UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
HemaSure, Inc.
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(Name of Issuer)
Common Stock, $.01 par value
--------------------------------------------
(Title of Class of Securities)
423504109
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(CUSIP Number)
Edward C. Wood Peter D. Lyons, Esq.
COBE BCT, Inc. Shearman & Sterling
1201 Oak Street 599 Lexington Avenue
Lakewood, Colorado 80215-4498 New York, NY 10022
Telephone: 800-525-2623 Telephone: 212-848-4000
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
May 3, 1999
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(Date of Event which requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of ss. 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box |_|.
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See ss. 240.13d-7(b) for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
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The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
CUSIP No. 423504109
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1. Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
COBE Laboratories, Inc.
95-2403584
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2. Check the Appropriate Box if a Member of a Group
(a) |_|
(b) |_|
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3. SEC Use Only
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4. Source of Funds (See Instructions)
WC
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5. Check if Disclosure of Legal Proceedings is Required Pursuant to
Item 2(d) or 2(e).
|_|
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6. Citizenship or Place of Organization
Colorado
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7. Sole Voting Power
0
---------------------------------------------
Number of Shares
8. Beneficially Shared Voting Power
Owned
By 4,998,355
Each ---------------------------------------------
9. Reporting Person Sole Dispositive Power
With
0
---------------------------------------------
10. Shared Dispositive Power
4,998,355
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11. Aggregate Amount Beneficially Owned by Each Reporting Person
4,998,355
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12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions)
|_|
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13. Percent of Class Represented by Amount in Row (11)
33%
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14. Type of Reporting Person (See Instructions)
CO
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<PAGE>
CUSIP No. 423504109
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1. Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Gambro AB
- --------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group
(a) |_|
(b) |_|
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3. SEC Use Only
- --------------------------------------------------------------------------------
4. Source of Funds (See Instructions)
AF
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5. Check if Disclosure of Legal Proceedings is Required Pursuant to
Item 2(d) or 2(e).
|_|
- --------------------------------------------------------------------------------
6. Citizenship or Place of Organization
Sweden
- --------------------------------------------------------------------------------
7. Sole Voting Power
0
Number of Shares ---------------------------------------------
8. Beneficially Shared Voting Power
Owned
By 4,998,355
Each ---------------------------------------------
9. Reporting Person Sole Dispositive Power
With
0
---------------------------------------------
10. Shared Dispositive Power
4,998,355
- --------------------------------------------------------------------------------
11. Aggregate Amount Beneficially Owned by Each Reporting Person
4,998,355
- --------------------------------------------------------------------------------
12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions)
|_|
- --------------------------------------------------------------------------------
13. Percent of Class Represented by Amount in Row (11)
33%
- --------------------------------------------------------------------------------
14. Type of Reporting Person (See Instructions)
CO
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<PAGE>
Item 1. Security and Issuer
The class of equity securities to which this joint statement on Schedule
13D relates is the common stock, $.01 par value (the "Common Stock"), of
HemaSure, Inc., a Delaware corporation, with its principal executive offices at
140 Locke Drive, Marlborough, MA 01752 (the "Issuer").
Item 2. Identity and Background
The persons listed in numbers 1 and 2 below are the persons filing this
joint statement.
1. a. Gambro AB ("Gambro AB") is a corporation organized under the laws
of Sweden.
b. Gambro AB is a global medical technology company engaged
principally in the design, development, production, distribution,
sale and service of medical and therapeutic systems and products
in the areas of renal care and blood component technology. The
address of its principal executive office is P.O. Box 10101
Magistratsvagen 16, S-220 10 Lund, Sweden.
c. During the last five years, Gambro AB has not been convicted in
any criminal proceeding.
d. During the last five years, Gambro AB has not been a party to a
civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding is or
was subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation with
respect to such laws.
Information regarding the directors and executive officers of Gambro AB
is set forth on Schedule I attached hereto, which Schedule is incorporated
herein by reference. Except as set forth on Schedule I, all of the directors and
executive officers of Gambro AB are citizens of Sweden. During the last five
years, to the best of the knowledge of Gambro AB, no person named on Schedule I
has been (a) convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors) or (b) a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
is or was subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.
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2. a. COBE Laboratories, Inc. ("COBE") is a Colorado corporation.
b. COBE and its subsidiaries design, develop, manufacture,
distribute, sell and service medical and therapeutic systems for
three medical market segments: nephrology, apheresis and blood
banking. COBE is a wholly owned subsidiary of Gambro AB. COBE's
principal executive offices are located at 1185 Oak Street,
Lakewood, Colorado 80215.
c. During the last five years, COBE has not been convicted in any
criminal proceeding.
d. During the last five years, COBE has not been a party to a civil
proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding is or was subject
to a judgment, decree or final order enjoining future violations
of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to
such laws.
Information regarding the directors and executive officers of COBE is
set forth on Schedule II attached hereto, which Schedule is incorporated herein
by reference. Except as set forth on Schedule II, all of the directors and
executive officers of COBE are citizens of the United States. During the last
five years, to the best of the knowledge of COBE, no person named on Schedule II
has been (a) convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors) or (b) a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
is or was subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration
On May 3, 1999, COBE and the Issuer entered into a Stock Subscription
Agreement (the "Stock Subscription Agreement") pursuant to which COBE acquired
4,500,000 shares of Common Stock from the Issuer at a price of $2.00 per share.
In addition, the Issuer granted to COBE an option (the "Option") to purchase
$3,000,000 of Common Stock, exercisable on or after August 3, 1999 through May
2, 2000, at a price per share of Common Stock to be based upon the average
closing price of the Common Stock as quoted on the OTC bulletin board during the
30 trading days immediately prior to the exercise date. On October 5, 1999, COBE
irrevocably exercised the Option and acquired an additional 498,355 shares of
Common Stock ("Option Shares") on October 19, 1999.
The acquisition of such shares of Common Stock pursuant to the Stock
Subscription Agreement was not conditioned upon any financing arrangements. COBE
utilized internally generated funds to finance the foregoing acquisitions.
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<PAGE>
Item 4. Purpose of Transaction
COBE has acquired 4,500,000 shares of Common Stock pursuant to the Stock
Subscription Agreement, and further entered into a Stockholder's Agreement,
dated May 3, 1999 (the "Stockholder's Agreement"), between the Issuer and COBE
for the purpose of making an investment in the Issuer and not with a present
intention of acquiring control of the Issuer's business. The Stock Subscription
Agreement and Stockholder's Agreement are more fully described in Item 6 hereto.
COBE acquired an additional 498,355 shares of common stock (3% of the aggregate
number of outstanding shares of Common Stock) through the exercise of the Option
on October 19, 1999.
Pursuant to the Stock Subscription Agreement and the Stockholder's
Agreement, the board of directors of the Issuer has resolved to expand its board
from five to seven directors and to elect two designees of COBE to the board of
directors of the Issuer, to serve until the next annual meeting of the
stockholders of the Issuer. Pursuant to the Stock Subscription Agreement, the
Issuer agreed to amend its Articles of Incorporation to increase the number of
authorized shares of Common Stock from 20,000,000 shares to 35,000,000 shares.
Such amendment was effective on September 24, 1999.
Item 5. Interest in Securities of the Issuer
1. Gambro AB
(a)-(b)Following the acquisition of shares of Common Stock pursuant to
the Stock Subscription Agreement and giving effect to the Option Shares acquired
on October 19, 1999, Gambro AB is the beneficial owner of 4,998,355 shares of
Common Stock, representing 33% of the shared voting power of the outstanding
shares of Common Stock. The calculation of the foregoing percentage is based on
the number of shares of Common Stock disclosed in the Issuer's Quarterly Report
on Form 10-Q for the quarterly period ended June 30, 1999 as outstanding as of
August 6, 1999 (and as adjusted to reflect issuance of the Option Shares).
(c) Except as described herein, there have been no transactions by
Gambro AB in securities of the Issuer during the past sixty days.
(d) No one other than Gambro AB or COBE is known to have the right to
receive or the power to direct the receipt of dividends from, or the proceeds
from the sale of, the shares of Common Stock purchased by COBE.
(e) Not applicable.
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<PAGE>
2. COBE Laboratories, Inc.
(a)-(b)Following the acquisition of shares of Common Stock pursuant to
the Stock Subscription Agreement and giving effect to the Option Shares acquired
on October 19, 1999, COBE is the beneficial owner of 4,998,355 shares of Common
Stock, representing 33% of the shared voting power of the outstanding shares of
Common Stock. The calculation of the foregoing percentage is based on the number
of shares of Common Stock disclosed in the Issuer's Quarterly Report on Form
10-Q for the quarterly period ended June 30, 1999 as outstanding as of August 6,
1999 (and as adjusted to reflect the issuance of Option Shares).
(c) Except as described herein, there have been no transactions by COBE
in securities of the Issuer during the past sixty days.
(d) No one other than Gambro AB or COBE is known to have the right to
receive or the power to direct the receipt of dividends from, or the proceeds
from the sale of, the shares of Common Stock purchased by COBE.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understanding of Relationships with
Respect to Securities of the Issuer
(a) The Stock Subscription Agreement
Pursuant to the Stock Subscription Agreement, on May 3, 1999,
COBE purchased 4,500,000 shares of Common Stock from the Issuer at a purchase
price of $2.00 per share. In addition, the Issuer granted to COBE the Option. On
October 5, 1999, COBE irrevocably exercised the Option and acquired an
additional 498,355 shares of Common Stock on October 19, 1999.
Pursuant to the Stock Subscription Agreement, the Issuer agreed
to amend its Articles of Incorporation to increase the number of authorized
shares of Common Stock from 20,000,000 shares to 35,000,000 shares. Such
amendment was effective on September 24, 1999.
The Stock Subscription Agreement is attached to this Schedule 13D
as Exhibit 10.2.
(b) The Stockholder's Agreement
The Stockholder's Agreement provides that COBE will have
representation on the Issuer's board of directors and its representative
committees and contains, among other
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<PAGE>
things, various registration rights and anti-dilution and standstill provisions
customary in such agreements.
The Stockholder's Agreement is attached to this Schedule 13D as
Exhibit 10.3.
(c) Amended and Restated Exclusive Distribution Agreement
In connection with the Stock Subscription Agreement, COBE entered
into an Amended and Restated Exclusive Distribution Agreement with the Issuer.
The amended distribution agreement expands the territory in which COBE will
distribute the Issuer's products to make it worldwide, excluding sales to the
American Red Cross. In addition, the agreement provides for joint efforts
related to the defense of the Issuer's products against intellectual property
claims made by third parties. As in the original agreement, there is a provision
for the development of additional products to be incorporated by COBE into its
automated blood component equipment.
The Amended and Restated Exclusive Distribution Agreement is
attached to this Schedule 13D as Exhibit 10.4.
Item 7. Material to be Filed as Exhibits
Exhibit 10.1 Joint Filing Agreement between Gambro AB and COBE
pursuant to Rule 13d-1(k)(1)(iii) of the United States
Securities Exchange Act of 1934
Exhibit 10.2 The Stock Subscription Agreement
Exhibit 10.3 The Stockholder's Agreement
Exhibit 10.4 Amended and Restated Exclusive Distribution Agreement
All materials to be filed as exhibits to this Schedule 13D are attached hereto.
[Remainder of this page intentionally left blank.
Signatures commence on Page 9.]
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After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: October 19, 1999
GAMBRO AB
By: /s/ Ingmar Magnusson
---------------------------------------------
Name: Ingmar Magnusson
Title: General Counsel
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: October 19, 1999
COBE LABORATORIES, INC.
By: /s/ Kevin M. Smith
---------------------------------------------
Name: Kevin M. Smith
Title: President
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<PAGE>
Schedule I
Directors and Executive Officers of Gambro AB
1. Board of Directors
Members
Claes Dahback
Chairman of Gambro AB
SE-103 32 Stockholm
Sweden
Gosta Gahrton
Professor Emeritus, Karolinska Institute
Hallingsbacken 8 16767 Bromma
Sweden
Peter H. Grassmann
President and Chief Executive Officer of Carl Zeiss
DE-73446 Oberkochen
Germany
German Citizen
Juha P. Kokko
Professor of Medicine and Associate Dean for Clinical Research, Emory University
1364 Clifton Road, Emory University Hospital
Atlanta, Georgia 30322, United States
Mikael Lilius
President and Chief Executive Officer of Gambro AB
P.O. Box 7373 SE-103 91 Stockholm
Sweden
Finnish Citizen
Hakan Mogren
President and Chief Executive Officer of Astra AB
SE-151 85 Sodertalje
Sweden
Sven Nyman
Managing Director of Investor AB
Arsenalsgatan 8C SE-103 32 Stockholm
Sweden
<PAGE>
Bjorn Svedberg
Chairman of Chalmers Institute of Technology,
Chairman of the Royal Swedish Academy of Engineering Sciences
P.O. Box 16066 SE-103 22 Stockholm
Sweden
Anitha Svensson-Grane
Employee Representative, Federation of Salaried Employees to Industry
and Services
Gambro Lundia AB Box 10101 220 10 Lund
Sweden
Karl-Olof Tell
Employee Representative, Swedish Confederation of Trade Unions
Gambro Lundia AB Box 10101 220 10 Lund
Sweden
2. Executive Officers
Mikael Lilius
President and Chief Executive Officer
see Directors, above
Soren Mellstig
Executive Vice President and Head of Renal Care Products
P.O. Box 7373 SE-103 91 Stockholm
Sweden
Mats Wahlstrom
Executive Vice President and Head of Gambro Healthcare, Inc.
225 Union Blvd., Suite 600
Lakewood, CO 80228, United States
Edward C. Wood
President of COBE BCT, Inc.
1201 Oak Street
Lakewood, Colorado 80215-4498, United States
United States Citizen
Lars Fahlen
Senior Vice Presient, Corporate Human Resources
P.O. Box 7373 SE-103 91 Stockholm
Sweden
<PAGE>
Bengt Modeer
Senior Vice President, Corporate Communications
P.O. Box 7373 SE-103 91 Stockholm
Sweden
Leif Smeby
Senior Vice President, Research and Development
Box 10101 Magistratsvagen 22010 Lund
Sweden
Norwegian Citizen
<PAGE>
Schedule II
Directors and Executive Officers of COBE Laboratories, Inc.
1. Board of Directors
Mats Wahlstrom
Chairman of the Board
225 Union Blvd., Suite 600
Lakewood, CO 80228
Swedish Citizen
Kevin M. Smith
President/Treasurer, COBE Laboratories, Inc.
225 Union Blvd., Suite 600
Lakewood, CO 80228
Edward C. Wood, Jr.
Vice President, COBE Laboratories, Inc.
1201 Oak Street
Lakewood, Colorado 80215-4498
Mikael Lilius
President and Chief Executive Officer of Gambro AB
P.O. Box 7373 SE-103 91 Stockholm
Sweden
Finnish Citizen
Soren Mellstig
Executive Vice President of Gambro AB
P.O. Box 7373 SE-103 91 Stockholm
Sweden
Swedish Citizen
2. Executive Officers
Kevin M. Smith
President/Treasurer, COBE Laboratories, Inc.
225 Union Blvd., Suite 600
Lakewood, CO 80228
Ralph Z. Levy, Jr.
Vice President/Secretary/Assistant Treasurer, COBE Laboratories, Inc.
5200 Maryland Way, Suite 300
Brentwood, TN 37027
<PAGE>
Edward C. Wood, Jr.
Vice President, COBE Laboratories, Inc.
1201 Oak Street
Lakewood, CO 80215
Hans Ahlinder
Vice President, COBE Laboratories, Inc.
P.O. Box 7373 SE-103 91 Stockholm
Sweden
Swedish Citizen
Nancy Walla
Vice President, COBE Laboratories, Inc.
225 Union Blvd., Suite 600
Lakewood, CO 80228
Mary Nick
Vice President, COBE Laboratories, Inc.
225 Union Blvd., Suite 600
Lakewood, CO 80228
David Doerr
Assistant Treasurer, COBE Laboratories, Inc.
225 Union Blvd., Suite 600
Lakewood, CO 80228
Monty Price
Assistant Treasurer, COBE Laboratories, Inc.
225 Union Blvd., Suite 600
Lakewood, CO 80228
Bruce Winsor
Assistant Secretary, COBE Laboratories, Inc.
1201 Oak Street
Lakewood, CO 80215
Edna O'Connor
Assistant Secretary, COBE Laboratories, Inc.
1201 Oak Street
Lakewood, CO 80215
Lynn N. Meyer
Assistant Secretary, COBE Laboratories, Inc.
1201 Oak Street
Lakewood, CO 80215
EXHIBIT 10.1
JOINT FILING AGREEMENT
The undersigned hereby agree that the Statement on Schedule 13D, dated
October 20, 1999 ("Schedule 13D"), with respect to the Common Stock, $.01 par
value, of HemaSure, Inc., a Delaware corporation, is, and any amendments thereto
executed by each of us shall be, filed on behalf of each of us pursuant to and
in accordance with the provisions of Rule 13d-1(k) under the United States
Securities Exchange Act of 1934, as amended, and that this Agreement shall be
included as an Exhibit to the Schedule 13D and each such amendment. Each of the
undersigned agrees to be responsible for the timely filing of the Schedule 13D
and any amendments thereto, and for the completeness and accuracy of the
information concerning itself contained therein. This Agreement may be executed
in any number of counterparts, all of which taken together shall constitute one
and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
October 19, 1999.
GAMBRO AB
By /s/ Ingmar Magnusson
--------------------------------------
Name: Ingmar Magnusson
Title: General Counsel
COBE LABORATORIES, INC.
By /s/ Kevin M. Smith
--------------------------------------
Name: Kevin M. Smith
Title: President
================================================================================
--------------------------------------
STOCK SUBSCRIPTION AGREEMENT
--------------------------------------
By and Between
HEMASURE INC.
and
COBE LABORATORIES, INC.
Dated May 3, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS
1.01. Certain Defined Terms...................................................1
1.02. Other Definitions.......................................................4
1.03. Terms Generally.........................................................5
ARTICLE II
SUBSCRIPTION AND SALE
2.01. Subscription and Sale of the Shares.....................................6
2.02. Firm Share Purchase Price...............................................6
2.03. First Closing...........................................................6
2.04. The Option; Option Purchase Price.......................................6
2.05. The Option Closing......................................................7
2.06. Closing Deliveries by the Company.......................................7
2.07. Closing Deliveries by the Purchaser.....................................8
2.08. Other First Closing Deliveries..........................................9
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.01. Organization, Authority and Qualification of the Company;
Subsidiaries..........................................................9
3.02. Capital Stock of the Company; Ownership of the Shares..................10
3.03. No Conflict............................................................10
3.04. Governmental Consents and Approvals....................................11
3.05. SEC Filings; Financial Statements......................................11
3.06. No Undisclosed Liabilities.............................................11
3.07. Conduct of the Business................................................12
3.08. Litigation.............................................................12
3.09. Compliance with Laws...................................................12
3.10. Material Contracts.....................................................12
3.11. Intellectual Property..................................................13
3.12. Year 2000 Compliance...................................................14
3.13. Title to Properties; Absence of Encumbrances...........................14
3.14. Employee Benefit Matters; Labor Matters................................14
3.15. Brokers................................................................15
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Section Page
3.16. Limitations on Representations and Warranties..........................15
3.17. Disclosure Schedule....................................................16
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
4.01. Organization and Authority of the Purchaser............................16
4.02. No Conflict............................................................16
4.03. Governmental Consents and Approvals....................................17
4.04. Investment Purpose.....................................................17
4.05. Status of Shares; Limitations on Transfer and Other Restrictions.......17
4.06. Sophistication and Financial Condition of Purchaser....................17
4.07. Year 2000 Compliance...................................................17
ARTICLE V
ADDITIONAL AGREEMENTS
5.01. Actions Regarding Market...............................................18
5.02. Confidentiality........................................................18
5.03. Public Announcements...................................................18
5.04. Capital Increase.......................................................18
5.05. Further Action.........................................................19
ARTICLE VI
INDEMNIFICATION
6.01. Survival of Representations and Warranties.............................19
6.02. Indemnification........................................................19
6.03. Limits on Indemnification..............................................21
ARTICLE VII
GENERAL PROVISIONS
7.01. Waiver.................................................................21
7.02. Expenses...............................................................22
7.03. Notices................................................................22
7.04. Headings...............................................................23
7.05. Severability...........................................................23
7.06. Entire Agreement.......................................................23
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Section Page
7.07. Assignment.............................................................24
7.08. No Third Party Beneficiaries...........................................24
7.09. Amendment..............................................................24
7.10. Governing Law..........................................................24
7.11. Arbitration............................................................24
7.12. Counterparts...........................................................25
7.13. Specific Performance...................................................25
EXHIBITS
2.06(d) FORM OF OPINION OF THE COMPANY'S COUNSEL
2.07(c)(i) FORM OF OPINION OF INTERNAL COUNSEL OF THE PURCHASER
2.07(c)(ii) FORM OF OPINION OF THE PURCHASER'S OUTSIDE COUNSEL
-iii-
<PAGE>
STOCK SUBSCRIPTION AGREEMENT, dated May 3, 1999, by and
between HEMASURE INC., a Delaware corporation (the "Company"), and COBE
LABORATORIES, INC., a Colorado corporation (the "Purchaser").
W I T N E S S E T H:
WHEREAS, the Company wishes to issue and sell to the
Purchaser, and the Purchaser wishes to purchase from the Company, up to
$12,000,000 of common stock, par value $.01 per share, of the Company ("Common
Stock"), upon the terms and subject to the conditions set forth herein. All
shares of Common Stock which may be purchased pursuant to this Agreement are
collectively referred to as the "Shares"; and
WHEREAS, simultaneously with the execution of this Agreement,
the parties hereto are executing the Stockholder's Agreement (as defined below)
and the Distribution Agreement (as defined below);
NOW, THEREFORE, in consideration of the premises and the
mutual agreements and covenants hereinafter set forth, the Purchaser and the
Company hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this
Agreement, the following terms shall have the following meanings:
"Action" means any claim, action, suit, arbitration, inquiry,
proceeding or investigation by or before any Governmental Authority.
"Affiliate" means, with respect to any specified Person, any
other Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person.
"Agreement" or "this Agreement" means this Stock Subscription
Agreement, dated May 3, 1999, by and between the Company and the Purchaser
(including the Exhibits hereto and the Disclosure Schedule) and all amendments
hereto made in accordance with the provisions of Section 7.09.
"Alliance Agreements" means this Agreement, the Stockholder's
Agreement and the Distribution Agreement.
"Business" means the business of the development and
manufacture of leukoreduction products.
<PAGE>
2
"Business Day" means any day that is not a Saturday, a Sunday
or other day on which banks are required or authorized by law to be closed in
The City of New York.
"Code" means the Internal Revenue Code of 1986, as amended
through the date hereof.
"Company Systems" shall mean all computer, hardware, software,
systems and equipment (including embedded microcontrollers in noncomputer
equipment) embedded within or required to operate the current products of the
Company (i.e., currently distributed, currently supported or subject to valid
agreements requiring the Company to provide support, maintenance, enhancement or
bug fixes), and/or material to or necessary for the Company to carry on the
Business as currently conducted.
"control" (including the terms "controlled by" and "under
common control with"), with respect to the relationship between or among two or
more Persons, means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the affairs or
management of a Person, whether through the ownership of voting securities, as
trustee or executor, by contract or otherwise, including, without limitation,
the ownership, directly or indirectly, of securities having the power to elect a
majority of the board of directors or similar body governing the affairs of such
Person.
"Disclosure Schedule" means the Disclosure Schedule delivered
in connection with this Agreement, dated as of the date hereof, and incorporated
herein by reference.
"Distribution Agreement" means the Amended and Restated
Distribution Agreement, dated the date hereof, between the Company and the
Purchaser.
"Encumbrance" means any security interest, pledge, mortgage,
lien (including, without limitation, environmental and tax liens), charge,
encumbrance, adverse claim, preferential arrangement or restriction of any kind,
including, without limitation, any restriction on the use, voting, transfer,
receipt of income or other exercise of any attributes of ownership, but
excluding Permitted Encumbrances.
"Governmental Authority" means any United States federal,
state, local, supranational or any foreign government, governmental, regulatory
or administrative authority, agency or commission or any court, tribunal, or
judicial or arbitral body.
"Governmental Order" means any order, writ, judgment,
injunction, decree, stipulation, determination or award entered by or with any
Governmental Authority.
"Intellectual Property" means (i) United States, international
and foreign patents, patent applications and statutory invention registrations,
(ii) trademarks, service marks, trade dress, logos, and other source
identifiers, including registrations and applications for registration
<PAGE>
3
thereof, (iii) copyrights, including registrations and applications for
registration thereof, (iv) confidential and proprietary information, including
trade secrets and know-how and (v) material computer software developed by or on
behalf of the Company, or manufactured, distributed, sold, licensed or marketed
by the Company.
"Law" means any federal, state, local or foreign statute, law,
ordinance, regulation, rule, code, order, other requirement or rule of law.
"Leased Real Property" means the real property leased by the
Company, as tenant, together with, to the extent leased by the Company, all
buildings and other structures, facilities or improvements currently or
hereafter located thereon, all fixtures, systems, equipment and items of
personal property of the Company attached or appurtenant thereto, and all
easements, licenses, rights and appurtenances relating to the foregoing.
"Liabilities" means any and all debts, liabilities and
obligations, whether accrued or fixed, absolute or contingent, matured or
unmatured or determined or determinable, including, without limitation, those
arising under any Law (including, without limitation, any Environmental Law),
Action or Governmental Order and those arising under any contract, agreement,
arrangement, commitment or undertaking.
"Material Adverse Effect" means any circumstance, change in,
or effect on the Business, the Company or any Subsidiary that, individually or
in the aggregate with any other circumstances, changes in, or effects on, the
Business, the Company or any Subsidiary is, or would be reasonably expected to
be, materially adverse to the Business, financial condition or results of
operations of the Company and the Subsidiaries, taken as a whole.
"Permitted Encumbrances" means such of the following as to
which no enforcement, collection, execution, levy or foreclosure proceeding
shall have been commenced: (a) liens for taxes, assessments and governmental
charges or levies not yet due and payable which are not in excess of the amount
accrued therefor on the Company Balance Sheet; (b) Encumbrances imposed by law,
such as materialmen's, mechanics', carriers', workmen's and repairmen's liens
and other similar liens arising in the ordinary course of business securing
obligations that (i) are not overdue for a period of more than 30 days and (ii)
are not in excess of $25,000 in the case of a single property or $100,000 in the
aggregate at any time; (c) pledges or deposits to secure obligations under
workers' compensation laws or similar legislation or to secure public or
statutory obligations; and (d) minor survey exceptions, reciprocal easement
agreements and other customary encumbrances on title to real property that (i)
were not incurred in connection with any indebtedness, (ii) do not render title
to the property encumbered thereby unmarketable and (iii) do not, individually
or in the aggregate, materially adversely affect the value or use of such
property for its current and anticipated purposes.
<PAGE>
4
"Person" means any individual, partnership, firm, corporation,
association, trust, unincorporated organization or other entity, as well as any
syndicate or group that would be deemed to be a person under Section 13(d)(3) of
the Exchange Act.
"Purchase Price Bank Account" means a bank account in the
United States to be designated by the Company in a written notice to the
Purchaser at least five Business Days before each Closing.
"Purchaser Systems" shall mean all computer, hardware,
software, systems and equipment (including embedded microcontrollers in
noncomputer equipment) embedded within or required to operate the current
products of the Purchaser (i.e., currently distributed, currently supported or
subject to valid agreements requiring the Purchaser to provide support,
maintenance, enhancement or bug fixes), and/or material to or necessary for the
Purchaser to carry on its business as currently conducted.
"SEC" means the United States Securities and Exchange
Commission.
"Stockholder's Agreement" means the Stockholder's Agreement,
dated the date hereof, by and between the Company and the Purchaser.
"Subsidiaries" means HemaPharm Inc., a Delaware corporation,
HemaSure A/S, a company organized under the laws of the Kingdom of Denmark, and
HemaSure A/B, a company organized under the laws of the Kingdom of Sweden.
"Vendors" means any and all vendors who are unaffiliated with
the Company or the Purchaser, as the case may be, who supply raw materials,
components, spare parts, supplies, goods, merchandise or services to the Company
or the Purchaser, as the case may be.
"Year 2000 Compliant" means that the Company Systems or
Purchaser Systems, as the case may be, provide uninterrupted millennium
functionality in that the Company Systems or Purchaser Systems, as the case may
be, will record, store, process and present calendar dates falling on or after
January 1, 2000, in the same manner and with the same functionality as the
Company Systems or Purchaser Systems, as the case may be, record, store, process
and present calendar dates falling on or before December 31, 1999.
SECTION 1.02. Other Definitions. The meanings of the following
terms can be found in the Sections of this Agreement indicated below:
Term Section
Capital Increase.....................................Section 2.04(b)
Closing..............................................Section 2.05
Closing Date.........................................Section 2.05
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5
COBE.................................................Section 3.01(a)
Common Stock.........................................Recitals
Company..............................................Preamble
Company Balance Sheet................................Section 3.05(b)
Company Benefit Plans................................Section 3.14
Company Loss.........................................Section 6.02(b)
Company SEC Reports..................................Section 3.05(a)
Confidentiality Agreement............................Section 5.02
ERISA................................................Section 3.14(a)
Exchange Act.........................................Section 3.04
Exercise Date........................................Section 2.04(a)
FDA..................................................Section 3.09(a)
Firm Shares..........................................Section 2.01
First Closing........................................Section 2.03
First Closing Date...................................Section 2.03
First Purchase Price.................................Section 2.02
Indemnified Party....................................Section 6.02(c)
Indemnifying Party...................................Section 6.02(c)
IRS..................................................Section 3.14(d)
Licensed Intellectual Property.......................Section 3.11(a)
Loss.................................................Section 6.02(b)
Material Contracts...................................Section 3.10(a)
Multiemployer Plan...................................Section 3.14(b)
Multiple Employer Plan...............................Section 3.14(b)
Option...............................................Section 2.04(a)
Option Closing.......................................Section 2.05
Option Closing Date..................................Section 2.05
Option Purchase Price................................Section 2.04(a)
Option Shares........................................Section 2.04(a)
Owned Intellectual Property..........................Section 3.11(a)
Per Share Option Purchase Price......................Section 2.04(a)
Preferred Stock......................................Section 3.02
Purchase Price.......................................Section 2.04(a)
Purchaser............................................Preamble
Purchaser Loss.......................................Section 6.02(a)
Regulated Products...................................Section 3.09(a)
Securities Act.......................................Section 3.05(a)
Sepracor.............................................Section 2.08
Shares...............................................Recitals
Third Party Claims...................................Section 6.02(c)
SECTION 1.03. Terms Generally. References in this Agreement to
articles, sections, paragraphs, clauses, schedules and exhibits are to articles,
sections, paragraphs, clauses,
<PAGE>
6
schedules and exhibits in or to this Agreement unless otherwise indicated.
Whenever the context may require, any pronoun includes the corresponding
masculine, feminine and neuter forms. Any term defined by reference to any
agreement, instrument or document has the meaning assigned to it whether or not
such agreement, instrument or document is in effect. The words "include",
"includes" and "including" are deemed to be followed by the phrase "without
limitation". Unless the context otherwise requires, any agreement, instrument or
other document defined or referred to herein refers to such agreement,
instrument or other document as from time to time amended, supplemented or
otherwise modified from time to time. Unless the context otherwise requires,
references herein to any Person include its successors and assigns. The words
"shall" and "will" have the same meaning and effect.
ARTICLE II
SUBSCRIPTION AND SALE
SECTION 2.01. Subscription and Sale of the Shares. On the date
hereof, the Company shall sell to the Purchaser, and the Purchaser shall
purchase from the Company, 4,500,000 shares of Common Stock (the "Firm Shares").
SECTION 2.02. Firm Share Purchase Price. The aggregate
purchase price to be paid by the Purchaser to the Company for the Firm Shares is
$9,000,000, payable at the First Closing (as defined below) by wire transfer in
immediately available funds (the "First Purchase Price").
SECTION 2.03. First Closing. The subscription and purchase of
the Firm Shares contemplated by this Agreement is taking place at a closing (the
"First Closing") being held at the offices of Shearman & Sterling, 599 Lexington
Avenue, New York, New York on the date hereof ("First Closing Date").
SECTION 2.04. The Option; Option Purchase Price. (a) Subject
to Section 2.04(b) below, the Company hereby grants to the Purchaser the right
and option (the "Option") to purchase, at the election of the Purchaser,
$3,000,000 (the "Option Purchase Price") in aggregate value of Common Stock
("Option Shares") for a price per share equal to the Per Share Option Purchase
Price. The Option may be exercised by the Purchaser on one occasion at any time
during the period commencing 90 days after the First Closing and expiring on the
first year anniversary date of the First Closing, and the Option must be
exercised in its entirety, if at all. The "Per Share Option Purchase Price"
shall be equal to the average closing price of each share of the Common Stock as
quoted on the OTC bulletin board during the 30 trading days immediately prior to
the date (the "Exercise Date") the Purchaser shall provide irrevocable written
notice to the Company of its intent and agreement to exercise the Option, which
notice shall include the Purchaser's calculation of the number of Option Shares
the Purchaser elects to purchase and the Purchaser's calculation of the Per
Share Option Purchase Price. The Option Purchase Price shall
<PAGE>
7
be payable at the Option Closing (as defined below), if any, by wire transfer in
immediately available funds. Each of the First Purchase Price and the Option
Purchase Price is individually referred to as a "Purchase Price." For so long as
the Option shall remain unexercised without the exercise period of the Option
having expired, the Company shall reserve from time to time, as is reasonably
practicable, such number of shares of its authorized but unissued Common Stock
as shall enable the Company to issue Option Shares to the Purchaser.
(b) Notwithstanding anything herein to the contrary, the
Option shall not be deemed granted, nor may it be exercised, until such time as
the stockholders of the Company duly approve an amendment to the certificate of
incorporation of the Company increasing the number of authorized shares of
Common Stock from 20,000,000 shares to 35,000,000 shares (the "Capital
Increase"), and such amended certificate of incorporation is filed with the
Secretary of State of Delaware.
SECTION 2.05. The Option Closing. The purchase of the Option
Shares pursuant to the Option shall take place at a closing (the "Option
Closing" and each of the First Closing and the Option Closing is referred to
individually as a "Closing") to be held at the offices of Shearman & Sterling,
599 Lexington Avenue, New York, New York at 10:00 A.M. New York time on the
tenth Business Day after the Exercise Date or at such other place or at such
other time or on such other date as the Company and the Purchaser may mutually
agree upon in writing (the day on which the Option Closing takes place being the
"Option Closing Date" and each of the First Closing Date and the Option Closing
Date being referred to individually as a "Closing Date").
SECTION 2.06. Closing Deliveries by the Company. At each
Closing, the Company shall deliver or cause to be delivered to the Purchaser:
(a) a newly issued stock certificate, issued to the Purchaser
and evidencing the Shares being purchased at such Closing;
(b) a receipt for the applicable Purchase Price;
(c) for the First Closing only, a true and complete copy,
certified by the Secretary or an Assistant Secretary of the Company, of
the resolutions duly and validly adopted by the board of directors of
the Company evidencing (i) its authorization of the execution and
delivery of the Alliance Agreements and the consummation of the
transactions contemplated hereby and thereby, including the issuance of
the Firm Shares and the Option Shares (upon exercise of the Option),
(ii) the expansion of the board of directors of the Company from five
to seven directors and the election of the individuals designated by
the Purchaser in writing to the board of directors (which designees
shall be to the reasonable satisfaction of the Company), each to serve
until the next annual meeting of the Company's stockholders and (iii)
the appointment of at least one of the Purchaser's designees to each
committee of the board of directors;
<PAGE>
8
(d) from Battle Fowler LLP, a legal opinion, addressed to the
Purchaser and dated such Closing Date, substantially in the form of
Exhibit 2.06(d) (except that with respect to the Option Closing Battle
Fowler LLP will only be required to deliver the opinion in Paragraph 6
of Exhibit 2.06(b));
(e) for the First Closing only, a copy of (i) the certificate
of incorporation, as amended, of the Company, certified by the
Secretary of State of Delaware, as of a date not earlier than five
Business Days prior to the applicable Closing Date and accompanied by a
certificate of the Secretary or Assistant Secretary of the Company,
dated as of the applicable Closing Date, stating that no amendments
have been made to such certificate of incorporation since such date,
and (ii) the by-laws of the Company, certified by the Secretary or
Assistant Secretary of the Company;
(f) for the First Closing only, good standing certificates for
the Company from the Secretary of State of Delaware dated as of a date
not earlier than five Business Days prior to such Closing Date; and
(g) for the First Closing only, a certificate of the registrar
and transfer agent of the Company, certifying the number of outstanding
shares of Common Stock of the Company as of a date not more than two
Business Days prior to such Closing Date.
SECTION 2.07. Closing Deliveries by the Purchaser. At each
Closing, the Purchaser shall deliver to the Company:
(a) the applicable Purchase Price to the Purchase Price Bank
Account;
(b) a receipt acknowledging delivery of the stock certificate
specified in Section 2.06(a);
(c) for the First Closing only, a legal opinion addressed to
the Company and dated such Closing Date from (i) internal counsel for
the Purchaser, substantially in the form of Exhibit 2.07(c)(i) hereto,
and (ii) Shearman & Sterling, as outside counsel to the Purchaser,
substantially in the form of Exhibit 2.07(c)(ii) hereto;
(d) for the First Closing only, a true and complete copy,
certified by the Secretary or Assistant Secretary of the Purchaser, of
the resolutions duly and validly adopted by the board of directors of
the Purchaser evidencing its authorization of the execution and
delivery of the Alliance Agreements and the consummation of the
transactions contemplated hereby and thereby;
(e) for the First Closing only, a copy of (i) the certificate
of incorporation, as amended, of the Purchaser, certified by the
Secretary of State of Colorado, as of a date not earlier than five
Business Days prior to the applicable Closing Date and accompanied
<PAGE>
9
by a certificate of the Secretary or Assistant Secretary of the
Purchaser, dated as of the applicable Closing Date, stating that no
amendments have been made to such certificate of incorporation since
such date, and (ii) the by-laws of the Purchaser, certified by the
Secretary or Assistant Secretary of the Purchaser; and
(f) for the First Closing only, a good standing certificate
for the Purchaser from the Secretary of State of Colorado as of a date
not earlier than five Business Days prior to such Closing Date.
SECTION 2.08. Other First Closing Deliveries. At the First
Closing, the Company shall cause to be delivered to the Purchaser a side letter
agreement from Sepracor, Inc., a Delaware company ("Sepracor"), addressed to the
Company to the effect that Sepracor will vote its shares of Common Stock
beneficially owned by it in favor of the Capital Increase.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As an inducement to the Purchaser to enter into this
Agreement, the Company hereby represents and warrants to the Purchaser as
follows:
SECTION 3.01. Organization, Authority and Qualification of the
Company; Subsidiaries. (a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and the
Company has all necessary corporate power and authority to enter into each of
this Agreement and the other Alliance Agreements, to carry out its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. The Company is duly qualified to do business and is in good
standing in each jurisdiction in which the properties owned or leased by it or
the operation of its Business makes such qualification necessary, except to the
extent that the failure to be so qualified would not, individually or in the
aggregate, have a Material Adverse Effect. The execution and delivery of this
Agreement and the other Alliance Agreements by the Company, the performance by
the Company of its obligations hereunder and thereunder and the consummation by
the Company of the transactions contemplated hereby and thereby have been duly
authorized by all requisite action on the part of the Company other than, with
respect to the Capital Increase, the approval of the Capital Increase by the
stockholders of the Company and the filing with the Secretary of State of
Delaware of an amended certificate of incorporation of the Company relating to
the Capital Increase. Each of the Alliance Agreements has been duly executed and
delivered by the Company, and (assuming due authorization, execution and
delivery by the Purchaser and COBE BCT, Inc. ("COBE"), as the case may be) each
of the Alliance Agreements constitutes a legal, valid and binding obligation of
the Company enforceable against the Company in accordance with its terms, except
as may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights and
general
<PAGE>
10
principals of equity. The Company is not in violation of any of the provisions
of its certificate of incorporation or by-laws.
(b) The Subsidiaries are the only Persons in which the
Company beneficially owns a 10% or greater equity interest (directly or
indirectly), except as disclosed in Section 3.01(b) of the Disclosure Schedule,
no Subsidiary has any material assets, Liabilities or business activities, and
no Subsidiary, currently or at any time in the past, has owned or leased any
real property.
SECTION 3.02. Capital Stock of the Company; Ownership of the
Shares. As of the date hereof and without giving effect to the consummation of
the transactions contemplated hereby, the authorized capital stock of the
Company consists of 20,000,000 shares of Common Stock and 1,000 shares of
preferred stock, par value $.01 per share, of the Company ("Preferred Stock").
As of the date hereof, (a) (i) 10,421,071 shares of Common Stock are issued and
outstanding, all of which are validly issued, fully paid and nonassessable, (ii)
no shares of Common Stock are held in the treasury of the Company, and (iii)
6,788,028 shares of Common Stock are reserved for issuance pursuant to the
exercise of any rights to purchase, or options, warrants or other securities
convertible into or exchangeable for, Common Stock, including the Option
(assuming a $2.00 Per Share Option Purchase Price), (b) no shares of Preferred
Stock have been issued and are outstanding and (c) 219,860 shares of Common
Stock are authorized for issuance pursuant to the Company Benefit Plans. None of
the issued and outstanding shares of Common Stock was issued in violation of any
preemptive rights. Except for the Company Benefit Plans and the warrants
described above, there are no options, warrants, convertible securities or other
rights, agreements, arrangements or commitments relating to the capital stock of
the Company or obligating the Company to issue or sell any shares of capital
stock of, or any other equity interest in, the Company. There are no outstanding
contractual obligations of the Company to repurchase, redeem or otherwise
acquire any shares of Common Stock or to provide funds to, or make any
investment (in the form of a loan, capital contribution or otherwise) in, any
other Person. Upon consummation of the First Closing as contemplated hereby,
including receipt by the Company of the First Purchase Price, the Firm Shares
owned by Purchaser will be fully paid and nonassessable. Upon consummation of
the Option Closing as contemplated hereby, including receipt by the Company of
the Option Purchase Price, the Option Shares owned by the Purchaser will be
fully paid and nonassessable.
SECTION 3.03. No Conflict. The execution, delivery and
performance of the Alliance Agreements by the Company do not and will not (a)
violate, conflict with or result in the breach of any provision of the charter
or by-laws of the Company, (b) conflict with or violate any Law or Governmental
Order applicable to the Company or any of its assets, properties or businesses,
including, without limitation, the Business, or (c) except as disclosed in
Section 3.03 of the Disclosure Schedule, conflict with, result in any breach of,
constitute a default (or event which with the giving of notice or lapse of time,
or both, would become a default) under, require any consent under, or give to
others any rights of termination, amendment, acceleration, suspension,
revocation or cancellation of, or result in the creation of any Encumbrance on
any of
<PAGE>
11
the assets or properties of the Company pursuant to, any note, bond, mortgage or
indenture, contract, agreement, lease, sublease, license, permit, franchise or
other instrument, obligation or arrangement to which the Company is a party or
by which any of its assets or properties is bound or affected, except, with
respect to clauses (b) and (c), as would not, individually or in the aggregate,
have a Material Adverse Effect.
SECTION 3.04. Governmental Consents and Approvals. The
execution, delivery and performance of the Alliance Agreements by the Company do
not and will not require any consent, approval, authorization or other order of,
action by, filing with or notification to any Governmental Authority, except for
the applicable requirements, if any, of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and except as disclosed in Section 3.04 of the
Disclosure Schedule.
SECTION 3.05. SEC Filings; Financial Statements. (a) Except as
set forth in Section 3.10(a) of the Disclosure Schedule, the Company has filed
all forms, reports and documents required to be filed by it with the SEC since
January 1, 1998 (collectively, the "Company SEC Reports"). As of the respective
dates on which they were filed, (i) the Company SEC Reports complied in all
material respects with the requirements of the Securities Act of 1933, as
amended (together with the rules and regulations promulgated thereunder, the
"Securities Act"), and the Exchange Act, as the case may be, and (ii) none of
the Company SEC Reports contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading.
(b) Each of the consolidated financial statements (including,
in each case, any notes thereto) contained in the Company SEC Reports was
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods indicated (except as may be indicated
in the notes thereto or, in the case of unaudited statements, as permitted by
Form 10-Q and Regulation S-X of the SEC), and each presented fairly, in all
material respects, the consolidated financial position, results of operations
and cash flows of the Company as at the respective dates thereof and for the
respective periods indicated therein, except as otherwise noted therein
(subject, in the case of unaudited statements, to normal and recurring year-end
adjustments that could not be reasonably expected to, individually or in the
aggregate, have a Material Adverse Effect). The balance sheet of the Company
contained in the Company SEC Reports as of December 31, 1998 is hereinafter
referred to as the "Company Balance Sheet."
(c) The Company has no current intention of filing with the
SEC any amendments or modifications on Exchange Act Form 10K-A and is not
currently obligated to file any report on Exchange Act Form 8-K (except as may
be required with respect to the transactions contemplated hereby), pursuant to
the Securities Act or the Exchange Act.
SECTION 3.06. No Undisclosed Liabilities. There are no
Liabilities of the Company which would be required to be reflected on a balance
sheet, or the notes thereto,
<PAGE>
12
prepared in accordance with generally accepted accounting principles, other than
Liabilities (i) reflected or reserved against on the Company Balance Sheet, (ii)
disclosed in Section 3.06 of the Disclosure Schedule or (iii) incurred since the
date of the Company Balance Sheet in the ordinary course of the business,
consistent with the past practices, of the Company and which are not reasonably
likely, individually or in the aggregate, to have a Material Adverse Effect.
SECTION 3.07. Conduct of the Business. Since December 31,
1998, except as contemplated by, or disclosed pursuant to, this Agreement or
disclosed in any SEC Report filed after December 31, 1998, the Company has
conducted the Business only in the ordinary course and in a manner consistent
with past practices.
SECTION 3.08. Litigation. Except as disclosed in Section 3.08
of the Disclosure Schedule or as disclosed in the SEC Reports filed prior to the
date of this Agreement, there are no Actions by or against the Company or any
Affiliate thereof (and relating to the Business or the Company), or affecting
any of the assets of the Company, pending before any Governmental Authority or,
to the knowledge of the Company threatened to be brought by or before any
Governmental Authority. Except as disclosed in Section 3.08 of the Disclosure
Schedule, neither the Company nor any of the assets of the Company is subject to
any Governmental Order (nor, to the knowledge of the Company, are there any such
Governmental Orders threatened to be imposed by any Governmental Authority)
which has or has had, individually or in the aggregate, a Material Adverse
Effect.
SECTION 3.09. Compliance with Laws. Except as disclosed in
Section 3.09 of the Disclosure Schedule, the Company is not in default or
violation of any Law or Governmental Order (including, but not limited to, those
of the Food and Drug Administration (the "FDA") or any nongovernmental
self-regulatory agency and including environmental laws or regulations), except
for such defaults or violations that would not, individually or in the
aggregate, have a Material Adverse Effect. The Company has timely filed or
otherwise provided all registrations, reports, data, and other information and
applications with respect to its medical device, pharmaceutical, consumer,
health care and other governmentally regulated products (the "Regulated
Products") required to be filed with or otherwise provided to the FDA or any
Governmental Authority with jurisdiction over the manufacture, use or sale of
the Regulated Products, and all regulatory licenses or approvals in respect
thereof are in full force and effect, except where the failure to file timely
such registrations, reports, data, information and applications or the failure
to have such licenses and approvals in full force and effect would not,
individually or in the aggregate, have a Material Adverse Effect.
SECTION 3.10. Material Contracts. (a) Except as set forth in
Section 3.10(a) of the Disclosure Schedule, other than as filed as Exhibits to
the SEC Reports, there are no contracts, agreements, leases, licenses or
commitments to which the Company is a party that are material to the Company
("Material Contracts").
<PAGE>
13
(b) Except as disclosed in Section 3.10(b) of the Disclosure
Schedule, each Material Contract is valid and binding on the Company and is in
full force and effect. The Company is not in material breach of, or default
under, any Material Contract.
(c) Except as disclosed in Section 3.10(c) of the Disclosure
Schedule, to the knowledge of the Company, no other party to any Material
Contract is in breach thereof or default thereunder.
SECTION 3.11. Intellectual Property. (a) Section 3.11(a) of
the Disclosure Schedule sets forth a true and complete list of all (i) material
patents and patent applications and other material Intellectual Property, in
each case owned by the Company ("Owned Intellectual Property"), and (ii)
licenses of Intellectual Property to the Company or by the Company to a third
party, in each case that are material to the Business ("Licensed Intellectual
Property"), other than (A) any end-user operating system obtained with the
purchase or license of equipment and (B) any end-user application software, in
each case, that is commonly available.
(b) The Company is the exclusive owner of the entire and
unencumbered right, title and interest in and to each item of Owned Intellectual
Property.
(c) The Owned Intellectual Property of the Company is
subsisting and has not been adjudged invalid or unenforceable in whole or part.
(d) Except as disclosed in Section 3.11(d) of the Disclosure
Schedule, no claims have been asserted, or are pending or, to the knowledge of
the Company, threatened against the Company (i) based upon or challenging or
seeking to deny or restrict the use by the Company of any of the Owned
Intellectual Property or Licensed Intellectual Property, (ii) alleging that any
services provided by, processes used by or products manufactured or sold by the
Company or that the use of Owned Intellectual Property or Licensed Intellectual
Property in the ordinary course of business of the Company infringes upon or
misappropriates any Intellectual Property right of any third party or (iii)
alleging that any Intellectual Property licensed pursuant to the Licensed
Intellectual Property infringes upon any Intellectual Property right of any
third party or is being licensed or sublicensed in conflict with the terms of
any license or other agreement.
(e) Except as disclosed in Section 3.11(e) of the Disclosure
Schedule, the Company has not granted any license or other right to any third
party with respect to the Owned Intellectual Property or Licensed Intellectual
Property, except to the customers of the Company pursuant to written license
agreements entered into in the ordinary course of business.
(f) To the knowledge of the Company (i) there has been no
misappropriation of any material trade secrets or other material confidential
Intellectual Property of the Company by any person, (ii) neither the Company nor
any employee, independent contractor or agent of the Company has misappropriated
any trade secrets or software of any other person in the course of such
performance as an employee, independent contractor or agent, and (iii) no
employee,
<PAGE>
14
independent contractor or agent of the Company is in default or breach of any
term of any employment agreement, nondisclosure agreement,
assignment-of-invention agreement or similar agreement or contract relating in
any way to the protection, ownership, development, use or transfer of
Intellectual Property.
SECTION 3.12. Year 2000 Compliance. The Company has (i)
undertaken an assessment of those Company Systems that could be adversely
affected by a failure to be Year 2000 Compliant and (ii) developed a plan and
time line for rendering such Company Systems Year 2000 Compliant. The Company
has made available for review to the Purchaser copies of all material documents
related to such assessment and plan implementation efforts, including
communications to and from customers and material Vendors and suppliers and all
plans, time lines and cost estimates for rendering the Company Systems Year 2000
Compliant. Based on such review and assessment, all Company Systems are Year
2000 Compliant or will be Year 2000 Compliant as required to avoid having a
Material Adverse Effect.
SECTION 3.13. Title to Properties; Absence of Encumbrances.
(a) Other than the leaseholds created under the Leased Real Property identified
in Section 3.13(a) of the Disclosure Schedule, the Company has no ownership or
leasehold interest in any real property.
(b) The Company has good and valid title to, or, in the case
of leased properties and assets, valid leasehold interests in, all of the
tangible properties and assets, real, personal and mixed, used or held for use
in, or which are necessary to conduct, the Business as currently conducted, free
and clear of any Encumbrances except for Permitted Encumbrances.
SECTION 3.14. Employee Benefit Matters; Labor Matters. (a) For
purposes of this Agreement, "Company Benefit Plans" means (i) all employee
benefit plans (as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) and all bonus, stock option, stock
purchase, restricted stock, incentive, deferred compensation, retiree medical or
life insurance, supplemental retirement, severance or other benefit plans,
programs or arrangements, and all employment, termination, severance or other
contracts or agreements, whether legally enforceable or not, to which the
Company is a party, with respect to which the Company has any obligation or
which are maintained, contributed to or sponsored by the Company for the benefit
of any current or former employee, officer or director of the Company, (ii) each
employee benefit plan for which the Company could incur liability under Section
4069 of ERISA in the event such plan has been or was to be terminated, (iii) any
plan in respect of which the Company could incur liability under Section 4212(c)
of ERISA and (iv) any contracts or arrangements between the Company or any of
its Affiliates and any employee of the Company including, without limitation,
any contracts or arrangements relating to a sale of the Company.
(b) Except for the Company Benefit Plans listed in the
Disclosure Schedule, none of the Company Benefit Plans provides for the payment
of separation, severance, termination or similar-type benefits to any person or
obligates the Company to pay separation,
<PAGE>
15
severance, termination or similar-type benefits solely or partially as a result
of any transaction contemplated by this Agreement and the other Alliance
Agreements.
(c) Each Company Benefit Plan is now and always has been
operated in accordance with its terms and the requirements of all applicable
Laws, including, without limitation, ERISA and the Code, except where such
failure would not, individually or in the aggregate, have a Material Adverse
Effect. The Company has performed all obligations required to be performed by it
under, is not in any respect in default under or in violation of, and has no
knowledge of any default or violation by any party to, any Company Benefit Plan,
except where such failure to perform obligations, default or violation would
not, individually or in the aggregate, have a Material Adverse Effect. No
action, claim or proceeding is pending or, to the knowledge of the Company,
threatened with respect to any Company Benefit Plan (other than claims for
benefits in the ordinary course) and, to the knowledge of the Company, no fact
or event exists that could give rise to any material action, claim or
proceeding.
(d) Each Company Benefit Plan that is intended to be qualified
under Section 401(a) of the Code has received a favorable determination letter
from the Internal Revenue Service ("IRS") and each trust established in
connection with any Company Benefit Plan which is intended to be exempt from
federal income taxation under Section 501(a) of the Code has received a
determination letter from the IRS that it is so exempt.
(e) The Company has not incurred any Liability under, arising
out of or by operation of Title IV of ERISA (other than liability for premiums
to the Pension Benefit Guaranty Corporation arising in the ordinary course),
including, without limitation, any Liability in connection with (i) the
termination or reorganization of any employee benefit plan subject to Title IV
of ERISA or (ii) the withdrawal from any Multiemployer Plan or Multiple Employer
Plan, and no fact or event exists which could give rise to any such Liability.
SECTION 3.15. Brokers. No broker, finder or investment banker
is entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Company.
SECTION 3.16. Limitations on Representations and Warranties.
Except for the representations and warranties expressly contained in this
Agreement and the other Alliance Agreements, neither the Company nor any other
person or entity makes any representation or warranty to the Purchaser, express
or implied, and the Company hereby disclaims any such representation or
warranty, whether by the Company or any of its agents, brokers or
representatives or any other person or entity, notwithstanding the delivery or
disclosure to the Purchaser or any of its officers, directors, employees, agents
or representatives or any other person or entity of any document or other
information by the Company or any of its agents, brokers or representatives or
any other person or entity. In addition, if, to the Purchaser's actual
knowledge, any of the representations and warranties set forth in this Agreement
are not true as
<PAGE>
16
of any Closing, and the Purchaser elects nonetheless to close, the Purchase
shall be deemed to have waived any claim for breach of such representation and
warranty.
SECTION 3.17. Disclosure Schedule. Any event, fact or
circumstance described in any section of the Disclosure Schedule shall be deemed
a disclosure for purposes of all other portions of the Disclosure Schedule,
provided the relevance of the disclosure to such other portions can be
reasonably discerned from the applicable section of the Disclosure Schedule.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
As an inducement to the Company to enter into this Agreement,
the Purchaser hereby represents and warrants to the Company as follows:
SECTION 4.01. Organization and Authority of the Purchaser. The
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of the State of Colorado. The Purchaser has all necessary
corporate power and authority to enter into this Agreement and the other
Alliance Agreements to which it is a party, to carry out its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement and the other Alliance
Agreements by the Purchaser, the performance by the Purchaser of its obligations
hereunder and thereunder and the consummation by the Purchaser of the
transactions contemplated hereby and thereby have been duly authorized by all
requisite action on the part of the Purchaser. This Agreement and the other
Alliance Agreements have been duly executed and delivered by the Purchaser, and
(assuming due authorization, execution and delivery by the Company) constitute
legal, valid and binding obligations of the Purchaser enforceable against the
Purchaser in accordance with their terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights and general principals of
equity.
SECTION 4.02. No Conflict. Assuming the making and obtaining
of all filings, notifications, consents, approvals, authorizations and other
actions referred to in Section 4.03, except as may result from any facts or
circumstances relating solely to the Company, the execution, delivery and
performance of the Alliance Agreements by the Purchaser does not and will not
(a) violate, conflict with or result in the breach of any provision of the
certificate of incorporation or by-laws of the Purchaser, (b) conflict with or
violate any Law or Governmental Order applicable to the Purchaser or (c)
conflict with, or result in any breach of, constitute a default (or event which
with the giving of notice or lapse or time, or both, would become a default)
under, require any consent under, or give to others any rights of termination,
amendment, acceleration, suspension, revocation, or cancellation of, or result
in the creation of any Encumbrance on any of the assets or properties of the
Purchaser pursuant to, any note, bond, mortgage or indenture, contract,
agreement, lease, sublease, license, permit, franchise or other
<PAGE>
17
instrument or arrangement to which the Purchaser is a party or by which any of
such assets or properties are bound or affected which, with respect to clauses
(b) and (c) above would have a material adverse effect on the ability of the
Purchaser to consummate the transactions contemplated by the Alliance
Agreements.
SECTION 4.03. Governmental Consents and Approvals. The
execution, delivery and performance of the Alliance Agreements by the Purchaser
do not and will not require any consent, approval, authorization or other order
of, action by, filing with, or notification to, any Governmental Authority.
SECTION 4.04. Investment Purpose. The Purchaser is acquiring
the Shares for its own account solely for the purpose of investment and not with
a view to, or for offer or sale in connection with, any distribution thereof.
SECTION 4.05. Status of Shares; Limitations on Transfer and
Other Restrictions. The Purchaser understands that the Shares have not been and
will not be registered under the Securities Act or under any state securities
laws (other than in accordance with the Stockholder's Agreement) and are being
offered and sold in reliance upon federal and state exemptions for transactions
not involving any public offering and that the Shares have not been approved or
disapproved by the SEC or by any other federal or state agency. The Purchaser
further understands that such exemption depends in part upon, and such Shares
are being sold in reliance on, the representations and warranties set forth in
this Article IV. The Purchaser understands that (i) none of the Shares may be
sold, transferred or assigned unless registered by the Company pursuant to the
Securities Act and any applicable state securities laws, or unless an exemption
therefrom is available, and, accordingly, it may not be possible for the
Purchaser to liquidate its investment in the Shares, and it agrees not to sell,
assign or otherwise transfer or dispose of any Shares unless such Shares have
been so registered or an exemption from registration is available, and (ii) the
Shares are subject to certain restrictions on transfer and voting, as set forth
in the Stockholder's Agreement.
SECTION 4.06. Sophistication and Financial Condition of
Purchaser. The Purchaser represents and warrants to the Company that it is an
"Accredited Investor" as defined in Regulation D under the Securities Act and
that it considers itself to be an experienced and sophisticated investor and to
have such knowledge and experience in financial and business matters as are
necessary to evaluate the merits and risks of an investment in the Shares. The
Purchaser also represents it has not been organized for the sole purpose of
acquiring the Shares. The Purchaser has been furnished access to such
information and documents as it has requested and has been afforded an
opportunity to ask questions of and receive answers from representatives of the
Company concerning the terms and conditions of this Agreement and the purchase
of the Shares contemplated hereby.
SECTION 4.07. Year 2000 Compliance. The Purchaser has (i)
undertaken an assessment of those Purchaser Systems that could be adversely
affected by a failure to be Year
<PAGE>
18
2000 Compliant and (ii) developed a plan and time line for rendering such
Purchaser Systems Year 2000 Compliant. The Purchaser has made available for
review to the Company copies of all material documents related to such
assessment and plan implementation efforts, including communications to and from
customers and material Vendors and suppliers and all plans, time lines and cost
estimates for rendering the Purchaser Systems Year 2000 Compliant. Based on such
review and assessment, all Purchaser Systems are Year 2000 Compliant or will be
Year 2000 Compliant as required to avoid having a material adverse effect on the
Purchaser's ability to perform any of its obligations under the Alliance
Agreements.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Actions Regarding Market. Prior to the exercise
of the Option, the Company shall not take any action outside the ordinary course
of business which would reasonably be expected to cause or result in
stabilization or to influence the price of any security of the Company in
connection with the sale of the Shares, except as may be approved by the board
of directors of the Company.
SECTION 5.02. Confidentiality. Notwithstanding anything herein
to the contrary, the Confidentiality Agreement dated November 12, 1997, as
amended (the "Confidentiality Agreement"), between the Company and COBE shall
remain in full force and effect in accordance with its terms.
SECTION 5.03. Public Announcements. The initial press release
relating to this Agreement shall be a joint press release the text of which has
been agreed to by each of the Purchaser and the Company. Thereafter, unless
otherwise required by applicable Law, each of the Purchaser and the Company
shall use commercially reasonable efforts to consult with the other before
issuing any press release or otherwise making any organized, pre-arranged or
pre-scheduled public statements with respect to any of the Alliance Agreements
or any of the other transactions hereby or thereby.
SECTION 5.04. Capital Increase. The Company shall use its best
efforts and take all actions permitted by Law to (a) call and hold an annual
meeting of the stockholders of the Company as expeditiously as possible for the
purpose of voting upon the Capital Increase; (b) cause the board of directors of
the Company to recommend, and not withdraw its recommendation, to the
stockholders to vote in favor of the Capital Increase; and (c) upon any approval
by the stockholders of the Company of the Capital Increase, expeditiously file
an amended certificate of incorporation of the Company relating to the Capital
Increase with the Secretary of State of Delaware.
<PAGE>
19
SECTION 5.05. Further Action. Each of the parties hereto shall
use all reasonable efforts to take, or cause to be taken, all appropriate
action, do or cause to be done all things necessary, proper or advisable under
applicable Law, and execute and deliver such documents and other papers, as may
be required to carry out the provisions of the Alliance Agreements and
consummate and make effective the transactions contemplated by the Alliance
Agreements.
ARTICLE VI
INDEMNIFICATION
SECTION 6.01. Survival of Representations and Warranties. The
representations and warranties of the respective parties contained in this
Agreement and all statements contained in this Agreement and the Disclosure
Schedule shall survive until May 15, 2000. If written notice of a claim has been
given prior to the expiration of the applicable representations and warranties
by either party, then the relevant representations and warranties of the other
party shall survive as to such claim, until such claim has been finally
resolved.
SECTION 6.02. Indemnification. (a) The Purchaser, its
Affiliates and its successors and assigns and the officers, directors, employees
and agents of the Purchaser, its Affiliates and its successors and assigns shall
be indemnified and held harmless by the Company for any and all Liabilities,
losses, damages, claims, costs and expenses, interest, awards, judgments and
penalties (including, without limitation, reasonable attorneys' fees and
expenses) actually suffered or incurred by them (including, without limitation,
any Action brought or otherwise initiated by any of them) (hereinafter a
"Purchaser Loss"), arising out of or resulting from:
(i) the breach of any representation or warranty made by the
Company contained in this Agreement; or
(ii) the breach of any covenant or agreement by the Company
contained in this Agreement.
To the extent that the Company's undertakings set forth in this Section 6.02(a)
may be unenforceable, the Company shall contribute the maximum amount that it is
permitted to contribute under applicable Law to the payment and satisfaction of
all Purchaser Losses incurred by the Purchaser.
(b) The Company, its Affiliates and its successors and assigns
and the officers, directors, employees and agents of the Company, its Affiliates
and its successors and assigns shall be indemnified and held harmless by the
Purchaser for any and all Liabilities, losses, damages, claims, costs and
expenses, interest, awards, judgments and penalties (including, without
limitation, reasonable attorneys' fees and expenses) actually suffered or
incurred by them
<PAGE>
20
(including, without limitation, any Action brought or otherwise initiated by any
of them) (hereinafter a "Company Loss"; and each of a Company Loss and Purchaser
Loss is hereinafter referred to as a "Loss" with respect to such party), arising
out of or resulting from:
(i) the breach of any representation or warranty made by the
Purchaser contained in this Agreement; or
(ii) the breach of any covenant or agreement by the Purchaser
contained in this Agreement.
To the extent that the Purchaser's undertakings set forth in this Section
6.02(b) may be unenforceable, the Purchaser shall contribute the maximum amount
that it is permitted to contribute under applicable Law to the payment and
satisfaction of all Company Losses incurred by the Company.
(c) Whenever a claim shall arise for indemnification under
this Article VI, the party entitled to indemnification (the "Indemnified Party")
shall give notice to the other party (the "Indemnifying Party") of any matter
that the Indemnified Party has determined has given or could give rise to a
right of indemnification under this Agreement promptly, but in no event later
than 30 days, except with respect to any claim exceeding, or potential Loss
reasonably likely to exceed, $250,000, in which cases such notice shall not be
later than 10 days, stating the amount of the Loss, if known, and method of
computation thereof, and containing a reference to the provisions of this
Agreement in respect of which such right of indemnification is claimed or
arises. The obligations and Liabilities of the Indemnifying Party under this
Article VI with respect to Losses arising from claims of any third party which
are subject to the indemnification provided for in this Article VI ("Third Party
Claims") shall be governed by and contingent upon the following additional terms
and conditions: if an Indemnified Party shall receive notice of any Third Party
Claim, the Indemnified Party shall give the Indemnifying Party notice of such
Third Party Claim following receipt by the Indemnified Party of such notice in
the time frame provided above; provided, however, that the failure to provide
such notice shall not release the Indemnifying Party from any of its obligations
under this Article VI except to the extent the Indemnifying Party is materially
prejudiced by such failure and shall not relieve the Indemnifying Party from any
other obligation or Liability that it may have to any Indemnified Party
otherwise than under this Article VI. If the Indemnifying Party acknowledges in
writing its obligation to indemnify the Indemnified Party hereunder against any
Losses that may result from such Third Party Claim, then the Indemnifying Party
shall be entitled to assume and control the defense of such Third Party Claim at
its expense and through counsel of its choice if it gives notice of its
intention to do so to the Indemnified Party within ten days of the receipt of
such notice from the Indemnified Party; provided, however, that if there exists
or is reasonably likely to exist a conflict of interest that would make it
inappropriate in the judgment of the Indemnified Party, in its reasonable
discretion, for the same counsel to represent both the Indemnified Party and the
Indemnifying Party, then the Indemnified Party shall be entitled to retain its
own counsel at the expense of the Indemnifying Party. In the event the
Indemnifying Party exercises the right to undertake any such defense
<PAGE>
21
against any such Third Party Claim as provided above, the Indemnified Party
shall cooperate with the Indemnifying Party in such defense and make available
to the Indemnifying Party, at the Indemnifying Party's expense, all witnesses,
pertinent records, materials and information in the Indemnified Party's
possession or under the Indemnified Party's control relating thereto as is
reasonably required by the Indemnifying Party. Similarly, in the event the
Indemnified Party is, directly or indirectly, conducting the defense against any
such Third Party Claim, the Indemnifying Party shall cooperate with the
Indemnified Party in such defense and make available to the Indemnified Party,
at the Indemnifying Party's expense, all such witnesses, records, materials and
information in the Indemnifying Party's possession or under the Indemnifying
Party's control relating thereto as is reasonably required by the Indemnified
Party. No such Third Party Claim may be settled by the Indemnifying Party
without the prior written consent of the Indemnified Party, which consent shall
not be unreasonably withheld or delayed.
SECTION 6.03. Limits on Indemnification. (a) Notwithstanding
anything to the contrary contained in this Agreement, the maximum amount of
indemnifiable Losses which may be recovered from the Company arising out of or
resulting from the causes enumerated in Section 6.02(a) shall be (x) prior to
the Option Closing, if any, $4,500,000 and (y) following the Option Closing, if
any $6,000,000. Notwithstanding any provision of this Agreement, for the
avoidance of doubt, the parties expressly acknowledge and agree that the
indemnification provisions set forth in the Distribution Agreement are not
affected in any way by this Agreement, including, without limitation, by any
provision of this Article VI, and remain in full force and effect in accordance
with the terms of the Distribution Agreement.
(b) Notwithstanding anything herein to the contrary, in no
event shall the Company or the Purchaser indemnify hereunder the other from and
against any facts or circumstances relating to their respective performance of
any of their respective obligations under the Distribution Agreement or
otherwise in respect of matters, directly or indirectly, relating to the
Distribution Agreement.
(c) Notwithstanding anything to the contrary elsewhere in this
Agreement, Losses shall not include, and no Indemnifying Party shall, in any
event, be liable to any other party for, any consequential, punitive or special
damages (including, but not limited to, damages for lost profits).
ARTICLE VII
GENERAL PROVISIONS
SECTION 7.01. Waiver. The Company and the Purchaser may (a)
extend the time for the performance of any of the obligations or other acts of
the other party, (b) waive any inaccuracies in the representations and
warranties of the other party contained herein or in any document delivered by
the other party pursuant hereto or (c) waive compliance with any of the
<PAGE>
22
agreements or conditions of the other party contained herein. Any such extension
or waiver shall be valid only if set forth in an instrument in writing signed by
the party to be bound thereby. Any waiver of any term or condition shall not be
construed as a waiver of any subsequent breach or a subsequent waiver of the
same term or condition, or a waiver of any other term or condition, of this
Agreement. The failure of any party to assert any of its rights hereunder shall
not constitute a waiver of any of such rights.
SECTION 7.02. Expenses. Except as otherwise specified in this
Agreement, all costs and expenses, including, without limitation, fees and
disbursements of counsel, financial advisors and accountants, incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such costs and expenses.
SECTION 7.03. Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given or
made (and shall be deemed to have been duly given or made upon receipt) by
delivery in person, by courier service, by cable, by telecopy, by telegram, by
telex or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the following addresses (or at such
other address for a party as shall be specified in a notice given in accordance
with this Section 7.03):
(a) if to the Company:
HemaSure Inc.
140 Locke Drive
Marlborough, MA 01752
Fax: 508-485-6045
Attention: President and Chief Executive Officer
with a copy to:
Battle Fowler LLP
Park Avenue Tower
75 East 55th Street
New York, NY 10022-3205
Fax: 212-339-9150
Attention: Luke P. Iovine, III, Esq.
<PAGE>
23
(b) if to the Purchaser:
COBE Laboratories, Inc.
1201 Oak Street
Lakewood, CO 80215-4498
Fax: 303-231-4151
Attention: Edward C. Wood
with a copy to:
Legal Department
COBE Laboratories, Inc.
1201 Oak Street
Lakewood, CO 80215
Telecopier: (303) 205-2519
and
Shearman & Sterling
599 Lexington Avenue
New York, NY 10022
Telecopy: 212-848-7179
Attention: Peter D. Lyons, Esq.
and Kenneth A. Gerasimovich, Esq.
SECTION 7.04. Headings. The descriptive headings contained in
this Agreement are for convenience of reference only and shall not affect in any
way the meaning or interpretation of this Agreement.
SECTION 7.05. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any Law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner in
order that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
SECTION 7.06. Entire Agreement. This Agreement and the other
Alliance Agreements constitute the entire agreement of the parties hereto with
respect to the subject matter hereof and thereof and supersedes all prior
agreements and undertakings, both written and
<PAGE>
24
oral, between the Company and the Purchaser with respect to the subject matter
hereof and thereof.
SECTION 7.07. Assignment. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties; provided, however, neither party hereto shall assign or delegate any of
the rights or obligations created under this Agreement without the prior written
consent of the other party.
SECTION 7.08. No Third Party Beneficiaries. Except for the
provisions of Article VI relating to Indemnified Parties, this Agreement shall
be binding upon and inure solely to the benefit of the parties hereto and their
permitted assigns and nothing herein, express or implied, is intended to or
shall confer upon any other Person any legal or equitable right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement.
SECTION 7.09. Amendment. This Agreement may not be amended or
modified except (a) by an instrument in writing signed by, or on behalf of, the
Company and the Purchaser or (b) by a waiver in accordance with Section 7.01.
SECTION 7.10. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York, excluding
(to the greatest extent permissible by law) any rule of law that would cause the
application of the laws of any jurisdiction other than the State of New York,
without regard to principles of conflict of law.
SECTION 7.11. Arbitration. (a) If a dispute arises from or
relates to this Agreement or the breach thereof, whether of law or fact, of any
nature whatsoever, and such dispute cannot be settled through direct discussions
between the parties, the parties agree to endeavor first to settle the dispute
in an amicable manner by mediation administered by the American Arbitration
Association under its Commercial Mediation Rules before resorting to litigation.
Mediation shall take place in New York, New York. If the dispute cannot be
resolved within 60 days of the initiation thereof by such party, any party may
initiate arbitration in accordance with the provisions of Section 7.11(b) below.
(b) All disputes arising under this Agreement that cannot be
amicably resolved under Section 7.11(a) above, shall be settled by binding
arbitration. Judgment upon the award rendered may be entered in any court in the
New York, New York metropolitan area. Each party agrees to the following
arbitration procedures:
(i) Any party requesting arbitration shall serve a written
demand for arbitration on another party. The demand shall set forth in
reasonable detail a statement of the nature of the dispute, the amount
involved and the remedies sought. No later than 20 calendar days after
a demand for arbitration is served, the parties shall jointly select
and appoint a retired judge of the Courts of the State of New York to
act as the arbitrator. In the event that the parties do not agree on
the selection of an arbitrator, the party seeking
<PAGE>
25
arbitration shall apply to the United States District Court for the
Southern District of New York for appointment of a retired judge to
serve as arbitrator.
(ii) No later than ten calendar days after appointment of an
arbitrator, the parties shall jointly prepare and submit to the
arbitrator a set of rules for the arbitration. In the event that the
parties cannot agree on the rules for the arbitration, the arbitrator
shall establish the rules. No later than ten calendar days after the
arbitrator is appointed, such arbitrator shall arrange for a hearing to
commence on a mutually convenient date. The hearing shall commence no
later than 120 calendar days after the arbitrator is appointed and
shall continue from day to day until completed.
(iii) The arbitrator shall issue his or her award in writing
no later than 20 calendar days after the conclusion of the hearing. The
arbitration award shall be final and binding regardless of whether any
party fails or refuses to participate in the arbitration. The
arbitrator is empowered to hear and determine all disputes between the
parties hereto concerning the subject matter of this Agreement, and the
arbitrator may award money damages (but specifically not punitive
damages), injunctive relief, rescission, restitution, costs, and
attorneys' fees. The arbitrator shall not have the power to amend this
Agreement in any respect.
(iv) In the event that any party serves a proper demand for
arbitration under this Agreement, all parties may pursue discovery in
accordance with the Rules of Civil Procedure of the State of New York
the provisions of which are incorporated herein by reference, with the
following exceptions: (A) the parties hereto may conduct all discovery,
including depositions for discovery purposes, without leave of the
arbitrator; and (B) all discovery shall be completed no later than the
commencement of the arbitration hearing or 120 calendar days after the
date that a proper demand for arbitration is served, whichever occurs
earlier, unless upon a showing of good cause the arbitrator extends or
shortens that period.
SECTION 7.12. Counterparts. This Agreement may be executed in
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
SECTION 7.13. Specific Performance. The parties hereto agree
that irreparable damage would occur in the event any provision of this Agreement
was not performed in accordance with the terms hereof and that the parties shall
be entitled to specific performance of the terms hereof, in addition to any
other remedy at law or equity.
<PAGE>
26
IN WITNESS WHEREOF, the Company and the Purchaser have caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
HEMASURE INC.
By: /s/ John F. McGuire, III
--------------------------------------
Name: John F. McGuire, III
Title: President
COBE LABORATORIES, INC.
By: /s/ Edward C. Wood, Jr.
--------------------------------------
Name: Edward C. Wood, Jr.
Title: Vice President
================================================================================
STOCKHOLDER'S AGREEMENT
By and Between
HEMASURE INC.
and
COBE LABORATORIES, INC.
Dated May 3, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions.....................................................1
ARTICLE II
GOVERNANCE
SECTION 2.01. Board Representation............................................3
SECTION 2.02. Resignations and Replacements...................................4
SECTION 2.03. Committees......................................................4
ARTICLE III
VOTING OBLIGATIONS
SECTION 3.01. Voting Obligations..............................................4
ARTICLE IV
STANDSTILL AND TRANSFER PROVISIONS
SECTION 4.01. Standstill Period...............................................5
SECTION 4.02. Transfer Restrictions...........................................5
SECTION 4.03. Acquisition of Additional Shares; Other Restrictions............6
SECTION 4.04. Company Rights of First Negotiation; Permitted Sales............7
SECTION 4.05. Stockholder Rights of First Notice..............................8
SECTION 4.06. Anti-Dilutive Rights............................................8
ARTICLE V
REGISTRATION RIGHTS
SECTION 5.01. Restrictive Legend.............................................10
SECTION 5.02. Notice of Proposed Transfer....................................10
SECTION 5.03. Required Registrations.........................................11
SECTION 5.04. Incidental Registration........................................13
SECTION 5.05. Shelf Registration.............................................13
i
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SECTION 5.06. Obligations of the Company.....................................14
SECTION 5.07. Furnish Information............................................17
SECTION 5.08. Expenses of Registration.......................................17
SECTION 5.09. Underwriting Requirements......................................17
SECTION 5.10. Indemnification................................................17
SECTION 5.11. Transfer of Registration Rights................................20
SECTION 5.12. Rule 144 Information...........................................20
SECTION 5.13. Limitations on Registration Rights.............................21
ARTICLE VI
GENERAL PROVISIONS
SECTION 6.01. Waiver.........................................................21
SECTION 6.02. Expenses.......................................................21
SECTION 6.03. Notices........................................................22
SECTION 6.04. Headings.......................................................23
SECTION 6.05. Severability...................................................23
SECTION 6.06. Entire Agreement...............................................23
SECTION 6.07. Assignment.....................................................23
SECTION 6.08. No Third Party Beneficiaries...................................24
SECTION 6.09. Amendment......................................................24
SECTION 6.10. Governing Law..................................................24
SECTION 6.11. Arbitration....................................................24
SECTION 6.12. Counterparts...................................................25
SECTION 6.13. Specific Performance...........................................25
ANNEX A - GENERAL FORM OF STANDSTILL AND VOTING AGREEMENT FOR
PERMITTED TRANSFEREES
ii
<PAGE>
STOCKHOLDER'S AGREEMENT
STOCKHOLDER'S AGREEMENT, dated May 3, 1999 (this
"Agreement"), by and between HEMASURE INC., a Delaware corporation (the
"Company"), and COBE LABORATORIES, INC., a Colorado corporation ("COBE" or the
"Stockholder").
WHEREAS, the Company and COBE have entered into the Stock
Subscription Agreement, dated the date hereof (the "Stock Subscription
Agreement"), pursuant to which the Company is issuing to the Stockholder, and
the Stockholder is purchasing from the Company, common stock, par value $ .01
per share, of the Company ("Common Stock"), upon the terms set forth in the
Stock Subscription Agreement; and
WHEREAS, the Company and the Stockholder wish to enter into
this Agreement to set forth their agreement as to the matters set forth herein
with respect to, among other things, representation on the Company's Board of
Directors (the "Board"), the sale of securities by the Company and the holding,
acquisition and Transfer (as defined below) of the Common Stock by the
Stockholder;
NOW, THEREFORE, in consideration of these premises, the
mutual agreements and covenants hereinafter set forth, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Company and the Stockholder hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. (a) Unless otherwise defined in
this Agreement, capitalized terms are used herein as defined in the Stock
Subscription Agreement.
(b) As used in this Agreement, the following terms shall have
the following meanings:
"Beneficially Own" has the meaning set forth in Rule 13d-3,
as in effect on the date hereof, under the Exchange Act.
"Director" means a member of the Board.
"Fully Diluted Basis" means, in respect of the Common Stock,
the method of calculating the number of shares of Common Stock issued
and outstanding on an applicable measurement date, pursuant to which
the number of shares of Common Stock issued and outstanding on any
such date are aggregated with the number of shares of
<PAGE>
Common Stock issuable on such date upon exercise or conversion of any other
security of the Company outstanding on such date (including employee stock
options issued pursuant to Company Benefit Plans).
"Register", "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement
or similar document with the SEC in compliance with the Securities Act
and the declaration or ordering of effectiveness by the SEC of such
registration statement or document.
"Registrable Stock" shall mean any Shares purchased by the
Stockholder pursuant to the Stock Subscription Agreement or Section
4.06(a) of this Agreement. For purposes of this Agreement, any
Registrable Stock shall cease to be Registrable Stock when (w) a
registration statement covering such Registrable Stock has been
declared effective and such Registrable Stock has been disposed of
pursuant to such effective registration statement, (x) such Registrable
Stock is sold by a Person in a transaction in which the rights under
the provisions of Article V are not assigned, (y) such Registrable
Stock may be sold pursuant to Rule 144(k) (or any similar provision
then in force, but not Rule 144(A)) or in a single transaction pursuant
to Rule 144(e) (or its successor) under the Securities Act without
registration under the Securities Act or (z) such Registrable Stock is
sold, transferred or otherwise disposed of in any manner to any Person
or entity which, by virtue of this Agreement, is not entitled to the
registration rights provided by this Agreement.
"Stockholder Director" means a Director designated by the
Stockholder pursuant to this Agreement.
(c) The following terms have the meanings set forth in the
Sections set forth below:
Term Location
- ---- --------
Agreement.......................................................Preamble
Anti-Dilutive Rights............................................ss. 4.06(a)
Board...........................................................Recitals
COBE............................................................Preamble
Common Stock....................................................Recitals
Company.........................................................Preamble
Departing Stockholder Director..................................ss. 2.02(a)
Maintenance Shares..............................................ss. 4.06(a)
Permitted Transferee............................................ss. 4.02(a)
Proposed Transferee.............................................ss. 4.04(a)(ii)
Shelf Registration..............................................ss. 5.05(a)
<PAGE>
3
Term Location
- ---- --------
Standstill Period...............................................ss. 4.01
Stock Subscription Agreement....................................Recitals
Stockholder.....................................................Preamble
Transfer........................................................ss. 4.02(a)
(d) References in this Agreement to articles, sections,
paragraphs, clauses, schedules and exhibits are to articles, sections,
paragraphs, clauses, schedules and exhibits in or to this Agreement unless
otherwise indicated. Whenever the context may require, any pronoun includes the
corresponding masculine, feminine and neuter forms. Any term defined by
reference to any agreement, instrument or document has the meaning assigned to
it whether or not such agreement, instrument or document is in effect. The words
"include", "includes" and "including" are deemed to be followed by the phrase
"without limitation". Unless the context otherwise requires, any agreement,
instrument or other document defined or referred to herein refers to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified from time to time. Unless the context
otherwise requires, references herein to any Person include its successors and
assigns. The words "shall" and "will" have the same meaning and effect.
ARTICLE II
GOVERNANCE
SECTION 2.01. Board Representation. From and after the date
hereof,
(a) for as long as the Stockholder and any Permitted
Transferees, in the aggregate, Beneficially Own any combination of
Company securities consisting of, or convertible into, in the
aggregate, at least 20% of the issued and outstanding shares of Common
Stock, the parties hereto shall use best efforts and exercise all
authority under applicable law to (i) cause the Board to consist of
seven Directors and (ii) cause any slate of Directors presented to the
stockholders of the Company for election to the Board to consist of
such nominees that, if elected, would result in a Board that included
two Stockholder Directors as designated by the Stockholder (which
designees shall be subject to the reasonable satisfaction of the
Company).
(b) for as long as the Stockholder and any Permitted
Transferees, in the aggregate, Beneficially Own any combination of
Company securities consisting of, or convertible into, in the
aggregate, at least 15% but less than 20% of the issued and
outstanding shares of Common Stock, the parties hereto shall use best
efforts and exercise all authority under applicable law to cause any
slate of Directors presented to the
<PAGE>
4
stockholders of the Company for election to the Board to consist of
such nominee that, if elected, would result in a Board that included
one Stockholder Director as designated by the Stockholder (which
designee shall be subject to the reasonable satisfaction of the
Company).
(c) If the Stockholder and any Permitted Transferees, in the
aggregate, Beneficially Own any combination of Company securities
consisting of, or convertible into, in the aggregate, less than 15% of
the issued and outstanding shares of Common Stock, the Company shall
have no obligation pursuant to this Agreement to cause any slate of
Directors presented to the stockholders of the Company for election to
the Board to include any designee of the Stockholder.
SECTION 2.02. Resignations and Replacements. (a) If a
Stockholder Director ceases to serve as a Director for any reason (a "Departing
Stockholder Director"), the Company shall take all action necessary to ensure
that the vacancy created by such Departing Stockholder Director shall be filled
by an individual designated by the Stockholder (which designee shall be to the
reasonable satisfaction of the Company), which individual shall serve out the
remaining term of the Departing Stockholder Director as a Stockholder Director.
(b) In the event that at any time the Stockholder shall no
longer be entitled to designate Directors pursuant to Section 2.01, then the
Stockholder Directors shall be deemed to have resigned immediately upon the
occurrence of such event and the Company and the Stockholder shall take all
action promptly to effect the resignation or removal of such Directors.
SECTION 2.03. Committees. For so long as there are two
Stockholder Directors, the Company will take all actions necessary to cause the
appointment of at least one Stockholder Director to serve on each committee of
the Board. If there is only one Stockholder Director, the Company will not be
obligated to take any such actions; provided that, if the Company forms an
executive committee or a committee by any such other name that performs
functions similar to those typically performed by an executive committee, the
Company will take all actions necessary to cause the appointment of such
Stockholder Director to serve on such committee.
ARTICLE III
VOTING OBLIGATIONS
SECTION 3.01. Voting Obligations. The Stockholder and any
Permitted Transferees agree to vote, and shall vote, at all times all of the
Shares Beneficially Owned by them for the election of the entire slate of Board
nominees established by the Board and submitted to the stockholders of the
Company for approval if, and to the extent that, all of the Stockholder's
<PAGE>
5
designated Stockholder Directors are included with such nominees; provided that
if the Company is in breach of any of its material obligations under the
Alliance Agreements as finally determined pursuant to the arbitration procedures
set forth in the relevant Alliance Agreement, the Stockholder and any Permitted
Transferees may refrain from voting any shares of Common Stock Beneficially
Owned by them in favor of, but may not vote against, the election of the entire
slate of Board nominees established by the Board; provided further that if such
abstention would have the same effect as a vote against the matter or would act
to make it impossible to obtain a quorum, the Stockholder and any Permitted
Transferees shall vote (and shall be deemed to have voted) all shares of Common
Stock Beneficially Owned by them in the same proportion of the votes cast by the
other stockholders of the Company of the applicable class of Company securities.
ARTICLE IV
STANDSTILL AND TRANSFER PROVISIONS
SECTION 4.01. Standstill Period. The "Standstill Period"
shall mean any period beginning on or after the date hereof during which the
Stockholder and any Permitted Transferees, in the aggregate, Beneficially Own
any combination of Company securities consisting of, or convertible into, in the
aggregate, 5% or more of the issued and outstanding shares of Common Stock. The
Stockholder represents and warrants to the Company that the Stockholder,
together with its "Affiliates" and "associates" (as such term is defined under
Rule 12b-2 of the Exchange Act, or any successor thereto), Beneficially Own an
aggregate, as of the date hereof, of 4,500,000 shares of Common Stock, and no
other securities of the Company whatsoever other than the Option.
SECTION 4.02. Transfer Restrictions. (a) For as long as both
(i) the Standstill Period is in effect and (ii) the Distribution Agreement shall
not have expired and shall not have been terminated in its entirety or with
respect to the United States of America portion of the Territory (as defined in
the Distribution Agreement), the Stockholder shall not, and shall cause any
Permitted Transferees not to, directly or indirectly, sell, transfer, assign,
pledge, hypothecate or otherwise dispose of ("Transfer") any shares of Common
Stock except to any wholly owned subsidiary of the Stockholder that expressly
assumes the Stockholder's obligations under this Agreement relating to such
shares of Common Stock (a "Permitted Transferee").
(b) During any period when either of the conditions described
in clause 4.02(a)(i) or (ii) are absent, the Stockholder or its Permitted
Transferees shall be permitted to Transfer shares of Common Stock only in
accordance with the provisions of Section 4.04.
<PAGE>
6
(c) The Stockholder agrees that it will not, directly or
indirectly, Transfer its interests in any Permitted Transferee unless prior
thereto the shares of Common Stock held by such entity are transferred to the
Stockholder or to one or more other Permitted Transferees.
(d) Any attempted Transfer in violation of this Section 4.02
shall be null, void and of no force and effect.
SECTION 4.03. Acquisition of Additional Shares; Other
Restrictions. Subject to the provisions of Sections 4.05 and 4.06 and subject to
the Stockholder's right to exercise the Option under the Stock Subscription
Agreement, during a Standstill Period, except with the prior approval of the
Board, the Stockholder shall not, directly or indirectly, and shall cause its
Permitted Transferees not to, directly or indirectly:
(a) acquire, offer to acquire, or agree to acquire beneficial
ownership of any additional equity or debt securities of the Company;
(b) make, or in any way participate in, directly or
indirectly, any "solicitation" of "proxies" or become a "participant"
in any "election contest" with respect to the Company, or execute any
written consent in lieu of a meeting of stockholders of the Company;
(c) initiate, propose or otherwise solicit stockholders for
the approval of one or more stockholder proposals with respect to the
Company or induce or attempt to induce any other Person to initiate
any stockholder proposal;
(d) seek nomination or election to the Board, serve on the
Board if elected, seek to place a representative on the Board or seek
the removal of any member of the Board (except with respect to the
Stockholder's rights to designate Stockholder Directors);
(e) subject to the Stockholder's rights to consult with the
Stockholder Directors, call or seek to have called any meeting of the
stockholders of the Company;
(f) otherwise act, directly or indirectly, alone or in
concert with others, to (i) subject to the Stockholder's rights to
consult with the Stockholder Directors, seek to control the management
of the Company or the Board or the policies or affairs of the Company,
(ii) subject to the Stockholder's rights to consult with the
Stockholder Directors, solicit, propose, seek to effect or negotiate
with any other Person with respect to any form of business combination
transaction with the Company or any Subsidiary thereof, or any
restructuring, recapitalization or similar transaction with respect to
the Company or any Subsidiary thereof, (iii) solicit, make or propose
or encourage, or negotiate with any other Person with respect to, or
announce an intention to make, any
<PAGE>
7
tender offer or exchange offer for any debt or equity securities of
the Company, (iv) disclose an intention, purpose, plan or proposal
with respect to the Company or any debt or equity securities of the
Company, or (v) subject to the Stockholder's rights to consult with
the Stockholder Directors, assist, participate in, facilitate,
encourage or solicit any effort or attempt by any Person to do or seek
to do any of the foregoing; provided, however, that nothing in this
Section 4.03(f) shall apply to discussions between or among officers,
employees or agents of the Stockholder, the Permitted Transferees and
the Stockholder Directors;
(g) request the Company (or its Directors, officers,
employees or agents), directly or indirectly, to amend or waive any
material provisions set forth herein; or
(h) encourage or render advice to or make any recommendation
or proposal to any Person to engage in any of the actions covered
hereby.
Nothing contained in this Section 4.03 shall be deemed or
construed to limit any Stockholder Director from casting any vote in his or her
capacity as a member of the Board (or otherwise acting at the direction of the
Board, in such capacity) or the exercise by the Stockholder or any Permitted
Transferee of its voting rights with respect to any shares of Common Stock it
Beneficially Owns.
SECTION 4.04. Company Rights of First Negotiation; Permitted
Sales. (a) During any period that the condition described in clause (ii) of
Section 4.02(a) shall no longer exist but there shall be a Standstill Period, if
the Stockholder or any Permitted Transferee shall desire to Transfer any shares
of Common Stock owned by it other than to a Permitted Transferee, then the
Company and the Stockholder shall negotiate in good faith in order to reach a
mutually agreeable disposition of all shares of Common Stock owned by the
Stockholder and any Permitted Transferees to one or more third parties or for
the repurchase by the Company of all of such shares of Common Stock; provided
that neither the Company nor the Stockholder (nor any Permitted Transferee)
shall be obligated to effect any such disposition or repurchase, and neither
party shall be obligated to so negotiate for a period in excess of six months.
If after such six-month period the parties are unable to reach a definitive
agreement with respect to a mutually agreeable disposition or repurchase of the
Shares, then the Stockholder and any such Permitted Transferee may sell its
shares of Common Stock as follows:
(i) in unsolicited broker transactions as contemplated by
Rule 144 under the Securities Act;
(ii) in one or more private transactions to any third party
("Proposed Transferee"), but only if such Proposed Transferee executes
and delivers to the Company the standstill, voting and transfer
limitation agreement in the form of Annex A hereto; and
<PAGE>
8
(iii) in a widely disbursed underwritten public offering of
such shares of Common Stock pursuant to which no Person or entity
acquires more than 5% of the number of shares of Common Stock issued
and outstanding at the time of such offering.
To the extent the Stockholder and any Permitted Transferees are permitted to
Transfer any shares of Common Stock pursuant to this Section 4.04(a), the
Company shall cause to be issued to the Stockholder and such Permitted
Transferees, at their written request, new stock certificates representing such
shares without a restrictive legend regarding this Agreement (and the old stock
certificates shall be surrendered in order to receive the new stock
certificates). Notwithstanding anything herein to the contrary, no shares of
Common Stock may be sold, transferred, assigned or otherwise disposed of unless
registered by the Company pursuant to the Securities Act and any applicable
state laws, or unless an exemption therefrom is available.
(b) During any period in which the conditions described in
both clauses (i) and (ii) of Section 4.02(a) shall no longer exist, the
Stockholder and any Permitted Transferees shall be permitted to freely Transfer
any and all shares of Common Stock without restriction and the Company shall
cause to be issued to the Stockholder and any Permitted Transferees, at their
written request, new stock certificates representing shares of Common Stock
without a restrictive legend regarding this Agreement (and the old stock
certificates shall be surrendered in order to receive the new stock
certificates). Notwithstanding anything herein to the contrary, no shares of
Common Stock may be sold, transferred, assigned or otherwise disposed of unless
registered by the Company pursuant to the Securities Act and any applicable
state laws, or unless an exemption therefrom is available.
SECTION 4.05. Stockholder Rights of First Notice. Following
the Option Closing, if any, in the event the Company determines to issue and
sell to a third party any Company securities (other than Company securities
issued and sold by the Company in a widely disbursed public offering, Company
securities issued pursuant to a registration statement on Securities Act Form
S-4 or S-8, or its successors, or options issued pursuant to the Company Benefit
Plans or similar plans), the Company shall deliver to the Stockholder not less
than 30 days' prior written notice of its intention to do so. Following the
delivery of such notice to the Stockholder, the Company shall negotiate with the
Stockholder for such thirty-day period for the purpose of permitting the
Stockholder to make, in its sole discretion, one or more proposals to the
Company regarding the Stockholder's desire to acquire the Company securities.
Following the expiration of such thirty-day period, the Company may effect the
issuance and sale of the Company securities to any such third party, without
limitation or further obligation to the Stockholder. Notwithstanding anything
herein to the contrary, in no event shall the Company be obligated, for any
reason, to issue and sell to the Stockholder any Company securities.
SECTION 4.06. Anti-Dilutive Rights. (a) Except as provided in
Section 4.06(c) below, the Company shall not issue, sell or Transfer, whether in
private issuances or sales or in a registered public offering, any Common Stock
or securities convertible into Common Stock to
<PAGE>
9
any Person unless the Stockholder and any Permitted Transferees are offered in
writing the right to purchase, at the same price and on the same terms proposed
to be issued and sold, an amount of such Common Stock or other securities (the
"Maintenance Shares") as is necessary for the Stockholder and any Permitted
Transferees to maintain, individually, the level of their respective percentage
Beneficial Ownership of Common Stock (on a Fully Diluted Basis) as it owned
immediately prior to such issuance ("Anti-Dilutive Rights"). In the case of a
public offering, the Company shall, as part of its offer, provide a copy of any
preliminary prospectus and other information concerning the offering reasonably
requested by the Stockholder or any Permitted Transferees. The Stockholder and
any Permitted Transferee shall have the right, during the period specified in
Section 4.06(b), to accept the offer for any or all of the Maintenance Shares
offered to each of them.
(b) If the Stockholder or any Permitted Transferee does not
deliver to the Company written notice of acceptance of any offer made pursuant
to Section 4.06(a) within 10 Business Days after the Stockholder's or any such
Permitted Transferee's receipt of such offer, the Stockholder or such Permitted
Transferee, as the case may be, shall be deemed to have waived its right to
purchase all or any part of its Maintenance Shares as set forth in such offer,
but the Stockholder or any such Permitted Transferee shall retain its rights
under this Section 4.06 with respect to future offers; provided, however, that
the applicable number of Maintenance Shares shall be reduced and recalculated
immediately prior to any such future issuance.
(c) The Anti-Dilutive Rights set forth in this Section 4.06
shall not apply to (i) the grant or exercise of options to purchase Common Stock
to employees or Directors of the Company or any of its Subsidiaries or otherwise
pursuant to a Company Benefit Plan or similar plan in existence on the date
hereof or otherwise adopted by the Board hereafter (whether or not such options
were issued prior to the date hereof, or are hereafter issued), (ii) the
issuance of shares of Common Stock issuable upon exercise of any option,
warrant, convertible security or other rights to purchase or subscribe for
Common Stock which, in each case, had been issued by the Company prior to the
date of this Agreement or (iii) securities issued pursuant to any stock split,
stock dividend or other similar stock recapitalization.
(d) A closing for the purchase of shares of Common Stock
pursuant to this Section 4.06 shall occur on the later of (i) the date on which
such public or private issuance occurs and (ii) such date as may be mutually
agreed to by the Company and the Stockholder or the Permitted Transferee, as the
case may be, and shall take place at the offices of the Company or at such other
reasonable location as the Company may otherwise notify the Stockholder and/or a
Permitted Transferee, as the case may be, at the time specified by the Company
in such notice provided to the Stockholder or the Permitted Transferee, as the
case may be, at least five days prior to such closing date. In connection with
such closing, the Company and the Stockholder or Permitted Transferee, as the
case may be, shall provide such closing certificates and other closing
deliveries provided in the transaction giving rise to the rights specified in
Section 4.06.
<PAGE>
10
(e) Solely to the extent that the Stockholder suffers
dilution as a result of the exercise of employee stock options, then,
notwithstanding the provisions of Section 4.03, the Stockholder at any time
thereafter may purchase shares of Common Stock from a third party or through one
or more open market purchases for the purposes of maintaining its percentage
level of Beneficial Ownership of Common Stock. The Company and the Stockholder
shall use all commercially reasonable efforts to cooperate with each other so as
to permit the Stockholder to exercise its rights under this Section 4.06(e) in
an accurate, orderly and non-disruptive manner (provided that in no event shall
any purchase be affected more than once in any fiscal quarter).
ARTICLE V
REGISTRATION RIGHTS
SECTION 5.01. Restrictive Legend. Each certificate
representing shares of Common Stock held by Stockholder shall, except as
otherwise provided in this Article V, be stamped or otherwise imprinted with a
legend substantially in the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), AND MAY NOT BE TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER THE ACT OR AN
EXEMPTION FROM REGISTRATION IS AVAILABLE.
THE SECURITY REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AND CERTAIN RESTRICTIONS ON VOTING CONTAINED
IN THE STOCKHOLDER'S AGREEMENT, DATED AS OF MAY 3, 1999, BY AND
BETWEEN THE COMPANY AND COBE LABORATORIES, INC.
A certificate shall not bear the Securities Act legend or the legend regarding
this Agreement, as the case may be, if in the opinion of counsel satisfactory to
the Company (it being agreed that Shearman & Sterling shall be satisfactory),
the shares being sold thereby may be publicly sold without registration under
the Securities Act or may be sold without being subject to the restrictions on
sale specified in Article IV.
SECTION 5.02. Notice of Proposed Transfer. Prior to any
proposed Transfer of any shares of Registrable Stock (other than under the
circumstances described in Section 5.03, 5.04 or 5.05), the Stockholder shall
give written notice to the Company of its intention to effect such Transfer.
Each such notice shall describe the manner of the proposed Transfer whereupon
the Stockholder shall be entitled to Transfer such stock in accordance with the
terms of its notice, except as may be precluded hereunder and subject in any
event to the restrictions set forth in this
<PAGE>
11
Agreement. Each certificate representing shares of Common Stock transferred as
above provided shall bear the legends set forth in Section 5.01, except that
such certificate (a) shall not bear the Securities Act legend if (i) such
Transfer is in accordance with the provisions of Rule 144 of the Securities Act
(or any other rule permitting public sale without registration under the
Securities Act, but not Rule 144A of the Securities Act) or (ii) the opinion of
counsel referred to above is to the further effect that the transferee and any
subsequent transferee (other than an Affiliate of the Company) would be entitled
to Transfer such securities in a public sale without registration under the
Securities Act and (b) shall not bear the legend related to this Agreement if
such Transfer is to a third party in accordance with the provisions of Article
IV and such transferee is not subject to the restrictions on Transfer set forth
in this Agreement. The restrictions provided for in this Section 5.02 shall not
apply to securities that are not required to bear the legends prescribed by
Section 5.01 in accordance with the provisions of Section 5.01.
SECTION 5.03. Required Registrations. (a) Commencing at any
time after September 15, 1999, for as long as the Stockholder holds five percent
or more of the outstanding shares of Common Stock of the Company, the
Stockholder may request in a written notice (which request shall state the
number of Registrable Shares to be so registered, the intended method of
distribution and a certification as to the market value of such shares, as
described below), that the Company file a registration statement under the
Securities Act (or a similar document pursuant to any other statute then in
effect corresponding to the Securities Act) covering the registration of any or
all Registrable Stock owned by the Stockholder and any Permitted Transferee,
provided that either (i) such Registrable Stock has an aggregate offering price
of at least $3,000,000 (based on the last reported sale price for the Common
Stock on the Business Day preceding the date of such written request, as
reported by the OTC Bulletin Board or any other exchange or market on which the
Common Stock is then listed or included for quotation) or (ii) such Registrable
Stock represents 100% of any combination of Company securities consisting of, or
convertible into, shares of Common Stock Beneficially Owned by the Stockholder
and its Permitted Transferees. Following receipt of any notice under this
Section 5.03, the Company shall use its best efforts to cause to be registered
under the Securities Act all Registrable Stock that the Stockholder requested be
registered in accordance with the manner of disposition specified in such
notice.
(b) If the Stockholder intends to have the Registrable Stock
distributed by means of an underwritten offering, the Stockholder and the
Company shall enter into an underwriting agreement in customary form with the
underwriter or underwriters which shall contain any customary provisions
(including customary provisions with respect to indemnification by the Company
of the underwriters) as the underwriters may reasonably request. Such
underwriter or underwriters shall be selected by the Stockholder and shall be
approved by the Company, which approval shall not be unreasonably withheld.
<PAGE>
12
(c) Notwithstanding any provision of this Agreement to the
contrary:
(i) the Company shall not be required to effect a
registration pursuant to this Section 5.03 during the period starting
with the date which is 30 days prior to the date of the initial public
filing by the Company of, and ending on a date 120 days following the
effective date of, a registration statement pertaining to a public
offering of securities for the account of the Company or on behalf of
the selling stockholders under any other registration rights agreement
which the Stockholder has been entitled to join pursuant to Section
5.04; provided that the Company shall actively employ in good faith
all reasonable efforts to cause such registration statement to become
effective as soon as possible;
(ii) if (A) (i) the Company is in possession of material
nonpublic information relating to the Company or any Subsidiary and
(ii) the Company determines in good faith that public disclosure of
such material nonpublic information would not be in the best interests
of the Company and its stockholders, (B) (i) the Company has made a
public announcement relating to an acquisition or business combination
transaction that includes the Company and/or one or more of its
Subsidiaries that is material to the Company and its Subsidiaries,
taken as a whole and (ii) the Company determines in good-faith that
(x) offers and sales of Registrable Stock pursuant to any registration
statement prior to the consummation of such transaction (or such
earlier date as the Company shall determine) is not in the best
interests of the Company and its stockholders or (y) it would be
impracticable at the time to obtain any financial statements relating
to such acquisition or business combination transaction that would be
required to be set forth in a registration statement or (C) the
Company shall furnish to the Stockholder a certificate signed by the
president of the Company stating that in the good faith opinion of the
Board such registration would interfere with any material transaction
or financing, confidential negotiations or business activities then
being pursued by the Company or any of its Subsidiaries, then, in any
such case, the Company's obligation to use all reasonable efforts to
file a registration statement shall be deferred, or the effectiveness
of any registration statement may be suspended, in each case for a
period not to exceed 120 days; provided that the Company may not delay
the filing or suspend the effectiveness of any registration statement
under this Section 5.03(ii) on more than one occasion in any
consecutive 12-month period;
(iii) the Company shall not be required to effect a
registration pursuant to this Section 5.03 if the Registrable Stock
requested by the Stockholder to be registered pursuant to such
registration are included in, and eligible for sale under, a Shelf
Registration (as defined below); and
(iv) the Company shall not be required to effect a
registration pursuant to this Section 5.03 within six months after the
effective date of any other registration statement registering shares
to be sold by the Company.
<PAGE>
13
(d) The Company shall not be obligated to effect and pay for
more than two registrations pursuant to this Section 5.03 (both of which may be
Shelf Registrations requested pursuant to Section 5.05); provided that a
registration requested pursuant to this Section 5.03 shall not be deemed to have
been effected for purposes of this Section 5.03(d) unless (i) it has been
declared effective by the SEC, (ii) it has remained effective for the period set
forth in Section 5.06(a) and (iii) the offering of Registrable Stock pursuant to
such registration is not subject to any stop order, injunction or other order or
requirement of the SEC (other than any such stop order, injunction, or other
requirement of the SEC prompted by any act or omission of the Stockholder).
SECTION 5.04. Incidental Registration. (a) Subject to Section
5.09, if at any time the Company determines that it shall file a registration
statement under the Exchange Act for the registration of Common Stock (other
than a registration statement on a Form S-4 or S-8 or an offering of securities
solely to the Company's existing stockholders) on any form that would also
permit the registration of the Registrable Stock and such filing is to be on its
behalf or on behalf of selling holders of its securities for the general
registration of Common Stock to be sold for cash, the Company shall each such
time promptly give the Stockholder written notice of such determination setting
forth the date on which the Company proposes to file such registration
statement, which date shall be no earlier than 15 days from the date of such
notice, and advising the Stockholder of its right to have Registrable Stock
included in such registration. Upon the written request of the Stockholder
received by the Company no later than 10 days after the date of the Company's
notice (which request shall state the number of Registrable Shares to be so
registered and the intended method of distribution), the Company shall, subject
to Section 5.04(b) below, use all reasonable efforts to cause to be registered
under the Securities Act all of the Registrable Stock that the Stockholder has
so requested to be registered; provided that the Company shall have the right to
postpone or withdraw any registration effected pursuant to this Section 5.04
without obligation or liability to the Stockholder.
(b) If, in the opinion of the managing underwriter (or, in
the case of a non-underwritten offering, in the good faith reasonable opinion of
the Company), the total amount of such securities to be so registered, including
such Registrable Stock, will exceed the maximum amount of the Company's
securities which can be marketed (i) at a price reasonably related to the then
current market value of such securities or (ii) without otherwise materially and
adversely affecting the entire offering, then the Company shall be entitled to
reduce the number of shares of Registrable Stock to be sold in such offering by
the Stockholder and any other stockholder of the Company requesting to be
included in the registration in proportion (as nearly as practicable) to the
amount of shares of Common Stock requested to be included by the Stockholder and
each other stockholder at the time of filing the registration statement.
SECTION 5.05. Shelf Registration. (a) The Stockholder may use
its two request registration rights granted pursuant to Section 5.03, subject to
the limitations of Section 5.03(d), to request that the Company file a "shelf"
registration statement pursuant to Rule 415 under the
<PAGE>
14
Securities Act or any successor rule (the "Shelf Registration") with respect to
the Registrable Stock. The Company shall (i) use all reasonable efforts to have
the Shelf Registration filed within 30 days of such request and declared
effective as soon as reasonably practicable following such request and (ii)
subject to Section 5.03(c)(iii), use all reasonable efforts to keep the Shelf
Registration continuously effective from the date such Shelf Registration is
declared effective until at least the earlier of such time as (A) all such
Registrable Stock has been sold thereunder or (B) the first anniversary of such
effective date in order to permit the prospectus forming a part thereof to be
usable by the Stockholder during such period.
(b) Subject to Section 5.03(c)(iii), the Company shall
supplement or amend the Shelf Registration (i) as required by the registration
form utilized by the Company or by the instructions applicable to such
registration form or by the Securities Act, (ii) to include in such Shelf
Registration any additional securities that become Registrable Stock by
operation of the definition thereof and (iii) following the written request of
the Stockholder pursuant to Section 5.05(c), to cover offers and sales of all or
a part of the Registrable Stock by means of an underwriting. The Company shall
furnish to the Stockholder copies of any such supplement or amendment
sufficiently in advance (but in no event less than five Business Days in
advance) of its use or filing with the SEC to allow the Stockholder a meaningful
opportunity to comment thereon.
(c) The Stockholder may, at its election and upon written
notice by the Stockholder to the Company, subject to the limitations set forth
in Section 5.03(c)(iii), effect offers and sales under the Shelf Registration by
means of one or more underwritten offerings, in which case the provisions of
Section 5.03(b) shall apply to any such underwritten distribution of securities
under the Shelf Registration and such underwriting shall, if sales of
Registrable Stock pursuant thereto shall have closed, be regarded as the
exercise of one of the registration rights contemplated by Section 5.03.
SECTION 5.06. Obligations of the Company. Whenever required
under Sections 5.03 and 5.05 to effect the registration of any Registrable Stock
under the Securities Act, the Company shall:
(a) in a reasonably timely manner, file with the SEC a
registration statement with respect to such Registrable Stock, and use
best efforts to cause such registration statement to become and remain
effective for the period of the distribution contemplated thereby
determined as provided hereafter; provided that the Company shall not
be required to keep any Registration Statement (other than the Shelf
Registration) effective more than 90 days;
(b) as expeditiously as possible, prepare and file with the
SEC such amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to
comply with the provisions of the Securities
<PAGE>
15
Act with respect to the disposition of all Registrable Stock covered
by such registration statement;
(c) as expeditiously as possible, furnish to the Stockholder
such reasonable numbers of copies of the registration statement and
the prospectus included therein (including each preliminary prospectus
and any amendments or supplements thereto) in conformity with the
requirements of the Securities Act, any exhibits filed therewith and
such other documents and information as they may reasonably request;
(d) as expeditiously as possible, use best efforts to
register or qualify the Registrable Stock covered by such registration
statement under such other securities or "blue sky" laws of such
states as shall be reasonably requested by the Stockholder for the
distribution of the Registrable Stock covered by the registration
statement; provided, however, that the Company shall not be required
in connection therewith or as a condition thereto to qualify to do
business in or to file a general consent to service of process in any
jurisdiction wherein it would not but for the requirements of this
paragraph (except that the Company will use its best efforts to
register or qualify Registrable Stock in such additional jurisdiction
as the Stockholder may request subject to the foregoing proviso and at
the Stockholder's own expense) be obligated to do so; and provided
further that the Company shall not for any purpose be required to
qualify such Registrable Stock in any jurisdiction in which the
securities regulatory authority requires that the Stockholder submit
any shares of Registrable Stock to the terms, provisions and
restrictions of any escrow, lockup or similar agreement(s) for consent
to sell Registrable Stock in such jurisdiction unless the Stockholder
agrees to do so;
(e) promptly notify the Stockholder, 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 any
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances under
which they were made, and at the request of the Stockholder promptly
prepare and furnish to the Stockholder 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
securities, 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 not misleading in
light of the circumstances under which they were made. In the event
the Company shall give such notice, the Company shall extend the
period during which such Registration Statement shall be maintained
effective as provided in Section 5.06(a) (or, in the case of the Shelf
Registration, Section 5.05(a)) by the number of days during the period
from and including the date of the giving of such notice to the date
when the Company shall make available to the Stockholder such
supplemented or amended prospectus;
<PAGE>
16
(f) furnish, at the request of the Stockholder, if the method
of distribution is by means of an underwriting, on the date that the
shares of Registrable Stock are delivered to the underwriters for sale
pursuant to such registration or, if such Registrable Stock is not
being sold through underwriters, on the date that the registration
statement with respect to such shares of Registrable Stock becomes
effective, (1) a signed opinion, dated on or about such date, of the
independent legal counsel representing the Company for the purpose of
such registration, addressed to the underwriters, if any, and if such
Registrable Stock is not being sold through underwriters, then to the
Stockholder, as to such matters as such underwriters or the
Stockholder, as the case may be, may reasonably request and as would
be customary in such a transaction, and (2) letters dated on or about
such date and the date the offering is priced from the independent
certified public accountants of the Company, addressed to the
underwriters, if any, and if such Registrable Stock is not being sold
through underwriters, then to the Stockholder, if such accountants
refuse to deliver such letters to the Stockholder, then to the Company
(i) stating that they are independent certified public accountants
within the meaning of the Securities Act and that, in the opinion of
such accountants, the financial statements and other financial data of
the Company included in the registration statement or the prospectus,
or any amendment or supplement thereto, comply as to form in all
material respects with the applicable accounting requirements of the
Securities Act and (ii) covering such other financial matters
(including information as to the period ending not more than five
Business Days prior to the date of such letters) with respect to the
registration in respect of which such letter is being given as such
underwriters or the Stockholder, as the case may be, may reasonably
request and as would be customary in such a transaction;
(g) enter into customary agreements (including, if the method
of distribution is by means of an underwriting, an underwriting
agreement in customary form) and take such other actions as are
reasonably required in order to expedite or facilitate the disposition
of the Registrable Stock to be so included in the registration
statement;
(h) otherwise use best efforts to comply with all applicable
rules and regulations of the SEC, and make available to its
securityholders, as soon as reasonably practicable, but not later than
18 months after the effective date of the registration statement, an
earnings statement covering the period of at least 12 months beginning
with the first full month after the effective date of such
registration statement, which earnings statements shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158
thereunder; and
(i) use all reasonable efforts to list the Registrable Stock
covered by such registration statement with any U.S. nationally
recognized securities exchange on which the Company Common Stock is
then listed.
<PAGE>
17
For purposes of Sections 5.06(a) and 5.06(b), the period of distribution of
Registrable Stock in a firm commitment underwritten public offering shall be
deemed to extend until each underwriter has completed the distribution of all
securities purchased by it, and the period of distribution of Registrable Stock
in any other registration shall be deemed to extend until the earlier of the
sale of all Registrable Stock covered thereby and six months after the effective
date thereof.
SECTION 5.07. Furnish Information. It shall be a condition
precedent to the obligations of the Company to take any action pursuant to
Article V of this Agreement that the Stockholder shall furnish to the Company
such information regarding the Stockholder, the Registrable Stock held by it,
and the intended method of disposition of such securities as the Company shall
reasonably request and as shall be required in connection with the action to be
taken by the Company.
SECTION 5.08. Expenses of Registration. All expenses incurred
in connection with each registration pursuant to Sections 5.03, 5.04 and 5.05 of
this Agreement, excluding underwriters' discounts and commissions, but
including, without limitation, all registration, filing and qualification fees,
word processing, duplicating, printers' and accounting fees (including the
expenses of any special audits or "cold comfort" letters required by or incident
to such performance and compliance), fees of the National Association of
Securities Dealers, Inc. or listing fees, messenger and delivery expenses, all
fees and expenses of complying with state securities or "blue sky" laws, and the
fees and disbursements of counsel for the Company, and the reasonable fees and
disbursements of counsel for the Stockholder (which counsel shall be selected by
the Stockholder), shall be paid by the Company; provided, however, that if a
registration request pursuant to Section 5.03 or 5.05 is subsequently withdrawn
by the Stockholder, the Company shall not be required to pay any expenses of
such registration proceeding and the Stockholder shall bear such expenses. The
Stockholder shall bear and pay the underwriting commissions and discounts
applicable to securities offered for its account and the fees and disbursements
of its counsel in connection with any registrations, filings and qualifications
made pursuant to this Agreement.
SECTION 5.09. Underwriting Requirements. In connection with
any underwritten offering, the Company shall not be required under Section 5.04
to include shares of Registrable Stock in such underwritten offering unless the
Stockholder accepts the terms of the underwriting of such offering that have
been reasonably agreed upon between the Company and the underwriters selected by
the Stockholder.
SECTION 5.10. Indemnification. In the event any Registrable
Stock is included in a registration statement under this Agreement:
(a) The Company shall indemnify and hold harmless the
Stockholder, the Stockholder's directors and officers, each Person who
participates in the offering of such Registrable Stock, and each
Person, if any, who controls the Stockholder or participating
<PAGE>
18
Person within the meaning of the Securities Act, against any losses,
claims, damages or liabilities, joint or several, to which they 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 proceedings in respect thereof)
arise out of or are based on any untrue or alleged untrue statement of
any material fact contained in such registration statement on the
effective date thereof (including any preliminary prospectus or
prospectus filed under Rule 424 under the Securities Act or any
amendments or supplements thereto) or arise out of or are based upon
the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and shall reimburse the Stockholder, the
Stockholder's directors and officers, such participating Person or
controlling Person for any legal or other expenses reasonably incurred
by them (but not in excess of expenses incurred in respect of one
counsel for all of them unless there is an actual conflict of interest
between any indemnified parties, which indemnified parties may be
represented by separate counsel) in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,
however, that the indemnity agreement contained in this Section
5.10(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is
effected without the consent of the Company; provided further that the
Company shall not be liable to the Stockholder, the Stockholder's
directors and officers, participating Person or controlling Person in
any such case for any such loss, claim, damage, liability or action to
the extent that it arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in
connection with such registration statement, preliminary prospectus,
final prospectus or amendments or supplements thereto, in reliance
upon and in conformity with written information furnished expressly
for use in connection with such registration by the Stockholder, the
Stockholder's directors and officers, participating Person or
controlling Person. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the
Stockholder, the Stockholder's directors and officers, participating
Person or controlling Person, and shall survive the Transfer of such
securities by the Stockholder.
(b) The Stockholder shall indemnify and hold harmless the
Company, each of its directors and officers, each Person, if any, who
controls the Company within the meaning of the Securities Act, and
each agent and any underwriter for the Company (within the meaning of
the Securities Act) against any losses, claims, damages or
liabilities, joint or several, to which the Company or any such
director, officer, controlling Person, agent or underwriter 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 proceedings in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in such registration statement on the
effective date thereof (including any preliminary prospectus or
prospectus filed under Rule 424 under the Securities Act or any
amendments or
<PAGE>
19
supplements thereto) or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or
alleged omission was made in such registration statement, preliminary
or final prospectus, or amendments or supplements thereto, in reliance
upon and in conformity with written information furnished by or on
behalf of the Stockholder expressly for use in connection with such
registration; and the Stockholder shall reimburse any legal or other
expenses reasonably incurred by the Company or any such director,
officer, controlling Person, agent or underwriter (but not in excess
of expenses incurred in respect of one counsel for all of them unless
there is an actual conflict of interest between any indemnified
parties which indemnified parties may be represented by separate
counsel) in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this Section 5.10(b) shall not apply
to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent
of the Stockholder, which consent shall not be unreasonably withheld
or delayed, and provided further that the liability of the Stockholder
hereunder shall be limited to the proportion of any such loss, claim,
damage, liability or expense which is equal to the proportion that the
net proceeds from the sale of the shares of Common Stock sold by the
Stockholder under such registration statement bears to the total net
proceeds from the sale of all securities sold thereunder, but not in
any event to exceed the net proceeds received by the Stockholder from
the sale of Registrable Stock covered by such registration statement.
(c) Promptly after receipt by an indemnified party under this
Section 5.10 of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made
against any indemnifying party under this Section 5.10, notify the
indemnifying party in writing of the commencement thereof and the
indemnifying party shall have the right to participate in and assume
the defense thereof with counsel selected by the indemnifying party
and reasonably satisfactory to the indemnified party; provided,
however, that an indemnified party shall have the right to retain its
own counsel, with all fees and expenses thereof to be paid by such
indemnified party, and to be apprised of all progress in any
proceeding the defense of which has been assumed by the indemnifying
party. The failure to notify an indemnifying party promptly of the
commencement of any such action shall not relieve the indemnifying
party from any liability in respect of such action which it may have
to such indemnified party on account of the indemnity contained in
this Section 5.10, unless (and only to the extent) the indemnifying
party was prejudiced by such failure, and in no event shall such
failure relieve the indemnifying party from any other liability which
it may have to such indemnified party. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any claim or pending or threatened proceeding in respect
of which the indemnified party is or could have been a party and
indemnity could have been
<PAGE>
20
sought hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party from all
liability arising out of such claim or proceeding.
(d) To the extent any indemnification by an indemnifying
party is prohibited or limited by applicable law, the indemnifying
party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as
a result of such losses, claims, damages or liabilities in such
proportion as is appropriate to reflect the relative fault of the
indemnifying party and the indemnified party in connection with the
actions which resulted in such losses, claims, damages or liabilities
as well as any other relevant equitable considerations. The relative
fault of such indemnifying party and indemnified party shall be
determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of material
fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such indemnifying
party or indemnified party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent
such action. The amount paid or payable by a party as a result of the
losses, claims, damages or liabilities referred to above shall be
deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with any investigation or
proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 5.10(d) were
determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred
to in the immediately preceding paragraph. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.
SECTION 5.11. Transfer of Registration Rights. Subject to
Article IV, the registration rights of the Stockholder under this Agreement with
respect to any Registrable Stock may be transferred to any Permitted Transferee
of such Registrable Stock; provided, however, that (i) the Stockholder shall
give the Company written notice at or prior to the time of such Transfer stating
the name and address of the Permitted Transferee and identifying the securities
with respect to which the rights under this Agreement are being transferred;
(ii) such Permitted Transferee shall agree in writing, in form and substance
reasonable satisfactory to the Company, to be bound by the provisions of this
Agreement as if it were a stockholder of the Company; and (iii) immediately
following such Transfer, the further disposition of such securities by such
transferee is restricted under the Securities Act.
SECTION 5.12. Rule 144 Information. Subject to Article IV,
and with a view to making available the benefits of certain rules and
regulations of the SEC which may at any time
<PAGE>
21
permit the sale of the Registrable Stock to the public without registration, at
all times after ninety (90) days after any Shelf Registration Statement covering
a public offering of securities of the Company under the Securities Act shall
have become effective, the Company agrees to:
(a) make and keep public information available, as those
terms are understood and defined in Rule 144 under the Securities Act;
(b) use its best efforts to file with the SEC in a timely
manner all reports and other documents required of the Company under
the Securities Act and the Exchange Act; and
(c) furnish to the Stockholder forthwith upon request a
written statement by the Company as to its compliance with the
reporting requirements of such Rule 144 and of the Securities Act and
the Exchange Act, a copy of the most recent annual or quarterly report
of the Company, and such other reports and documents so filed by the
Company as the Stockholder may reasonably request in availing itself
of any rule or regulation of the SEC allowing the Stockholder to sell
any Registrable Stock without registration.
SECTION 5.13. Limitations on Registration Rights.
Notwithstanding anything herein to the contrary, neither the Stockholder nor any
Permitted Transferee shall be entitled to exercise any registration rights
specified in this Article V for so long as the Stockholder is in material breach
of any of its covenants, agreements or other obligations under the Distribution
Agreement.
ARTICLE VI
GENERAL PROVISIONS
SECTION 6.01. Waiver. The Company and the Stockholder may (a)
extend the time for the performance of any of the obligations or other acts of
the other party or (b) waive compliance with any of the agreements or conditions
of the other party contained herein. Any such extension or waiver shall be valid
only if set forth in an instrument in writing signed by the party to be bound
thereby. Any waiver of any term or condition shall not be construed as a waiver
of any subsequent breach or a subsequent waiver of the same term or condition,
or a waiver of any other term or condition, of this Agreement. The failure of
any party to assert any of its rights hereunder shall not constitute a waiver of
any of such rights.
SECTION 6.02. Expenses. Except as otherwise specified in this
Agreement, all costs and expenses, including, without limitation, fees and
disbursements of counsel and financial advisors, incurred in connection with
this Agreement shall be paid by the party incurring such costs and expenses.
<PAGE>
22
SECTION 6.03. Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given or
made (and shall be deemed to have been duly given or made upon receipt) by
delivery in person, by courier service, by cable, by telecopy, by telegram, by
telex or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the following addresses (or at such
other address for a party as shall be specified in a notice given in accordance
with this Section 6.03):
(a) if to the Company:
HemaSure Inc.
140 Locke Drive
Marlborough, MA 01752
Fax: 508-485-6045
Attention: President and Chief Executive Officer
with a copy to:
Battle Fowler LLP
Park Avenue Tower
75 East 55th Street
New York, NY 10022-3205
Fax: 212-339-9150
Attention: Luke P. Iovine, III, Esq.
(b) if to COBE:
COBE Laboratories, Inc.
1201 Oak Street
Lakewood, CO 80215-4498
Fax: 303-231-4151
Attention: Edward C. Wood
<PAGE>
23
with a copy to:
Legal Department
COBE Laboratories, Inc.
1201 Oak Street
Lakewood, CO 80215
Telecopy: 303-231-2519
and
Shearman & Sterling
599 Lexington Avenue
New York, NY 10022
Telecopy: 212-848-7179
Attention: Peter D. Lyons, Esq. and
Kenneth A. Gerasimovich, Esq.
SECTION 6.04. Headings. The descriptive headings contained in
this Agreement are for convenience of reference only and shall not affect in any
way the meaning or interpretation of this Agreement.
SECTION 6.05. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any Law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner in
order that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
SECTION 6.06. Entire Agreement. This Agreement and the other
Alliance Agreements constitute the entire agreement of the parties hereto with
respect to the subject matter hereof and thereof and supersedes all prior
agreements and undertakings, both written and oral, between the Company and COBE
with respect to the subject matter hereof and thereof.
SECTION 6.07. Assignment. This Agreement may not be assigned
without the express written consent of the Company and the Stockholder (which
consent shall not be unreasonably withheld or delayed by the Company or the
Stockholder, as the case may be); provided, however, that all covenants and
agreements contained in this Agreement by or on behalf of any parties hereto
will bind and inure to the benefit of their respective successors and assigns.
<PAGE>
24
SECTION 6.08. No Third Party Beneficiaries. Except for the
provisions of Section 5.10 relating to indemnified parties, this Agreement shall
be binding upon and inure solely to the benefit of the parties hereto and their
permitted assigns and nothing herein, express or implied, is intended to or
shall confer upon any other Person any legal or equitable right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement.
SECTION 6.09. Amendment. This Agreement may not be amended or
modified except (a) by an instrument in writing signed by, or on behalf of, the
Company and COBE or (b) by a waiver in accordance with Section 6.01.
SECTION 6.10. Governing Law. This Agreement shall be governed
by the laws of the State of New York, excluding (to the greatest extent
permissible by law) any rule of law that would cause the application of the laws
of any jurisdiction other than the State of New York.
SECTION 6.11. Arbitration. (a) If a dispute arises from or
relates to this Agreement or the breach thereof, whether of law or fact, of any
nature whatsoever, and such dispute cannot be settled through direct discussions
between the parties, the parties agree to endeavor first to settle the dispute
in an amicable manner by mediation administered by the American Arbitration
Association under its Commercial Mediation Rules before resorting to litigation.
Mediation shall take place in New York, New York. If the dispute cannot be
resolved within 60 days of the initiation thereof by such party, any party may
initiate arbitration in accordance with the provisions of Section 6.11(b) below.
(b) All disputes arising under this Agreement that cannot be
amicably resolved under Section 6.11(a) above, shall be settled by binding
arbitration. Judgment upon the award rendered may be entered in any court in the
New York, New York metropolitan area. Each party agrees to the following
arbitration procedures:
(i) Any party requesting arbitration shall serve a written
demand for arbitration on the other party. The demand shall set forth
in reasonable detail a statement of the nature of the dispute, the
amount involved and the remedies sought. No later than 20 calendar
days after a demand for arbitration is served, the parties shall
jointly select and appoint a retired judge of the Courts of the State
of New York to act as the arbitrator. In the event that the parties do
not agree on the selection of an arbitrator, the party seeking
arbitration shall apply to the United States District Court for the
Southern District of New York, as applicable, for appointment of a
retired judge to serve as arbitrator.
(ii) No later than 10 calendar days after appointment of an
arbitrator, the parties shall jointly prepare and submit to the
arbitrator a set of rules for the arbitration. In the event that the
parties cannot agree on the rules for the arbitration, the arbitrator
shall establish the rules. No later than 10 calendar days after the
arbitrator is appointed, such arbitrator shall arrange for a hearing
to commence on a mutually convenient date.
<PAGE>
25
The hearing shall commence no later than 120 calendar days after the
arbitrator is appointed and shall continue from day to day until
completed.
(iii) The arbitrator shall issue his or her award in writing
no later than 20 calendar days after the conclusion of the hearing.
The arbitration award shall be final and binding regardless of whether
any party fails or refuses to participate in the arbitration. The
arbitrator is empowered to hear and determine all disputes between the
parties hereto concerning the subject matter of this Agreement, and
the arbitrator may award money damages (but specifically not punitive
damages), injunctive relief, rescission, restitution, costs, and
attorneys' fees. The arbitrator shall not have the power to amend this
Agreement in any respect.
(iv) In the event that any party serves a proper demand for
arbitration under this Agreement, all parties may pursue discovery in
accordance with the Rules of Civil Procedure of the State of New York,
the provisions of which are incorporated herein by reference, with the
following exceptions: (A) the parties hereto may conduct all
discovery, including depositions for discovery purposes, without leave
of the arbitrator; and (B) all discovery shall be completed no later
than the commencement of the arbitration hearing or 120 calendar days
after the date that a proper demand for arbitration is served,
whichever occurs earlier, unless upon a showing of good cause the
arbitrator extends or shortens that period.
SECTION 6.12. Counterparts. This Agreement may be executed in
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
SECTION 6.13. Specific Performance. The parties hereto agree
that irreparable damage would occur in the event any provision of this Agreement
was not performed in accordance with the terms hereof and that the parties shall
be entitled to specific performance of the terms hereof, in addition to any
other remedy at law or equity.
<PAGE>
26
IN WITNESS WHEREOF, the Company and the Stockholder have
caused this Agreement to be executed as of the date first above written by their
respective officers thereunto duly authorized.
HEMASURE INC.
By: /s/ John F. McGuire, III
--------------------------------------
Name: John F. McGuire, III
Title: President
COBE LABORATORIES, INC.
By: /s/ Edward C. Wood, Jr.
--------------------------------------
Name: Edward C. Wood, Jr.
Title: Vice President
AMENDED AND RESTATED EXCLUSIVE DISTRIBUTION AGREEMENT
BETWEEN
HEMASURE INC.
AND
COBE LABORATORIES, INC.
Amended and Restated Exclusive Distribution Agreement (this
"Distribution Agreement") dated as of May 3, 1999, between HEMASURE INC., a
corporation organized under the laws of Delaware ("HemaSure"), and COBE
LABORATORIES, INC., a corporation organized under the laws of the State of
Colorado ("COBE").
RECITALS
A. HemaSure manufactures and distributes certain medical products and
supplies, together with parts necessary for repair and replacement and including
all devices now or hereafter manufactured or designed by HemaSure that filter
blood and its components. HemaSure's current Products are identified in the list
attached as Exhibit 1 (collectively, the "Products"), and such list may be
updated with mutual agreement from time to time to reflect additional Products
as described above (the "Product List").
B. HemaSure and COBE BCT, Inc. ("COBE BCT") entered into an Exclusive
Distribution Agreement on August 14, 1998 (the "Former Distribution Agreement")
whereby (1) COBE BCT became the exclusive distributor, and HemaSure became the
exclusive supplier to COBE BCT, in each case, during the term of the Former
Distribution Agreement, for the Products throughout the world except for China
and the United States, for a term commencing on August 14, 1998, and (2)
HemaSure would supply to COBE BCT certain Products to be incorporated into
medical devices manufactured by COBE BCT for sale to Affiliates of COBE BCT and
to third parties (the "COBE Products").
C. The parties hereto desire to amend and restate the Former
Distribution Agreement in its entirety, as provided herein.
D. The parties hereto desire that (1) COBE be the exclusive
distributor, and that HemaSure be the exclusive supplier to COBE, pursuant to
this Distribution Agreement for the Products throughout the Territory (as
defined below) for a term commencing on the date hereof (the "Commencement
Date") and continuing throughout the term of this Distribution Agreement set
forth in Article X hereof and (2) HemaSure supply to COBE and its Affiliates
certain Products to be incorporated into the COBE Products.
<PAGE>
2
In consideration of these premises and the mutual promises
made herein by the parties to each other, they agree as follows:
ARTICLE 1 - APPOINTMENT
1.1 Except as otherwise specifically provided herein, HemaSure hereby
appoints COBE as its exclusive distributor for the Products with the right to
appoint sub-distributors, in the Territory and for the term of this Distribution
Agreement, and COBE hereby accepts this appointment. In return, COBE appoints
HemaSure as its sole and exclusive supplier of the Products, for the term of
this Distribution Agreement, and HemaSure accepts this appointment. For purposes
of this Distribution Agreement, the "Territory" shall be, subject to the
provisions of Sections 10.7 and 10.8, the entire world. Notwithstanding any
provision of this Distribution Agreement to the contrary, HemaSure shall
maintain the exclusive right to distribute products (including, but not limited
to, the Products) made by HemaSure or its Subsidiaries to the American Red Cross
and its Affiliates solely as end-users (subject to COBE's right to sell OEM (as
defined in Section 3.2) products to the American Red Cross and its Affiliates).
1.2 All Products shall meet specifications set forth in Exhibit 1;
provided, however, that HemaSure, upon thirty (30) days' prior written notice
specifying the nature of and reasons for such changes, shall have the right to
make any changes in the specifications of the Products to the extent necessary
to satisfy regulatory requirements or to avoid a material adverse affect on the
quality or performance of the Products.
1.3 If COBE requests additional Products from HemaSure, or additional
development with respect to a Product, the parties agree to negotiate in good
faith the terms of a development agreement (a "Development Agreement") for the
additional Products or development services. Product development shall be
conducted in accordance with mutually agreed upon plans setting forth the
estimated cost and expense, the proposed specifications for and uses of the
Products and the requirements for and timing of the design, performance, quality
and manufacturability validation, regulatory approval and manufacturing
requirements.
1.4 In connection with any development pursuant to a Development
Agreement, if COBE pays for the complete development of any additional Products
or portions thereof, any improvements to HemaSure's Owned Intellectual Property
resulting therefrom (the "Improvements") shall be COBE's Owned Intellectual
Property, but HemaSure shall have a perpetual, non-exclusive, world-wide,
royalty-free license under such Improvements and Intellectual Property outside
the field of devices that filter blood and its components. If HemaSure's Owned
Intellectual Property existing on the date of any such Development Agreement is
required to practice any such COBE's
<PAGE>
3
Owned Intellectual Property, COBE shall have a perpetual non-exclusive,
world-wide, royalty-free license under such HemaSure Owned Intellectual Property
for the term of this Distribution Agreement (as such term may be extended),
limited to the field of devices that filter blood and its components.
Additionally, after the term of this Distribution Agreement, the provisions of
Section 10.10 shall apply to any product sales by COBE utilizing such HemaSure
Owned Intellectual Property, and HemaSure shall be entitled to the 12% royalty
contemplated in Section 10.10. Notwithstanding the above, any final Development
Agreement may set forth terms and conditions which are different than those set
forth in this Section 1.4.
1.5 COBE's sole compensation under this Distribution Agreement shall be
the profit it may realize from the resale of the Products.
1.6 If Sections 10.7 and 10.8 become applicable, COBE shall not,
without the written consent of HemaSure: (i) seek customers or establish any
branch or maintain any distribution depot for the Products outside the Territory
or (ii) knowingly sell the Products to any customer for use outside the
Territory.
1.7 COBE shall be fully responsible for the acts and conduct of its
employees, agents, sub-agents and sub-distributors and shall indemnify and hold
HemaSure harmless from all claims, liabilities and damages arising out of any
negligence or misconduct of COBE or its employees, agents, sub-agents or
sub-distributors.
1.8 Neither COBE nor HemaSure shall disclose to any third party any
trade secrets of the other party or any Confidential Information (as such term
is defined in the Confidentiality Agreement) concerning the other party, its
Products or its business. The terms of the Confidentiality Agreement are
incorporated herein by reference thereto in Exhibit 2, as amended in such
Exhibit 2. When this Distribution Agreement terminates, except as otherwise
agreed, each party shall promptly return to the other party all trade secret and
Confidential Information of said other party and shall not disclose or otherwise
use such information for a period of three years after the date of termination.
1.9 The following definitions shall apply to this Distribution
Agreement:
(a) "Affiliate" means, with respect to any specified Person, any other
Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person.
(b) "Change in Control" means the occurrence of any of the following
events: (i) any Person, other than a trustee or other fiduciary holding
securities under an employee benefit plan of HemaSure or any subsidiary of
HemaSure or any stockholder
<PAGE>
4
(and such stockholder's affiliates) as of the date hereof and direct transferees
thereof, becomes, after the date hereof, the "beneficial owner" (as defined in
Rule 13d-3 of the Securities Exchange Act of 1934, as amended), directly or
indirectly, of securities of HemaSure representing 50.1% or more of the total
voting power represented by HemaSure's then outstanding securities on a fully
diluted basis that vote generally in the election of directors ("Voting
Securities"); or (ii) the merger or consolidation of HemaSure with any other
corporation, other than a merger or consolidation in which the Voting Securities
of HemaSure outstanding immediately prior thereto continue to represent (either
by remaining outstanding or by being converted into Voting Securities of the
surviving entity) at least a majority of the total voting power of the surviving
entity; or (iii) the sale or transfer (in one transaction or a series of
transactions) of all or substantially all of the assets of HemaSure, other than
to a subsidiary of HemaSure.
(c) "Intellectual Property" of COBE or HemaSure, as the case may be,
means (i) inventions, whether or not patentable, whether or not reduced to
practice, and whether or not yet made the subject of a pending patent
application or applications, (ii) ideas and conceptions of potentially
patentable subject matter, including, without limitation, any patent
disclosures, whether or not reduced to practice and whether or not yet made the
subject of a pending patent application or applications, (iii) national
(including the United States) and multinational statutory invention
registrations, patents, patent registrations and patent applications (including
all reissues, divisions, continuations, continuations-in-part, extensions and
reexaminations) and all rights therein provided by international treaties or
conventions and all improvements to the inventions disclosed in each such
registration, patent or application, (iv) trademarks, service marks, trade
dress, logos, trade names and corporate names, whether or not registered, and
all rights therein provided by international treaties or conventions, (v)
copyrights (registered or otherwise) and registrations and applications for
registration thereof, and all rights therein provided by international treaties
or conventions, (vi) computer software, including, without limitation, source
code, operating systems and specifications, data, data bases, files,
documentation and other materials related thereto, data and documentation, (vii)
trade secrets and confidential, technical and business information (including
ideas, formulas, compositions, inventions, and conceptions of inventions whether
patentable or unpatentable and whether or not reduced to practice), (viii)
whether or not confidential, technology (including know-how and show-how),
manufacturing and production processes and techniques, research and development
information, drawings, specifications, designs, plans, proposals, technical
data, copyrightable works, financial, marketing and business data, pricing and
cost information, business and marketing plans and customer and supplier lists
and information, (ix) copies and tangible embodiments of all the foregoing, in
whatever form or medium, (x) all rights to obtain and rights to apply for
patents, and to register trademarks and copyrights, and (xi) all rights to sue
or recover and retain damages and costs and attorneys' fees for present and past
infringement of any of the foregoing.
<PAGE>
5
(d) "Licensed Intellectual Property" means all Intellectual Property
licensed or sublicensed to COBE or HemaSure, as the case may be, from a third
party.
(e) "Owned Intellectual Property" means all Intellectual Property,
other than the Licensed Intellectual Property, in and to which COBE or HemaSure,
as the case may be, holds, or has a right to hold, any right, title or interest.
(f) "Person" means an individual, corporation, partnership,
association, trust, joint venture, unincorporated organization, other entity or
group (as defined in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended).
ARTICLE 2 - DUTIES OF COBE
During the term of this Distribution Agreement, COBE shall:
-----------------------------------------------------------
2.1 Use commercially reasonable efforts to market and sell the Products
and develop a profitable market for them in the Territory.
2.2 Maintain and utilize such personnel, organization and facilities as
will be competent and adequate to enable COBE to satisfy its obligations under
this Distribution Agreement.
2.3 At least thirty days before the end of each calendar quarter,
prepare and furnish to HemaSure a proposed annual purchase forecast by month for
the following four calendar quarters, specifying the quantities of the Products
which COBE forecasts will be purchased for delivery during each month of that
year; provided, however, that in no event may HemaSure be required to deliver
quantities of any Product during a month which exceed 110% of the maximum
deliveries of such Product to COBE during any earlier calendar month. All orders
for shipment of Products within 30 days from the order shall be deemed to be
firm and non-cancelable.
2.4 Purchase from HemaSure and at all times maintain the minimum
inventories of Products to provide adequate service and delivery to customers in
the Territory. COBE shall meet the minimum purchase requirement set forth in
Exhibit 3, attached hereto, unless Exhibit 4 shall be applicable pursuant to the
provisions of Sections 10.7 and 10.8 in which case COBE shall meet the minimum
purchase requirements set forth therein, as the same shall be amended from time
to time. In the event that Exhibit 4 is applicable, the parties shall meet at
least three months before the end of each calendar year with respect to the
matters set forth in Exhibit 4 and negotiate in good faith the minimum purchase
requirements for the following calendar year, provided, that if they fail to
agree by the beginning of the year the aggregate
<PAGE>
6
minimum purchase requirements for all Products during that year shall equal 110%
of such aggregate minimum requirements for the preceding year.
2.5 Advise HemaSure of inquiries which COBE or any Affiliates receive
from potential customers for the Products outside the Territory, if applicable,
and shall use its commercially reasonable efforts to transfer to HemaSure all
customers who are reasonably likely to use the Products outside the Territory,
if applicable.
2.6 Except as otherwise agreed by the parties in writing, obtain all
regulatory approvals, registrations, and listing of Products required (Food and
Drug Administration (the "F.D.A."), C.E., C.S.A., etc.) in the Territory to make
and sell Products incorporated into COBE Products, or certify that such
approvals and registrations have been obtained or are not required, and comply
with all applicable laws, standards, rules and regulations.
2.7 Not modify or alter the Products in any way without the prior
written approval of HemaSure.
2.8 Indemnify and hold harmless HemaSure and its Affiliates and
customers, and their officers, directors, agents and employees, from and against
losses, claims and damages (including reasonable fees and expenses of counsel)
("Losses") as they are incurred, but solely to the extent such Losses arise out
of or are related to any claim by a third party that any Product modifications
or specifications requested by COBE on Products sold by COBE conflict with or
infringe upon Intellectual Property owned or licensed by the third party. An
exception to the above is that COBE will not indemnify and hold harmless
HemaSure and its Affiliates for any additional Losses arising from a
determination of willful infringement.
2.9 Indemnify and hold harmless HemaSure and its Affiliates and
customers, and their officers, directors, agents and employees, from and against
Losses as they are incurred, solely to the extent such Losses arise out of or
are related to any claim by a third party that any Product has caused personal
injury or other loss to the third party, and only to the extent such actual or
alleged personal injury or loss arises from willful misconduct, gross
negligence, failure to follow HemaSure's written instructions, or alterations of
a Product or Products without HemaSure's written approval. COBE shall maintain
product liability insurance with reputable insurers in such amounts and covering
such risks and on such terms and conditions as are in accordance with normal
industry practice.
2.10 In connection with the promotion and marketing of the Products,
(i) make clear in all dealing with customers that it is acting as a distributor
of the Products and not as an agent of HemaSure, (ii) comply with all material
legal requirements with respect to the storage and sale of the Products, (iii)
provide, at the reasonable request
<PAGE>
7
of HemaSure, copies of its price lists and copies of promotional aids and
literature, (iv) permit HemaSure's representatives to visit during normal
business hours, upon reasonable advance notice, any premises of COBE used in
connection with the sale of the Products, and (v) use only those advertising,
promotional and other selling materials approved by HemaSure (which approval
shall not be unreasonably withheld).
2.11 Provide full traceability of the Products to its customers. COBE
agrees that at all times it will be able to know its customer for each
individual Product lot for all Products delivered by HemaSure to COBE.
2.12 Be responsible (when applicable) for obtaining any necessary
import licenses, or other requisite documents, with respect to the importation
of the Products into the Territory and their resale in the Territory.
2.13 Provide information to HemaSure on Product complaints received. A
complaint is considered to be any oral or written expression of dissatisfaction
with the identity, quality, durability, reliability, safety, effectiveness, or
performance of a product. Any complaint involving injury or death will be
reported immediately to HemaSure. COBE will be responsible for follow-up
communication with the customer.
2.14 Cause its warehouses and distribution networks to be maintained
and operated (i) in a manner that will protect the integrity and quality of the
Products, maintaining safety and efficacy at all times; (ii) to ISO 9000
standards with respect to traceability and complaints; and (iii) to conform to
all national regulatory and other requirements.
2.15 Purchase from HemaSure all of its requirements for Products from
HemaSure and any and all devices and products substantially identical to the
Products for sale in the Territory, or that have uses or intended uses
substantially identical to the Products.
ARTICLE 3 - DUTIES OF HEMASURE
During the term of this Distribution Agreement, HemaSure shall:
---------------------------------------------------------------
3.1 Manufacture each Product in sufficient quantities to permit timely
delivery of the quantities of the Product provided for in COBE's forecast.
3.2 Package and mark the Products under COBE's name, in such manner as
COBE may reasonably direct, provided that Products sold to an original equipment
manufacturer ("OEM") unaffiliated with COBE for incorporation into devices
<PAGE>
8
manufactured by the OEM may be labeled with HemaSure's trademarks upon
HemaSure's receipt from COBE of its written consent regarding the same.
3.3 Advise COBE of inquiries which HemaSure or its other distributors,
if any, receive from potential customers for the Products within the Territory
and shall use its commercially reasonable efforts to transfer to COBE all
customers for the Products who are located within the Territory.
3.4 Except as otherwise agreed by the parties, obtain all regulatory
approvals, registrations, and listing of Products required (F.D.A., C.E.,
C.S.A., etc.) to sell the Products in the Territory (other than for Products
incorporated into COBE Products), or certify that such approvals and
registrations have been obtained or are not required, and comply with all
applicable laws, standards, rules and regulations.
3.5 Perform any investigations required with respect to Product
complaints and similar events and take necessary corrective action, keeping COBE
informed of such investigations and corrective action. HemaSure will conduct any
field actions which may be necessary, including Product recalls, modifications
and upgrades, as determined by HemaSure in its reasonable discretion. Any
extraordinary costs of conducting a field action, such as replacement of Product
and return of Product, shall be borne by HemaSure.
3.6 Notify COBE at least 90 days in advance of any changes in the
Products.
3.7 Comply with the Good Manufacturing Practices (GMP) regulations of
the F.D.A. and similar requirements of other jurisdictions within the Territory,
making HemaSure's records and documents available and cooperating with COBE
should COBE audit HemaSure for compliance with regulatory requirements.
3.8 Replace all defective Products at HemaSure's expense, including all
reasonable delivery, handling and related costs of the replacement.
3.9 Subject to Article 5, take such commercially reasonable actions as
may be needed in order to protect its rights in HemaSure's Owned Intellectual
Property against infringement, and to maintain its proprietary interest in its
Owned Intellectual Property in full force and effect.
3.10 Indemnify and hold harmless COBE and its Affiliates and customers,
and their officers, directors, agents and employees, from and against Losses as
they are incurred, arising out of or related to any claim by a third party that
any Product conflicts with or infringes upon Intellectual Property owned or
licensed by
<PAGE>
9
the third party. An exception to the above is that HemaSure will not indemnify
and hold harmless COBE and its Affiliates for any additional Losses arising from
a determination of willful infringement.
3.11 Indemnify and hold harmless COBE and its Affiliates and customers,
and their officers, directors, agents and employees, from and against Losses as
they are incurred, arising out of or related to any claim by a third party that
any Product has caused personal injury or other loss to the third party.
HemaSure shall maintain product liability insurance with reputable insurers in
such amounts and covering such risks and on such terms and conditions as are in
accordance with normal industry practice.
3.12 Warrant the Products to COBE and its customers under its standard
product warranty as set forth in Exhibit 5 hereto; provided, however, that the
representations, warranties and indemnification given by HemaSure herein are
subject to the conditions that HemaSure shall not be under liability in respect
of any defect in the Products:
(i) to the extent such defect arises solely from any
modifications made by COBE or its customers and not
approved by HemaSure in writing, or
(ii) to the extent such defect arises solely from willful
misconduct, gross negligence, failure to follow
HemaSure's written instruction, or alteration of the
Products without HemaSure's approval.
3.13 Have the right to sell Products to other manufacturers (other than
COBE or its Affiliates) to be included in said manufacturer's products to be
sold to end-users.
ARTICLE 4 - TRADEMARKS
4.1 COBE may use HemaSure's names and marks (the "Trademarks") in
advertising, or marketing and information materials, on COBE's letterheads or at
its place of business, to indicate that the Product is manufactured for COBE by
HemaSure (but not that COBE is otherwise associated with HemaSure). COBE may not
otherwise use HemaSure's Trademarks, trade names, or company name in connection
with the promotion or sale of any goods or services, except with HemaSure's
prior written approval. Upon termination of this Distribution Agreement for any
reason, COBE will immediately stop using HemaSure's Trademarks and trade or
company names and will
<PAGE>
10
stop advertising or otherwise indicating that COBE is a distributor of the
Products. COBE hereby acknowledges that HemaSure has the sole rights to such
trade names, company names and Trademarks.
4.2 COBE shall not:
(i) make any modifications to the Products or their
packaging, except on specific instructions from
local, state or federal authorities (any
modifications for purposes of enhancing the product
sales is to be submitted to HemaSure for approval
and said approval shall not be unreasonably
withheld);
(ii) alter, remove or tamper with any Trademarks, number,
or other means of identification used on or in
relation to the Products;
(iii) use any of the Trademarks in any way which might
prejudice their distinctiveness or validity or the
goodwill of HemaSure;
(iv) use in relation to the Products any trademarks other
than the Trademarks without obtaining the prior
written consent of HemaSure; or
(v) use in the Territory any trademarks or trade names
in any way similar to any Trademark or trade names
of HemaSure or which would be likely to cause
confusion to customers or potential customers;
provided that Section 4.2(i), (ii) and (iv) shall not apply to COBE Products.
4.3 COBE shall, at the expense of HemaSure, take all such reasonable
steps as HemaSure may reasonably require to assist HemaSure in maintaining the
validity and enforceability of the Trademarks of HemaSure during the term of
this Distribution Agreement. COBE shall at the request of HemaSure execute such
registered user agreements or licenses in respect of the use of the Trademarks
in the Territory as HemaSure may reasonably require, provided that the
provisions of any such agreement or license are not more onerous or restrictive
than the provisions of this Distribution Agreement.
4.4 COBE shall promptly notify HemaSure in writing of any actual or
threatened (in writing) infringement in the Territory of any Trademarks of
HemaSure which comes to COBE's actual notice and of any claim by any third party
so coming to its notice that the importation of the Products into the Territory,
or their sale therein, infringes any rights with respect to trademarks of any
other person, and COBE shall at
<PAGE>
11
the request and expense of HemaSure do all such reasonable things as may be
reasonably required to assist HemaSure in taking or resisting any proceedings in
relation to any such infringement or claim.
4.5 HemaSure may seek to register its Trademarks, trade names and
company names in the Territory, and do whatever it deems desirable to prevent
their unauthorized use by others.
4.6 To the extent necessary to fulfill HemaSure's obligations under
Section 3.2, HemaSure is hereby licensed by COBE to apply COBE's trademarks and
trade names to Products to be sold by COBE. COBE shall at all times have control
of the quality of goods bearing COBE's trademarks and trade names and may reject
any products not meeting COBE's quality requirements. Such quality requirements
shall be comparable to the quality requirements established by COBE for goods
manufactured by COBE. HemaSure may not otherwise use COBE's trademarks, trade
names, or company names in connection with the promotion of sale of any goods or
services, except with COBE's prior written approval. Upon termination of this
Distribution Agreement for any reason, HemaSure will immediately stop using
COBE's trademarks and trade or company names. HemaSure hereby acknowledges that
COBE has the sole rights to such trademarks and trade and company names.
4.7 COBE may seek to register its trademarks and trade and company
names for use in connection with its sale of the Products in the Territory, and
do whatever COBE deems desirable to prevent their use by others.
ARTICLE 5 - EXPENSES FOR NEW PATENT LITIGATION
5.1 The parties hereby agree to jointly appoint counsel in connection
with any new patent infringement litigation proceeding (including, without
limitation, any declaratory judgment action and specifically the action
commenced on April 5, 1999 against Pall Corporation in the United States
District Court for the District of Colorado and any other related action) and,
to the extent the parties agree on the appointment of counsel, COBE shall pay
all of the expenses incident thereto, including the fees and expenses of such
counsel (even in the event of an unsuccessful action). COBE's obligation to pay
expenses incident to the new patent infringement litigation proceeding does not
include an obligation to pay any damages that may be assessed against HemaSure
and/or COBE or any of their Affiliates in such new proceeding. HemaSure may, at
its own sole expense, appoint its own counsel at any time to advise and
represent HemaSure.
<PAGE>
12
5.2 Such appointed counsel will represent both COBE and HemaSure. Both
parties will consult and use best efforts to mutually agree on the litigation
strategy and related decisions.
5.3 Either party shall have the right to settle any such patent
infringement litigation on its own behalf. If COBE settles such patent
infringement litigation without the prior written consent of HemaSure, then
HemaSure shall not be obligated to indemnify COBE pursuant to this Distribution
Agreement or to pay any damages or other award that COBE agrees to pay as part
of such a settlement. Either party who settles any such patent infringement
litigation without the prior written consent of the other party shall indemnify
the other non-settling party for any damages, prejudice or adverse effect caused
by such settlement on the non-settling party. With respect to any such
settlement, neither party shall, without the consent of the other party (which
consent shall not be unreasonably withheld), admit that the Product infringes
the intellectual property rights of another or expressly admit that a third
party's patent is valid or enforceable.
5.4 Subject to Section 6.5 below, all rights and obligations of the
parties with respect to the matters described under this Article 5 (other than
with respect to the payment of fees and expenses) shall terminate upon
termination of any portion of this Distribution Agreement.
ARTICLE 6 - CONFIDENTIAL LITIGATION INFORMATION
In addition to each of the parties' rights and obligations pursuant to
the Confidentiality Agreements listed, and incorporated by reference, on Exhibit
2 to this Distribution Agreement, COBE and HemaSure shall each have the
following rights and obligations in connection with the confidential
information:
6.1 It may be necessary during the course of any new patent
infringement litigation for COBE and HemaSure to share litigation confidential
information. For purposes of this Article 6, litigation confidential information
refers to information that a producing party claims in writing to be its trade
secret or other confidential research, development, or commercial information
within the meaning of Rule 26(c)(7) of the Federal Rules of Civil Procedure, as
may be amended from time to time.
6.2 Other than pursuant to a court order or similar order
from a governmental or regulatory authority, the party receiving litigation
confidential information agrees to maintain all such information in confidence,
the receiving party will limit access to the litigation confidential information
on a need-to-know basis, and
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13
the receiving party agrees not to release the litigation confidential
information outside the company without the prior written approval of the
disclosing party.
6.3 All documents and litigation confidential information remain the
sole property of the disclosing party. The receiving party agrees to return all
documents and any copies to the disclosing party at the disclosing party's
request.
6.4 The obligations of the parties under this Article 6 are in addition
to any other obligations of the parties under this Distribution Agreement and
the Confidentiality Agreements listed, and incorporated by reference, in Exhibit
2 hereto, with respect to Confidential Information.
6.5 Notwithstanding Section 5.4 above, the provisions contained in this
Article 6 shall govern the relationship of the parties with respect to the
exchange of litigation confidential information in the context of any new patent
infringement litigation and shall remain in full force and effect
notwithstanding termination of this Distribution Agreement.
ARTICLE 7 - PRIVILEGED INFORMATION
In addition to each of the parties' rights and obligations pursuant to
the Confidentiality Agreements listed, and incorporated by reference, on Exhibit
2 to this Distribution Agreement, COBE and HemaSure shall each have the
following rights and obligations in connection with the privileged information:
7.1 It may be necessary during the course of any new patent
infringement litigation for COBE and HemaSure to share privileged information.
Privileged information is information that is subject to a claim of
attorney-client privilege or work-product immunity as defined under applicable
law.
7.2 Subject to Section 4 of the Confidentiality Agreement, (a) the
party receiving privileged information agrees to maintain such privilege; (b)
the receiving party will limit access to the privileged information on a
need-to-know basis, and the receiving party agrees not to release the privileged
information beyond its own officers, directors, employees and counsel without
the prior written approval of the disclosing party; and (c) the receiving party
agrees that privileged information will not be used in testimony at trial, at
any motion hearing, and at depositions and will not be offered into evidence at
trial or at any motion hearing without the prior written approval of the
disclosing party.
7.3 The receiving party will not assert waiver or estoppel based upon
its receipt of the privileged information.
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14
7.4 Notwithstanding Section 5.4 above, the provisions contained in this
Article 7 shall remain in full force and effect notwithstanding termination of
this Distribution Agreement.
ARTICLE 8 - TERMS OF SALES
8.1 Subject to the terms of Exhibit 3 hereto, if applicable, COBE shall
pay the prices determined as specified in Exhibit 1 for the Products. The prices
set forth in Exhibit 1 will remain in effect until December 31, 1999.
Thereafter, HemaSure and COBE shall negotiate annually in good faith to
establish annual price changes to remain in effect for each annual period
following 1999. Unless otherwise agreed, prices for each Product shall increase
or decrease each year by a percentage equal to any percentage increase or
decrease in the standard manufacturing cost for the Product (as determined by
HemaSure in accordance with generally accepted accounting principles and
HemaSure's historical accounting practices) during HemaSure's preceding fiscal
year, provided that in no event shall such percentage change exceed the
percentage change in COBE's average selling price for the Product during the
preceding fiscal year.
8.2 Unless otherwise agreed in writing, all prices for the Products
shall be F.O.B. HemaSure's factory, freight collect, and shall be inclusive of
all taxes, duties and other governmental charges assessed or assessable prior to
passage of title to COBE. Title to the Products and risk of loss shall pass to
COBE on delivery of the Products to the destination specified by COBE in its
purchase orders. Products shall be shipped against COBE purchase orders
specifying shipment dates, transportation requirements and quantities of
Products.
8.3 Unless otherwise agreed in writing, all payments for the Products
shall be made in U.S. dollars, payable within 30 days after delivery, by check
drawn on a U.S. bank.
8.4 The Products will be packaged for shipping in packaging labeled as
provided in Section 3.2, substantially comparable in all other respects to
HemaSure's standard packaging, which shall be appropriate for shipment by the
means/carrier specified by COBE in its purchase orders.
8.5 Other terms of sale shall be as agreed to by the parties.
ARTICLE 9 - TRAINING; MARKETING
9.1 To the extent deemed reasonably necessary by COBE and HemaSure,
HemaSure will provide COBE's service personnel with reasonable technical
<PAGE>
15
training for the proper maintenance of the Products, at a mutually agreed upon
location and date. For this purpose, HemaSure will pay for the expenses of its
personnel and, unless the parties have agreed otherwise in advance, COBE shall
bear all expenses of its personnel associated with this training.
9.2 To the extent deemed reasonably necessary by COBE and HemaSure,
HemaSure will provide marketing and sales training and product information to
COBE's sales personnel at a mutually agreed upon location and date. For this
purpose, HemaSure will pay the expenses of its personnel and, unless the parties
have agreed otherwise in advance, COBE shall bear all expenses of its personnel
associated with the training.
9.3 At COBE's reasonable request HemaSure will make technical visits
and presentations to COBE customers, at such times and places as COBE may
reasonably request and subject to the availability of appropriate HemaSure
personnel. COBE will reimburse HemaSure for its reasonable out-of-pocket costs
for such visits and presentations, including per diem charges based on
HemaSure's actual costs for the employees involved. HemaSure may also initiate
such visits and presentations with COBE's prior approval and at the expense of
HemaSure.
9.4 HemaSure shall supply COBE with standard product information in the
English language and such other English language advertising material, sales
literature and instructions as HemaSure and COBE deem appropriate to assist COBE
in the promotion, sale and service of the Products in the Territory. Additional
quantities of such materials may be purchased by COBE at prices quoted by
HemaSure from time to time. Unless otherwise agreed, any other advertising and
promotional expenses shall be paid by COBE. COBE may modify, adapt or reproduce
any such information provided by HemaSure to the extent COBE deems appropriate
to fulfill its obligations under this Distribution Agreement, subject to the
approval of HemaSure, which will not be withheld unreasonably.
ARTICLE 10 - TERM OF AGREEMENT
10.1 This Distribution Agreement shall become effective as of the
Commencement Date and, unless earlier terminated in accordance with its
provisions, shall remain in effect for a period of five (5) years from the date
of receipt of 510(k) approval from the F.D.A. for the r/LS Leukoreduction Filter
(the "Approval Date"). At any time in the next to last year of a term either
party may give written notice to the other party of its intent to terminate this
Distribution Agreement at the end of the then-current term. If neither party
gives such notice to the other party, this Distribution Agreement shall be
extended automatically for an additional term of three (3) years.
<PAGE>
16
10.2 Either party may terminate this Distribution Agreement for a
material breach of this Distribution Agreement by the other party, by notifying
the other party in writing of such breach and, except as otherwise provided in
Sections 10.3, 10.4 and 10.5, allowing sixty (60) days within which to cure the
breach. If the breach is not cured within the sixty (60) day period, the
complaining party may terminate this Distribution Agreement at any time
thereafter by giving written notice of termination to the defaulting party.
Failure to exercise this right of termination in any instance of breach shall
not be a waiver of this right as to any subsequent breach.
10.3 This Distribution Agreement shall terminate automatically, upon
written notice by one party to the other party, without any further notice,
summons or process whatever, if one of the following circumstances occurs:
(a) An event of bankruptcy occurs with respect to the other party; or
(b) Either party ceases to engage in the business or activities which
are the subject of this Distribution Agreement.
10.4 COBE may, at its discretion, terminate this Distribution Agreement
for cause immediately upon written notice if:
(a) HemaSure has failed to supply any Products in quantities greater
than 85% of the minimum amounts forecasted for two of any six consecutive
calendar quarters.
(b) HemaSure violates the provisions of Section 1.1.
10.5 Notwithstanding the foregoing, HemaSure's sole remedy in the event
COBE fails to meet the minimum purchase requirements of (a) Exhibit 3, if
applicable, shall be as set forth under the heading "Consequences of Exceeding
or Failure to Meet Minimum Volume Targets" in Exhibit 3, or (b) Exhibit 4, if
applicable, shall be the remedies set forth in such Exhibit 4; provided, that
with respect to Exhibit 4 COBE may cure any such breach within the sixty (60)
day notice period by ordering sufficient Products to fulfill the minimum for the
quarter during which the sixty (60) day period ends.
10.6 Neither HemaSure nor COBE owns or shall be deemed to own any right
of property in this Distribution Agreement.
10.7 HemaSure shall have the right to terminate this Distribution
Agreement with respect to the United States of America in the event of a Change
in Control of HemaSure, and, in the event of such termination, the definition of
the "Territory" and the minimum volume purchase requirements of COBE shall be
revised
<PAGE>
17
as provided in Section 10.8 below. In the event that HemaSure desires to
terminate this Distribution Agreement in the United States of America pursuant
to the preceding sentence, HemaSure shall deliver written notice to COBE setting
forth (i) a description of the Change in Control and (ii) the date the
termination process (as contemplated below) shall commence; provided that in no
event shall the date of the commencement of such termination process be less
than 18 months after the Approval Date. The termination process shall be
completed by, and the date of termination of this Distribution Agreement with
respect to the United States of America pursuant to this Section 10.7 shall be,
the first-year anniversary of the date of commencement of the termination
process (as specified in HemaSure's termination notice to COBE). During the
period of the termination process and prior to the termination date with respect
to the United States of America, (i) HemaSure may, by itself or through other
distributors, distribute or co-distribute Products under its own brand name or
any other brand name (other than COBE's brand names) or no brand name to any
Person, (ii) COBE shall not solicit any new customers for Products, other than
such customers as COBE shall have identified to HemaSure in a written schedule
(which schedule shall consist of customers that COBE is then currently in
negotiations with for the sale of Products) delivered to HemaSure not later than
10 business days after COBE's receipt of such notice of termination, (iii) each
of COBE and HemaSure will use their respective best efforts to facilitate an
orderly transition of COBE's business for the sale of Products in the United
States of America on the date of delivery of such termination notice by HemaSure
and (iv) COBE shall not be bound by the second sentence of Section 1.1 and
Section 2.15 with respect to the United States of America.
10.8 In the event HemaSure exercises its rights under Section 10.7,
upon the effective date of the termination contemplated thereby, (i) the
Territory shall be the entire world other than the United States of America and
(ii) the minimum purchase requirement shall be as set forth on Exhibit 4, not
Exhibit 3.
10.9 In the event of termination of this Distribution Agreement for any
reason, the provisions of Articles 6 and 7 and Sections 1.4, 1.7, 1.8, 2.8, 2.9,
3.8 through 3.12, 10.7 through 10.13 and 13.5 through 13.8 shall nevertheless
remain in effect.
10.10 If this Distribution Agreement expires by its terms, or is
terminated for any reason, including pursuant to Section 10.7, other than
willful default by COBE, COBE shall have and is hereby granted a non-exclusive,
world-wide perpetual license of HemaSure's Owned Intellectual Property (but only
to the extent such Owned Intellectual Property exists and is in effect as of the
date of the termination) to make, have made, use and sell devices for filtration
of blood and its components, for a royalty, as to any Product (but only in the
Territory) and/or COBE Product (on a world-wide basis) incorporating such
HemaSure Owned Intellectual Property, equal to 12% of the most recent net
purchase price paid by COBE to HemaSure for that Product. The
<PAGE>
18
indemnification by HemaSure set forth in Section 3.10 of this Distribution
Agreement shall not apply to the activities of COBE done pursuant to a license
granted under this Section 10.10.
10.11 Notwithstanding Section 10.10, above, if termination or
expiration happens solely as a result of COBE's providing HemaSure notice of
termination at the end of the then-current term under Section 10.1 above, then
the COBE license provided for in Section 10.10 will be a limited time period
license for all Products (except those Products used as a component of COBE's
own products, which shall remain a perpetual license), so as to allow a
commercially reasonable market transition by COBE to other suppliers or
distributors.
10.12 Notwithstanding any other provision contained in this
Distribution Agreement, including, without limitation, Section 10.7 of this
Distribution Agreement, upon Termination of this Distribution Agreement for any
reason, in whole or in part, HemaSure shall continue to supply all Products
required by COBE (i) in order to permit COBE to fulfill its obligations under
COBE's then existing third party contracts and (ii) with respect to all of
COBE's existing and future OEM arrangements and products. In the event that
HemaSure should deliver its notice of termination with respect to the United
States of America portion of the Territory pursuant to Section 10.7, COBE shall
not, after receipt of such notification and except as permitted by Section 10.7,
enter into any new contracts for the supply of Products in the United States of
America which would extend beyond the date of the expiration of the termination
process contemplated by Section 10.7.
10.13 Within sixty days following the expiration or termination of this
Distribution Agreement, HemaSure shall repurchase from COBE at the original
purchase price any Products delivered to COBE in the sixty days prior to the
expiration or termination of this Distribution Agreement, which remain in COBE's
inventory and which have remaining shelf life and are in good re-sellable
condition.
ARTICLE 11 - ASSIGNMENT
11.1 HemaSure shall not take any action that would result in the
assignment of this Distribution Agreement, in whole or in part, without the
express written consent of COBE, which consent shall not be unreasonably
withheld or delayed. In addition, subject to the terms of this Distribution
Agreement, including, without limitation, Sections 10.7 and 10.8, HemaSure shall
not sell or transfer, in one transaction or a series of transactions, all or
substantially all of the assets of HemaSure unless the acquiror of such assets
agrees to be bound by the provisions of this Distribution Agreement. This
Distribution Agreement shall not be assignable by COBE without the prior written
consent of HemaSure, which consent shall not be
<PAGE>
19
unreasonably withheld or delayed, except that COBE may assign this Distribution
Agreement to an Affiliate and, subject to HemaSure's rights of termination in
Article 10, COBE may assign this Distribution Agreement as a part of the sale of
substantially all of its assets related to its blood filtration products
business.
ARTICLE 12 - LIMIT OF LIABILITY
12.1 The parties shall not be liable for any breach of this
Distribution Agreement resulting from any cause beyond their control including,
without limitation, acts of God, fire, flood, strike, lockout, factory shutdown,
act of civil or military authority, priority request, order of any government or
any department or agency thereof, insurrection, riot, war, embargo, or a party's
inability to obtain labor or materials from its usual sources. Any suspension of
a party's performance by reason of this Section shall be limited to the period
during which the cause of such suspension exists, but shall not affect or extend
the running of the term of this Distribution Agreement.
12.2 HemaSure shall maintain its current comprehensive general and
product liability insurance in effect for the term of this Distribution
Agreement. The insurance shall name COBE on the list of distributors subject to
vendor's coverage. Upon receiving COBE's prior written instruction, HemaSure
shall provide COBE proof of the continued maintenance of the insurance annually.
12.3 COBE assumes all risk and liability for loss, damage or injury to
any person or property arising from repair, alteration, misuse, mishandling, or
negligence in storing or handling, of any Products by COBE, including its agents
and employees. COBE's product liability insurance shall cover Products
incorporated into COBE Products.
ARTICLE 13 - MISCELLANEOUS
13.1 The parties shall comply with all governmental rules and
regulations in force within the Territory relating to this Distribution
Agreement, including without limitation any registration or approval required
for the import and sale of the Products, except where non-compliance would not
have a material adverse effect on either party. HemaSure shall comply with all
governmental rules and regulations to the extent necessary for the performance
of HemaSure's obligations under this Distribution Agreement.
13.2 All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be given (and shall be deemed to have
been duly given upon receipt) by delivery in person, by telecopy or by
registered or certified
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20
mail (postage prepaid, return receipt requested) to the respective parties at
the following addresses (or at such other address for a Party as shall be
specified by like notice):
(a) if to COBE:
COBE Laboratories, Inc.
1185 Oak Street
Lakewood, Colorado 80215
Attention: Edward C. Wood
Telecopier: (303) 988-5782
with copies to:
Legal Department
COBE Laboratories, Inc.
1201 Oak Street
Lakewood, Colorado 80215
Telecopier: (303) 231-4198
and to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Telecopy: (212) 848-7179
Attention: Peter D. Lyons, Esq. and
Kenneth A. Gerasimovich, Esq.
(b) if to HemaSure:
HemaSure Inc.
140 Locke Drive
Marlborough, Massachusetts 01752
Attention: James B. Murphy
Telecopier: (508) 485-6045
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21
with a copy to:
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Attention: Luke P. Iovine, III, Esq.
Telecopier: (212) 339-9150
13.3 The failure of either party to exercise any rights hereunder shall
not be deemed to be a waiver of such right.
13.4 No modification or amendment to this Distribution Agreement
shall be binding unless in writing, duly executed by both parties. In the event
of any inconsistent term or condition of a purchase order, invoice or other
document utilized by the parties in connection with matters contemplated under
this Distribution Agreement, the terms and conditions of this Distribution
Agreement shall be deemed to govern.
13.5 In the event that either party initiates any action under either
Section 13.6 or Section 13.7 of this Distribution Agreement, this Distribution
Agreement shall be governed by and construed under the laws of the State of New
York, without reference to its conflicts of laws provisions.
13.6 If a dispute arises from or relates to this Distribution Agreement
or the breach thereof, whether of law or fact, of any nature whatsoever, and
such dispute cannot be settled through direct discussions between the parties,
the parties agree to endeavor first to settle the dispute in an amicable manner
by mediation administered by the American Arbitration Association under its
Commercial Mediation Rules before resorting to litigation. The parties agree
that the mediator shall be a person who is, or has served as, a senior vice
president of a medical products company for at least five (5) years. Mediation
shall take place in New York, New York. If the dispute cannot be resolved within
60 days of the initiation thereof by either party, either party may initiate
arbitration in accordance with the provisions of Section 13.7 of this
Distribution Agreement.
13.7 All disputes arising under this Distribution Agreement that cannot
be amicably resolved under Section 13.6, shall be settled by binding
arbitration. Judgment upon the award rendered may be entered in any court in the
New York, New York metropolitan area.
(a) Any party requesting arbitration shall serve a written demand for
arbitration on the other party. The demand shall set forth in reasonable detail
a statement of the nature of the dispute, the amount involved and the remedies
sought.
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22
No later than twenty (20) calendar days after a demand for arbitration is
served, the parties shall jointly select and appoint a retired judge of the
Courts of the State of New York to act as the arbitrator. In the event that the
parties do not agree on the selection of an arbitrator, the party seeking
arbitration shall apply to the United States District Court for the Southern
District of New York for appointment of a retired judge to serve as arbitrator.
(b) No later than ten (10) calendar days after appointment of an
arbitrator, the parties shall jointly prepare and submit to the arbitrator a set
of rules for the arbitration. In the event that the parties cannot agree on the
rules for the arbitration, the arbitrator shall establish the rules. No later
than ten (10) calendar days after the arbitrator is appointed he shall arrange
for a hearing to commence on a mutually convenient date. The hearing shall
commence no later than one hundred twenty (120) calendar days after the
arbitrator is appointed and shall continue from day to day until completed.
(c) The arbitrator shall issue his or her award in writing no later
than twenty (20) calendar days after the conclusion of the hearing. The
arbitration award shall be final and binding regardless of whether any party
fails or refuses to participate in the arbitration. The arbitrator is empowered
to hear and determine all disputes between the parties hereto concerning the
subject matter of this Distribution Agreement, and the arbitrator may award
money damages (but specifically not punitive damages), injunctive relief,
rescission, restitution, costs, and attorneys' fees. The arbitrator shall not
have the power to amend this Distribution Agreement in any respect.
(d) In the event that any party serves a proper demand for arbitration
under this Distribution Agreement, all parties may pursue discovery in
accordance with the Rules of Civil Procedure of the State of New York, the
provisions of which are incorporated herein by reference, with the following
exceptions: (x) the parties hereto may conduct all discovery, including
depositions for discovery purposes, without leave of the arbitrator; and (y) all
discovery shall be completed no later than the commencement of the arbitration
hearing or one hundred twenty (120) calendar days after the date that a proper
demand for arbitration is served, whichever occurs earlier, unless upon a
showing of good cause the arbitrator extends or shortens that period.
13.8 If any provision of this Distribution Agreement is held by any
Court, or other authority having jurisdiction, to be invalid or unenforceable
under the law applicable thereto, the provision shall be deemed modified or
deleted to the extent necessary to result in compliance with such applicable
legal provision and this Distribution Agreement, as so modified or amended,
shall continue in full force and effect in all other respects.
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23
13.9 Any waiver by either party of a breach of any provision of this
Distribution Agreement shall not be considered as a waiver of any subsequent
breach of the same or any other provision.
13.10 As of the date hereof, the Former Distribution Agreement is
amended and restated hereby in its entirety and is no longer in effect, and by
its execution of this Distribution Agreement, each of HemaSure and COBE BCT
agrees that the Former Distribution Agreement is so amended and restated in its
entirety and is no longer in effect.
<PAGE>
24
IN WITNESS WHEREOF, the undersigned have executed this Distribution
Agreement as of the date first written above.
COBE LABORATORIES, INC.
By: /s/ Edward C. Wood, Jr.
-------------------------------
Edward C. Wood, Vice President
COBE BCT, INC.
By: /s/ Edward C. Wood, Jr.
-------------------------------
Edward C. Wood, President
HEMASURE INC.
By: /s/ John F. McGuire, III
-------------------------------
John F. McGuire III, President
