFICATION BY THE PURCHASER.
(a) The Purchaser and Parent shall jointly and severally defend and
indemnify the Seller and hold the Seller wholly harmless from and against any
and all losses, liabilities, damages, costs (including, without limitation,
court costs and cost of appeal) and expenses (including, without limitation,
reasonable attorneys' fees and expenses) that the Seller incurs as a result of,
or with respect to or arising from:
(i) any inaccuracy in or breach of any representation, warranty,
covenant or agreement of the Parent or the Purchaser contained in this
Agreement to the extent the Seller suffers damage by reason of such breach;
(ii) any claim, cause of action, liability or obligation (actual or
alleged), of any nature whatsoever of the Parent or the Purchaser arising
out of or relating to any act or omission of the Parent or the Purchaser,
or any of their agents, employees, or officers, occurring on or after the
Closing Date, including, without limitation, any claim or cause of action
arising out of or relating to any act of negligence, occurring after the
Closing Date.
(b) The Purchaser and Parent, jointly and severally, shall defend and
indemnify the Seller and UAB and hold them wholly harmless from and against any
and all losses, liabilities, damages, costs (including, without limitation,
court costs and cost of appeal) and expenses (including, without limitation,
reasonable attorneys' fees and expenses ) that the Seller or UAB incur as a
result of, or with respect to or arising from the acts or omissions of any
employee of Seller or UAB performing services under a consulting or similar
agreement with Purchaser or Parent or acting as Medical Director or Director of
the MSAB of Purchaser or Parent.
11.4 PROCEDURE FOR INDEMNIFICATION. The following procedure shall apply
with respect to any claims or proceedings covered by the foregoing agreements to
indemnify and hold harmless:
(a) The party who is seeking indemnification (the "CLAIMANT") shall
give written notice to the party from whom indemnification is sought (the
"INDEMNITOR") promptly after the Claimant learns of the claim or proceeding but
(with respect to breaches of representations and warranties only) not later than
the period after the Closing Date (if any) specified in Section 11.1 hereof;
PROVIDED THAT the failure to give such notice shall not relieve the Indemnitor
of its obligations hereunder provided the Claimant uses its best efforts to
mitigate damages and except to the extent Indemnitor actually is damaged or
prejudiced thereby.
(b) With respect to any third-party claims or proceedings as to which
the Claimant is entitled to indemnification, the Indemnitor shall have the right
to select and employ counsel of its own choosing to defend against any such
claim or proceeding, to assume control of the defense of such claim or
proceeding, and to compromise, settle or otherwise dispose of the same, if the
Indemnitor deems it advisable to do so, all at the expense of the Indemnitor;
PROVIDED, HOWEVER that the Claimant may employ counsel, of its own choosing, at
its sole expense. The parties will fully cooperate in any such action, and shall
make available to each other any books or records useful for
29
<PAGE>
the defense of any such claim or proceeding. The Claimant may elect to
participate in the defense of any such third party claim, and may, at its sole
expense, retain separate counsel in connection therewith. Subject to the
foregoing the Claimant shall not settle or compromise any such third party claim
without the prior consent of the Indemnitor, which consent shall not be
unreasonably withheld.
11.5 LIMITATIONS ON INDEMNIFICATION RIGHTS. Neither Parent, Purchaser nor
Seller shall be entitled to be indemnified pursuant to Section 11.2 or 11.3
hereof, respectively, unless and until the aggregate of all losses, liabilities,
damages, costs and other expenses (collectively, "DAMAGES") of Parent and
Purchaser or Seller, as the case may be, shall exceed Twenty-Five Thousand and
No/100 Dollars ($25,000.00) (the "THRESHOLD"), and upon exceeding such amount
Parent and Purchaser shall be entitled to be indemnified for all Damages on a
dollar for dollar basis. Indemnification shall be due only to the extent of the
loss or damage actually suffered (I.E., reduced by any offsetting or related
asset or service received and by any recovery from any third party, such as an
insurer). Any claim brought under Section 11.2(i) or 11.3(a)(i) shall be brought
within the time period set forth with respect to the representation or warranty
alleged to have been breached as set forth in Section 11.1 hereto. The amount of
indemnfication payable shall in no event exceed the sum of the Closing
Consideration plus the amount of Contingent Consideration actually paid;
PROVIDED THAT such limit shall not apply to any liabilities arising out of the
inventory of Seller acquired by Purchaser hereunder.
12. ENTIRE AGREEMENT; MODIFICATION, WAIVER. This Agreement and its Disclosure
Statement and Exhibits constitute the entire agreement between the parties
pertaining to the subject matter contained in it and supersedes all prior and
contemporaneous agreements, representations, and understandings of the parties.
No supplement, modification, or amendment of this Agreement will be binding
unless executed in writing by all of the parties. No waiver of any of the
provisions of this Agreement will be deemed, or will constitute, a waiver of any
other provisions, whether or not similar, nor will any waiver constitute a
continuing waiver. No waiver will be binding unless executed in writing by the
party making the waiver.
13. KNOWLEDGE. For purposes of this Agreement, the Seller will be deemed to
have "knowledge" of a fact if any of the following individuals is actually aware
of such fact: Kirby I. Bland, M.D., Christopher Meeks, Sondra Phillips, and
Arnold Diethelm, M.D. For purposes of this Agreement, the Parent and the
Purchaser will be deemed to have "knowledge" of a fact if any of the following
individuals is actually aware of such fact: Jamie Grooms, Richard Allen, Nancy
Holland, Russell Donda, Frederick C. Preiss, Charles Randal Mills, T. Sander,
Thomas Brewer, James Abraham, and David Fragale.
14. THIRD PARTY BENEFICIARIES. The parties hereto expressly acknowledge and
agree that UAB is a third party beneficiary to this Agreement with regard to
Sections 5.1(g) and 11.3(b) hereof, and that UAB shall be entitled to directly
assert its rights with regard to those Sections against the Purchaser and the
Parent in accordance with the terms and conditions of this Agreement.
15. EXPENSES. The parties shall each bear their respective legal, accounting
and other expenses in connection with the transactions contemplated hereby
whether or not the transaction is consummated.
30
<PAGE>
16. FURTHER ASSURANCES. The parties from time to time will execute and deliver
such additional documents and instruments and take such additional actions as
may be necessary to carry out the transactions contemplated by the Agreement.
17. SUCCESSORS AND ASSIGNS; ASSIGNMENT. This Agreement will be binding on, and
inure to the benefit of, the parties hereto and any and all respective heirs,
legal representatives, successors and assigns. After the Closing, the Purchaser
may assign all of its rights and obligations hereunder to an affiliate of the
Parent.
18. NOTICES.
All notices, requests, demands and other communications required or
permitted to be given or made under this Agreement will be in writing and will
be delivered personally or will be sent postage prepaid by United States
registered or certified mail, return receipt requested or by overnight courier
service as follows:
(a) To the Seller:
University of Alabama Health Services Foundation, P.C.
500 22nd Street South
Birmingham, Alabama 35233
Attention: President
WITH A COPY TO:
University of Alabama Health Services Foundation, P.C.
500 22nd Street South
Birmingham, Alabama 35233
Attention: General Counsel
(b) To the Purchaser or Parent at:
c/o Regeneration Technologies, Inc.
1 Innovation Drive
Alachua, Florida 32615
Tel: 904-418-8888
Fax: 904-418-0342
Attention: Richard Allen
Chief Financial Officer
19. GOVERNING LAW. This Agreement will be construed in accordance with, and
governed by, the laws of the State of Florida, without reference to its
conflicts of laws provisions.
20. GUARANTEE OF PERFORMANCE. Notwithstanding anything in this Agreement to the
contrary, the Parent guarantees the performance by the Purchaser of all of its
covenants and obligations hereunder.
31
<PAGE>
21. NO OBLIGATION OF UAB. This Agreement is not binding upon, and does not
create any obligation for, The University of Alabama at Birmingham.
22. DELAWARE REINCORPORATION. It is acknowledged and agreed that Parent may,
prior to the Closing Date, reincorporate in Delaware by merging with and into a
newly formed, wholly owned subsidiary, organized under the laws of the State of
Delaware. All references to Parent herein shall, upon such merger, be deemed to
refer to the Delaware corporation which shall succeed to all rights and
obligations of Parent hereunder.
32
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of April
27, 2000.
ALABAMA TISSUE CENTER, INC.
By:________________________________________
Richard R. Allen
Title: Chief Financial Officer
REGENERATION TECHNOLOGIES, INC.
By:________________________________________
Richard R. Allen
Title: Chief Financial Officer
UNIVERSITY OF ALABAMA HEALTH
SERVICES FOUNDATION, P.C.
By:_______________________________________
Steven C. Schultz
Title: Executive Vice President
ACCEPTED:
By:_____________________________________
John J. McMahon
Title: Chairman, Board of Directors,
UAB Health System
By:_____________________________________
Kirby I. Bland, M.D.
Title: Chairman, Department of Surgery
By:_____________________________________
David J. Fine, Ph.D.
Title: Chief Executive Officer,
UAB Health System
33
<PAGE>
EXHIBIT A
CONFIDENTIALITY OBLIGATIONS
Until the Closing Date, each party shall keep all information obtained
from any other party either before or after the date of this Agreement
confidential, and no party shall reveal such information to, nor produce copies
of any written information for, any person outside its management group or its
professional advisors without the prior written consent of the other parties,
unless such party is compelled to disclose such information by judicial or
administrative process or by any other requirements of Law. If the transactions
contemplated by this Agreement should fail to close for any reason, each party
shall return to the original provider as soon as practicable all originals and
copies of written information provided to such party by or on behalf of any
other party and none of such information shall be used by any party, or their
employees, agents or representatives in the business operations of any party.
Notwithstanding the foregoing, each party's obligations hereunder shall not
apply to any information or document which is or becomes available to the public
other than as a result of a disclosure by such party in violation of this
Agreement or other obligation of confidentiality under which such information
may be held or becomes available to the party on a non-confidential basis from a
source other than such other party or its officers, directors, employees,
representatives or agents. The parties' obligations hereunder shall survive the
termination of this Agreement.
<PAGE>
EXHIBIT B
MANAGEMENT SERVICES AGREEMENT
This Management Services Agreement ("Agreement"), effective as of this
15th day of June, 2000 ("Effective Date" is by and among Regeneration
Technologies, Inc. ("RTI"), and the University of Alabama Health Services
Foundation, P.C., an Alabama not-for-profit corporation ("HSF").
WITNESSETH
WHEREAS, RTI processes and distributes human donor tissue for use by
physicians in surgical implant procedures around the world; and
WHEREAS, HSF through it's Alabama Organ Center ("AOC") recovers human
donor tissue in its territory (Alabama), and AOC will create a separate
division for tissue recovery; and
WHEREAS, AOC desires to provide RTI, and RTI desires to receive from
AOC, human donor tissue for use by physicians in surgical implant procedures
around the world;
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
contained herein and for other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, RTI and HSF agree as follows:
I - DEFINITIONS
When used in this Agreement, the capitalized terms below shall be
defined as:
1.1 "Tissue" shall mean any human donor tissue including, but not
limited to, femur, humerus, fibula, tibia, radius, ulna, hemi-pelvis, fascia,
cardiovascular, vascular, pericardium, skin, achilles, patellar or any other
tendon or ligament, whether individually, cumulatively, or any part thereof,
but excluding human organs recovered by AOC, eyes and ocluar tissue.
1.2 "Soft Tissue Recovery" shall mean any human donor tissue
recovered by AOC without bone, such as: cardiovascular, vascular, fascia,
achilles, pericardium, skin and dura, but excluding human organs.
1.3 " Conventional Tissue Recovery" shall mean heart or any
combination of eight (8) of the following: femur, fibula, tibia, humerus,
radius, ulna, hemi-pelvis, and associated tissues such as fascia, achilles
and patellar tendons and ligaments, plus the associated tissues and
pericardium and skin are recovered by AOC, but excluding human organs, eyes
and ocular tissue.
1.4 "Tissue Recovery Operations" mean the operations of AOC Tissue
Recovery Division with respect to Soft Tissue Recovery and Conventional
Tissue Recovery.
1.5 "TRAB" means the Tissue Recovery Advisory Board established
pursuant to Section 3.3 hereof.
1
<PAGE>
II. CERTAIN COVENANTS OF RTI
2.1 RTI will provide AOC's Tissue Recovery Operations with certain
administrative support and management services as set forth in EXHIBIT 2.1
("Management Services") attached hereto.
2.2 Each year during which this Agreement is in effect. RTI will fund
a budget for AOC's Tissue Recovery Operations (the "Budget"). The said Budget
must be mutually agreed upon by AOC and RTI annually. The Budget may be
adjusted downward quarterly to reflect the actual quantity of donors
recovered, but in no event by more than $[*****] donor. The Budget may be
adjusted upward upon review and approval by the TRAB. RTI will directly pay
for all Budgeted expenses except payroll, which will be paid by AOC and
reimbursed to AOC by RTI through the Budget. By the fifth (5th) day of each
month, AOC Tissue Recovery Division will invoice RTI for actual payroll
expenditures, including payroll withholdings, in the previous month that are
reimbursable under the approved Budget. By the tenth (10th) day of the month,
RTI will transfer the invoiced amounts to an account designated by HSF,
failure to make any transfer shall be a material breach of this Agreement.
2.3 RTI covenants that any policies, procedures or requirements of
RTI with respect to AOC's Tissue Recovery Operations will conform to the
standards established by the Chairman of the Department of the School of
Medicine of the University of Alabama School of Medicine ("UASOM") and RTI
will obtain approval by such Chairman of such policies, procedures and
requirements prior to implementation.
2.4 RTI covenants that it will cooperate with HSF in meeting its
responsibilities under that certain Eye, Organ and Tissue Procurement Public
Education Services Agreement dated January 28, 1998, between the Alabama Eye
Bank, Inc. and HSF, a copy of which has been provided to RTI.
III - TISSUE MATTERS
3.1 For the term of this Agreement, AOC Tissue Recovery Division
shall provide Tissue exclusively to RTI or Alabama Tissue Center, Inc., a
subsidiary of RTI ("ATC"), unless otherwise instructed by RTI in writing. In
the event AOC provides Tissue to RTI which RTI, at is sole discretion and by
written notice to AOC, elects not to receive, AOC may distribute such Tissue
to others.
3.2 The parties acknowledge the importance of having Tissues available
for distribution in Alabama, and both parties shall, in good faith, endeavor
to meet the implant needs of Alabama. To this end, RTI covenants and agrees
that it shall, or shall cause ATC to, provide Tissue (including heart valves)
to HSF and to the University of Alabama Hospital on a preferred basis, with
precedence over all other clients, up to the volume of such Tissue which has
been recovered by AOC Tissue Recovery Division in Alabama.
3.3 HSF shall establish a division of AOC with respect to its Tissue
Recovery Operations. The Tissue Recovery Advisory Board shall be established,
which shall consist of three members. One member shall be appointed by HSF
(and initially shall be A.G. Diethelm, M.D.); a
2
<PAGE>
second member shall be selected by RTI, and a third member shall be mutually
selected by the parties hereto. The meeting policies of the TRAB shall
provide that all meetings of the TRAB shall be called upon 30 days notice,
absent a written waiver of notice by all TRAB members.
3.4 On a yearly basis, the TRAB shall establish Tissue Recovery
Benchmarks for AOC Tissue Recovery Division. AOC Tissue Recovery Division
shall use its best reasonable efforts to meet the Tissue Recovery Benchmarks.
All Tissues supplied by AOC Tissue Recovery Division to RTI shall meet or
exceed RTI's recovery requirements as set forth in the specifications
provided to AOC Tissue Recovery Division by RTI from time to time.
3.5 AOC Tissue Recovery Division shall be entitled to a Bonus up to a
maximum of $25,000 per quarter,as calculated by RTI and approved by TRAB
in accordance with the provisions of Exhibit 3.5 hereof.
3.6 RTI shall (i) provide processing and distribution services for
Tissue recovered by AOC and accepted by RTI; (ii) provide AOC with
information indicating the extent of processed Tissue distributed in the AOC
community; and (iii) provide under the Budget all supplies necessary for use
by the AOC Tissue Recovery Division in procuring Tissue. Distribution
representatives of RTI or any distribution partner of RTI may establish
contacts with AOC Tissue Recovery Division at mutually acceptable times for
information purposes including the indications and use of various Tissue
products in the AOC operations area.
IV - TERM AND TERMINATION
4.1 The term of this Agreement shall be for a period of five (5) years
commencing with the effective date herein ("Initial Term") and may be renewed
upon the written agreement of the parties hereto for two additional renewal
terms of five year terms each ("Renewal Term"). This Agreement may be
terminated prior to the end of the Initial Term or any Renewal Term:
(a) by either party due to a material breach by the other party
of any of its obligations or covenants herein upon thirty
(30) calendar days written notice to the breaching party, but
only if such breaching party fails to remedy said breach
within thirty (30) calendar days of such written notice,
PROVIDED, HOWEVER, such notice and cure periods shall instead
be five (5) calendar days instead of thirty (30) in the event
the breach is a failure by RTI to make the payroll payments
required by Section 2.2 hereof (other than authorized Budget
adjustments) or a failure of RTI to comply with the
provisions of Section 2.3 hereof; or
(b) by either party promptly upon the insolvency or filing for
receivership or bankruptcy by the other party.
V - OWNERSHIP OF COPYRIGHTS AND INTELLECTUAL
PROPERTY RIGHTS
3
<PAGE>
5.1 In connection with the performance of this Agreement, each party
will have access to the confidential and proprietary processes, methods,
trade secrets, know-how, techniques, data, training materials and other
intellectual properties developed, used or owned by the other party (or, in
the case of HSF, owned by either HSF or the University of Alabama at
Birmingham ("UAB")) ("Intellectual Property"). Each party agrees that all
Intellectual Property will remain the exclusive property of the party or
person owning such Intellectual Property, and any improvements,
modifications, advancements to, and any invention, product, or process based
upon or derived from the Intellectual Property, shall be the sole and
exclusive property of the original owner of the Intellectual Property, and
each expressly disclaims any right, title and interest in the same. Any
dispute regarding any invention, product, or process developed by a party as
an improvement, modification or any advancement to, or based upon or derived
from the Intellectual Property of such party shall be fully and finally
resolved by the written legal opinion of a licensed patent attorney serving
as an arbitrator, who shall be selected by the parties in accordance with the
rules of the American Arbitration Association.
5.2 Each party agrees to promptly disclose any and all improvements,
modifications or advancements to any invention, product, or process based
upon or derived from the Intellectual Property of the other. Each party
further agrees to promptly assign any of its rights to the same to the other.
5.3 Except as consented to in writing by the owner of the Intellectual
Property, neither party will reveal, divulge or make known to any person or
entity or use for its or his or her own account or for the account of any
person, any Intellectual Property, whether or not obtained with the knowledge
and permission of the other party, and each party, upon termination of this
Agreement, shall deliver to the owner all written copies of Intellectual
Property in the possession of the other.
VI - OTHER
6.1 The rights and obligations of either party hereunder may not be
sublicensed, assigned or transferred by operation of law or otherwise without
the written consent of the other party.
6.2 This Agreement is governed by and shall be construed and enforced
in accordance with the laws of the State of Alabama, without regard to
conflict of law rules. In the event a dispute arises out of or relates to or
concerns this Agreement, or the breach thereof, the parties agree first to
try in good faith to settle the dispute by mediation administered by the
American Arbitration Association under its Commercial Mediation Rules before
resorting to litigation or some other dispute resolution procedure.
6.3 Nothing in this Agreement shall be construed as (i) a warranty or
representation by RTI as to the validity, enforceability or scope of any RTI
parent; (ii) a warranty or representation that anything made, used, sold, or
otherwise disposed of pursuant to this Agreement is or will be free from
infringement of patents or other intangible rights of third parties; (iii) a
requirement that RTI shall file any patent application, secure any patent, or
maintain any patent in force; (iv) an obligation on RTI to bring or prosecute
actions or suits against third parties for infringement of RTI patents; (v)
an obligation to furnish any manufacturing or technical information except as
specifically provided herein; (vi) a granting by implication, estoppel, or
otherwise, any license or rights under
4
<PAGE>
patents, trade secrets, know-how, copyrights, or other intangible rights of
RTI other than those specifically set forth herein; (vii) a warranty or
representation by RTI that it shall not grant the right to others to make,
use or sell products not covered by the claims of RTI patents which may be
similar or compete with RTI Tissue products.
6.4 AOC shall at all times during the term of this Agreement and
thereafter, indemnify, defend and hold harmless RTI, its Affiliates (as
hereinafter defined) or any of its assigns, against all claims and expenses,
including legal expenses and reasonable attorney fees, arising out of any
other claim, proceeding, demand, expense, loss, and liability of any kind
whatsoever (collectively, "RTI Losses") resulting from the activities of AOC
under this Agreement, except where such RTI Losses result solely from RTI's
negligence or willful misconduct. As used in this Agreement, "Affiliates"
shall mean RTI's trustees, directors, officers, agents and employees and any
business entity owned or controlled by RTI. Notwithstanding the above, RTI at
all times reserves the right to retain counsel of their own, at their own
expense, to defend RTI's interests.
6.5 RTI shall at all times during the term of this Agreement and
thereafter, indemnify, defend and hold harmless AOC, HSF and HSF Affiliates
(as hereinafter defined) or any of its assigns, against all claims and
expenses, including legal expenses and reasonable attorney fees, arising out
of any other claim, proceeding, demand, expense, loss, and liability of any
kind whatsoever (collectively, "HSF Losses") resulting from the activities of
RTI under this Agreement, except where such HSF Losses result solely from
HSF's negligence or willful misconduct. As used in this Agreement, "HSF
Affiliates" shall mean HSF's directors, officers, agents and employees.
Notwithstanding the above, HSF at all times reserves the right to retain
counsel of its own, at its own expense, to defend HSF's interests.
6.6 RTI shall provide for AOC's professional liability insurance
coverage or self-insurance through HSF's self-insurance program by including
in the Budget the assessments against AOC to fund the Tissue Recovery
Operations' proportionate share of the HSF self-insurance fund. Throughout
the term of this Agreement, RTI shall provide and pay for its own insurance
for professional liability in the minimum amounts of $1 million per
occurrence and $3 million annual aggregate, and shall furnish HSF with a
certificate evidencing such coverage. All other insurance necessary to the
Tissue Recovery Operations shall be included in the Budget as a reimbursable
expense.
6.7 Each party represents that it shall conduct its business in a
manner consistent with the highest standards of industry business practices,
that it shall comply with all applicable laws and regulations, and that it
shall not represent any relationship with the other or any of their
respective affiliates other than as set forth herein.
6.8 The right of either party to terminate under this Agreement shall
not be an exclusive remedy, and either party shall be entitled, if the
circumstances warrant, alternatively or cumulatively, to damages for breach
of this Agreement, or to an order or injunction requiring performance of the
obligations of this Agreement or to any other remedy available at law or
equity.
6.9 This Agreement, together with its exhibits and attachments,
constitutes the entire agreement and understanding of the parties with regard
to the subject matter hereof and supersedes all prior discussions,
negotiations, understandings and agreements between the parties concerning
5
<PAGE>
the subject matter hereof. If any term of this Agreement is held by a court
of competent jurisdiction to be invalid or unenforceable, then this Agreement,
including all of the remaining terms, will remain in full force and effect as
if such invalid or unenforceable term had never been included.
6.10 This Agreement may be amended only by written agreement of the
parties hereto.
6.11 Each party to this Agreement hereby agrees to execute, acknowledge
and deliver all such further instruments as may be necessary or appropriate
to carry out the intent and purposes of this Agreement.
6.12 The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation
of this Agreement.
6.13 Neither party shall be responsible or liable to the other party
for nonperformance or delay in performance of any terms or conditions of this
Agreement, except for those relative to the protection of proprietary rights,
due to circumstances beyond the control of the nonperforming or delayed party
including, but not limited to, acts of God, acts of government, wars, riots,
strikes or other labor disputes, shortages of labor or materials, fires and
floods; provided the nonperforming or delayed party provides to the other
party written notice of the existence and the reason for such nonperformance
or delay. Notwithstanding the foregoing, the nonperformance or delay by any
party in excess of 180 days shall constitute cause for termination of this
Agreement with such notice given in writing by one party to the other.
6.14 Any notice, report or consent required or permitted by this
Agreement to be given or delivered, shall be in writing and shall be deemed
given or delivered if delivered in person, sent by courier, expedited
delivery service, or sent by registered or certified mail, postage prepaid,
return receipt requested, or sent by facsimile (if confirmed), as follows:
If to RTI:
Regeneration Technologies, Inc.
One Innovation Drive
Alice, Florida 32615
Attn: Jamie Grooms, President
If to HSF:
University of Alabama Health Services Foundation, P.C.
500 22nd Street South
Birmingham, Alabama 35233
Attn: Executive Vice President
With a copy to:
General Counsel
6.15 The relationship between HSF and RTI shall not be deemed to be an
6
<PAGE>
employee, agent or representatives of RTI. Neither party shall have any right
to enter into any contract or commitment in the name of, or on behalf of the
other, or to bind the other in any respect whatsoever.
6.16 This Agreement may be executed in several counterparts, each of
which shall be deemed an original, and all of which shall constitute but one
and the same instrument.
7
<PAGE>
IN WITNESS WHEREOF, the parties have caused this instrument to be
executed in duplicate as of the day and year first above written.
UNIVERSITY OF ALABAMA
HEALTH SERVICES FOUNDATION, P.C.
By:
---------------------- ----------------------------------
Witness Print Name:
--------------------------
Title:
-------------------------------
REGENERATION TECHNOLOGIES, INC.
By:
---------------------- ----------------------------------
Witness Print Name:
--------------------------
Title:
-------------------------------
8
<PAGE>
EXHIBIT 2.1
MANAGEMENT SERVICES
RTI will provide AOC with:
1. Assistance and Budget funding for Tissue Recovery Operations and
payment for all other expenses except payroll, which shall be
reimbursed to AOC in accordance with Section 2.2. All payments and
reimbursements must be in accordance with the Budget;
2. Recovery and procedures training for AOC staff is approved by AOC, in
addition to a general orientation for AOC staff;
3. A complete and specific list of all Tissues to be recovered by AOC
which will be provided to RTI for processing, as reasonably agreed
upon by the parties, which list must be reviewed by TRAB;
4. Support of development of donor programs with funeral homes,
hospitals, etc., as approved by TRAB;
5. Assist the AOC Tissue Recovery Divison's marketing and sales staff as
needed to educate and inform the community of the availability and
aspects of RTI processed Tissues, as approved by TRAB; and
6. RTI will provide policy and procedure materials for AOC in addition
to regulatory and quality assurance advice and consultation as
needed to maintain a high quality Tissue recovery service. Any
policies and procedures must be approved by the TRAB and by the
Chairman of the Department of Surgery of UASOM.
9
<PAGE>
Exhibit 3.5
Bonus Calculation
The Bonus shall be calculated as follows:
Step 1: (Total AOC Tissue Recovery Division quarterly expenses); divided by
(Total number of Conventional Tissue Recoveries received by RTI
within that quarter) = cost per Conventional Tissue Recovery = A
Step 2: ($[*****]* - A) x (Total number of Convention Tissue Recoveries
received by RTI within that quarter) = Bonus payable by AOC Tissue
Recovery Division, not to exceed a maximum of $25,000 per quarter
* Subject to annual adjustment by the TRAB
10
<PAGE>
EXHIBIT C
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made
as of April __, 2000, by and between Regeneration Technologies, Inc., a Florida
corporation (the "Company") and University of Alabama Health Services
Foundation, P.C. ("UAHSF").
WHEREAS, Parent has agreed to issue shares of its Common
Stock, par value $0.001 per share (the "UAHSF Common Stock") to UAHSF in
connection with the acquisition of Alabama Tissue Center (the "Acquisition");
and
WHEREAS, as a condition to the Acquisition, it is in the best
interests of the Company to grant to UAHSF certain registration rights.
NOW, THEREFORE, in consideration of the premises and mutual
covenants contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
ARTICLE I
REGISTRATION RIGHTS
1.1 CERTAIN DEFINITIONS. As used in this Article I and
elsewhere in this Agreement, the following terms shall have the following
respective meanings:
"Commission" means the Securities and Exchange Commission,
or any other Federal agency at the time administering the Securities Act.
"Exchange Act" means the Securities Exchange Act of 1934,
as amended, or any similar Federal statute, and the rules and regulations of the
Commission issued under such Act, as they each may, from time to time, be in
effect.
"Registrable Shares" means (i) the UAHSF Common Stock and
(ii) any other shares of Common Stock of the Company issued in respect of the
UAHSF Common Stock (because of stock splits, stock dividends, reclassifications,
recapitalizations, or similar event(s); PROVIDED, HOWEVER, that shares of Common
Stock which are Registrable Shares shall cease to be Registrable Shares upon any
sale pursuant to a Registration Statement, Section 4(1) of the Securities Act or
Rule 144 under the Securities Act.
"Registration Statement" means a registration statement
filed by the Company with the Commission for a public offering and sale of
securities of the Company (other than a registration statement on Form S-8 or
Form S-4, or their successors, or any other form for a limited
<PAGE>
purpose, or any registration statement covering only securities proposed to be
issued in exchange for securities or assets of another corporation).
"Securities Act" means the Securities Act of 1933, as
amended, or any similar Federal statute, and the rules and regulations of the
Commission issued under such Act, as they each may, from time to time, be in
effect.
"Stockholders" means UAHSF and any persons or entities to
whom the rights granted under this Article I are transferred by UAHSF, its
successors or assigns pursuant to Article I hereof.
1.2 SALE OR TRANSFER OF SHARES; LEGEND.
(a) The Registrable Shares and shares issued in respect of
the Registrable Shares shall not be sold or transferred unless either (i) they
first shall have been registered under the Securities Act, or (ii) the Company
first shall have been furnished with an opinion of legal counsel, reasonably
satisfactory to the Company, to the effect that such sale or transfer is exempt
from the registration requirements of the Securities Act.
(b) Notwithstanding the foregoing, no registration or
opinion of counsel shall be required for a transfer made in accordance with Rule
144 under the Securities Act.
(c) Each certificate representing the Registrable Shares
and shares issued in respect of the Registrable Shares shall bear legends
substantially in the following form:
The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, and may not be offered,
sold or otherwise transferred, pledged or hypothecated unless and
until such shares are registered under such Act or an opinion of
counsel satisfactory to the Company is obtained to the effect that
such registration is not required.
The foregoing legend shall be removed from the certificates
representing any Registrable Shares, at the request of the holder thereof, at
such time as they become eligible for resale pursuant to Rule 144(k) under the
Securities Act.
(d) The Company agrees, upon the request of UAHSF, to make
available to UAHSF and to any prospective transferee of any Registrable Shares
of UAHSF the information concerning the Company described in Rule 144A(d)(4)
under the Securities Act.
- 2 -
<PAGE>
1.3 INCIDENTAL REGISTRATION.
(a) Whenever the Company proposes to file a Registration
Statement at any time and from time to time, it will, prior to such filing, give
written notice to all Stockholders of its intention to do so and, upon the
written request of a Stockholder or Stockholders given within twenty (20) days
after the Company provides such notice (which request shall state the intended
method of disposition of such Registrable Shares), the Company shall use its
best efforts to cause all Registrable Shares which the Company has been
requested by such Stockholder or Stockholders to register to be registered under
the Securities Act to the extent necessary to permit their sale or other
disposition in accordance with the intended methods of distribution specified in
the request of such Stockholder or Stockholders; provided that the Company shall
have the right to postpone or withdraw any registration effected pursuant to
this subsection 1.3 without obligation to any Stockholder.
(b) In connection with any offering under this subsection 1.3
involving an underwriting, the Company shall not be required to include any
Registrable Shares in such underwriting unless the holders thereof accept the
terms of the underwriting as agreed upon between the Company and the
underwriters selected by it, and then only in such quantity as will not, in the
opinion of the underwriters, have a material adverse effect on the success of
the offering by the Company. If in the opinion of the managing underwriter the
registration of all, or part of, the Registrable Shares which the holders have
requested to be included would materially and adversely affect such public
offering, then the Company shall be required to include in the underwriting only
that number of Registrable Shares, if any, which the managing underwriter
believes may be sold without causing such adverse effect; provided that no
persons or entities other than the Company, the Stockholders and persons or
entities holding registration rights granted in accordance with subsection 1.9
hereof shall be permitted to include securities in the offering. If the number
of Registrable Shares to be included in the underwriting in accordance with the
foregoing is less than the total number of shares which the holders of
Registrable Shares have requested to be included, then the number of shares to
be offered shall be reduced or limited in the following order of priority: (i)
FIRST, the securities proposed by the Company to be sold for its own account
(except where the Company is the party that initiated such registration); (ii)
SECOND, the number of shares to be offered by all other holders of securities of
the Company other than the holder of Registrable Shares or other holders who
have registration rights (except where such other holders have initiated such
registration) to the extent necessary to reduce the total number of shares as
recommended by such managing underwriters; and (iii) THIRD, if further reduction
or limitation is required, the number of shares to be offered for the account of
the Stockholders and other persons having registration rights shall be reduced
or limited on a PRO RATA basis in proportion to the relative number of
Registrable Shares of the Stockholders and other persons having registration
rights participating in such registration.
(c) WITHDRAWAL ELECTION. If, as a result of the proration
provisions of the Section 1.3, any Stockholder shall not be entitled to include
at least 50% of the Registrable Shares in such Incidental Registration pursuant
to Section 1.3(a) that such Stockholder has requested to be included,
- 3 -
<PAGE>
such Stockholder may elect to withdraw his, her or its request to include
Registrable Shares in such registration (a "Withdrawal Election") without
incurring any liability for his, her or its fees and expenses; PROVIDED,
HOWEVER, that a Withdrawal Election shall be irrevocable and, after making a
Withdrawal Election, a Stockholder shall no longer have any right to include
Registrable Shares in the Registration as to which such Withdrawal Election is
made.
1.4 REGISTRATION PROCEDURES. If and whenever the Company is
required by the provisions of this Agreement to use its best efforts to effect
the registration of any of the Registrable Shares under the Securities Act, the
Company shall:
(a) Prepare and file with the Commission a Registration
Statement with respect to such Registrable Shares and use its best efforts to
cause such Registration Statement to become effective; provided that before
filing a Registration Statement or prospectus or any amendment or supplement
thereto, including documents incorporated by reference after the initial filing
of any Registration Statement, the Company shall furnish to the Stockholders of
the Registrable Shares covered by such Registration Statement (such shares,
"Registered Shares") and the underwriters, if any, copies of all such documents
proposed to be filed, which documents will be subject to the review of such
Stockholders and underwriters.
(b) Prepare and file with the Commission such amendments and
post-effective amendments to a Registration Statement as may be necessary to
keep such registration effective for a period of six (6) months or until the
Stockholder or Stockholders have completed the distribution described in the
Registration Statement relating thereto, whichever first occurs; provided,
however, that the Company, in good faith, may delay the filing of any amendment
or supplement to the Registration Statement for a reasonable period of time, not
to exceed 120 days, in order to permit the Company (A) to effect disclosure or
disposition or consummation of any transaction requiring confidential treatment
which is being actively pursued at such time and which would require disclosure
in the Registration Statement or (B) to negotiate, effect or complete any
transaction which the Company reasonably believes might be jeopardized, delayed
or made more costly to the Company by disclosure in the Registration Statement;
and provided further, however, that (i) such 6 month period shall be extended
for a period of time equal to the period the Stockholder refrains from selling
any securities included in such registration in accordance with the provisions
of Section 1.8 hereof; (ii) such 6 month period shall be extended by the number
of days during the period from and including the date of the giving of notice
pursuant to Section 1.4(e) hereof to and including the date when each
Stockholder of Registrable Shares covered by such Registration Statement shall
have received the copies of the supplemented or amended prospectus contemplated
by Section 1.4(e) hereof; and (iii) in the case of any registration of
Registrable Shares on Form S-3 which are intended to be offered on a continuous
or delayed basis, such 6 month period shall be extended, if necessary, to keep
the Registration Statement effective until all such Registrable Shares are sold,
provided that Rule 415, or any successor rule under the Securities Act, permits
an offering on a continuous or: delayed basis, and provided further that
applicable rules under the Securities Act governing the obligation to file a
post-effective amendment permit, in lieu of filing a post-effective amendment
which (y) includes any prospectus required by Section 10(a)(3) of the Securities
Act or (z) reflects
- 4 -
<PAGE>
facts or events representing a material or fundamental change in the information
set forth in the Registration Statement, the incorporation by reference in the
Registration Statement of periodic reports filed pursuant to Section 13 or 15(d)
of the Exchange Act that contain the information required to be included in (y)
and (z) above;
(c) Cause the related prospectus to be supplemented by any
required prospectus supplement, and as so supplemented, to be filed pursuant to
Rule 424 under the Securities Act; and comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
Registration Statement during such period in accordance with the intended
methods of disposition by the sellers thereof set forth in such Registration
Statement or supplement to such prospectus;
(d) Furnish such number of prospectuses and other documents
incident thereto, including any amendment of or supplement to the prospectus as
a Stockholder from time to time may reasonably request;
(e) Notify each seller of Registered Shares covered by such
Registration Statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such Registration Statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, and at the request of any such seller, prepare and furnish
to such seller a reasonable number of copies of a supplement to or an amendment
of such prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such shares, such prospectus shall not include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(f) Cause all such Registered Shares to be listed on each
securities exchange on which similar securities issued by the Company are then
listed or, if not then listed, cause such Registered Shares to be included in
whatever exchange or national automated quotation system the Board of Directors
determines is appropriate;
(g) Provide a transfer agent and registrar for all Registered
Shares and a CUSIP number for all such Registered Shares, in each case not later
than the effective date of such registration;
(h) Make available for inspection during regular business
hours by any seller of Registrable Shares, any underwriter participating in any
disposition pursuant to such Registration Statement, and any attorney,
accountant or other agent retained by any such seller or underwriter
(collectively, the "Inspectors"), all financial and other records, pertinent
corporate documents and properties of the Company (collectively the "Records")
as shall be reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers, directors,
- 5 -
<PAGE>
employees and independent accountants to supply all information reasonably
requested by such seller, underwriter, attorney or accountant in connection with
such Registration Statement. Records which the Company determines, in good
faith, to be confidential and which it notifies the Inspectors are confidential
shall not be disclosed by the Inspectors unless (A) the disclosure of such
Records is, in the opinion of counsel for the selling Stockholders, reasonably
necessary to avoid or correct any misstatement or omission in the Registration
Statement, (B) the release of such Records is ordered pursuant to a subpoena or
other order from a court of competent jurisdiction, or (C) the disclosure of
such Records is required by any governmental regulatory body with jurisdiction
over any seller of Registrable Shares. Such seller, upon learning, that
disclosure of such Records is sought in a court of competent jurisdiction, shall
notify the Company and allow the Company, at its expense, to undertake
appropriate action to prevent disclosure of the Records deemed confidential;
(i) Cooperate with the sellers of Registered Shares and the
managing underwriter(s), if any, to facilitate the timely preparation and
delivery of certificates representing the Registered Shares to be sold, without
any restrictive legends, in such denominations and registered in such names as
the managing underwriter(s) may request at least two business days prior to any
sale thereof to the underwriters, if applicable;
(j) Participate, to the extent reasonably requested by the
managing underwriter for the offering or the selling Stockholders, in efforts to
sell the Registrable Shares under the offering (including, without limitation,
participating in "roadshow" meetings with prospective investors) that would be
customary for underwritten primary offerings of a comparable percent of equity
securities by the Company;
(k) Obtain from its accountants "cold-comfort" letters, dated
the effective date of the Registration Statement and the date of the closing of
the sale of the Registered Shares, and addressed to the Company and the selling
Stockholders, in form and substance as are customarily issued in connection with
underwritten public offerings;
(l) Obtain from its counsel an opinion, addressed to the
selling Stockholders, with respect to the offering in form and substance
reasonably satisfactory to a majority-in-interest of such Stockholders;
(m) Otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security Stockholders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months, but not more than eighteen
months, beginning with the first month after the effective date of the
Registration Statement, which earnings statement shall satisfy the provisions of
Section 11 (a) of the Securities Act;
(n) In connection with any underwritten offering pursuant to a
Registration Statement filed pursuant to Section 1 hereof, the Company will
enter into any underwriting agreement reasonably necessary to effect the offer
and sale of Common stock, provided such
- 6 -
<PAGE>
underwriting agreement contains customary underwriting, indemnification and
contribution provisions; PROVIDED , HOWEVER, that no Stockholder will be liable
for indemnification or contribution in excess of the net proceeds such
Stockholder received in the offering;
(o) Use its best efforts to register or qualify such
Registrable Shares under such other securities or blue sky laws of such
jurisdictions as any seller reasonably requests and do any and all other acts
and things which may be reasonably necessary or advisable to enable such seller
to consummate the disposition in such jurisdictions of the Registrable Shares
owned by such seller (provided that the Company will not be required to (i)
qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subparagraph, (ii) subject itself
to taxation in any such jurisdiction or (iii) consent to general service of
process in any such jurisdiction);
(p) Use its best efforts to cause such Registrable Shares
covered by such Registration Statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to enable the
sellers thereof to consummate the disposition of such Registrable Shares; and
(q) Take all such other actions as the underwriters, if any,
and a majority-in interest of the selling Stockholders reasonably request in
order to expedite or facilitate the disposition of such Registrable Shares
(including, without limitation, effecting a stock split or combination of
shares).
1.5 ALLOCATION OF EXPENSES. The Company will pay all
Registration Expenses of all registrations under this Agreement. For purposes of
this Section, the term "Registration Expenses" shall mean all expenses incurred
by the Company in complying with this Article I, including, without limitation,
all registration and filing fees, exchange listing fees, printing expenses, fees
and disbursements of counsel for the Company and the fees and expenses of one
counsel selected by the selling Stockholders, as applicable, to represent the
selling Stockholders, as applicable, state Blue Sky fees and expenses, and the
expense of any special audits incident to or required by any such registration,
but excluding underwriting discounts, selling commissions and the fees and
expenses of the selling Stockholders' own counsel (other than the counsel
selected to represent all selling Stockholders).
1.6 INDEMNIFICATION AND CONTRIBUTION. In the event of any
registration of any of the Registrable Shares under the Securities Act pursuant
to this Agreement, the Company will indemnify and hold harmless the seller of
such Registrable Shares, each underwriter of such Registrable Shares, and each
other person, if any, who controls such seller or underwriter within the meaning
of the Securities Act or the Exchange Act against any losses, claims, damages or
liabilities, joint or several, to which such seller, underwriter or controlling
person may become subject under the Securities Act, the Exchange Act, state
securities or Blue Sky laws or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in any Registration
- 7 -
<PAGE>
Statement under which such Registrable Shares were registered under the
Securities Act, any preliminary prospectus or final prospectus contained in the
Registration Statement, or any amendment or supplement to such Registration
Statement, or arise out of or are based upon the omission or alleged omission to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading; and the Company will promptly reimburse such
seller, underwriter and each such controlling person upon demand for any legal
or any other expenses reasonably incurred by such seller, underwriter or
controlling person in connection with investigating or defending any such loss,
claim, damage, liability or action; PROVIDED, HOWEVER, that the Company will not
be liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any untrue statement or omission made
in such Registration Statement, preliminary prospectus or prospectus, or any
such amendment or supplement, in reliance upon and in conformity with
information furnished to the Company, in writing, by or on behalf of such
seller, underwriter or controlling person specifically for use in the
preparation thereof.
In the event of any registration of any of the Registrable
Shares under the Securities Act pursuant to this Agreement, each seller of
Registrable Shares, severally and not jointly, will indemnify and hold harmless
the Company, each of its directors and officers and each underwriter (if any)
and each person, if any, who controls the Company or any such underwriter within
the meaning of the Securities Act or the Exchange Act, against any losses,
claims, damages or liabilities, joint or several, to which the Company, such
directors and officers, underwriter or controlling person may, become subject
under the Securities Act, Exchange Act, state securities or Blue Sky laws or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of, a material fact contained in any Registration Statement
under which such Registrable Shares were registered under the Securities Act,
any preliminary prospectus or final prospectus contained in the Registration
Statement, or any amendment or supplement to the Registration Statement, or
arise out of or are based upon any omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, if, but only if, the statement or omission was made in
reliance upon and in conformity with information furnished in writing to the
Company by or on behalf of such seller, specifically for use in connection with
the preparation of such Registration Statement, prospectus, amendment or
supplement; PROVIDED, HOWEVER, that the obligations of such Stockholders
hereunder shall be limited to an amount equal to the proceeds to each
Stockholder of Registrable Shares sold as contemplated herein.
Each party entitled to indemnification under this subsection
1.6 (the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; PROVIDED, that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld); and, PROVIDED, FURTHER, that the failure of any Indemnified Party to
give notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Article I. The Indemnified Party may participate in such
defense at such party's expense; PROVIDED,
- 8 -
<PAGE>
HOWEVER, that the Indemnifying Party shall pay such expense if representation of
such Indemnified Party by the counsel retained by the Indemnifying Party would
be inappropriate due to actual or potential differing interests between the
Indemnified Party and any other party represented by such counsel in such
proceeding. No Indemnifying Party in the defense of any such claim or litigation
shall, except with the consent of each Indemnified Party, consent to entry of
any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect of such claim or
litigation, and no Indemnified Party shall consent to entry of any judgment or
settle such claim or litigation without the prior written consent of the
Indemnifying Party.
In order to provide for just and equitable contribution to
joint liability under the Securities Act in any case in which either (i) any
holder of Registrable Shares exercising rights under this Agreement, or any
controlling person of any such holder, makes a claim for indemnification
pursuant to this subsection 1.6 but it is judicially determined (by the entry of
a final judgment or decree by a court of competent jurisdiction and the
expiration of time to appeal or the denial of the last right of appeal) that
such indemnification may not be enforced in such case notwithstanding the fact
that this subsection 1.6 provides for indemnification in such case, or (ii)
contribution under the Securities Act may be required on the part of any such
selling Stockholder, as applicable, or any such controlling person in
circumstances for which indemnification is provided under this subsection 1.6;
then, in each such case, the Company and such Stockholder will contribute to the
aggregate losses, claims, damages, or liabilities to which they may be subject
(after contribution from others) in such proportion as is appropriate to reflect
the relative fault of the Stockholder on the one hand and the Company on the
other in connection with the action that resulted in such loss, claim, damage or
liability, as well as any other relevant equitable considerations. The relative
fault of the indemnifying party and of the indemnified party shall be determined
by a court of law by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission to state a material
fact relates to information supplied by the indemnifying party or the
indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission;
provided, that in no event shall any contribution by a holder exceed the
proceeds to it of all Registrable Shares sold by it pursuant to such
Registration Statement, and (B) no person or entity guilty of fraudulent
misrepresentation, within the meaning of Section 11 (f) of the Securities Act,
shall be entitled to contribution from any person or entity who is not guilty of
such fraudulent misrepresentation.
1.7 INFORMATION BY HOLDER. Each holder of Registrable Shares
included in any registration shall furnish to the Company such information
regarding such holder and the distribution proposed by such holder as the
Company may request in writing and as shall be required in connection with any
registration, qualification or compliance referred to in this Article I.
1.8 "MARKET STAND-OFF" AGREEMENT.
(a) Each Stockholder, if requested by the Company and an
underwriter of Common Stock or other securities of the Company, shall agree not
to sell or otherwise transfer or
- 9 -
<PAGE>
dispose of any Registrable Shares or other securities of the Company held by
such Stockholder for a specified period of time (not to exceed 180 days)
following the effective date of a Registration Statement; PROVIDED, that:
(i) such agreement shall only apply to the first such
Registration Statement covering Common Stock of the Company to be sold
on its behalf to the public in an underwritten offering; and
(ii) all Stockholders holding not less than the
number of shares of Common Stock held by such Stockholder (including
shares of Common Stock issuable upon the conversion of Shares, or other
convertible securities, or upon the exercise of options, warrants or
rights) and all officers and directors of the Company enter into
similar agreements.
1.9 LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. The Company
shall not, without the prior written consent of Stockholders holding at least
662/3% of the Registrable Shares, enter into any agreement (other than this
Agreement) with any holder or prospective holder of any securities of the
Company which would allow such holder or prospective holder to include
securities of the Company in any registration filed under subsection 1.3, unless
under the terms of such agreement, such holder or prospective holder may include
such securities in any such registration only on terms substantially similar to
the terms on which holders of Registrable Shares may include shares in such
registration, including the terms of Section 1.3(b) hereof.
1.10 RULE 144 REQUIREMENTS. After the earliest of (i) the
closing of the sale of securities of the Company pursuant to a Registration
Statement, (ii) the registration by the Company of a class of securities under
Section 12 of the Exchange Act, or (iii) the issuance by the Company of an
offering circular pursuant to Regulation A under the Securities Act, the Company
agrees to:
(a) Comply with the requirements of Rule 144(c) under the
Securities Act with respect to current public information about the Company;
(b) use its best efforts to file with the Commission in a
timely manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act (at any time after it has become subject to
such reporting requirements); and
(c) furnish to any holder of Registrable Shares upon request
(i) a written statement by the Company as to its compliance with the
requirements of said Rule 144(c), and the reporting requirements of the
Securities Act and the Exchange Act (at any time after it has become subject to
such reporting requirements), (ii) a copy of the most recent annual or quarterly
report of the Company, and (iii) such, other reports and documents of the
Company as such holder may reasonably request to avail itself of any similar
rule or regulation of the Commission allowing it to sell any such securities
without registration.
- 10 -
<PAGE>
1.11 SELECTION OF UNDERWRITER. In the case of any registration
effected pursuant to this Article I, the Company shall have the right to
designate the managing underwriter in any underwritten offering, subject to the
approval of the holders of a majority of the Registrable Shares requested to be
included in such offering, which approval shall not be unreasonably withheld.
1.12 MERGERS, ETC. The Company shall not, directly or
indirectly, enter into any merger, consolidation, or reorganization in which the
Company shall not be the surviving corporation unless the proposed surviving
corporation shall, prior to such merger, consolidation, or reorganization, agree
in writing to assume the obligations of the Company under this Article I, and
for that purpose references hereunder to "Registrable Shares" shall be deemed to
be references to the securities that each Stockholder would be entitled to
receive in exchange for Registrable Shares under any such merger, consolidation,
or reorganization; PROVIDED, HOWEVER, that the provisions of this Article I
shall not apply in the event of any merger, consolidation, or reorganization in
which the Company is not the surviving corporation if all Stockholders are
entitled to receive in exchange for their Registrable Shares consideration
consisting solely of (i) cash, (ii) securities of the acquiring corporation that
may be immediately sold to the public without registration under the Securities
Act, or (iii) securities of the acquiring corporation that the acquiring
corporation has agreed to register within ninety (90) days of completion of the
transaction for resale to the public pursuant to the Securities Act.
ARTICLE II
TRANSFERS OF CERTAIN RIGHTS
2.1 The rights granted to UAHSF under this Agreement may be
transferred by UAHSF to an affiliate, partner or shareholder of UAHSF or any
transferee who after such transfer holds at least 20% of the UAHSF's Registrable
Shares; PROVIDED, HOWEVER, that the Company is given written notice by the
transferee at the time of such transfer stating the name and address of the
transferee and identifying the securities with respect to which such rights are
being transferred, and that the Company gives its consent to the transfer of
rights to any transferee which is not an affiliate, partner or shareholder,
which consent shall not be unreasonably withheld.
2.2 TRANSFEREES. Any transferee to whom rights under this
Agreement are transferred shall, as a condition to such transfer, deliver to the
Company a written instrument by which such transferee agrees to be bound by the
obligations under this Agreement to the same extent as if such transferee were
UAHSF.
2.3 SUBSEQUENT TRANSFEREES. Any transferee to whom rights are
transferred pursuant to this Section 2 may not again transfer such rights to any
other person or entity, other than as provided in Subsection 2.1 or Subsection
2.2 above.
- 11 -
<PAGE>
ARTICLE III
MISCELLANEOUS RIGHTS
3.1 NO INCONSISTENT AGREEMENTS. The Company will not hereafter
enter into any agreement with respect to its securities which is inconsistent
with or violates the rights granted to the holders of Registrable Shares in this
Agreement.
3.2 ADJUSTMENTS AFFECTING REGISTRABLE SHARES. The Company will
not take any action, or permit any change to occur, with respect to its
securities that would adversely affect the ability of the holders of Registrable
Shares to include such Registrable Shares in a registration undertaken pursuant
to this Agreement or that would adversely affect the marketability of such
Registrable Shares in any such registration (including, without limitation,
effecting a stock split or a combination of shares).
3.3 REMEDIES. Any person having rights under any provision of
this Agreement will be entitled to enforce such rights specifically (without
posting any bond or other security), to recover damages caused by reason of any
breach of any provision of this Agreement and to exercise all other rights
granted by law.
3.4 AMENDMENTS AND WAIVERS. Except as otherwise provided
herein, the provisions of this Agreement may be amended and the Company may take
action herein prohibited, or omit to perform any act herein required to be
performed by it, if, but only if, the Company has obtained the written consent
of holders of at least 2/3 of the Registrable Shares then in existence.
3.5 SUCCESSORS AND ASSIGNS. All covenants and agreements in
this Agreement by or on behalf of any of the parties hereto will bind and inure
to the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not. In addition, irrespective of whether any express
assignment has been made, the provisions of this Agreement that are for the
benefit of purchasers or holders of Registrable Shares are also for the benefit
of, and enforceable by, any subsequent holder permitted by Section 2.1.
3.6 GOVERNING LAW. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Florida.
Each of the Company and each Investor hereby irrevocably and unconditionally
submit to the jurisdiction of the courts of the State of Florida and the United
States of America located in the State of Florida (the "Florida Courts") for any
litigation arising out of or relating to this Agreement and the transactions
contemplated hereby (and agree not to commence any litigation relating thereto
except in such courts), consent to service of process in such Florida Courts,
waive any objection to the laying of venue of any such litigation in Alachua
County, Florida, and agree not to plead or claim in any Florida Court that such
litigation brought therein has been brought in any inconvenient forum.
- 12 -
<PAGE>
3.7 TERM OF REGISTRATION RIGHTS. Notwithstanding anything to
the contrary contained herein, the registration of each holder of Registrable
Shares set forth in Section 1 shall terminate in their entirety on the fifth
anniversary of the date hereof.
3.8 ENTIRE AGREEMENT. This Agreement and the other documents
delivered pursuant hereto constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereof and thereof.
3.9 NOTICES. Any and all notices or elections permitted or
required to be made under this Agreement shall be in writing, signed by the
party giving such notice or election and shall be delivered personally, by
courier or sent by registered or certified mail, return receipt requested, to
the Company and UAHSF at their respective addresses below:
If to the Company to:
Regeneration Technologies, Inc.
One Innovation Drive
Alachua, Florida 32615
Attn: Richard R. Allen
with copy (which shall not constitute notice) to:
Fulbright & Jaworski L.L.P.
666 Fifth Avenue
New York, NY 10103
Attn: Warren J. Nimetz
If to UAHSF to:
University of Alabama Health Services Foundation, P.C.
500 22nd Street South
Birmingham, Alabama 35233
Attention: President
with a copy to:
University of Alabama Health Services Foundation, P.C.
500 22nd Street South
Birmingham, Alabama 35233
Attention: General Counsel
- 13 -
<PAGE>
3.10 SEVERABILITY. In case any provision of this Agreement
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions of this Agreement or any provision of
the other Agreements shall not in any way be affected or impaired thereby.
3.11 TITLES AND SUBTITLES. The titles of the sections and
subsections of this Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.
3.12 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which when so executed shall be deemed an original,
and all such counterparts taken together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, this Agreement has been executed by the
parties hereto as of the day and year first written above.
REGENERATION TECHNOLOGIES, INC.
By:
-----------------------------------------
Name: James M. Grooms
Its: President
UNIVERSITY OF ALABAMA HEALTH
SERVICES FOUNDATION, P.C.
By:
-----------------------------------------
Name:
Title:
- 14 -
