UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended October 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From ________to________
Commission file number 0-17019
ANGEION CORPORATION
(Exact name of registrant as specified in its charter)
Minnesota 41-1579150
(State of Incorporation) (IRS Employer Identification No.)
Suite 170
7601 Northland Drive, Minneapolis, MN 55428-1088
(Address of principal (Zip Code)
executive offices)
(612) 315-2000
(Telephone number)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES __X__ NO ____
Common stock, par value $.01 per share: 32,955,041 shares
outstanding as of December 10, 1997
<PAGE>
EXPLANATORY NOTE
Angeion Corporation (the "Company") filed a request for Confidential
Treatment on December 14, 1997 (the "Request") in connection with certain
transactions with Synthelabo and its subsidiaries. The documents related to such
transactions were originally included as exhibits to the Company's original Form
10-Q filed on December 15, 1997. Pursuant to discussions with the Securities and
Exchange Commission regarding the Request, the Company is refiling such
documents in their final redacted forms as exhibits to this Form 10-Q/A.
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
Method of
Item No. Item Filing
- -------- ---- ------
10.1 Amended and Restated Investment and Master Filed
Strategic Relationship Agreement dated as of herewith.
October 9, 1997 between Company and
Synthelabo.*
10.2 Limited Liability Company Operating Filed
Agreement of Angellan Medical Systems, LLC herewith.
dated December 9, 1997 between the Company
and ELA Medical, Inc.*
10.3 Implantable Cardioverter Defibrillator Filed
Product Manufacturing and Supply Agreement herewith.
dated December 9, 1997 between the Company
and ELA Medical, Inc.*
10.4 Implantable Cardioverter Defibrillator Filed
Product Manufacturing and Supply Agreement herewith.
dated December 9, 1997 between the Company
and Angellan Medical Systems, LLC.*
10.5 First Amendment to Rights Agreement dated as Filed
of October 9, 1997 between the Company and herewith.
Norwest Bank Minnesota, N.A.
10.6 Second Amendment to Rights Agreement dated Filed
as of October 9, 1997 between the Company herewith.
and Norwest Bank Minnesota, N.A.
10.7 Form of Common Stock Purchase Warrant to Filed
purchase 1,350,845 shares of Common Stock herewith.
issued to Synthelabo.
10.8 Form of Supplemental Common Stock Purchase Filed
Warrant. herewith.
10.9 Form of Second Investment Common Stock Filed
Purchase Warrant. herewith.
10.10 Form of Third Investment Common Stock Filed
Purchase Warrant. herewith.
10.11 Form of Fourth Investment Common Stock Filed
Purchase Warrant. herewith.
10.12 1994 Non-Employee Director Plan (as amended **
through September 30, 1997).
10.13 1997 Employee Stock Purchase Plan. **
10.14 Side Letter between Company and Synthelabo Filed
dated as of December 9, 1997. herewith.
27.1 Financial Data Schedule. **
(b) A current report on Form 8-K, dated October 22, 1997, was filed during the
three months ended October 31, 1997, pursuant to Item 5. This filing was
made in reference to the announcement by the Company of change in its
fiscal year-end from July 31 to December 31. No financial statements were
included in this filing.
* Confidential treatment has been requested with respect to designated
portions contained within this exhibit. Such portions have been omitted and
filed separately with the Commission pursuant to Rule 24b-2 of the
Securities and Exchange Act of 1934, as amended.
** Incorporated by reference to the original Form 10-Q filed by the Company on
December 15, 1997.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ANGEION CORPORATION
By: /s/ James B. Hickey, Jr.
-------------------------------------
James B. Hickey, Jr.
President and Chief Executive Officer
July 29, 1998
EXHIBIT 10.1
AMENDED AND RESTATED
INVESTMENT AND MASTER
STRATEGIC RELATIONSHIP AGREEMENT
BETWEEN
SYNTHELABO
AND
ANGEION CORPORATION
-------------------
DATED AS OF OCTOBER 9, 1997
Note: Portions of this exhibit marked with "X's" have been omitted pursuant
to a request for confidentiality under Rule 24b-2 of the Securities
Exchange Act of 1934, as amended. A copy of this exhibit in its
entirety has been filed separately with the Securities and Exchange
Commission.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I. Definitions.............................................................................1
ARTICLE II. Purchase and Sale of Shares and Warrants..............................................12
2.1. Purchase and Sale of the Initial Shares and Warrants..........................12
2.2. Purchase and Sale of Additional Shares and Warrants...........................17
2.3. Share Ownership Maintenance Rights............................................20
2.4. Anti-Dilution Provisions......................................................22
ARTICLE III. Representations and Warranties.......................................................28
3.1. Representations and Warranties of the Company.................................28
3.2. Representations and Warranties of Investor....................................32
ARTICLE IV. Covenants.............................................................................34
4.1. Covenants of the Company......................................................34
4.2. Covenants of the Investor.....................................................37
4.3. Mutual Covenants..............................................................44
ARTICLE V. Additional Agreements..................................................................46
5.1. Indemnification...............................................................46
5.2. XXXXXXXXXXXXXXXXX.............................................................47
5.3. XXXXXXXXXXX...................................................................47
5.4. Distribution Agreements.......................................................47
5.5. Third Party Financing.........................................................47
ARTICLE VI. Deferred Closing and Supplemental Closing Conditions..................................48
6.1. Investor Conditions...........................................................48
6.2. Company Conditions............................................................49
ARTICLE VII. Registration Rights..................................................................49
7.1. Definitions...................................................................49
7.2. Demand Registration...........................................................50
7.3. Incidental Registration.......................................................52
7.4. Registration Procedures.......................................................53
7.5. Indemnification...............................................................56
7.6. Registration Rights Granted to Third Parties..................................58
<PAGE>
ARTICLE VIII. Miscellaneous.......................................................................59
8.1. Fees and Expenses.............................................................59
8.2. Legend........................................................................59
8.3. Survivability.................................................................59
8.4. Severability..................................................................60
8.5. Specific Enforcement; Consent to Jurisdiction.................................60
8.6. Dispute Resolution Procedures.................................................61
8.7. Brokers.......................................................................64
8.8. Entire Agreement; Amendments..................................................64
8.9. Notices.......................................................................65
8.10. No Waiver....................................................................66
8.11. Heading......................................................................66
8.12. Successors and Assigns.......................................................66
8.13. No Third Party Beneficiaries.................................................67
8.14. Governing Law................................................................67
8.15. Further Assurances...........................................................67
8.16. English Language Controls....................................................67
8.17. Relationship of the Parties..................................................67
8.18. Confidentiality; Publicity...................................................68
8.19. Number and Gender of Words...................................................69
8.20. Interpretation...............................................................69
8.21. Counterparts.................................................................69
</TABLE>
<PAGE>
AMENDED AND RESTATED INVESTMENT AND MASTER STRATEGIC RELATIONSHIP
AGREEMENT dated as of October 9, 1997 among SYNTHELABO, a societe anonyme (the
"Investor"), and ANGEION CORPORATION, a Minnesota corporation (the "Company").
A. The Investor and the Company believe that a more extensive business
relationship between them would be mutually advantageous.
B. As part of such business relationship, the Parties desire that the
Investor become a long-term equity investor in the Company by purchasing shares
of the Company's common stock (the "Common Stock") and warrants (the "Warrants")
to purchase shares of Common Stock, for an aggregate purchase price of
$30,000,000, on the terms and conditions set forth herein.
C. In connection with the Investor becoming a long-term investor in the
Company, the Company will enter into various agreements with Affiliates of the
Investor including ELA Medical, a societe anonyme ("ELA"), and the Company and
the Investor desire to define certain aspects of the overall relationship
between the groups of companies.
NOW, THEREFORE, the Parties hereto agree as follows:
ARTICLE I.
Definitions
As used in this Agreement, the following terms shall be defined as
follows::
"Accredited Investor" shall have the meaning set forth in section
3.2(d).
"Acquisition Event" shall have the meaning set forth in section 4.2(g).
"Affiliate(s)" shall mean any corporation, association or other entity
which directly or indirectly controls, is controlled by or is under common
control with the party in question, but only for so long as such relationship
exists. As used herein, the term "control" shall mean the ability to direct the
business of a company and shall be presumed in the case of ownership, directly
or indirectly, of shares of stock having at least fifty percent (50%) of the
voting power entitled to vote for the election of directors in the case of a
corporation, and at least fifty percent (50%) of the voting power and interest
in profits in the case of a business entity other than a corporation, or only if
less than fifty percent (50%) of the voting power and interest in profits is
permitted by Applicable Law, the maximum amount allowed in the country in
question (so long as the holder otherwise retains the ability to direct the
business of the entity). The Parties acknowledge and agree that neither L'Oreal
nor the Joint Venture shall be deemed to be included within the term
<PAGE>
"Affiliate" for any purposes under this Agreement unless otherwise expressly
provided in this Agreement.
"AIMD" shall mean Directive 90/385/EEC Relating to Active Implantable
Medical Devices and all regulations, guidelines or guidance issued thereunder.
"Angeion JV Manufacturing and Supply Agreement" shall have the meaning
set forth in section 2.1(b)(ii)(A)(5).
"Applicable Laws" shall mean all foreign, federal, state and local
laws, statutes, rules and regulations which have been enacted by a Governmental
Authority and are in force as of the date hereof or which are enacted by a
Governmental Authority and come into force during the term of this Agreement, in
each case to the extent that the same are applicable to the performance by the
Parties of their respective obligations under this Agreement.
"Articles of Incorporation" shall have the meaning set forth in section
3.1(c).
"Bankruptcy" shall mean with respect to any Person (A) the entry by a
court having jurisdiction in the premises of (i) a decree or order for relief in
respect of such Person in an involuntary case or proceeding under any applicable
federal or state bankruptcy, insolvency, reorganization or other similar law or
(ii) a decree or order adjudging such Person a bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization, arrangement,
adjustment or composition of or in respect of such Person under any Applicable
Law, or appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of such Person or of any substantial part
of such Person's property, or ordering the winding up or liquidation of the
affairs of such Person and the continuance of any such decree or order for
relief or any such other decree or order unstayed and in effect for a period of
30 consecutive days or (B) the commencement by such Person of a voluntary case
or proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to be
adjudicated a bankrupt or insolvent, or the consent by such Person to the entry
of a decree or order for relief in respect of such Person in an involuntary case
or proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any bankruptcy or
insolvency case or proceeding against it, or the filing by such Person of a
petition or answer or consent seeking reorganization or relief under any
Applicable Law, or the consent by such Person to the filing of such petition or
to the appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator or similar official of such Person or of any
substantial part of such Person's property, or the making by such Person of an
assignment for the benefit of creditors, or the admission by such Party in
writing of its inability to pay its debts generally as they become due, or the
taking of corporate or other action by such Person in furtherance of any such
action or the calling of a meeting of creditors of the Person or appointment of
a committee of creditors or liquidating agents with respect to such Person or
its assets, or any offering of a
<PAGE>
composition of or extension to creditors with respect to such Person or its
assets, with or without the consent or acquiescence of such Person.
"Beneficially Owns" or any derivation of such term shall have the same
meaning as set forth in Rule 13d-3 under the Exchange Act, and shall include,
with respect to the Investor, all Shares underlying exercisable Warrants issued
pursuant to this Agreement but shall exclude (i) any rights existing under the
Rights Agreement, and (ii) any Shares that may be purchaseable by or issuable to
(as applicable) the Investor pursuant to Sections 2.3, 2.4 or Section 4.2(b)(ii)
until such Shares are so issued or purchased.
"Best Efforts" shall be determined under New York law and shall mean
such efforts as are consistent with efforts made by businesses of similar size
and resources in a similar circumstance and context, to achieve a particular
result in a timely manner, but shall not require a party to take actions that
would be commercially unreasonable to such party in the circumstances.
"By-laws" shall have the meaning set forth in section 3.1(c).
"Cardiac Stimulation Device" shall mean an implantable medical device
for electrically stimulating or shocking the heart which is suitable for use by
or with human patients. The term "Cardiac Stimulation Device" includes, without
limitation: cardiac pacemakers, antitachycardia pacemakers, cardioverters and
defibrillators, including combinations thereof ("such devices"), pulse
generators and other waveform generators for such devices; electronic and
mechanical components, including without limitation, batteries and capacitors to
the extent these components are used for or with such devices; mechanisms for
coupling such generators in a stimulating, shocking or sensing relationship to
the heart including without limitation leads, electrodes, and sensors; and data
dispensing, processing and gathering systems for such devices, including without
limitation programmers, pacing system analyzers, defibrillation system
analyzers, testers, encoders, decoders, transmitters, receivers, and computer
software-controlled systems, including all related software; and internal, but
not external, holter monitors used for recording heart rhythms (even though such
internal holter monitors do not electrically stimulate the heart). The term
"Cardiac Stimulation Device" excludes, by way of example and not limitation,
muscle stimulators, nerve stimulators, bone growth stimulators, cardiomyoplasty
stimulators and associated devices, arrhythmia mapping devices, imaging
technology, angioplasty devices, catheter ablation systems, and temporary
external pacemakers and defibrillators; and EKG monitors (other than pacing
programmers) which are standalone, non-ambulatory and not intended for
transtelephonic monitoring.
"Change of Control" shall be deemed to have occurred in either of the
following circumstances:
(i) with respect to the Company, if (A) any "person," as such
term is used in Sections 13(d) and 14(d) of the Exchange Act (other than the
Company, an Affiliate of the Company, any trustee or other fiduciary holding
securities under any compensatory benefit plan of the Company or an Affiliate of
the Company, or any entity
<PAGE>
owned directly or indirectly by the stockholders of the Company in substantially
the same proportions as their ownership of stock of the Company), is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of Voting Securities representing 30% or more of the
Company's then outstanding Voting Securities; (B) during any period of two (2)
consecutive years (not including any period prior to the date hereof),
individuals who at the beginning of such period constituted the board of
directors of the Company, together with any new director (other than a director
designated by a person who has entered into an agreement with the Company to
effect a transaction described in clause (A), (C), or (D) of this paragraph
whose election by the board of directors of the Company or nomination for
election by the Company stockholders was approved by a vote of at least
two-thirds of the directors then still in office who either were directors at
the beginning of the two-year period or whose election or nomination for
election was previously so approved), cease for any reason to constitute at
least a majority of the board of directors of the Company; (C) a merger or
consolidation of the Company with any other corporation which is not an
Affiliate of the Company is consummated, other than a merger that would result
in the Voting Securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than 50% of the combined
voting power of the Voting Securities of the Company (or the comparable voting
securities of such surviving entity) outstanding immediately after such merger
or consolidation; provided, however, that a merger or consolidation effected to
implement a recapitalization of the Company or such Affiliate (or similar
transaction) in which no person acquires more than 30% of the combined voting
power of the Company's then outstanding Voting Securities shall not constitute a
"Change in Control" of the Company; or (D) an agreement for the sale or
disposition by the Company of all or substantially all of the Company's assets
is consummated; and
(ii) with respect to the Investor, if any Person, other than
Investor or an Affiliate of Investor acquires, directly or indirectly, all or
substantially all of the Cardiac Stimulation Device business of Investor,
whether through a merger or the acquisition of stock and/or assets, as such
business is currently conducted through ELA, and various other Affiliates of
Investor, including ELA Medical, Inc., a Delaware corporation, and as such
business may hereafter be conducted through such entities or other Affiliates of
Investor.
"Clinical Services Agreement" shall have the meaning set forth in
section 2.1(b)(ii)(A)(3).
"Common Stock" shall have the meaning set forth in Recital B.
"Company Securities" shall mean the Company's Common Stock or
securities (including options, warrants or rights) convertible into,
exchangeable for or exercisable for shares of Common Stock.
"Composite Tape" shall have the meaning set forth in section
2.1(a)(ii).
<PAGE>
"Confidential Information" shall mean technical and business
information relating to a Party's Intellectual Property Rights, trade secret
processes or devices, techniques, data, formula, inventions (whether or not
patentable) or products, research and development (including research subjects,
methods and results), production, manufacturing and engineering processes,
computer software, costs, profit or margin information, pricing policies,
confidential market information, finances, customers, distribution, sales,
marketing, and production and future business plans and any other information of
a "confidential" nature, specifically including, without limitation, any
information that is identified orally or in writing by the disclosing party to
be confidential, or that the receiving party should reasonably understand under
the circumstances to be a trade secret of the disclosing party or information of
a similar nature that is not generally known to the public.
"Convertible Securities" shall have the meaning set forth in section
2.4(g)(i).
"Deferred Closing" shall mean the Second Investment Closing, the Third
Investment Closing and/or the Fourth Investment Closing, as applicable.
"Deferred Closing Date" shall mean the Second Investment Closing Date,
the Third Investment Closing Date and/or the Fourth Investment Closing Date, as
applicable.
"Deferred Market Price" shall mean the Initial Market Price, the Second
Investment Market Price, the Third Investment Market Price or the Fourth
Investment Market Price, as applicable.
"Demand for Arbitration" shall have the meaning set forth in section
8.6(a).
"Disinterested Directors" shall have the meaning set forth in section
4.2(e).
"ELA JV Supply Agreement" shall have the meaning set forth in section
2.1(b)(ii)(5).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Fair Market Value Price" shall have the meaning set forth in section
2.4(e).
"FDA" shall mean the Federal Food and Drug Administration.
"FDA Act" shall mean the United States Food, Drug and Cosmetic Act of
1938, as amended from time to time and any applicable regulations under such Act
governing manufacturing practices.
"First Anniversary Market Price" shall have the meaning set forth in
section 2.1(e)(i).
"Fourth Investment Closing" shall have the meaning set forth in section
2.2(c)(iii).
<PAGE>
"Fourth Investment Closing Date" shall have the meaning set forth in
section 2.2(c)(iii).
"Fourth Investment Market Price" shall have the meaning set forth in
section 2.2(c)(ii).
"Fourth Investment Purchase Price" shall have the meaning set forth in
section 2.2(c)(i)(A).
"Fourth Investment Share Price" shall have the meaning set forth in
section 2.2(c)(i)(A).
"Fourth Investment Shares" shall have the meaning set forth in section
2.2(c)(i)(A).
"Fourth Investment Warrants" shall have the meaning set forth in
section 2.2(c)(i)(B).
"Fully Diluted Basis" shall mean based on the assumption that all
options, warrants, or other rights to receive securities have been exercised or
converted, as applicable, and shall include all Shares underlying exercisable
Warrants issued pursuant to this Agreement but shall exclude (i) any rights
existing under the Rights Agreement, and (ii) any Shares that may be
purchaseable by or issuable to (as applicable) the Investor pursuant to Sections
2.1, 2.2, 2.3, 2.4 or Section 4.2(b)(ii) until such Shares are so issued or
purchased.
"Future Financing" shall have the meaning set forth in Section 2.3(a).
"Governmental Authority" shall mean any nation or government, any
state, province or other political subdivision thereof or any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, including the FDA.
"group" shall have the meaning set forth in section 4.2(b)(i)(C).
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended.
"Holder" shall have the meaning set forth in section 7.1.
"Holder Securities" shall have the meaning set forth in section 7.3.
"ICD" shall mean implantable cardioverter defibrillator.
"Indemnified Party" shall have the meaning set forth in section 7.5.
"Indemnifying Party" shall have the meaning set forth in section 7.5.
<PAGE>
"Indemnitee" shall have the meaning set forth in section 5.1(c).
"Indemnitor" shall have the meaning set forth in section 5.1(c).
"Initial Anti-Dilution Period" shall have the meaning set forth in
section 2.4.
"Initial Closing" shall have the meaning set forth in section
2.1(b)(i).
"Initial Closing Date" shall have the meaning set forth in section
2.1(b)(i).
"Initial Market Price" shall have the meaning set forth in section
2.1(a)(ii).
"Initial Purchase Price" shall have the meaning set forth in section
2.1(a)(i)(A).
"Initial Share Price" shall have the meaning set forth in section
2.1(a)(i)(A).
"Initial Shares" shall have the meaning set forth in section
2.1(a)(i)(A).
"Initial Warrants" shall have the meaning set forth in section
2.1(a)(i)(B).
"Initially Proposed Securities" shall have the meaning set forth in
section 7.3.
"Initiating Party" shall have the meaning set forth in section 8.6(d).
"Intellectual Property Rights" shall mean any patent, copyright,
registered design, trademark or other industrial or intellectual property right
owned or otherwise enforceable pursuant to license or otherwise by any Person,
and applications for any of the foregoing.
"Intercompany Services Agreement" shall have the meaning set forth in
section 2.1(b)(ii)(A)(4).
"Investment Price" shall mean the Initial Share Price, the Second
Investment Share Price, the Third Investment Share Price or the Fourth
Investment Share Price, as applicable.
"Investor's Rights Termination Date" shall mean, at the election of the
Company by written notice to the Investor the date of the earliest to occur of
the following events: (a) the Investor's Beneficially Owned shares of Common
Stock (on a Fully Diluted Basis) constitute less than five percent (5%) of all
outstanding Common Stock (on a Fully Diluted Basis), provided that, with respect
to Section 2.3, such percentage is not calculated until the day after the last
day of the Future Financing Acceptance Period, or (b) both the U.S. Joint
Venture Agreement and the Manufacturing and Supply Agreement expire or terminate
for any reason (other than (i), in the case of the U.S. Joint Venture Agreement,
as a result of any Involuntary Withdrawal in which the Company is the
Withdrawing Member or any Change of Control Withdrawal in which the Company is
the Resigning Member (as those terms are defined in the U.S. Joint Venture
Agreement), and (ii), in the case of the Manufacturing and Supply Agreement, any
breach of the
<PAGE>
Manufacturing and Supply Agreement by the Company or its Affiliates), provided
that, as of the date of any such expiration or termination of the U.S. Joint
Venture Agreement or the European Manufacturing and Supply Agreement, the
Investor's Beneficially Owned shares of Common Stock (on a Fully Diluted Basis)
constitute less than ten percent (10%) of all outstanding Common Stock (on a
Fully Diluted Basis) or (c) the Manufacturing and Supply Agreement terminates as
a result of any breach of such agreement by the Investor or its Affiliates and
the U.S. Joint Venture Agreement terminates because ELA is the Withdrawing
Member or the Resigning Member under the U.S. Joint Venture Agreement.
"Investor Acquisition Proposals" shall have the meaning set forth in
section 4.2(e).
"Joint Venture" shall mean the limited liability company contemplated
by the U.S. Joint Venture Agreement (defined below).
"Liability" shall mean any debt, obligation, duty or liability of any
nature including any unknown, undisclosed, unmatured, unaccrued, unasserted,
contingent, indirect, conditional, implied, vicarious, derivative, joint,
several or secondary liability, regardless of whether such debt, obligation,
duty or liability would be required to be disclosed on a balance sheet prepared
in accordance with generally accepted accounting principles, consistently
applied, and regardless of whether such debt, obligation, duty or liability is
immediately due and payable.
"Manufacturing and Supply Agreement" shall have the meaning set forth
in section 2.1(b)(ii)(A)(1).
"Material Adverse Effect" shall mean any material adverse effect on the
assets, results of operations, properties, business or financial condition of
either Party hereto, as applicable, and such Party's subsidiaries taken as a
whole.
"MDD" shall mean Directive 93/42/EEC Concerning Medical Devices and any
laws, regulations, guides, guidelines or guidance documents or standards issued
thereunder.
"Notified Body" shall mean any standards, testing or certification body
appointed by a member state of the European Union and notified as competent to
assess a medical device's conformity to one or more of the annexes in the AIMD
or MDD.
"Offer Notice" shall have the meaning set forth in section 2.3(a).
"Other Holders" shall have the meaning set forth in section 7.3(iv).
"Party" or "Parties" shall mean the Investor, the Company or both, as
applicable.
"Person" shall mean any individual, general partnership, limited
partnership, limited liability company, corporation, joint venture, trust,
business trust, cooperative or
<PAGE>
association, or any foreign trust or foreign business organization or any
Governmental Authority.
"Plans" shall have the meaning set forth in section 2.4(f)(i).
"Proceeds" shall have the meaning set forth in section 4.1(b).
"Product" and "Products" shall mean the entire current and future ICD
product line, including, without limitation, mechanisms for coupling such
devices in a stimulating, shocking or sensing relationship to the heart
including, without limitation, leads, electrodes and sensors; and data
dispensing, processing and gathering systems for such devices including, without
limitation, programmers, defibrillation system analyzers, testers, encoders,
decoders, transmitters, receivers and computer software-controlled systems,
including all related software developed or acquired directly or indirectly
(including by the Company being acquired by or becoming an Affiliate of a party
not previously an Affiliate) by the Company and its Affiliates, and all
subsequent modifications, components and improvements used therein during the
term of the Manufacturing and Supply Agreement; provided, however, that any
Products acquired by the Company, directly or indirectly, that are subject to
agreements or restrictions that prevent the Company from complying with the
terms thereof shall be excluded therefrom only to the extent of such
pre-existing agreements and only for the remainder of the then existing term
thereof.
"Proxy Contest" shall have the meaning set forth in section 4.2(h).
"Quoted Price" shall have the meaning set forth in section 2.1(a)(ii).
"Registrable Securities" shall have the meaning set forth in section
7.1.
"Related Agreements" shall mean the Warrant Agreements and the
agreements listed in Section 2.1(b)(ii)(A).
"Respondent" shall have the meaning set forth in section 8.6(d).
"Restricted Employees" shall have the meaning set forth in section
4.3(a).
"Restricted Securities" shall have the meaning set forth in section
3.2(d)
"Revised Standstill Date" shall have the meaning set forth in section
4.2(b)(ii).
"Revised Standstill Percentage" shall have the meaning set forth in
section 4.2(b)(ii).
"Rights" shall have the meaning set forth in the Rights Agreement
attached hereto as Exhibit G.
"Rights Agreement" shall have the meaning set forth in section 3.1(f).
<PAGE>
"SEC" shall have the meaning set forth in section 2.3(c).
"SEC Documents" shall have the meaning set forth in section 3.1(f).
"Second Investment Closing" shall have the meaning set forth in section
2.2(a)(iii).
"Second Investment Closing Date" shall have the meaning set forth in
section 2.2(a)(iii).
"Second Investment Market Price" shall have the meaning set forth in
section 2.2(a)(ii).
"Second Investment Purchase Price" shall have the meaning set forth in
section 2.2(a)(i)(A).
"Second Investment Share Price" shall have the meaning set forth in
section 2.2(a)(i)(A).
"Second Investment Shares" shall have the meaning set forth in section
2.2(a)(i)(A).
"Second Investment Warrants" shall have the meaning set forth in
section 2.2(a)(i)(B).
"Securities Act" shall have the meaning set forth in section 4.2(d)(i).
"Shares" shall mean all shares of the Common Stock acquired by the
Investor pursuant to this Agreement, including all shares of Common Stock issued
to or purchased by the Investor pursuant to the provisions of Sections 2.1 and
2.2 (including upon exercise of any Warrants), 2.3, 2.4 and 4.2(b)(ii) of this
Agreement and all shares of Common Stock issued to the Investor upon any stock
split, stock dividend, recapitalization or similar event.
"Solicit for hire" shall have the meaning set forth in section 4.3(a).
"Standstill Percentage" shall have the meaning set forth in section
4.2(b)(i)(A).
"Standstill Period" shall have the meaning set forth in section
4.2(b)(i).
"Subject Securities" shall have the meaning set forth in section
7.4(a).
"Supplemental Closing" shall have the meaning set forth in section
2.1(e)(iv).
"Supplemental Closing Date" shall have the meaning set forth in section
2.1(e)(iv).
"Supplemental Shares" shall have the meaning set forth in section
2.1(e)(ii).
<PAGE>
"Supplemental Warrants" shall have the meaning set forth in section
2.1(e)(ii).
"Third Investment Closing" shall have the meaning set forth in section
2.2(b)(iii).
"Third Investment Closing Date" shall have the meaning set forth in
section 2.2(b)(iii).
"Third Investment Market Price" shall have the meaning set forth in
section 2.2(b)(ii).
"Third Investment Purchase Price" shall have the meaning set forth in
section 2.2(b)(i)(A).
"Third Investment Share Price" shall have the meaning set forth in
section 2.2(b)(i)(A).
"Third Investment Shares" shall have the meaning set forth in section
2.2(b)(i)(A).
"Third Investment Warrants" shall have the meaning set forth in section
2.2(b)(i)(B).
"Third Party License Agreements" shall mean any intellectual property
license agreements (including non-assertion agreements) relating to Cardiac
Stimulation Devices to which either Party or any of its respective Affiliates
is, or subsequent to the date hereof becomes, a party or a third party
beneficiary (whether through affiliate status thereunder or otherwise); a list
of such agreements as of the date hereof is attached hereto as Schedule 4.3(a).
"Third Party Offer" shall have the meaning set forth in section 4.2(h).
"U.S. Joint Venture Agreement" shall have the meaning set forth in
section 2.1(b)(ii)(A)(2).
"Voting Securities" shall mean any shares of any class of the Company's
capital stock with voting rights generally to elect directors of the Company.
"Warrant Agreement" shall have the meaning set forth in section
2.1(a)(i)(B).
"Warrants" shall have the meaning set forth in Recital B.
"Withdrawal Election" shall have the meaning set forth in section
7.3(iv).
"2010 Announcement" shall have the meaning set forth in section
2.2(a)(i).
"2010 Approval" shall have the meaning set forth in section 2.2(a)(i).
"2020 Announcement" shall have the meaning set forth in section
2.2(b)(i).
<PAGE>
"2020 Approval" shall have the meaning set forth in section 2.2(b)(i).
"4040 Announcement" shall have the meaning set forth in section
2.2(c)(i).
"4040 Approval" shall have the meaning set forth in section 2.2(c)(i).
Any reference in this Agreement to "writing" or cognate expressions
includes a reference to electronic or facsimile transmission or comparable means
of communications.
Any reference in this Agreement to any Applicable Law shall be
construed as a reference to the relevant Applicable Law (including any successor
provisions) as amended, re-enacted or extended at the time in question.
ARTICLE II.
Purchase and Sale of Shares and Warrants
2.1. Purchase and Sale of the Initial Shares and Warrants.
(a) INITIAL INVESTMENT.
(i) Subject to the terms and conditions hereof, the Company
will issue and sell to the Investor, and the Investor will purchase from the
Company, at the Initial Closing (defined below):
(A) An aggregate amount of shares of Common Stock, rounding
such amount up to the nearest whole number (the "Initial Shares"),
equal to the sum of $15.0 million (the "Initial Purchase Price")
divided by a per share price (the "Initial Share Price") equal to: (A)
one hundred thirty percent (130%) of the Initial Market Price (defined
below) if the Initial Market Price is less than or equal to $6.73 per
share; (B) $8.75 if the Initial Market Price is between $6.73 per share
and $7.29 per share; and (C) one hundred twenty percent (120%) of the
Initial Market Price if the Initial Market Price is equal to or greater
than $7.29 per share; and
(B) Warrants to purchase Common Stock in an amount equal to
sixty percent of the number of the Initial Shares (the "Initial Warrants"), with
such Initial Warrants to have an exercise price equal to the Initial Share
Price, to be exercisable at any time prior to the fourth anniversary of the
Initial Closing Date and to contain such other terms and conditions as set forth
in the form of Initial Warrant attached hereto as Exhibit A-1 (together with the
form of Warrants attached hereto as Exhibits A-2, A-3, A-4, and A-5,
collectively, the "Warrant Agreements" and each, a "Warrant Agreement").
(ii)The Initial Purchase Price shall be increased by the
amount of the Initial Share Price allocable to any fractional shares that would
be rounded up by the above formula. For the purposes of this Section 2.1(a),
"Initial Market Price" shall mean
<PAGE>
the average Quoted Price for all trading days within the fifteen (15) trading
days ending two days prior to the public announcement by the Company of the
transactions contemplated by this Agreement (not counting the date of such
announcement). The term "Quoted Price" of the Common Stock shall mean: the last
sale price regular way or, in case no such sale takes place on such day, the
average of the closing bid and asked prices regular way, in either case on the
NASDAQ National Market System as reported by NASDAQ, or, if the Common Stock is
not authorized for quotation on the NASDAQ National Market System, on the New
York Stock Exchange Composite Tape (the "Composite Tape"), or, if the Common
Stock is not listed or admitted to trading on such exchange, on the national
securities exchange in or nearest the City of New York on which the Common Stock
is listed or admitted to trading, or if the Common Stock is not listed or
admitted to trading on any national securities exchange, the last sale price
regular way or, in case no such sale takes place on such day, the average of the
highest reported bid and lowest reported asked prices as furnished by the
National Association of Securities Dealers, Inc. through NASDAQ or a similar
organization if NASDAQ is no longer reporting such information, or if on any
such trading day the Common Stock is not quoted by any such organization, the
fair value of a share of Common Stock on such day, as determined in good faith
by the board of directors of the Company.
(b) INITIAL CLOSING.
(i) The initial closing (the "Initial Closing") shall take
place on the second business day after the date of expiration of the applicable
waiting period under the HSR Act (or any earlier termination thereof) and
satisfaction of the other conditions to such Initial Closing set forth in
Section 2.1(c), or on such other date or at such other place or time as the
Investor and the Company may mutually agree (such date is hereinafter referred
to as the "Initial Closing Date").
(ii) At the Initial Closing:
(A) The Investor and the Company shall each execute
and deliver to the other or cause their respective Affiliates to execute and
deliver (or in the case of (6) below, cause their counsel to execute and
deliver):
(1) the Manufacturing and Supply Agreement
in the form attached hereto as Exhibit B (the "Manufacturing and Supply
Agreement");
(2) the Limited Liability Company Operating
Agreement in the form attached hereto as Exhibit C (the "U.S. Joint Venture
Agreement");
(3) the Intercompany Services Agreement in a
form to be agreed upon by the Parties (the "Intercompany Services Agreement");
(4) the Angeion JV Manufacturing and Supply
Agreement in the form attached hereto as Exhibit D, (the "Angeion JV
Manufacturing and Supply Agreement");
<PAGE>
(5) the ELA JV Supply Agreement in the form
attached hereto as Exhibit E (the "ELA JV Supply Agreement");
(6) an opinion letter from Oppenheimer,
Wolff & Donnelly, counsel to the Company, dated the Initial Closing Date,
substantially in the form of Exhibit F;
(7) any other agreements contemplated by
this Agreement.
(B) The Company shall deliver to the Investor a stock
certificate representing the Initial Shares and a Warrant Agreement representing
the Initial Warrants and the Investor shall pay the Initial Purchase Price by
wire transfer of immediately available funds in the manner requested by the
Company.
(c) INVESTOR'S CONDITIONS PRECEDENT TO THE INITIAL CLOSING.
The obligations of the Investor to purchase the Initial Shares on the
Initial Closing Date shall be subject to the satisfaction, or waiver by the
Investor in writing, of the following conditions on the Initial Closing Date:
(i) Representations and Warranties of the Company; Performance
by the Company. The representations and warranties of the Company contained in
the first sentence of Section 3.1(a), all of Section 3.1(b), the second sentence
of Section 3.1(c), all of Section 3.1(d), the first and third sentences of
Section 3.1(e), all of Section 3.1(h) and all of Section 3.1(i) of this
Agreement shall be true and correct in all material respects as of the Initial
Closing Date and with the same effect as though made on and as of that date,
provided that such condition shall be without prejudice to the Investor's rights
in the event that there is any breach of such representations and warranties, or
the representations and warranties contained in the other subsections of Section
3.1, as of the date hereof. The Company shall have performed and complied in all
material respects with all agreements and covenants required by this Agreement
and the transactions contemplated hereby to be performed or complied with by the
Company on or before the Initial Closing Date. The Investor shall have been
furnished with such certificates of officers of the Company, dated the Initial
Closing Date, as the Investor may reasonably request, certifying as to the
fulfillment of the foregoing conditions.
(ii)Absence of Certain Litigation. No statute, rule or
regulation shall have been promulgated or enacted which would make any of the
transactions contemplated by this Agreement illegal or would otherwise prevent
the consummation thereof, other than violations of Applicable Law that are
immaterial. No order, decree, writ or injunction shall have been issued and
shall remain in effect, by any court or Governmental Authority, which restrains,
enjoins or otherwise prohibits the consummation of the transactions contemplated
hereby, and no action, suit or proceeding before any court or Governmental
Authority shall have been instituted by any Governmental Authority.
<PAGE>
(iii) Approvals and Consents. All material consents,
approvals, exemptions or authorizations of any Governmental Authority that are
required in connection with the sale of the Initial Shares to the Investor and
the consummation of the transactions contemplated under this Agreement
(including, without limitation, all required filings and the expiration or early
termination of all applicable waiting periods under the HSR Act) shall have been
obtained and shall be in full force and effect.
(iv) Registration and Listing. The Common Stock shall be duly
registered under the Exchange Act and listed on the NASDAQ National Market or
the NASDAQ Small Cap Market or any national securities exchange.
(v) Company Change of Control. The Company shall not have
experienced a Change of Control or entered into any agreement whereby a Change
of Control would occur.
(d) COMPANY'S CONDITIONS PRECEDENT TO THE INITIAL CLOSING.
(i) Representations and Warranties of the Investor;
Performance by the Investor. The representations and warranties of the Investor
contained in Section 3.2 of this Agreement shall be true and correct in all
material respects as of the Initial Closing Date and with the same effect as
though made on and as of that date. The Investor shall have performed and
complied in all material respects with all agreements and conditions required by
this Agreement and the transactions contemplated hereby to be performed or
complied with by the Investor on or before the Initial Closing Date. The Company
shall have been furnished with such certificates of officers of the Investor,
dated the Initial Closing Date, as the Company may reasonably request,
certifying as to the fulfillment of the foregoing conditions.
(ii) Absence of Certain Litigation. No statute, rule or
regulation shall have been promulgated or enacted which would make any of the
transactions contemplated by this Agreement illegal or would otherwise prevent
the consummation thereof, other than violations of Applicable Law that are
immaterial. No order, decree, writ or injunction shall have been issued and
shall remain in effect, by any court or Governmental Authority, which restrains,
enjoins or otherwise prohibits the consummation of the transactions contemplated
hereby, and no action, suit or proceeding before any court or Governmental
Authority shall have been instituted by any Governmental Authority.
(iii) Approvals and Consents. All material consents,
approvals, exemptions or authorizations of any Governmental Authority that are
required in connection with the sale of the Initial Shares to the Investor and
the consummation of the transactions contemplated under this Agreement
(including, without limitation, all required filings and the expiration or early
termination of all applicable waiting periods under the HSR Act) shall have been
obtained and shall be in full force and effect.
<PAGE>
(e) ADJUSTMENT TO INITIAL SHARES
(i) It is acknowledged and agreed that the Initial Market
Price is $5.125 per share. The number of Initial Shares issuable to the Investor
shall be adjusted as of October 9, 1998 if the First Anniversary Market Price
(as defined below) is less than the Initial Market Price. For purposes hereof,
the "First Anniversary Market Price" shall mean the average Quoted Price for the
fifteen (15) trading days immediately prior to and including October 9, 1998.
(ii) If the First Anniversary Market Price is less than the
Initial Market Price, the Company shall issue to the Investor, as an adjustment
to the number of the Initial Shares previously issued to the Investor (and not
as a dividend), without additional consideration therefor, an additional number
of shares of Common Stock (the "Supplemental Shares") equal to: (A) the Initial
Purchase Price divided by one hundred thirty percent (130%) of the First
Anniversary Market Price minus (B) the number of the Initial Shares, and further
minus (C) the number of additional shares of Common Stock, if any, previously
issued with respect to the Initial Shares pursuant to Sections 2.4(a) or 2.4(e)
of this Agreement. The Company shall also issue to the Investor additional
warrants to purchase Common Stock in an amount equal to sixty percent of the
number of Supplemental Shares (the "Supplemental Warrants"), with such
Supplemental Warrants to have an exercise price equal to one hundred thirty
percent (130%) of the First Anniversary Market Price, to be exercisable at any
time prior to the fourth anniversary of the Initial Closing Date and to contain
such other terms and conditions as set forth in the form of Supplemental Warrant
attached hereto as Exhibit A-5. If Supplemental Warrants are issued, the
exercise price of the Initial Warrants shall be reset to equal the exercise
price of such Supplemental Warrants, as provided by the terms of the Initial
Warrants.
(iii) If Supplemental Shares and Supplemental Warrants are
issuable to the Investor pursuant to this Section 2.1(e), such shares and
warrants shall be issued and delivered to the Investor as soon as practicable
after October 9, 1998 but in any event no later than October 15, 1998. The
Closing of such issuance shall be referred to as the "Supplemental Closing" and
the date of such closing shall be referred to as the "Supplemental Closing
Date." The Supplemental Shares and Supplemental Warrants, if issued, shall be
deemed to constitute "Shares" (as defined herein) and "Warrants" (as defined
herein), respectively, for all purposes under this Agreement, including, without
limitation, for inclusion as "Registrable Securities" under Article VII of this
Agreement.
(iv) For the avoidance of doubt, the Supplemental Shares and
Supplemental Warrants shall be issuable to the Investor whether or not the 2010
Announcement, the 2020 Announcement or the 4040 Announcement (or any of them)
have occurred on or prior to October 9, 1998.
(v) No fractional shares shall be issued in connection with
the Supplemental Shares. In lieu of fractional shares, the number of
Supplemental Shares shall be rounded up to the nearest whole number of shares.
<PAGE>
2.2. Purchase and Sale of Additional Shares and Warrants.
(a) SECOND INVESTMENT.
(i) Upon or as soon as practicable immediately after the
earlier of (x) the public announcement by the Company of the granting of
approval by the FDA regarding the use of the Company's ICD model 2010 (the "2010
Approval"), or (y) the actual date of the grant by the FDA of the 2010 Approval
(the earlier of such dates, the "2010 Announcement"), the Company will issue and
sell to the Investor, and the Investor will purchase from the Company, at the
Second Investment Closing (as defined below):
(A) an aggregate amount of shares of Common Stock,
rounding such amount up to the nearest whole number (the "Second Investment
Shares"), equal to the sum of $5.0 million (the "Second Investment Purchase
Price") divided by a per share price (the "Second Investment Share Price") equal
to: (1) one hundred thirty percent (130%) of the Second Investment Market Price
(defined below) if the Second Investment Market Price is less than or equal to
$6.73 per share; (2) $8.75 if the Second Investment Market Price is between
$6.73 per share and $7.29 per share; and (3) one hundred twenty percent (120%)
of the Second Investment Market Price if the Second Investment Market Price is
equal to or greater than $7.29 per share; and
(B) Warrants to purchase Common Stock in an amount
equal to sixty percent of the number of the Second Investment Shares (the
"Second Investment Warrants"), with such Warrants to have an exercise price
equal to the Second Investment Share Price, to be exercisable at any time prior
to the third anniversary of the Second Investment Closing Date, and to contain
such other terms and conditions as set forth in the form of Warrant attached
hereto as Exhibit A-2.
(ii)The Second Investment Purchase Price shall be reduced by
the amount of the Second Investment Share Price allocable to any fractional
shares which would be generated by the above formula. For the purposes of this
Agreement, "Second Investment Market Price" shall mean the average Quoted Price
for all trading days within the fifteen (15) trading days ending two day(s)
prior to the date of the 2010 Announcement.
(iii) The second closing (the "Second Investment Closing")
shall take place at the offices of Morrison & Foerster LLP, 1290 Avenue of the
Americas, New York, New York 10104 at 1 p.m. (eastern standard time) on the
fifth business day after the date of the 2010 Announcement, subject to the
satisfaction of the conditions specified in Article VI hereof on such date, or
on such other date or at such other place or time as the Investor and the
Company may mutually agree (such date is hereinafter referred to as the "Second
Investment Closing Date").
(iv) At the Second Investment Closing, the Company shall
deliver to the Investor a stock certificate representing the Second Investment
Shares and a Warrant Agreement representing the Second Investment Warrants.
<PAGE>
(v) At the Second Investment Closing, the Investor shall pay
the Second Investment Purchase Price by wire transfer of immediately available
funds in the manner requested by the Company.
(vi) At the Second Investment Closing, the Company shall
provide Investor with copies of all of Company's SEC filings since the date
hereof and any information that would have been required to be disclosed in the
Schedules to Article III as if the representations and warranties thereunder
were being made as of the date of the Second Investment Closing, provided that
such representations and warranties shall not be deemed to be made on such
Second Investment Closing except as provided in Section 6.1(e).
(b) THIRD INVESTMENT.
(i) Upon or as soon as practicable immediately after the
earlier of (x) the public announcement by the Company of the granting of
approval by the FDA regarding the use of the Company's ICD model 2020, or (y)
the actual date of the grant by the FDA of the 2020 Approval (the earlier of
such dates, the "2020 Announcement"), the Company will issue and sell to the
Investor, and the Investor will purchase from the Company, at the Third
Investment Closing (defined below):
(A) An aggregate amount of shares of Common Stock,
rounding such amount up to the nearest whole number (the "Third Investment
Shares"), equal to the sum of $5.0 million (the "Third Investment Purchase
Price") divided by a per share price (the "Third Investment Share Price") equal
to: (1) one hundred thirty percent (130%) of the Third Investment Market Price
(defined below) if the Third Investment Market Price is less than or equal to
$6.73 per share; (2) $8.75 if the Third Investment Market Price is between $6.73
per share and $7.29 per share; and (3) one hundred twenty percent (120%) of the
Third Investment Market Price if the Third Investment Market Price is equal to
or greater than $7.29 per share; and
(B) Warrants to purchase Common Stock in an amount
equal to sixty percent of the number of the Third Investment Shares, with such
Warrants to have an exercise price equal to the Third Investment Share Price
(the "Third Investment Warrants"), to be exercisable at any time prior to the
third anniversary of the Third Investment Closing Date, and to contain such
other terms and conditions as set forth in the form of Warrant attached hereto
as Exhibit A-3.
(ii) The Third Investment Purchase Price shall be reduced by
the amount of the Third Investment Share Price allocable to any fractional
shares which would be generated by the above formula. For the purposes of this
Agreement, "Third Investment Market Price" shall mean the average Quoted Price
for the fifteen (15) trading days ending two day(s) prior to the date of the
2020 Announcement.
(iii) The third closing (the "Third Investment Closing") shall
take place at the offices of Morrison & Foerster LLP, 1290 Avenue of the
Americas, New York,
<PAGE>
New York 10104 at 1 p.m. (eastern standard time) on the fifth business day after
the date of the 2020 Announcement, subject to satisfaction of the conditions
specified in Article VI hereof on such date, or on such other date or at such
other place or time as the Investor and the Company may mutually agree (such
date is hereinafter referred to as the "Third Investment Closing Date").
(iv) At the Third Investment Closing, the Company shall
deliver to the Investor a stock certificate representing the Third Investment
Shares and a Warrant Agreement representing the Third Investment Warrants.
(v) At the Third Investment Closing, the Investor shall pay
the Third Investment Purchase Price by wire transfer of immediately available
funds in the manner requested by the Company; and
(vi) At the Third Investment Closing, the Company shall
provide Investor with copies of all of Company's SEC filings since the date
hereof and any information that would have been required to be disclosed in the
Schedules to Article III as if the representations and warranties thereunder
were being made as of the date of the Third Investment Closing, provided that
such representations and warranties shall not be deemed to be made on such Third
Investment Closing except as provided in Section 6.1(e).
(c) FOURTH INVESTMENT.
(i) Upon or as soon as practicable immediately thereafter the
earlier of (x) the public announcement by the Company of the granting of
approval by the FDA regarding the use of the Company's catheter lead model 4040
(the "4040 Approval"), or (y) the actual date of the grant by the FDA of the
4040 Approval (the earlier of such dates, the "4040 Announcement"), the Company
will issue and sell to the Investor, and the Investor will purchase from the
Company, at the Fourth Investment Closing (defined below):
(A) An aggregate amount of shares of Common Stock,
rounding such amount up to the nearest whole number (the "Fourth Investment
Shares"), equal to the sum of $5.0 million (the "Fourth Investment Purchase
Price") divided by a per share price (the "Fourth Investment Share Price") equal
to: (1) one hundred thirty percent (130%) of the Fourth Investment Market Price
(defined below) if the Fourth Investment Market Price is less than or equal to
$6.73 per share; (2) $8.75 if the Fourth Investment Market Price is between
$6.73 per share and $7.29 per share; and (3) one hundred twenty percent (120%)
of the Fourth Investment Market Price if the Fourth Investment Market Price is
equal to or greater than $7.29 per share; and
(B) Warrants to purchase Common Stock in an amount
equal to sixty percent of the number of the Fourth Investment Shares, with such
Warrants to have an exercise price equal to the Fourth Investment Share Price
(the "Fourth Investment Warrants"), to be exercisable at any time prior to the
third anniversary of the Fourth
<PAGE>
Investment Closing Date, and to contain such other terms and conditions as set
forth in the form of Warrant attached hereto as Exhibit A-4.
(ii) The Fourth Investment Purchase Price shall be reduced by
the amount of the Fourth Investment Share Price allocable to any fractional
shares which would be generated by the above formula. For the purposes of this
Agreement, "Fourth Investment Market Price" shall mean the average Quoted Price
for the fifteen (15) trading days ending two day(s) prior to the date of the
4040 Announcement.
(iii) The fourth closing (the "Fourth Investment Closing")
shall take place at the offices of Morrison & Foerster LLP, 1290 Avenue of the
Americas, New York, New York 10104 at 1 p.m. (eastern standard time) on the
fifth business day after the date of the 4040 Announcement or on such other date
or at such other place or time as the Investor and the Company may mutually
agree (such date is hereinafter referred to as the "Fourth Investment Closing
Date").
(iv) At the Fourth Investment Closing, the Company shall
deliver to the Investor a stock certificate representing the Fourth Investment
Shares and a Warrant Agreement representing the Fourth Investment Warrants.
(v) At the Fourth Investment Closing, the Investor shall pay
the Fourth Investment Purchase Price by wire transfer of immediately available
funds in the manner requested by the Company.
(vi) At the Fourth Investment Closing, the Company shall
provide Investor with copies of all of Company's SEC filings since the date
hereof and any information that would have been required to be disclosed in the
Schedules to Article III as if the representations and warranties thereunder
were being made as of the date of the Fourth Investment Closing, provided that
such representations and warranties shall not be deemed to be made on such
Fourth Investment Closing except as provided in Section 6.1(e).
2.3. Share Ownership Maintenance Rights.
The Investor shall have the following maintenance rights with respect
to its ownership of Shares acquired hereunder, each of which shall terminate
upon the occurrence of the Investor's Rights Termination Date and each of which
shall be subject to Section 2.4(f)(ii):
(a) From and after the Initial Closing Date, the Investor shall have
the right, but not the obligation, to acquire up to nineteen and nine-tenths
percent (19.9%) (the "Maintenance Percentage") of any future offering of Voting
Securities or Company Securities ("Future Financings"), excluding such Future
Financings listed on Schedule 2.3(a) hereto. The Company shall give 10 days'
prior written notice (the "Offer Notice") to the Investor of any Future
Financings which it proposes to make, which shall include information as to the
type of Voting Securities to be offered, the estimated price thereof
<PAGE>
and other terms of such offering. The Investor shall have the right, exercisable
by written notice to the Company within 15 days of its receipt of such Offer
Notice (the "Future Financing Acceptance Period"), to agree to participate in
such Future Financing at the same price and on the same terms and conditions as
all other investors in such Future Financing. The Company shall have the right
to close any Future Financing during such Future Financing Acceptance Period,
provided that such closing shall be without prejudice to the Investor's right to
elect to participate in such Future Financing at any time during the Future
Financing Acceptance Period, regardless of whether the closing of the Investor's
purchase of its Maintenance Percentage thereof occurs during or after the Future
Financing Acceptance Period. In the event that the Investor acquires less than
the Maintenance Percentage of any applicable Future Financing (other than the
financings listed on Schedule 2.3(a)), the Investor shall thereafter only have
the rights set forth in Section 2.3(b) below.
(b) If the right set forth in Section 2.3(a) has terminated, the
Company shall continue to provide an Offer Notice to the Investor not less than
10 days prior to all subsequent Future Financings, whereupon the Investor shall
have the right, but not the obligation, exercisable by written notice to the
Company within the corresponding Future Financing Acceptance Period for the
relevant Future Financing, to purchase such amount of securities pursuant to the
terms of the Future Financing on a pro rata basis in the Future Financing as are
necessary in order to allow the Investor to maintain its then current
proportionate share of all Voting Securities. For purposes of this right, the
Investor's proportionate share shall be the ratio of (i) the number of shares of
Common Stock Beneficially Owned by the Investor (determined on a Fully Diluted
Basis) immediately prior to the new issuance of Voting Securities in the Future
Financing to (ii) the Fully Diluted number of shares of Common Stock outstanding
immediately prior to such new issuance of Voting Securities. The Company shall
have the right to close any Future Financing during such Future Financing
Acceptance Period, provided that such closing shall be without prejudice to the
Investor's right to elect to participate in such Future Financing at any time
during the Future Financing Acceptance Period, regardless of whether the closing
of the Investor's purchase of its pro rata share thereof occurs during or after
the Future Financing Acceptance Period.
(c) The offer and closing of the Investor's purchase of additional
Voting Securities pursuant to this Section 2.3 is subject at all times to all
applicable rules and regulations promulgated by the Securities and Exchange
Commission (the "SEC") and compliance with all other Applicable Laws and any
purchase by the Investor may be deferred beyond the closing of a Future
Financing (including beyond the Future Financing Acceptance Period) in order to
permit compliance with such Applicable Laws, including the HSR Act or any
applicable securities laws. If the Investor is not able to purchase registered
securities in connection with a Future Financing, it shall acquire any
securities pursuant to Section 2.3(a) or 2.3(b) in a private placement occurring
concurrently with the closing of the Future Financing, or as nearly concurrently
thereto as may be permissible under Applicable Law. The Company and the Investor
covenant to cooperate and
<PAGE>
facilitate compliance with Applicable Laws and to cause any such Future
Financing to proceed as promptly as practicable.
2.4. Anti-Dilution Provisions.
(a) If the Company wishes to sell shares of Company Securities at an
effective price per share that is less than an amount equal to one hundred
fifteen percent (115%) of the Initial Market Price (the "Initial Reference
Price") at any time after the date hereof and prior to the first anniversary of
the Initial Closing Date (the "Initial Anti-Dilution Period"), then the
following shall occur if the Initial Closing has occurred:
(i) The Company shall issue additional shares of Common Stock
to the Investor equal to the product of the number of Shares purchased by the
Investor in the Initial Closing plus any Supplemental Shares issued to the
Investor (if applicable), in each case which are still held by the Investor on
the date that the Company wishes to sell such additional Company Securities,
multiplied by an amount equal to (A) a fraction (x) the numerator of which shall
be the number of shares of Common Stock outstanding immediately after the
issuance of such additional shares pursuant to such offering and (y) the
denominator of which shall be the sum of the number of shares of Common Stock
outstanding immediately prior to the issuance of such additional Company
Securities pursuant to such offering plus the number of shares of Common Stock
which the aggregate consideration received for the issuance of such additional
shares would purchase at such Initial Reference Price per share, minus (B) one.
(ii) The exercise price and other terms of the Initial
Warrants shall be subject to similar antidilution adjustments pursuant to the
provisions set forth in the applicable Warrant Agreement.
(b) If the Company wishes to sell shares of Company Securities at an
effective price per share that is less than an amount equal to one hundred
fifteen percent (115%) of the Second Investment Market Price (the "Second
Reference Price") at any time after the Second Investment Closing Date and prior
to the first anniversary of the Initial Closing Date, then the following shall
occur:
(i) The Company shall issue additional shares of Common Stock
to the Investor equal to the product of the number of Shares purchased by the
Investor in the Second Investment Closing which are still held by the Investor
on the date that the Company wishes to sell such additional Company Securities
multiplied by an amount equal to (A) a fraction (x) the numerator of which shall
be the number of shares of Common Stock outstanding immediately after the
issuance of such additional shares pursuant to such offering and (y) the
denominator of which shall be the sum of the number of shares of Common Stock
outstanding immediately prior to the issuance of such additional Company
Securities pursuant to such offering plus the number of shares of Common Stock
which the aggregate consideration received for the issuance of such additional
shares would purchase at such Second Reference Price per share, minus (B) one.
<PAGE>
(ii) The exercise price and other terms of the Second
Investment Warrants shall be subject to similar antidilution adjustments
pursuant to the provisions set forth in the applicable Warrant Agreement.
(c) If the Company wishes to sell shares of Company Securities at an
effective price per share that is less than an amount equal to one hundred
fifteen percent (115%) of the Third Investment Market Price (the "Third
Reference Price") at any time after the Third Investment Closing Date and prior
to the first anniversary of the Initial Closing Date, then the following shall
occur:
(i) The Company shall issue additional shares of Common Stock
to the Investor equal to the product of the number of Shares purchased by the
Investor in the Third Investment Closing which are still held by the Investor on
the date that the Company wishes to sell such additional Company Securities
multiplied by an amount equal to (A) a fraction (x) the numerator of which shall
be the number of shares of Common Stock outstanding immediately after the
issuance of such additional shares pursuant to such offering and (y) the
denominator of which shall be the sum of the number of shares of Common Stock
outstanding immediately prior to the issuance of such additional Company
Securities pursuant to such offering plus the number of shares of Common Stock
which the aggregate consideration received for the issuance of such additional
shares would purchase at such Third Reference Price per share, minus (B) one.
(ii) The exercise price and other terms of the Third
Investment Warrants shall be subject to similar antidilution adjustments
pursuant to the provisions set forth in the applicable Warrant Agreement.
(d) If the Company wishes to sell shares of Company Securities at an
effective price per share that is less than an amount equal to one hundred
fifteen percent (115%) of the Fourth Investment Market Price (the "Fourth
Reference Price") at any time after the Fourth Investment Closing Date and prior
to the first anniversary of the Initial Closing Date, then the following shall
occur:
(i) The Company shall issue additional shares of Common Stock
to the Investor equal to the product of the number of Shares purchased by the
Investor in the Fourth Investment Closing which are still held by the Investor
on the date that the Company wishes to sell such additional Company Securities
multiplied by an amount equal to (A) a fraction (x) the numerator of which shall
be the number of shares of Common Stock outstanding immediately after the
issuance of such additional shares pursuant to such offering and (y) the
denominator of which shall be the sum of the number of shares of Common Stock
outstanding immediately prior to the issuance of such additional Company
Securities pursuant to such offering plus the number of shares of Common Stock
which the aggregate consideration received for the issuance of such additional
shares would purchase at such Fourth Reference Price per share, minus (B) one.
<PAGE>
(ii) The exercise price and other terms of the Fourth
Investment Warrants shall be subject to similar antidilution adjustments
pursuant to the provisions set forth in the applicable Warrant Agreement.
(e) From the date hereof until the latest expiration date of any
Warrants issued to Investor under this Agreement, if the Company wishes to sell
Company Securities at an effective price per share less than the average Quoted
Price for the five business days prior to the closing of such sale (the "Fair
Market Value Price"), then the following shall occur (except with respect to the
Shares purchased by the Investor at the Initial Closing, at the Supplemental
Closing or any Deferred Closing to the extent that an antidilution share
issuance adjustment is being made with respect to such Shares pursuant to
Sections 2.4(a), 2.4(b), 2.4(c) or 2.4(d) in connection with such financing):
(i) The Company shall issue additional shares of Common Stock
to the Investor equal to the product of the number of Shares held by the
Investor multiplied by an amount equal to (A) a fraction (x) the numerator of
which shall be the sum of the number of shares of Common Stock outstanding
immediately after the issuance of such additional Company Securities and (y) the
denominator of which shall be the sum of the number of shares of Common Stock
outstanding immediately prior to the issuance of such additional Company
Securities plus the number of shares of Common Stock which the aggregate
consideration received for the issuance of such additional Company Securities
would purchase at the Fair Market Value Price, minus (B) one.
(ii) The exercise price and other terms of the Warrants shall
be subject to similar antidilution adjustments pursuant to the provisions set
forth in the applicable Warrant Agreement.
(f) Exceptions.
Anything herein to the contrary notwithstanding:
(i) (A) The Company shall not be required to make any of the
adjustments contemplated under Sections 2.4(a), (b), (c) or (d) in the case of:
(A) the issuance of shares of Common Stock upon the sale or exercise in whole or
part of the Warrants or any issuance of Shares or Warrants under this Agreement;
(B) the issuance of shares of Common Stock or any other securities which may now
or hereafter be granted or exercised under any of the Company's compensatory
benefits plans (regardless of whether such shares of Common Stock or other
securities are issued to employees, directors, consultants or others of the
Company or the joint venture established pursuant to the U.S. Joint Venture
Agreement) (the "Plans") and such other employee benefit arrangements, contracts
or plans as are recommended by the management of the Company and approved by its
board of directors (adjusted appropriately for any stock splits, stock
combinations or stock dividends); (C) the issuance or sale of shares of Common
Stock or convertible securities upon the exercise of any rights or warrants to
subscribe for or purchase, or any options for the purchase of, Common Stock or
convertible securities outstanding on the date of this Agreement, except as set
forth in Schedule 2.4(f)(i)(A)(C) hereto; (D) the
<PAGE>
issuance or sale of shares of Common Stock upon conversion or exchange of any
convertible securities or exercise of any options, warrants or other purchase
rights, if a prior anti-dilution adjustment was made or required to be made
hereunder upon the issuance, sale (or grant with respect to options) of such
convertible securities, options, warrants or other purchase rights; (E) the
issuance of shares of Common Stock in connection with a bona fide merger,
acquisition (including without limitation, acquisition of a third party's
assets, products, technology or other rights) or other similar transaction
involving the Company or a subsidiary of the Company if the board of directors
of the Company has obtained a fairness opinion with respect to the issuance of
such Company Securities from a nationally or regionally recognized investment
banking firm indicating that the financial terms of such merger, acquisition or
other similar transaction are fair to the Company when taken as a whole; or (F)
the issuance of any Company Securities in any transaction which is part of the
formation of a strategic relationship or joint venture between the Company and a
third party if the board of directors of the Company has obtained a fairness
opinion with respect to the issuance of Company Securities from a nationally or
regionally recognized investment banking firm indicating that the financial
terms of such strategic relationship, joint venture or other similar
relationship or venture are fair to the Company when taken as a whole.
(B) The Company shall not be required to make any
adjustment contemplated under Section 2.4(e) in the case of: (A) the issuance of
shares of Common Stock upon the sale or exercise in whole or part of the
Warrants or any issuance of Shares or Warrants under this Agreement; (B) the
issuance of shares of Common Stock or any other securities which may now or
hereafter be granted or exercised under any of the Plans and such other employee
benefit arrangements, contracts or plans as are recommended by the management of
the Company and approved by its board of directors (adjusted appropriately for
any stock splits, stock combinations or stock dividends); (C) the issuance or
sale of shares of Common Stock or convertible securities upon the exercise of
any rights or warrants to subscribe for or purchase, or any options for the
purchase of, Common Stock or convertible securities outstanding on the date of
this Agreement, except as set forth in Schedule 2.4(f)(i)(B)(C) hereto; (D) the
issuance or sale of shares of Common Stock upon conversion or exchange of any
convertible securities or exercise of any options, warrants or other purchase
rights, if a prior anti-dilution adjustment was made or required to be made
hereunder upon the issuance, sale (or grant with respect to options) of such
convertible securities, options, warrants or other purchase rights; (E) the
issuance of shares of Common Stock in connection with a bona fide merger,
acquisition (including without limitation, acquisition of a third party's
assets, products, technology or other rights) or other similar transaction
involving the Company or a subsidiary of the Company if the board of directors
of the Company has obtained a fairness opinion with respect to the
<PAGE>
issuance of such Company Securities from a nationally or regionally recognized
investment banking firm indicating that the financial terms of such merger,
acquisition or other similar transaction are fair to the Company when taken as a
whole; (F) the issuance of any Company Securities in any transaction which is
part of the formation of a strategic relationship or joint venture between the
Company and a third party if the board of directors of the Company has obtained
a fairness opinion with respect to the issuance of such Company Securities from
a nationally or regionally recognized investment banking firm indicating that
the financial terms of such strategic relationship or joint venture or other
similar relationship or venture are fair to the Company when taken as a whole;
or (G) the issuance of shares of Common Stock in connection with a bona fide
private placement transaction not involving purchasers or placement agents
affiliated with the Company if (1) the discount to market is not greater than
15% and (2) the Company has obtained a fairness opinion with respect to the
issuance thereof from a nationally or regionally recognized investment banking
firm that the financial terms of such transaction are fair to the Company when
taken as a whole.
(ii) The Company shall not be required to offer shares
pursuant to Section 2.3(a) or Section 2.3(b) in the case of any transaction
described in items (A), (B), (C) (except for the transactions described in
Schedule 2.4(f)(i)(A)(C), (D) (as to the issuance of Common Stock), (E) and (F)
as set forth in Section 2.3(f)(i) above.
(iii) The Company shall not be required to make any adjustment
contemplated under Section 2.4(a), (b), (c), (d) or (e) with respect to any
Future Financing if the Investor exercises its right to increase or maintain its
stock ownership with respect to such Future Financing pursuant to Section 2.3(a)
or (b).
(iv) The provisions of Sections 2.3 and 2.4(a) through (e)
(but not Section 4.2(b)(ii)) shall terminate and have no further force and
effect upon the Investor's Rights Termination Date.
(g) Additional Provisions.
The number of shares of Common Stock outstanding at any given time for
purposes of the calculations under Sections 2.4(a) through (e) shall be subject
to the following rules:
(i) In case of (1) the sale by the Company for cash (or as a
component of a unit being sold for cash) of any rights or warrants to subscribe
for or purchase, or any options for the purchase of, Common Stock or any
securities convertible into or exchangeable for Common Stock without the payment
of any further consideration other than cash, if any (such securities
convertible, exercisable or exchangeable into Common Stock being herein called
"Convertible Securities"), or (2) the issuance by the Company, without the
receipt by the Company of any consideration therefor, of any rights or warrants
to subscribe for or purchase, or any options for the purchase of, Common Stock
or Convertible Securities, in each case, if (and only if) the consideration
payable to the Company upon the exercise of such rights, warrants or options
shall consist of cash, whether or not such rights, warrants or options, or the
right to convert or exchange such Convertible Securities, are immediately
exercisable, and the price per share for which Common Stock is issuable upon the
exercise of such rights, warrants or options or upon the conversion or exchange
of such Convertible Securities (determined by dividing (x) the minimum aggregate
consideration payable to the Company upon the exercise of such rights, warrants
or options, plus the consideration, if any, received by the Company for the
<PAGE>
issuance or sale of such rights, warrants or options, plus, in the case of such
Convertible Securities, the minimum aggregate amount of additional
consideration, other than such Convertible Securities, payable upon the
conversion or exchange thereof, by (y) the total maximum number of shares of
Common Stock issuable upon the exercise of such rights, warrants or options or
upon the conversion or exchange of such Convertible Securities issuable upon the
exercise of such rights, warrants or options) is less than the applicable
Reference Price described in Sections 2.4(a) through (d) (such comparison being
made separately with respect to the Initial Shares and each tranche of Shares
issued on a Deferred Closing Date based upon whichever of Sections 2.4(a)
through (d) is applicable to such tranche) or Fair Market Value Price,
applicable in Section 2.4(e), as the case may be on the date of the issuance or
sale of such rights, warrants or options, then the total maximum number of
shares of Common Stock issuable upon the exercise of such rights, warrants or
options or upon the conversion or exchange of such Convertible Securities (as of
the date of the issuance or sale of such rights, warrants or options) shall be
deemed to be outstanding shares of Common Stock and shall be deemed to have been
sold for cash in an amount equal to (1) any cash paid for such warrants, options
or Convertible Securities plus (2) the price per share payable upon the exercise
of such rights, warrants or options or upon the conversion or exchange of such
Convertible Securities issuable upon the exercise of such rights, warrants or
options.
(ii) In case the Company shall modify the rights of
conversion, exchange or exercise of any of the securities referred to in (i)
above or any other securities of the Company convertible, exchangeable or
exercisable for shares of Common Stock, for any reason other than an event that
would require adjustment to prevent dilution, so that the consideration per
share received by the Company after such modification is less than the
applicable Reference Price described in Sections 2.4(a) through (d) (such
comparison being made with respect to the Initial Shares and each tranche of
Shares issued on a Deferred Closing Date based upon whichever of Sections 2.4(a)
through (d) is applicable to such tranche) or Fair Market Value Price, as
applicable, the number of shares to be issued and outstanding shall be
recalculated according to (i) and the number of antidilution shares issued
pursuant to any of Sections 2.4(a) through (e), as the case may be, shall be
recalculated and any additional resulting antidilution shares shall thereupon be
issued.
(iii) In case of the sale for cash of any shares of Common
Stock, any Convertible Securities, any rights or warrants to subscribe for or
purchase, or any options for the purchase of, Common Stock or Convertible
Securities, the consideration received by the Company theretofor shall be deemed
to be the gross sales price therefor without deducting therefrom any expense
paid or incurred by the Company or any underwriting discounts or commissions or
concessions paid or allowed by the Company in connection therewith.
<PAGE>
ARTICLE III.
Representations and Warranties
3.1. Representations and Warranties of the Company.
The Company hereby represents and warrants to the Investor that, except
as otherwise disclosed in Schedule 3.1 or as disclosed in the SEC Documents
(defined below):
(a) ORGANIZATION AND QUALIFICATION.
Each of the Company and its subsidiaries is a corporation duly
organized and existing in good standing under the laws of the jurisdiction in
which it is incorporated, and has the requisite corporate power to own its
properties and to carry on its business as now being conducted. Each of the
Company and its subsidiaries is duly qualified as a foreign corporation to do
business and is in good standing in every jurisdiction in which the nature of
the business conducted or property owned by it makes such qualification
necessary and where the failure to qualify would have a Material Adverse Effect
with respect to the Company.
(b) AUTHORIZATION; ENFORCEMENT.
The Company has the requisite corporate power and authority to
enter into and perform this Agreement and to issue the Shares, the Supplemental
Shares and the Warrants in accordance with the terms hereof. The execution and
delivery by the Company of this Agreement, the Initial Warrant Agreement and
each other Warrant Agreement to be delivered by the Company pursuant hereto and
the consummation by the Company of the transactions contemplated hereby and
thereby have been duly authorized by the Company's board of directors and no
further consent or authorization of the Company or its board or directors or
stockholders is required. This Agreement has been duly executed and delivered by
the Company. This Agreement, the Initial Warrant Agreement and each other
Warrant Agreement to be delivered by the Company pursuant hereto constitute (or
will constitute, as applicable) the valid and binding obligations of the Company
enforceable against the Company in accordance with their respective terms,
except as such enforceability may be limited by applicable insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and remedies or by
equitable principles of general application.
(c) CAPITALIZATION.
The authorized capital stock of the Company consists of (i) 3,000,000
shares of Preferred Stock, of which as of the date hereof (A) 600,000 shares are
designated Class A Convertible Preferred Stock, $.01 par value per share, (B)
300,000 shares are designated Series B Preferred Stock, $0.01 par value per
share, (C) 2,100,000 shares, the designation rights and preferences of which
have not been determined, and (D) no shares of Preferred
<PAGE>
Stock were issued and outstanding; (ii) 50,000,000 shares of Common Stock, of
which as of October 8, 1997, 30,695,633 shares were issued and outstanding. All
of such outstanding shares have been validly issued and are fully paid and
nonassessable. Except as disclosed in Schedule 3.1(c) or in the SEC Documents,
there are as of the date hereof no outstanding (i) options, warrants, scrip,
preemptive rights, first offer rights, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital of the Company or any of its
subsidiaries, or (ii) contracts, commitments, understandings, or arrangements by
which the Company or any of its subsidiaries is or may become bound to issue,
transfer, deliver, sell, repurchase or redeem shares of capital stock of the
Company or any of its subsidiaries or options, warrants, scrip, rights to
subscribe to, or commitments to purchase or acquire, any shares, or securities
or rights convertible into or exchangeable for shares, of capital stock of the
Company or any of its subsidiaries. As of the date hereof, the Company has
reserved shares of Common Stock for future issuance (excluding shares reserved
under this Agreement) as further described in Schedule 3.1(c). Except as set
forth in Schedule 3.1(c), the Company has not as of the date hereof granted or
agreed to grant any registration rights with respect to any class of its equity
securities to any Person. Except as set forth in Schedule 3.1(c), there are as
of the date hereof no voting trusts or other agreements or understandings to
which the Company is a party with respect to the voting of the capital stock of
the Company, and the Company is not aware of any other voting trusts, agreements
or understandings with respect to the voting of its capital stock. Except as set
forth in Schedule 3.1(c), the issuance of the Initial Shares and the Initial
Warrant Shares (assuming the Initial Warrant Shares were issued on the Initial
Closing Date) to the Investor pursuant to the provisions of this Agreement and
the Warrant Agreement, respectively, will not be subject to any right of first
refusal or preemptive rights or any anti-dilution protections given by the
Company to any Person (including, without limitation, any stockholder, lender,
warrant-holder, lessor and/or licensor). Since January 1, 1997 and as of the
date hereof, the Company has not entered into any contract or agreement
regarding any equity financings except as set forth on Schedule 2.4(f)(i)(A)(C).
The Company has furnished to the Investor true and correct copies of the
Company's Articles of Incorporation as in effect on the date hereof (the
"Articles of Incorporation") and the Company's By-laws, as in effect on the date
hereof (the "By-laws").
(d) VALIDITY OF SHARES.
The Initial Shares, and the shares of Common Stock issuable upon
exercise of the Initial Warrants (the "Warrant Shares"), respectively, have been
duly authorized and reserved for issuance and, upon their issuance in accordance
with the terms of this Agreement or the Warrant Agreement, respectively, will be
validly issued, fully paid and nonassessable.
<PAGE>
(e) NO CONFLICTS.
Except as set forth on Schedule 3.1(e) hereto, the execution, delivery
and performance by the Company of this Agreement, the Initial Warrant Agreement
and each other Warrant Agreement executed by the Company pursuant hereto and the
consummation by the Company of the transactions contemplated hereby and thereby
do not (i) result in a violation of the Company's Articles of Incorporation or
By-laws or (ii) conflict with, or constitute a default (or an event which with
material notice or lapse of time or both would become a default) under, or give
to others any rights of termination, amendment, acceleration or cancellation of,
any material agreement, material indenture or material instrument to which the
Company or any of its subsidiaries is a party, or result in a violation of any
law, rule, regulation, order, judgment or decree applicable to the Company, any
of its subsidiaries or by which any property or asset of the Company or any of
its subsidiaries is bound or affected (except, in the case of subclause (ii)
above, for such conflicts, defaults, terminations, amendments, accelerations,
cancellations and violations as would not, individually or in the aggregate,
have a Material Adverse Effect). No action, suit, dispute or proceeding is
pending or, to the best knowledge of the Company, threatened against the Company
which, if adversely determined, would prevent the Company from carrying out its
obligations under this Agreement. The business of the Company is not being
conducted in violation of any law, ordinance or regulation of any Governmental
Authority, except for possible violations which either singly or in the
aggregate do not and will not have a Material Adverse Effect with respect to the
Company. Except as contemplated by this Agreement, the Company is not required
to obtain any consent, authorization or order of, or make any filing or
registration with, any court or Governmental Authority in order for it to
execute, deliver or perform any of its obligations under the Agreement or any
Warrant Agreement or issue the Shares and the Warrants and sell the Shares and
Warrants in accordance with the terms hereof and thereof, as applicable.
(f) SEC DOCUMENTS, FINANCIAL STATEMENTS.
Since September 30, 1995, the Company has filed all reports, schedules,
forms, statements and other documents required to be filed by it with the SEC
pursuant to the reporting requirements of the Exchange Act (all filings with the
SEC since such date through the date of this Agreement are hereinafter referred
to herein as the "SEC Documents"). As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the
Exchange Act and the rules and regulations of the SEC promulgated thereunder
applicable to such SEC Documents, and none of the SEC Documents (when read
together with all exhibits included therein and financial statement schedules
thereto and documents (other than exhibits) incorporated by reference) 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
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the SEC
Documents comply as to form in all material respects with applicable accounting
requirements and the published rules and
<PAGE>
regulations of the SEC with respect thereto. Such financial statements have been
prepared in accordance with U.S. generally accepted accounting principles
applied on a consistent basis during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto or (ii) in
the case of unaudited interim statements, to the extent they may not include
footnotes or may be condensed or summary statements) and fairly present in all
material respects the consolidated financial position of the Company and its
consolidated subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments).
(g) ABSENCE OF CHANGES.
Between July 31, 1997 and the date hereof, no event which has had a
Material Adverse Effect has occurred or to the knowledge of the Company exists,
regarding the Company.
(h) AMENDMENT OF RIGHTS AGREEMENT.
That certain First Amendment to Rights Agreement attached hereto as
Exhibit G, and that certain Second Amendment to Rights Agreement attached hereto
as Exhibit H, each amending that certain Rights Agreement dated April 8, 1996
(the "Rights Agreement"), has been duly and validly executed and delivered by
each of the Company and the Rights Agent (as defined in the Rights Agreement).
(i) BOARD APPROVAL OF INVESTMENTS.
The investments contemplated herein to be made by the Investor have
been approved by a committee of disinterested members of the Company's board of
directors in accordance with the provisions of Section 302A.673 of the Minnesota
Business Corporations Act.
(j) LIABILITIES.
The Company has no Liabilities except as set forth in Schedule 3.1(j)
and further excepting as follows:
(i) Those Liabilities disclosed in the SEC Documents; or
(ii) Those Liabilities incurred by the Company in the ordinary
course of business since April 30, 1997, none of which individually or in the
aggregate had or will have a Material Adverse Effect on the business of the
Company or its property, assets, financial condition, earnings, profits or
prospects.
(k) LITIGATION.
Except as set forth in Schedule 3.1(k), there are no lawsuits, actions
or proceedings pending or, to the knowledge of the Company, threatened, against
the Company which, if
<PAGE>
decided adversely, are reasonably expected to have a Material Adverse Effect
with respect to the Company. Except as described on Schedule 3.1(k), no
judgment, order, writ, injunction, decree or award has been issued by any court,
arbitrator or Governmental Authority which is reasonably expected to result in a
Material Adverse Effect.
(l) DISCLAIMER.
The Company shall not be deemed to have made to the Investor any
representation or warranty other than as expressly made by the Company in this
Section 3.1. Without limiting the generality of the foregoing, and without
prejudice to any express representations and warranties made by the Company in
this Section 3.1, the Company makes no representation or warranty to the
Investor with regard to any issues related to Intellectual Property Rights,
projections, estimates or budgets or other matters previously delivered to or
made available to the Investor with respect to future revenues, expenses,
expenditures or future results of operations. Nothing in this Section 3.1(l)
shall limit any remedy that may be available to Investor pursuant to Rule 10b-5
under the Exchange Act or under similar state securities law statutes.
3.2. Representations and Warranties of Investor.
The Investor hereby makes the following representations and warranties
to the Company:
(a) AUTHORIZATION; ENFORCEMENT.
The Investor has the requisite corporate power and authority
to enter into and perform the Agreement. The execution and delivery of the
Agreement by the Investor and the consummation by the Investor of the
transactions contemplated thereby have been duly authorized by all necessary
corporate action, and no further consent or authorization of the Investor or its
directors or stockholders is required. The Agreement has been duly authorized,
executed and delivered by the Investor. The Agreement constitutes a valid and
binding obligation of the Investor enforceable against the Investor in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally the enforcement of, creditors' rights and
remedies or by other equitable principles of general application.
(b) PRESENT OWNERSHIP.
Other than the Shares and the Warrants to be acquired pursuant to this
Agreement, the Investor does not Beneficially Own any securities issued by the
Company.
(c) NO CONFLICTS.
Except as set forth on Schedule 3.2(c) hereto, the execution, delivery
and performance of the Agreement by the Investor and the consummation by the
Investor of
<PAGE>
the transactions contemplated hereby do not (i) result in a violation of the
Investor's Articles of Incorporation or By-laws or (ii) conflict with, or
constitute a default (or an event which with material notice or lapse of time or
both would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any material agreement, material
indenture or material instrument to which the Investor or any of its
subsidiaries is a party, or result in a violation of any law, rule, regulation,
order, judgment or decree applicable to the Investor, any of its subsidiaries or
by which any property or asset of the Investor or any of its subsidiaries is
bound or affected (except in the case of subclause (ii) for such conflicts,
defaults, terminations, amendments, accelerations, cancellations and violations
as would not, individually or in the aggregate, have a Material Adverse Effect
with respect to the Investor or materially impair the Investor's ability to
perform its obligations under the Agreement). No action, suit, dispute or
proceeding is pending or, to the best knowledge of the Investor, threatened
against the Investor which, if adversely determined, would prevent the Investor
from carrying out its obligations under this Agreement. Except as contemplated
by this Agreement, the Investor is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental agency in order for it to execute, deliver or perform any of its
obligations under the Agreement or purchase the Shares and the Warrants in
accordance with the terms hereof.
(d) INVESTMENT REPRESENTATION.
The Investor understands and acknowledges that none of the Shares or
shares underlying the Warrants have been registered or qualified under the
federal or applicable state securities laws and the Shares and the Warrants are
being sold to and purchased by the Investor in reliance upon applicable
exemptions from such registration and qualification requirements. The Investor
is an "Accredited Investor" within the meaning of the federal securities laws
and acknowledges that it has been furnished with access to, and has been
afforded access to, and afforded the opportunity to ask questions and receive
answers concerning such information pertaining to the Shares, the Warrants, the
Company, and its assets and liabilities as it deemed necessary to decide whether
to purchase the Shares and the Warrants pursuant to the terms of this Agreement.
The Shares and the Warrants will be acquired by the Investor for investment only
and not with a view to any public distribution thereof. The Investor understands
that the Shares and the Warrants are "restricted securities" within the meaning
of the federal securities laws. The Investor agrees that it will not offer to
sell or otherwise dispose of any of the Shares or the Warrants in violation of
the registration and qualification requirements of the federal and applicable
state securities laws. All certificates to be delivered at the Initial Closing,
the Second Investment Closing, the Third Investment Closing and the Fourth
Investment Closing, as applicable, evidencing the Shares and the Warrants will
contain appropriate legends incorporating any applicable securities laws
restrictions.
<PAGE>
(e) DISCLAIMER
The Investor shall not be deemed to have made to the Company any
representation or warranty other than as expressly made by the Investor in this
Section 3.2. Without limiting the generality of the foregoing, and without
prejudice to any express representations and warranties made by the Investor in
this Section 3.2, the Investor makes no representation or warranty to the
Company with regard to any issues related to Intellectual Property Rights,
projections, estimates or budgets or other matters previously delivered to or
made available to the Company with respect to future revenues, expenses,
expenditures or future results of operations. Nothing in this Section 3.2(e)
shall limit any remedy that may be available to Company pursuant to Applicable
Law.
ARTICLE IV.
Covenants
4.1. Covenants of the Company.
(a) NO INTERFERENCE.
The Company understands that, subject to the limitations set forth in
Section 4.2 hereof, from and after the Revised Standstill Date, the Investor may
seek to acquire additional Voting Securities from time to time from Persons
other than the Company, in open-market transactions or otherwise. The Company
agrees that it shall not take any action to interfere with any acquisition by
the Investor of additional Voting Securities or any attempt by the Investor to
acquire additional Voting Securities from Persons other than the Company, so
long as such acquisition would be in compliance with all provisions of this
Agreement, including without limitation Sections 4.2(b)(ii) and Section 2.3.
(b) USE OF PROCEEDS.
The Company shall use the proceeds (the "Proceeds") from each of the
Initial Purchase Price, the Second Investment Purchase Price, the Third
Investment Purchase Price and the Fourth Investment Purchase Price, as
applicable, to develop, manufacture and market the Products, including without
limitation: (i) the expansion of clinical trials; (ii) the process of obtaining
all required United States regulatory approvals; (iii) research and development;
and (iv) development of a joint sales force with the Investor with respect to
the Joint Venture to be established pursuant the U.S. Joint Venture Agreement.
The Company may also use the Proceeds to purchase equity interests in other
Persons where necessary to acquire access to technology which would be useful in
developing the Company's products.
<PAGE>
(c) BOARD REPRESENTATION.
The Company hereby agrees that, until the Investor's Rights Termination
Date occurs, the Investor shall have the right to designate, at any time from
and after the Initial Closing Date, one nominee to serve upon appointment or
election as a member of the Company's board of directors, provided that the
individual so designated is reasonably acceptable to the Company. In the event
that the Investor chooses a nominee to serve as a member of the board of
directors as aforesaid the Company agrees (i) to nominate such individual as one
of management's nominees at each regularly scheduled annual stockholders meeting
or any special meeting of stockholders at which the election of directors shall
take place, to recommend to the stockholders at such meeting such individual's
election to the board of directors and otherwise to use its Best Efforts to
cause the election of such individual, (ii) if requested by the Investor, and
subject to the fiduciary duties of the board of directors and compliance with
the Company's Articles of Incorporation and Bylaws, promptly to appoint such
individual to the board of directors during any interim period between the date
of the Investor's initial request and such next stockholders meeting and (iii)
to the extent necessary, at or prior to the election or appointment of such
individual pursuant to this Section 4.1(c), to increase the current size of the
board of directors (to the extent necessary) to permit such appointment or
election.
(d) SHAREHOLDER APPROVAL OF ADDITIONAL SHARES.
As of the Closing Date, (i) the Company shall have a sufficient number
of authorized but unissued shares of Common Stock to satisfy the issuance of the
Initial Shares and the Initial Warrant Shares and (ii) shall have reserved
5,000,000 shares of Common Stock for issuance at the Supplemental Closing and at
the Deferred Closings, or upon exercise of Warrants to be issued at the Deferred
Closings or Supplemental Closing. At any time prior to obtaining an increase in
the Company's authorized shares of Common Stock by means of an amendment to its
Articles of Incorporation, the Company may, upon written notice to the Investor,
release up to 2,000,000 shares of the Common Stock at any time so reserved for
issuance (i) if necessary to enable the Company to complete a financing
involving the sale of Voting Securities or Company Securities for cash, and (ii)
provided that at least an equal number of shares have been released from the
6,000,000 shares originally reserved for issuance under that certain Common
Stock Investment Agreement between Promethean Investment Group L.L.C. and the
Company dated as of September 2, 1997, as amended. If the Company invokes the
release of up to such 2,000,000 shares, and the Company subsequently increases
its authorized shares of Common Stock by at least 10,000,000 shares, (i) the
Company shall again reserve a number of shares for the benefit of the Investor
equal to the shares previously released and (ii) to the extent that the average
Quoted Price for the fifteen (15) trading days ending two days prior to the date
of the Company's stockholder meeting at which the increase in the Company's
authorized shares is approved is less than $4.00, the Company shall reserve an
additional 1,000,000 shares of Common Stock for issuance at the Supplemental
Closing and at the Deferred Closings, or upon exercise of Warrants to be issued
at the Deferred Closings or Supplemental Closing.
<PAGE>
If on or prior to any Deferred Closing Date, the Supplemental Closing
Date or in connection with any other issuance or grant of shares of Common Stock
to the Investor hereunder, the Company does not have a sufficient number of
authorized but unissued shares of Common Stock to cover the Shares and Warrants
issuable on such Deferred Closing Date, the Supplemental Closing Date or in
connection with any other issuance or grant of shares of Common Stock to the
Investor hereunder, the Company shall use its Best Efforts to cause an increase
in the number of authorized but unissued shares of Common Stock to satisfy its
obligations in connection with such Deferred Closing, the Supplemental Closing
Date or in connection with any other issuance or grant of shares of Common Stock
to the Investor hereunder, including by proposing an appropriate amendment to
the Company's Articles of Incorporation at the next regularly scheduled annual
shareholders meeting and recommending the approval of such amendment by the
stockholders. Without limiting the foregoing, within one hundred twenty (120)
days of the Initial Closing Date, the Company shall cause to be convened a
special meeting of its stockholders and shall include a proposal at such meeting
to increase the number of its shares of authorized Common Stock by at least
10,000,000 shares and shall seek stockholder approval of such proposal.
Notwithstanding anything to the contrary herein, if, after using its Best
Efforts, the Company is unable to obtain any necessary stockholder approval to
satisfy its obligations to deliver shares of Common Stock with respect to a
Deferred Closing or the Supplemental Closing, (i) then the Investor shall
thereafter have the right to purchase, in open-market transactions or otherwise,
an aggregate amount of shares of Common Stock equal to the number of Shares, and
shares of Common Stock underlying the respective Warrants, which the Investor
would have had a right to purchase pursuant to such Deferred Closing or
Supplemental Closing, and (ii) the Investor's obligation to purchase Shares and
Warrants (and its right pursuant to the preceding clause (i)) shall expire six
months after the date that Deferred Closing would otherwise have occurred but
for the failure of the Company to have sufficient authorized shares of Common
Stock.
(e) CERTAIN TRADING ACTIVITIES.
The Company and its Affiliates will not purchase or otherwise acquire
any shares of Common Stock (A) at any time during the period in which the First
Anniversary Market Price is calculated pursuant to Section 2.1(e)(i) or (B),
upon delivery of written notice to the Investor that the Company reasonably
believes that the period for calculating a Deferred Market Price with respect to
a Deferred Closing is about to commence, during the period from the date of such
notice until the relevant Deferred Closing Date.
(f) REGULATORY APPROVALS.
The Company will use its Best Efforts to obtain all consents,
authorizations and licenses required to be obtained and make any necessary
filings under the HSR Act or any other Applicable Law in connection with the
transactions contemplated by this Agreement and by the Related Agreements.
<PAGE>
(g) CONDUCT OF BUSINESS.
During the period commencing on the date hereof and terminating on the
Initial Closing Date, the Company agrees that:
(i) except as provided hereunder, no change will be made in
the Articles of Incorporation or By-Laws of the Company in effect as of the date
hereof; and
(ii) except pursuant to any of the Plans or as otherwise
disclosed in Schedule 2.3(a), it will not issue, grant or sell, or authorize or
propose the issuance of, or split, combine, reclassify or redeem, purchase or
otherwise acquire or propose the purchase of any shares of Common Stock or any
other Company Securities or issue any securities convertible into, or rights to
subscribe to, or warrants or options to acquire, or enter into any arrangement
or contract with respect to the issuance of any such shares of Common Stock or
other Company Securities.
4.2. Covenants of the Investor.
(a) REGULATORY APPROVALS.
The Investor will use its Best Efforts to obtain all consents,
authorizations and licenses required to be obtained and make any necessary
filings under the HSR Act or any other Applicable Law in connection with the
transactions contemplated by this Agreement and by the Related Agreements.
(b) STANDSTILL PROVISIONS.
(i) During the period commencing on the date hereof and ending
on the fifth anniversary of the Initial Closing (the "Standstill Period") the
Investor will not and will not permit any of its Affiliates to, alone or in
concert with others directly or indirectly, except as specifically permitted by
this Agreement:
(A) by purchase or otherwise, acquire, or agree to
acquire, Beneficial Ownership of any shares of Common Stock or
direct or indirect rights or options to acquire such
Beneficial Ownership (i) other than Voting Securities (A)
acquired by the Investor pursuant to Section 2.1 (including
any Supplemental Shares) or Section 2.2 or (B) which the
Investor has the right to purchase in Future Financings
pursuant to the provisions of Section 2.3 from and after the
Initial Closing Date (the amount of shares to which the
Investor is so limited is hereinafter referred to as the
"Standstill Percentage") or (ii) other than Voting Securities
in an amount that, together with Voting Securities
Beneficially Owned by any affiliate of Investor (as defined in
Rule 12b-2 under the Exchange Act, such term to have such
meaning for purposes of this Section 4.2(b) only) from and
after the Revised Standstill Date pursuant to Section
4.2(b)(ii) that does not exceed the Revised Standstill
Percentage; provided, however, that the
<PAGE>
foregoing subsections (i) and (ii) shall not prohibit
Beneficial Ownership of shares of Common Stock issued as
dividends or as a result of stock splits and similar
reclassifications of any Shares under this Agreement or issued
pursuant to the antidilution provisions of Section 2.4;
(B) make, or in any way participate in, any
"solicitation" of "proxies" (as such terms are defined or used in Regulation 14A
under the Exchange Act) or become a participant in any election contest (as such
terms are defined or used in Rule 14a-11 under the Exchange Act) to vote, or
seek to advise or influence any Person with respect to the voting of, any shares
of Common Stock of the Company;
(C) form, join or in any way participate in a "group"
(as such term is used in Section 13(d)(3) of the Exchange Act) with respect to
any Company Securities, deposit any Company Securities Beneficially Owned by the
Investor or its Affiliates in a voting trust or subject any Company Securities
to any arrangement or agreement with respect to the voting thereof, other than a
voting trust or similar arrangement to which only the Investor or the Affiliates
are parties;
(D) enter into any discussions, negotiations,
arrangements or understandings with any third party with respect to any of the
foregoing restrictions in this Section 4.2(b)(i);
(E) disclose to any Person or in any filing under the
Exchange Act any intention, plan or arrangement inconsistent with this Section
4.2(b) or with the restrictions on transfer set forth in Section 4.2(d); or
(F) act, alone or in concert with others, to seek to
control or influence in any material respect the management or policies of the
Company (beyond the actions of the Investor's nominee to the board of directors
of the Company pursuant to Section 4.1(c)).
(ii) From and after the earlier of (i) the Fourth Investment
Closing Date or (ii) the second anniversary of the Initial Closing Date (the
"Revised Standstill Date"), the Investor shall have the right to acquire
additional shares of Common Stock through open market purchases or other
purchases from other Persons in order to obtain Beneficial Ownership of up to
nineteen and nine-tenths percent (19.9%) of the Common Stock (the "Revised
Standstill Percentage") outstanding from time to time after the Revised
Standstill Date upon compliance with the following:
(A) The Investor shall first deliver a written notice
of the intention to purchase shares of Common Stock to the Company which shall
specify the number of shares of Common Stock (the "Specified Shares") the
Investor intends to purchase (the "Purchase Offer").
(B) If the Company desires to sell the Specified
Shares to the Investor, then the Company must give written notice (the "Purchase
Acceptance") to the
<PAGE>
Investor within fifteen (15) business days after receipt of such Purchase Offer
(the "Acceptance Period") stating its intention to sell such Specified Shares to
the Investor at the Specified Share Price.
(C) If the Company delivers the Purchase Acceptance
to the Investor, the Company and the Investor shall each use their respective
Best Efforts to secure any approvals of any Governmental Authority required in
connection therewith and shall be legally obligated to consummate the purchase
and sale contemplated hereby. The Closing shall take place three (3) business
days after such approvals are obtained (or three (3) business days after the
Purchase Acceptance if such approvals are not required). At the closing, the
Investor shall purchase the Specified Shares from the Company at a price equal
to the average Quoted Price for all trading days within the twenty (20) days
ending two days prior to the receipt by the Company of the Purchase Offer (the
"Specified Share Price") and the Company shall issue the Specified Shares to the
Investor.
(D) In the event that the Company does not exercise
its right to accept the Purchase Offer within the Acceptance Period, the
Investor shall be free, for a period of sixty (60) calendar days following the
expiration of the Acceptance Period, to purchase the Specified Shares in the
open market or from third parties, such purchases to be made at market prices
then prevailing or as otherwise agreed by the Investor. To the extent that the
Investor does not purchase any portion of the Specified Shares by the end of
such sixty (60) day period, the Investor may not purchase any additional shares
of Common Stock thereafter (except as otherwise provided under Sections 2.3(a)
and 2.3(b)) without delivering a new Purchase Offer to the Company pursuant to
this Section 4.2(b)(ii).
(E) The Investor's rights and obligations under this
Section 4.2(b)(ii) shall expire upon the expiration of the Standstill Period.
(iii) For the avoidance of doubt, if the Investor's aggregate
percentage Beneficial Ownership interest in the Company is increased beyond the
Standstill Percentage or the Revised Standstill Percentage, as applicable, as a
result of a recapitalization of the Company, a repurchase of securities by the
Company or any other action taken by the Company or its Affiliates, such
increase shall not violate the provisions of this Section 4.2(b).
(c) NOTICE OF ACQUISITION; COMPLIANCE.
During the Standstill Period, the Investor agrees that, prior to any
time that the Investor wishes to acquire Company Securities in any open market
purchase or other purchase from a Person permitted under this Section 4.2, it
will give the Company notice of its intention to make such acquisition. All open
market purchases of shares of Company Securities by the Investor and its
Affiliates shall be made in compliance with Applicable Laws.
<PAGE>
(d) TRANSFERS.
(i) During the Standstill Period, the Investor will not, at
any time, directly or indirectly, sell or transfer, or offer to sell or
transfer, any Company Securities Beneficially Owned by it, except (A) as
provided in clause (ii) of this paragraph (d); (B) in transactions in compliance
with Rule 144 promulgated under the Securities Act of 1933, an amended (the
"Securities Act"), as such rule exists on the date hereof or as hereafter
amended (or any successor or similar provision), or (C) in any other bona fide
sales or transfers to any Person pursuant to an exemption from the registration
requirements of the Securities Act, but only if (1) such Person, together with
all such Person's Affiliates, certify to the Investor that such Person, together
with such Person's affiliates and associates (as defined in the Exchange Act),
would not Beneficially Own or be a member of any group that Beneficially Owns,
after such sale or transfer, Voting Securities representing Beneficial Ownership
of in excess of 5% of all then outstanding Voting Securities, and (2) the
Investor has previously delivered to the Company an opinion of counsel
reasonably satisfactory to the Company to the effect that any sale or transfer
pursuant to this subclause (C) is exempt from registration under the Securities
Act.
(ii) The Investor shall be permitted to sell Company
Securities that are registered pursuant to an effective registration statement
under the Securities Act under Article VII hereof or otherwise; provided,
however, that no such sales or transfers of Company Securities may be made to
any Person that the Investor, the underwriters (if any) are aware, after due
inquiry, would Beneficially Own, or be a member of any group that Beneficially
Owns, together with such Person's affiliates and associates, Voting Securities
representing Beneficial Ownership of in excess of 5% of all then outstanding
Voting Securities, immediately after such distribution.
(e) INVESTOR PROPOSALS.
Notwithstanding the provisions of this Agreement, during the Standstill
Period and thereafter, the Investor may make proposals to members of the
Company's Board of Directors who are not employed by, or have any personal
contractual relationship with, the Investor collectively, the "Disinterested
Directors") to acquire additional Voting Securities (which may or may not be
sufficient to give the Investor control of the Company) through tender offers,
exchange offers, asset acquisitions or through other transactions which exceed
the Standstill Percentage or the Revised Standstill Percentage as applicable
("Investor Acquisition Proposals"). During the Standstill Period, the Investor
shall not take any action to consummate any transaction contemplated by an
Investor Acquisition Proposal unless a majority of the Disinterested Directors
has voted to approve such Investor Acquisition Proposal. During the Standstill
Period, the Investor shall not make any announcement regarding, and shall take
all reasonable measures necessary to prevent the disclosure of, any Investor
Acquisition Proposal without the prior written permission of a majority of the
Disinterested Directors. The provisions of this Section 4.2(e) shall not prevent
or otherwise interfere with any acquisitions of Voting Securities by the
Investor which are permitted under the terms of this Agreement.
<PAGE>
(f) COMPANY PROPOSALS.
Notwithstanding anything in this Section 4.2 to the contrary, in the
event the Company (i) publicly announces or (ii) invites any Person other than
the Investor to make a proposal, or elects to enter into negotiations with
respect to, or its board of directors adopts a plan or program regarding
(whether or not publicly announced): any merger, consolidation or other business
combination, liquidation or recapitalization of the Company, or any sale or
transfer of all or substantially all of the assets of the Company or any sale or
transfer of Voting Securities representing control of the Company, then the
Investor shall be permitted to participate in any such process on terms that are
substantially comparable to those made available to any other participant in
such process.
(g) EXCEPTIONS.
Notwithstanding anything in this Section 4.2 to the contrary, in the
event of any agreement between the Company and any other Person or group
pursuant to which such other Person or group would, following such transaction,
Beneficially Own (alone or together with its affiliates and associates 20% or
more of the outstanding Common Stock (any such event being an "Acquisition
Event"), the provisions of Section 4.2(b) shall terminate and have no further
force and effect. In the event that the transactions contemplated in connection
with the Acquisition Event are not completed, all restrictions contained in
Section 4.2(b) shall be reinstated upon 10 business days' notice to the Investor
and shall remain effective until subsequently terminated.
(h) TENDER OFFERS.
Notwithstanding anything in this Section 4.2 to the contrary, in the
event any Person or group shall commence (i) a tender offer for or exchange
offer which, if successful, would result in such Person or group Beneficially
Owning, together with its or their affiliates, Company Securities representing
in excess of 50% of the outstanding Voting Securities (on a Fully Diluted Basis)
(a "Third Party Offer") or (ii) a bona fide proxy contest initiated with the
intent of acquiring control of the Company or its Board of Directors ("Proxy
Contest"), and the bidder has financing or financial commitments from
responsible financial institutions sufficient to finance the cash portion of
such Third Party Offer, then the provisions of this Section 4.2 shall have no
force and effect so long as such Third Party Offer or Proxy Contest remains in
effect.
(i) APPOINTMENT OF AGENT FOR SERVICE OF PROCESS.
Investor has irrevocably designated Corporation Service Company, 1013
Centre Road, Wilmington, Delaware, 19805-1294, County of New Castle, as agent
for service of process hereunder and the above named is authorized and directed
to accept service of process on behalf of Investor in any suit and/or upon the
request of any of the Parties hereto will enter a general appearance upon
Investor's behalf in the event that such a suit shall be instituted regarding
the transactions contemplated by this Agreement or the Related Agreements.
<PAGE>
(j) MAINTENANCE OF THE OBLIGATIONS OF AFFILIATES.
(i) The Investor hereby guarantees (subject to the terms and
conditions hereof) the full performance and observance of all of the terms and
conditions of the Related Agreements by any Affiliate of the Investor that is a
party to any such Related Agreements, which guarantee obligation shall be
satisfied exclusively by payment and discharge of any damages arising from the
failure of an Affiliate to perform its obligations thereunder. The Investor
agrees that its guarantee obligations hereunder shall not be discharged, except
by the payment by the Investor of its obligations under this Section 4.2(j).
(ii) In the event that any such Affiliate fails to perform any
of its duties and obligations under the Related Agreements, and monetary claims
by the Company arising out of or with respect to such failure to perform have
been finally determined (by any judgment of a court, by an arbitral award, by
execution of a settlement agreement or by final resolution under the terms of
the relevant Related Agreement) to be payable to the Company ("Payment
Determination"), then in such case the Investor shall promptly pay over to the
Company all of the amounts so determined to be due to it within 30 days after
such Payment Determination if and to the extent that the relevant Affiliate
shall have failed to pay such amounts within such time period.
(iii) The Investor agrees that it will pay and perform all
obligations of such Affiliates established through any Payment Determination
made as a result of any litigation, arbitration or other proceeding, even though
such litigation, arbitration or any other proceeding may be appealed or is
appealable by the Investor or such Affiliate. The Investor also agrees that the
Company shall not be required to pursue any collection efforts or other remedies
against the relevant Affiliate with respect to any Payment Determination before
first proceeding against the Investor, it being understood and agreed that once
a Payment Determination has been made, the Company may exercise any and all
rights and remedies available to it at law or in equity in order to enforce the
provisions of this Section 4.2(j).
(iv) The obligations of Investor under this Section 4.2(j)
shall be primary obligations, and independent of any obligation of the
Investor's Affiliates; provided, however, Investor's obligations under this
Agreement are subject to any defense which its Affiliates are permitted to
assert excluding any Bankruptcy or related defenses as follows:
(A) The obligations contained in this Section 4.2(j)
shall continue to be effective if any obligations of Investor's Affiliates are
rescinded or nullified, or any payment made thereby must otherwise be restored
or returned to such Investor's Affiliate, or any trustee, receiver, custodian,
liquidator or other similar officer of either of them (and is so returned) upon
the Bankruptcy of such Investor's Affiliate or upon or as a result of the
appointment of a custodian, receiver, trustee or other officer with similar
powers with respect to such Investor's Affiliate in connection with such
<PAGE>
Bankruptcy. In the event of such an occurrence, or in the event payment by such
Investor's Affiliate shall be prevented by reason of the pendency of a case or
proceeding against such Investor's Affiliate under a bankruptcy or insolvency
law, Investor shall be obligated to comply with the requirements of Section
4.3(c).
(B) The obligations contained in this Section 4.2(j)
shall continue to be effective notwithstanding any other provision hereof or any
amendment or modification of this Agreement or any of the Related Agreements, or
any assignment or any rejection thereof which may occur in any Bankruptcy or
proceeding concerning any of Investor's Affiliates, whether permanent or
temporary, and whether or not assented to by any of the Parties to this
Agreement or any of the Related Agreements. The Investor shall be obligated
hereunder to pay and discharge the obligations hereunder and thereunder in
accordance with the terms of the Payment Determination under this Agreement and
the Related Agreement, as applicable, in effect on the date hereof, as the same
may be amended from time to time.
(C) Without notice to or further assent from the
Investor, any of the terms and conditions respecting the duties and obligations
of any of its Affiliates under the Related Agreements may be waived or modified
in writing by such Affiliates and the Company, and the time of payment of any
amount due or the time of performance of any obligation of such Affiliates may
be compromised, settled or extended in writing by such Affiliates and the
Company. The obligations of the Investor hereunder shall not be discharged or
impaired or otherwise affected by (i) any extension or renewal of any Related
Agreement or any obligations of such Affiliates thereunder, without notice or
further assent from the Investor; (ii) any rescission, waiver, amendment or
modification of any of the terms or provisions of any Related Agreement; (iii)
any permitted assignment or delegation by the Company, its successors and
assigns, of its rights and obligations under any Related Agreement; or (iv) any
other act or thing which may or might in any manner or to any extent vary the
risk of the Investor or which would otherwise operate as a discharge of the
Investor as a matter of law.
(v) The Company shall be entitled to recover from the Investor
all costs and expenses (including, without limitation, court costs and
reasonable attorneys fees) incurred by the Company in connection with the
enforcement of this Section 4.2(j) against the Investor, or the Affiliate, and
all actions or proceedings, in any way, manner or respect arising out of or
relating to the enforcement by the Company of its rights under this Section
4.2(j).
(k) CERTAIN TRADING ACTIVITIES.
The Investor and its Affiliates will not sell any Shares (A) at any
time during the period in which the First Anniversary Market Price is calculated
pursuant to Section 2.1(e)(i) or (B), upon receipt of written notice from the
Company that it reasonably believes that the period for calculating a Deferred
Market Price with respect to a Deferred
<PAGE>
Closing is about to commence, during the period from the Investor's receipt of
such written notice until the relevant Deferred Closing Date.
4.3. Mutual Covenants.
(a) NONSOLICITATION.
Unless otherwise agreed in writing, for a period commencing on the
Initial Closing Date and ending on the date of termination of the U.S. Joint
Venture Agreement, each of the Investor and the Company agrees not to solicit,
and to cause its Affiliates (other than the Joint Venture) not to solicit, for
hire any employees of the other Party ("Restricted Employees"). The phrase
"solicit for hire" shall not include general advertisements or other similar
solicitations that are not specifically directed at such Restricted Employees,
or solicitations directed at any Restricted Employee whose employment with the
nonsoliciting Party has terminated through no actions on the part of the
soliciting party.
(b) TERMINATION.
This Agreement may be terminated prior to the Initial Closing Date (i)
by mutual written consent of the Company and the Investor and (ii) by either
Party if the conditions for such Party set forth in Section 2.1(c) or (d), as
applicable, shall not have been satisfied within one hundred eighty (180) days
of the date hereof. If this Agreement is terminated, all further obligations of
the Parties under this Agreement shall terminate; provided, however, that the
Company and the Investor shall, in all events, remain bound by and continue to
be subject to the applicable provisions set forth in Article VIII.
(c) JOINT VENTURE LIABILITIES.
It is the agreement of the Parties that Joint Venture
Liabilities (as hereinafter defined) not be shared unequally by the parties to
the U.S. Joint Venture Agreement or their respective Affiliates. If at any time
either Party or any of its Affiliates (a "Party Group") incurs or pays, in a
manner that is not in breach of the U.S. Joint Venture Agreement, any
Liabilities of the Joint Venture (other than Liabilities for which either Party
or its Affiliates is required to indemnify the Joint Venture pursuant to the
provisions of the U.S. Joint Venture Agreement and the Related Agreements) (the
"Joint Venture Liabilities"), and the amount of Joint Venture Liabilities in
aggregate paid or otherwise satisfied by one Party Group exceeds amounts paid or
otherwise satisfied by the other Party Group, then promptly upon receipt of
proof of the payment or other satisfaction of the greater proportionate
Liability, the Party and its respective
<PAGE>
Affiliates paying or otherwise satisfying lesser proportionate Joint Venture
Liabilities shall pay to the other Party an amount such that after the payment
each Party has shared such Joint Venture Liabilities equally, together with
interest at the prime rate calculated from the date of the original payment
until the day of the equalizing payment; provided that: (i) if any such sharing
is made and subsequently one Party Group pays or otherwise satisfies additional
Joint Venture Liabilities or is discharged from Joint Venture Liabilities used
in the calculation of the amount to be shared, the obligations of each Party and
its respective Affiliates to share such Joint Venture Liabilities shall be
recalculated and appropriate payments made, together with interest at the prime
rate calculated from the date of the original payment until the day of the
adjustment payment so that each Party Group will have shared the total
Liabilities of such Joint Venture Liabilities equally. The obligations set forth
in this Section 4.3(c) shall be subject to the condition that the Party and its
respective Affiliates claiming a right to receive payments pursuant to this
Section 4.3(c) shall have conducted their activities in compliance with Section
4.3(d).
(d) OBSERVANCE OF SEPARATE ENTITY FORMALITIES.
The Parties shall cause, or cause their Affiliates to cause, the Joint
Venture to establish and comply with a set of financial, accounting and
corporate policies that (A) observe its character as a separate legal entity
from each of the Investor, the Company and their respective Affiliates, (B) are
similar to those generally established by companies comparable to the Joint
Venture, and (C) are reasonably satisfactory to the Investor and the Company.
Areas to be addressed by these policies shall include (without limitation):
(i) cash management policies and cash investment guidelines
which shall be on terms and conditions established comparable to those that
would apply in an arms' length transaction, including that all funds are
accounted for separately unless otherwise agreed to by the Parties;
(ii) levels of authorization and approval by management and
the Board of Directors of the Joint Venture for purchases, contracts, check
signing, wire transfers and capital commitments;
(iii) normal accounting procedures in accordance with
generally accepted accounting principles consistently applied including accrual
and recognition of expenses, depreciation, revenue recognition; and
(iv) observing all other required formalities of Applicable
Laws for a limited liability company, including holding any required meetings of
its managing board or other governing body, as well as meetings of holders of
its membership interests, in each case in accordance with the U.S. Joint Venture
Agreement.
(e) THIRD PARTY LICENSE AGREEMENTS.
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
<PAGE>
XXXXXXXX Each Party will use its Best Efforts to assist and cooperate with the
other Party in any disputes under any Third Party License Agreement regarding
the applicability of any rights set forth in any such Third Party License
Agreement that inure to the benefit of the other Party or its Affiliates in
connection with the transactions contemplated by this Agreement or any Related
Agreement; provided that such cooperation shall be at the sole expense of the
other Party and the first Party shall not be required to initiate or become a
party to any litigation in connection therewith.
ARTICLE V.
Additional Agreements
5.1. Indemnification.
(a) The Company agrees to indemnify, defend and hold the Investor
harmless from and against any demand, liability, loss, deficiency, damage, cost
or expense (including reasonable legal and accounting fees and expenses) to the
Investor arising out of any breach of any representation or warranty of the
Company or any nonfulfillment of any covenant or agreement of the Company
contained herein. The Investor shall not be entitled to indemnification with
respect to any claim under the foregoing provisions of this Section 5.1(a) as to
which notice shall not have been given by the Investor to the Company prior to
expiration of the relevant representation and warranty pursuant to Section 8.3.
(b) The Investor agrees to indemnify, defend and hold the Company
harmless from and against any demand, liability, loss, deficiency, damage, cost
or expense (including reasonable legal and accounting fees and expenses) to the
Company arising out of any breach of any representation or warranty of the
Company or any nonfulfillment of any covenant or agreement of the Investor
contained herein. The Company shall not be entitled to indemnification with
respect to any claim under the foregoing provisions of this Section 5.1(b) as to
which notice shall not have been given by the Company to the Investor prior to
expiration of the relevant representation and warranty pursuant to Section 8.3.
(c) If a Party seeks indemnification hereunder for a matter that
involves a claim by a third party, the Party seeking indemnification (an
"Indemnitee") shall promptly notify the indemnifying Party (the "Indemnitor") of
and shall provide reasonable information and details concerning the nature of
such claim. Indemnitor shall, to the extent applicable, have the right to assume
the defense at its expense of all third party claims and shall pay all costs and
damages finally awarded against the Indemnitor and the Indemnitee in conjunction
with such third party claims, provided that (i) the Indemnitee provides prompt
written notice to the Indemnitor of its receipt of service of any such claim;
(ii) the Indemnitor controls the defense of the third party claim on behalf of
all Parties; (iii) the Indemnitee consents to representation in such claims by
counsel selected
<PAGE>
by and representing the Indemnitor; provided, however, that if outside counsel
to the Indemnitee reasonably advises the Indemnitee and the Indemnitor in a
written opinion that such joint representation raises a potential conflict of
interest as between the Indemnitee and the Indemnitor (other than regarding the
right to indemnification under this Agreement), then the Indemnitee shall have
the right to retain separate counsel to represent its interests in such third
party claim and the reasonable costs, fees and expenses thereof shall be borne
equally by the Indemnitee and the Indemnitor; and (iv) upon request of the
Indemnitor, the Indemnitee uses its Best Efforts to cooperate with the
Indemnitor in defending such third party claim by providing the Indemnitor with
all necessary business information and relevant documents under its control
related to the third party claim and cooperating with such other reasonable
requests of the Indemnitor at the Indemnitor's expense in accordance with
Applicable Law. The Parties' indemnity obligations under this Section 5.1 shall
not apply to amounts paid in settlement of any loss, claim, liability or action
if such settlement is effected without the consent of the Indemnitor, which
consent shall not be unreasonably withheld. The Indemnitee's failure to deliver
notice to the Indemnitor within a reasonable time after the commencement of any
such action, if materially prejudicial to the Indemnitor's ability to defend
such action, shall relieve the Indemnitor of any liability to the Indemnitee
under this Section 5.1, but not any liability that it may have to the Indemnitee
otherwise than under this Section 5.1.
5.2. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX.
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
5.3. XXXXXXXXXXXXXXXXXXXXXXXXX.
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
5.4. Distribution Agreements.
During the term of the U.S. Joint Venture Agreement, and at the option
of the Company, the Investor agrees to cause one of its Affiliates to enter into
a distribution agreement with the Company for Cardiac Stimulation Devices for
the countries of Canada, Mexico, and those countries in Latin America as agreed
in writing by the Parties. Such distribution agreement shall be on terms and
conditions which shall be the same (except as otherwise mutually agreed by the
Parties) as the terms and conditions of the Manufacturing and Supply Agreement.
5.5. Third Party Financing.
Subject to any rights of the Investor under Sections 2.3(a) and 2.3
(b), the Investor agrees that the Company has the right to complete third party
financings after the date hereof including financings involving the issuance of
equity securities of the Company.
<PAGE>
ARTICLE VI.
Deferred Closing and Supplemental Closing Conditions
6.1. Investor Conditions.
The Investor's obligation to consummate the transactions contemplated
by this Agreement at any Deferred Closing or the Supplemental Closing are
conditioned upon the occurrence of the following (with any of such conditions
being waivable by the Investor upon written notice to the Company) prior to the
applicable Deferred Closing Date or Supplemental Closing Date:
(a) No statute, rule or regulation shall have been promulgated or
enacted which would make the actions to be taken at such Deferred Closing or the
Supplemental Closing illegal or would otherwise prevent the consummation
thereof. No order, decree, writ or injunction shall have been issued and shall
remain in effect, by any court or Governmental Authority, which restrains,
enjoins or otherwise prohibits the consummation of the actions to be taken at
such Deferred Closing or the Supplemental Closing, and no action, suit or
proceeding before any court or Governmental Authority shall have been instituted
by any Governmental Authority (or threatened by any Governmental Authority), and
no investigation by any Governmental Authority shall have been commenced and be
continuing, with respect to the actions to be taken at such Deferred Closing or
the Supplemental Closing.
(b) Any consents, approvals, exemptions or authorizations of any
Governmental Authorities that are required in connection with the actions to be
taken at such Deferred Closing or the Supplemental Closing and all required
filings and the expiration of all applicable waiting periods under the HSR Act
shall have been obtained and shall be in full force and effect.
(c) On the Deferred Closing Date, the Common Stock shall be duly
registered under the Exchange Act and listed on Nasdaq, the NASDAQ National
Market, the NASDAQ Small Cap Market or any national securities exchange.
(d) There shall have been no event of Bankruptcy with respect to the
Company or its assets.
(e) The representations and warranties of the Company set forth in
Sections 3.1(a), 3.1(b), 3.1(d) (solely with respect to Shares and Warrants to
be acquired pursuant to the applicable Deferred Closing or the Supplemental
Closing) and 3.1(e) (only with regard to the representation that the
transactions contemplated by such Deferred Closing or the Supplemental Closing
do not result in a violation of the Company's Articles of Incorporation or
By-laws and the representation set forth in subsection (ii) of the first
sentence of such Section 3.1(e), solely with respect to the existence of any
preemptive rights exercisable by a Person) shall be true and correct in all
material respects as of the Deferred Closing or the Supplemental Closing Date,
to the extent applicable, as though
<PAGE>
made on such date, and the Investor shall have been provided with a certificate
of an officer of the Company to such effect.
(f) Any shareholder approval of additional authorized but unissued
shares of Common Stock that may be necessary to enable the Company to issue or
reserve for issuance all (and not less than all) of the shares of Common Stock
and related Warrants that the Investor has the right to purchase at such
Deferred Closing or Supplemental Closing shall have been obtained and the
related amendment to the Company's Articles of Incorporation shall have been
filed and become effective. The Company shall have reserved for issuance all
shares of Common Stock issuable upon exercise of the Warrants issued at such
Deferred Closing or Supplemental Closing, as the case may be.
6.2. Company Conditions.
The Company's obligation to consummate the transactions contemplated by
this Agreement at any Deferred Closing or the Supplemental Closing are
conditioned upon the occurrence of the following (with any of such conditions
being waivable by the Company upon written notice to the Investor) prior to the
applicable Deferred Closing Date or Supplemental Closing Date:
(a) No statute, rule or regulation shall have been promulgated or
enacted which would make the actions to be taken at such Deferred Closing
illegal or would otherwise prevent the consummation thereof. No order, decree,
writ or injunction shall have been issued and shall remain in effect, by any
court or Governmental Authority, which restrains, enjoins or otherwise prohibits
the consummation of the actions to be taken at such Deferred Closing, and no
action, suit or proceeding, before any court or Governmental Authority shall
have been instituted by any Governmental Authority (or threatened by any
Governmental Authority), and no investigation by any Governmental Authority
shall have been commenced and be continuing, with respect to the actions to be
taken at such Deferred Closing.
(b) Any consents, approvals, exemptions or authorizations of any
Governmental Authorities that are required in connection with the actions to be
taken at such Deferred Closing and all required filings and the expiration of
all applicable waiting periods under the HSR Act shall have been obtained and
shall be in full force and effect.
ARTICLE VII.
Registration Rights
7.1. Definitions.
"Holder" means the Investor and any transferee of the Investor so long
as such transferee Beneficially Owns not less than 100,000 shares of Common
Stock. For purposes of this Agreement, the Company may deem and treat the
registered holder of a
<PAGE>
Registrable Security as the Holder and absolute owner thereof, and the Company
shall not be affected by any notice to the contrary.
"Registrable Securities" shall mean each of the following that are then
held by a Holder: (a) the Shares, (b) any Common Stock to which Holders of the
Warrants are entitled upon exercise of the Warrants, (c) all shares of Common
Stock issued to or acquired by the Investor pursuant to Sections 2.1, 2.2, 2.3,
2.4 or 4.2(b)(ii) of this Agreement and (d) any equity securities issued or
issuable in respect of the Shares or the Warrants referred to in clause (a), (b)
and (c) above by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, reclassification, merger or
liquidation, and any equity securities issued pursuant to any other pro rata
distribution with regard to the Shares or the Warrants. For purposes of this
Agreement, a Registrable Security ceases to be a Registrable Security when (A)
it has been effectively registered under the Securities Act and sold or
distributed in accordance with an effective registration statement covering it,
or (B) it is sold or distributed pursuant to Rule 144 (or any successor or
similar provision) under the Securities Act.
7.2. Demand Registration.
(a) Subject to the terms and conditions set forth in this Article VII,
if, at any time the Company shall receive a written request from one or more
Holders to register not less than 25% of the total outstanding Registrable
Securities held by all such Holders, and such notice requests registration under
the Securities Act of such Registrable Securities by the Company, the Company
shall use its Best Efforts to cause such the Registrable Securities identified
in such notice to be registered as soon as reasonably practicable, on such
appropriate form as the Company in its discretion shall determine, so as to
permit the sale thereof pursuant to an underwritten offering; provided, however,
that such requests shall express the present intention of the Holders to offer
or cause the offering of such Registrable Securities for distribution.
The Company's obligation to use its Best Efforts to cause
Registrable Securities to be registered in accordance with this Section 7.2(a)
is subject to each of the following limitations, conditions and qualifications:
(i) The Company shall not be required to register any
Registrable Securities which amount the Holder is able to qualify for sale under
Rule 144 or otherwise within a three-month period, or under a comparable rule or
regulation, provided that the Company shall be required to register all
Registrable Securities in excess of such amount so qualified under Rule 144 or
otherwise.
(ii) If the Company shall have previously given notice of a
registration (other than a registration statement on Form S-4 or S-8 or similar
form) to the Holders pursuant to Section 7.3, then the Company shall not be
required to effect any registration requested pursuant to Section 7.2(a) for a
period of 90 days from the date of such prior notice; provided, however, that if
the registration which was filed in connection therewith becomes effective
within such 90-day period, such 90-day period shall be extended for
<PAGE>
such period (not to exceed 45 days after the effective date of such registration
statement) as may be required pursuant to the terms and conditions of any
underwriting agreement entered into in connection with such proposed
registration.
(iii) The Company may postpone for a reasonable period of
time, not to exceed 120 days, the filing or the effectiveness of a registration
required pursuant to Section 7.2(a) if the Board of Directors of the Company in
good faith determines that (A) such registration right may have a Material
Adverse Effect on any plan or proposal by the Company or any of its subsidiaries
with respect to any financing, acquisition, recapitalization, reorganization or
other material transaction, or (B) the Company is in possession of material
non-public information that, if publicly disclosed, could result in a material
disruption of a major corporate development or transaction then pending or in
progress or in other material adverse consequences to the Company; provided,
however, that, the Company shall not have the right to obtain such a
postponement more than once in any 365-day period; and provided, further, that
as soon as the conditions permitting such delay no longer apply, the Company
shall give notice of that fact to the Holders, and shall proceed with the
registration unless the Holders shall have elected, at any time prior to the
close of business on the fifth business day after the Company has so notified
the Holders, to withdraw their request for registration, and such withdrawn
request shall not constitute a request hereunder.
(iv) The Company shall not be required to effect any
registration pursuant to Section 7.2(a) unless such registration relates to
Company Securities representing at least 25% of the Registrable Securities held
by all Holders.
(v) The obligation of the Company to register Registrable
Securities pursuant to Section 7.2(a) shall expire after four registration
statements (which may consist of (i) no more than two S-1 registration
statements and (ii) up to four S-3 registration statements) filed by reason of a
request pursuant to Section 7.2(a) shall have become effective.
(vi) The Company shall maintain the effectiveness of any
registration statement filed pursuant to this Section 7.2 for such period up to
ninety (90) days as may be requested by the Holders in their demand request. Any
obligation of the Company to register Registrable Securities under this Section
7.2 shall be deemed satisfied when a registration statement covering such shares
has been declared effective and has remained effective for the period specified
above.
(b) The Company may elect to include in any registration requested
pursuant to Section 7.2(a) any additional Company Securities which it shall
determine so to include and the consent of the Holders shall not be required
with respect thereto. Notwithstanding the foregoing, if the managing underwriter
for such registration shall advise the Company in writing that, in its opinion,
the number of securities proposed to be included in such registration should be
limited due to market conditions, then the Company shall not have the right to
include any additional Company Securities in such registration unless and until
<PAGE>
all Registrable Securities covered by the demand notice submitted by the
Investor have been included in such registration. For purposes of this Section
7.2(b), additional Company Securities sought to be included in any demand
registration by the Company shall include any securities proposed to be sold by
the Company for its own account.
7.3. Incidental Registration.
Subject to the terms and conditions set forth in this Article VII, if
the Company proposes at any time to register any Company Securities (the
"Initially Proposed Securities") under the Securities Act for sale (other than a
registration statement required to be filed in respect of the Plans or relating
to acquisitions), whether or not for its own account, pursuant to an
underwritten offering, the Company will promptly give written notice to the
Holders of its intention to effect such a registration (which notice shall
specify, to the extent known, the proposed offering price, the number of Company
Securities proposed to be registered and the distribution arrangements,
including indemnification of underwriters), and any Holder shall be entitled to
include in such registration statement, as a part of such underwritten offering,
such Registrable Securities (the "Holder Securities") to be sold for the account
of such Holders (on the same terms and conditions as the Initially Proposed
Securities ) as shall be specified in a request in writing (complying with the
requirements for a request set forth in Section 7.2(a)) delivered to the Company
within 5 days after the date upon which the Company gave the aforementioned
notice.
The Company's obligation to include Holder Securities in a
registration statement pursuant to this Section 7.3 is subject to each of the
following limitations, conditions and qualifications:
(i) The Company shall not be required to register any Holder
Securities which amount the Holder is able to qualify for sale under Rule 144 or
otherwise within a three month period, or under a comparable rule or regulation,
provided that the Company shall be required to register all Holder Securities in
excess of such amount so qualified under Rule 144 or otherwise.
(ii) If any Holder shall submit a request for registration of
Holder Securities pursuant to this Section 7.3, the Company shall use Best
Efforts to effect the registration under the Securities Act of all Holder
Securities that the Company has been so requested to register, subject to the
terms and conditions of this Agreement.
(iii) If, at any time after giving such written notice of its
intention to effect a registration pursuant to this Section 7.3 and prior to the
effective date of any registration statement filed in connection with such
registration, the Company shall determine for any reason not to register such
securities, the Company may, at its election, give written notice of such
determination to the Holders and thereupon it shall be relieved of its
obligation to use any efforts to register any Holder Securities in connection
with such aborted registration.
<PAGE>
(iv) If, in the opinion of the managing underwriter(s) of such
offering, the distribution of all or a specified portion of the Holder
Securities would materially interfere with the registration and sale, in
accordance with the intended method thereof, of the Initially Proposed
Securities, then the number of Holder Securities and Company Securities to be
registered on behalf of any Person (other than the Company) entitled to exercise
incidental registration rights with respect to such registration ("Other
Holders") to be included in such registration statement shall first be reduced
pro rata among the Holders on the basis of the number of Securities that each
such Holder requested be included, followed by a pro rata reduction among Other
Holders on the same terms, to such number, if any, that, in the opinion of such
managing underwriter(s), can be included without such interference. If, as a
result of the cutback provisions of the preceding sentence, any Holder is not
entitled to include all of the Holder Securities in such registration that such
Holder requested be so included, such Holder may elect to withdraw its request
to include such Holder Securities in such registration (a "Withdrawal
Election"); provided, that a Withdrawal Election shall be irrevocable and Holder
shall no longer have any right to include any Holder Securities in the
registration as to which such Withdrawal Election was made.
(v) As a condition to Holder's right to include Holder
Securities in a registration pursuant to this Section 7.3, Holder shall, if
requested by the Company or the managing underwriter(s) in connection with such
registration and distribution, (i) agree to sell the Holder Securities on the
basis provided in any underwriting arrangements entered into in connection
therewith and (ii) complete and execute all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents which are customary in
similar transactions and required under the terms of such underwriting
arrangements.
(vi) If any Holder disapproves of the terms of any such
registration, he may elect to withdraw therefrom by written notice to the
Company and the managing underwriter(s).
7.4. Registration Procedures.
(a) Whenever the Company is required to use its Best Efforts to effect
the registration of any Registrable Securities under the Securities Act pursuant
to the terms and conditions of Section 7.2(a) or the Company determines to
effect any registration in which Holder Securities are to be included pursuant
to Section 7.3 (such Registrable Securities and Holder Securities being
hereinafter referred to as "Subject Securities"), the Company will use its Best
Efforts to effect the registration and sale of the Subject Securities in
accordance with the intended method of disposition thereof. Without limiting the
generality of the foregoing, the Company will as soon as practicable:
(i) furnish the Holders of Subject Securities, without charge,
such number of copies of the prospectus included in a registration statement
(including each preliminary prospectus), and such other documents, as such
Holder may reasonably request;
<PAGE>
(ii) use its Best Efforts to register or qualify the Subject
Securities covered by such registration statement under the securities or blue
sky laws of such jurisdictions as the managing underwriter(s) shall reasonably
recommend, and do any and all other acts and things which may be reasonably
necessary or advisable to enable the Holders to consummate the disposition in
such jurisdictions of the Subject Securities covered by such registration
statement in accordance with the plan of distribution, except that the Company
shall not for any such purpose be required to (A) qualify generally to do
business as a foreign corporation in any jurisdiction wherein it is not so
qualified, (B) subject itself to taxation in any such jurisdiction wherein it is
not so subject or (C) consent to general service of process in any such
jurisdiction or otherwise take any action that may subject it to the general
jurisdiction of the courts of any jurisdiction in which it is not so subject;
(iii) otherwise use its Best Efforts to comply with all
applicable rules and regulations of the SEC;
(iv) immediately notify each Holder, at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act, if the Company, in its sole judgment, becomes aware that 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, in light of the
circumstances under which they were made, not misleading, and at the request of
Holder, deliver a reasonable number of copies of an amended or supplemental
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of the securities covered thereby, such prospectus shall not include
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading; and
(v) after a registration statement pursuant to Section 7.2 of
this Agreement is filed with the SEC, prepare and file with the SEC such
amendments (including post-effective amendments) and supplements to such
registration statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective for a period not in
excess of ninety (90) days and to comply with the provisions of the Securities
Act with respect to the disposition of all securities covered by such
registration statement during such period in accordance with the intended
methods of disposition by the Holder(s) set forth in such registration
statement; and
(vi) execute and deliver all instruments and documents
(including an underwriting agreement in customary form) and take such other
actions and obtain such certificates and opinions as are customary in
underwritten public offerings.
(b) The Holders shall provide (in writing and signed by the Holders and
stated to be specifically for use in the related registration statement,
preliminary prospectus, prospectus or other document incident thereto) all such
information and materials
<PAGE>
regarding the Holder and the plan of distribution and take all such action as
may be required in order to permit the Company to comply with all applicable
requirements of the SEC and any applicable state securities laws and to obtain
any desired acceleration of the effective date of any registration statement
prepared and filed by the Company pursuant to this Agreement.
(c) In connection with a registration pursuant to Section 7.2 involves
an underwritten offering, and in connection with any registration by the Company
of Company Securities for sale for its own account pursuant to Section 7.3, each
Holder agrees, whether or not any of such Holder's Registrable Securities are
included in such registration, not to effect any sale or distribution, including
any sale pursuant to Rule 144, of any Company Securities which are similar to
the securities included in such registration (other than as part of such
underwritten offering), without the consent of the managing underwriter, for a
period of 90 days after the date a request for registration is made pursuant
Section 7.2(a) or the date the Company notifies the Holders of its intent to
register such Company Securities pursuant to Section 7.3, as the case may be;
provided, however, that if the registration statement filed in connection
therewith becomes effective within such 90-day period, such 90-day period shall
be extended for such period (not to exceed 45 days after the date such
registration statement is declared effective) as may be required pursuant to the
terms and conditions of any underwriting agreement entered into in connection
with such proposed registration.
(d) In connection with a registration effected pursuant to Section 7.2
involving an underwritten offering, the Company agrees not to effect any public
offering of any of its equity securities or securities convertible into or
exchangeable or exercisable for any of such equity securities during a period
commencing on the effective date of such registration and ending not more than
90 calendar days thereafter, except for such underwritten offering or in
connection with any Plan or an acquisition merger or exchange offer.
(e) Upon receipt of any notice from the Company that the Company has
become aware that the prospectus (including any preliminary prospectus) included
in any registration statement filed pursuant to Section 7.2 or 7.3 hereof, as
then in effect, contains any 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, each Holder shall forthwith discontinue
disposition of Subject Securities pursuant to the registration statement
covering the same until such Holder's receipt of copies of a supplemented or
amended prospectus and, if so directed by the Company, deliver to the Company
(at the Company's expense) all copies other than permanent file copies then in
such Holder's possession of the prospectus covering the Subject Securities that
was in effect prior to such amendment or supplement.
(f) The Company shall pay all out-of-pocket expenses incurred in
connection with any registration statements in which Subject Securities are
included pursuant to Section 7.2 or 7.3 of this Agreement, including, without
limitation, all SEC and blue sky
<PAGE>
registration and filing fees, printing expenses, transfer agents' and
registrars' fees, underwriting discounts, commissions and expenses attributable
to securities sold for the account of the Company pursuant to such registration,
fees and disbursements of the Company's counsel and accountants and fees and
disbursements of experts by the Company in connection with such registration,
except that each Holder shall pay all underwriting discounts, commissions and
expenses attributable to the Subject Securities sold pursuant to such
registration, and fees and expenses of its counsel and accountants.
(g) If a Holder requests registration of Registrable Securities
pursuant to Section 7.2, the Company shall have the right to select the managing
underwriter for such offering with the selection to be subject to the approval
of the Holder, such approval not to be unreasonably withheld or delayed. In
connection with a registration effected under Section 7.3, the Company shall at
all times retain the right, in its sole discretion, to select any underwriters
necessary for making an offering in conjunction with such registration.
7.5. Indemnification.
(a) In the event of any registration of any of the Registrable
Securities under the Securities Act pursuant to this Article VII, then to the
extent permitted by law the Company shall indemnify and hold harmless the Holder
that sells such Registrable Securities, its directors and officers, each
underwriter of such Registrable Securities and each other Person, if any, who
controls such seller or underwriter within the meaning of the Securities Act or
the Exchange Act against any losses, claims, damages or liabilities, joint or
several, to which such Holder, such directors and officers, underwriter or
controlling Person may become subject under the Securities Act, the Exchange
Act, state securities laws or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact contained
in such registration statement, any preliminary prospectus or final prospectus
contained in such registration statement, or any amendment or supplement to such
registration statement, or arise out of or are based upon the omission or
alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; and the Company shall
reimburse the seller, underwriter and each such controlling Person for any legal
or any other expenses reasonably incurred by such seller, underwriter or
controlling Person in connection with investigating or defending any such loss,
claim, damage, liability or action; PROVIDED, HOWEVER, that the Company shall
not be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon any untrue statement or omission
made in such registration statement, preliminary prospectus or prospectus, or
any such amendment or supplement, in reliance upon and in conformity with
information furnished to the Company in writing, by or on behalf of such seller,
underwriter or controlling Person specifically for use in the preparation
thereof.
(b) In the event of any registration of the Registrable Securities
under the Securities Act pursuant to this Article VII, then to the extent
permitted by law, each Holder of Registrable Securities, whose securities are
included in such offering, shall,
<PAGE>
severally and not jointly, indemnify and hold harmless the Company, each of its
directors and officers and each underwriter (if any) and each Person, if any,
who controls the Company or any such underwriter within the meaning of the
Securities Act or the Exchange Act, against any losses, claims, damages or
liabilities, joint or several, to which the Company, such directors and
officers, underwriter or controlling Person may become subject under the
Securities Act, the Exchange Act, state securities laws or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in such registration statement, any preliminary
prospectus or final prospectus contained in such registration statement, or any
amendment or supplement to such registration statement, or arise out of or are
based upon any omission or alleged omission to state a material fact required to
be stated therein or necessary to make the statements therein not misleading, if
the statement or omission was made solely in reliance upon and in conformity
with information furnished in writing to the Company by or on behalf of such
seller, specifically for use in connection with the preparation of such
registration statement, prospectus, amendment or supplement; PROVIDED, HOWEVER,
that the Holders shall not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon any untrue
statement or omission made in such registration statement, preliminary
prospectus or final prospectus, or any such amendment or supplement, in reliance
upon and in conformity with information furnished by the Company. In no event
shall the liability of any Holder hereunder exceed the amount of the proceeds
received by such Holder upon the sale of the Registrable Securities giving rise
to such indemnity obligation.
(c) An underwriter shall not be entitled to indemnification pursuant to
this subsection in the event that it fails to deliver to any selling Holder any
preliminary or final or revised prospectus, as required by the rules and
regulations of the SEC. No indemnification shall be provided pursuant to this
subsection in the event that any error in a preliminary prospectus of the
Company is subsequently corrected in the final prospectus of the Company for a
particular offering, and such final prospectus is delivered to all purchasers in
the offering prior to the date of purchase of the securities.
(d) The aforesaid indemnity obligations of the Company and the Holders
shall remain in full force and effect following any termination of this
Agreement or any sale or transfer of the relevant securities by any Holder
pursuant to this Agreement.
(e) Each party entitled to indemnification under this Section 7.5 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; provided, that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld); and, provided, further, that the failure of any Indemnified Party to
give notice as provided herein shall not relieve the Indemnifying Party of its
obligations
<PAGE>
under this Section 7.5 unless the Indemnifying Party is materially prejudiced
thereby. The Indemnified Party may participate in such defense at such party's
expense; provided, however, that the Indemnifying Party shall pay such expense
if representation of such Indemnified Party by the counsel retained by the
Indemnifying Party would be inappropriate due to actual or potential differing
interests between the Indemnified Party and any other party represented by such
counsel in such proceeding. No Indemnifying Party, in the defense of any such
claim or litigation shall, except with the consent of each Indemnified Party,
consent to entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party of a release from all liability in respect of such
claim or litigation, and no Indemnified Party shall consent to entry of any
judgment or settle such claim or litigation without the prior written consent of
the Indemnifying Party which shall not be unreasonably withheld.
(f) If the indemnification provided for in this Section 7.5 shall for
any reason be held by a court to be unavailable to an Indemnified Party in
respect of any loss, claim, damage or liability, or any action in respect
thereof, then, in lieu of the amount paid or payable pursuant to such
indemnification, the Indemnified Party and the Indemnifying Party shall
contribute to the aggregate losses, claims, damages and liabilities (including
legal or other expenses reasonably incurred in connection with investigating the
same), (i) in such proportion as is appropriate to reflect the relative fault of
the Company and the Holders selling Registrable Securities covered by the
registration statement which resulted in such losses, claims, damages or
liabilities, or actions in respect thereof, with respect to the statements or
omissions which resulted in such losses, claims, damages or liabilities, or
actions in respect thereof, the opportunity to correct and prevent any statement
or omission, as well as any other relevant equitable considerations or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as shall be appropriate to reflect the relative benefits
received by the Company and such Holders from the offering of the securities
covered by such registration statement, provided that the limitation set forth
in the last sentence of the second paragraph of that Section 7.5 shall apply. 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. In addition, no Person
shall be obligated to contribute hereunder any amounts of payment for any
settlement of any actions or claim effected without such Person's consent, which
consent shall not be unreasonably withheld.
7.6. Registration Rights Granted to Third Parties.
The Company shall not grant any registration rights to any Person which
conflict with the terms of this Article VII.
<PAGE>
ARTICLE VIII.
Miscellaneous
8.1. Fees and Expenses.
Each Party shall be solely responsible for the payment of the fees and
expenses of its advisers, counsel, accountants and other experts, if any, and
all other expenses incurred by such Party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement and the
Related Agreements.
8.2. Legend.
All certificates evidencing the Shares and the Warrants shall bear the
following legend, to the extent applicable, which legend will remain on such
certificates until such time as the securities represented by such certificates
are no longer subject to the restrictions set forth in Section 4.2 and there is
delivered to the Company an opinion of counsel reasonably acceptable to the
Company to the effect that such legend is no longer required (at which time new
certificates shall be issued at the Company's expense without such legend):
THIS SECURITY IS SUBJECT TO THE PROVISIONS OF THE INVESTMENT
AND MASTER STRATEGIC RELATIONSHIP AGREEMENT DATED AS OF
OCTOBER 9, 1997 BETWEEN THE ISSUER AND SYNTHELABO AND MAY NOT
BE SOLD OR TRANSFERRED EXCEPT IN ACCORDANCE THEREWITH. A COPY
OF SUCH AGREEMENT IS ON FILE AT THE OFFICE OF THE CORPORATE
SECRETARY OF THE ISSUER. THIS SECURITY WAS SOLD IN A PRIVATE
PLACEMENT, WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF
1933, AND MAY BE OFFERED OR SOLD ONLY IF REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR IF AN EXEMPTION FROM REGISTRATION IS
AVAILABLE.
The Company may not enter a stop transfer order with any transfer agent for
Shares or Warrants against the transfer of any Shares or Warrants Beneficially
Owned by the Investor, except in compliance with the provisions of this
Agreement.
8.3. Survivability.
The representations and warranties made by the Parties to this Agreement as
of the Initial Closing shall be in full force and effect for a period of six
months after the Initial Closing Date, at which time all of such representations
and warranties shall terminate and be of no further force and effect. The
representations and warranties made by the Parties to this Agreement as of the
Supplemental Closing or any Deferred Closing shall remain in
<PAGE>
full force and effect as to the Shares and Warrants acquired at such the
Supplemental Closing or Deferred Closing for a period of six months after the
Supplemental Closing or such Deferred Closing, at which time all of such
representations and warranties shall terminate and be of no further force and
effect.
8.4. Severability.
If any provision of this Agreement is held by a court of competent
jurisdiction (including pursuant to enforcement of any arbitration award under
this Agreement) or panel of arbitrators to be invalid, unlawful or
unenforceable, it shall be modified, if possible, to the minimum extent
necessary to make it valid, lawful and enforceable or, if such modification is
not possible, it shall be stricken from this Agreement and the remaining
provisions of this Agreement shall continue in full force and effect; provided,
however, that if a provision is so stricken and is of a nature so as to
fundamentally alter the economic arrangements of this Agreement the Party
adversely affected may terminate this Agreement by giving to the other Party
sixty days written notice of termination.
8.5. Specific Enforcement; Consent to Jurisdiction.
(a) SPECIFIC ENFORCEMENT.
The Company and the Investor agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in
accordance with their specific intent or were otherwise breached. It is
accordingly agreed that the Parties shall be entitled to an injunction or
injunctions to prevent or cure breaches of the provisions of this Agreement and
to enforce specifically the terms and provisions hereof, this being in addition
to any other remedy to which they may be entitled by law or equity.
(b) CONSENT TO JURISDICTION.
For purposes of any suit, action, or legal proceeding permitted under
this Agreement, each Party to this Agreement (a) hereby irrevocably submits
itself to and consents to the non-exclusive jurisdiction of the United States
District Court for the Southern District of New York for the purposes of any
such suit, action or legal proceeding in connection with this Agreement
including to enforce an arbitral resolution, settlement, order or award made
pursuant to this Agreement or any of the Related Agreements (including pursuant
to the New York Convention, the U.S. Arbitration Act, or otherwise), and (b) to
the extent permitted by Applicable Law, hereby waives, and agrees not to assert,
by way of motion, as a defense, or otherwise, in any such suit, action, or legal
proceeding pending in such event, any claim that it is not personally subject to
the jurisdiction of such court, that the suit, action or legal proceeding is
brought in an inconvenient forum or that the venue of the suit, action or legal
proceeding is improper. Each Party to this Agreement hereby agrees to the entry
of an order to enforce any resolution, settlement, order or award made pursuant
to this Section by the United States District Court for the Southern District of
New York and in connection therewith hereby waives, and agrees not to assert by
way of motion, as a defense, or otherwise, any claim
<PAGE>
that such resolution, settlement, order or award is inconsistent with or
violative of the laws or public policy of the laws of the State of New York or
any other jurisdiction.
(c) SOVEREIGN IMMUNITY.
Each Party hereto agrees that, to the extent that it or any of its
property is or becomes entitled at any time to any immunity on the grounds of
sovereignty or otherwise from any legal action, suit or proceeding, from set off
or counterclaim, from the jurisdiction of any set off or counterclaim, from the
jurisdiction of any competent court, from service of process, from attachment
prior to judgment, from attachment in aid of execution, from execution prior to
judgment or from any other legal process in any jurisdiction, it, for itself and
its property, expressly, irrevocably and unconditionally waives, and agrees not
to plead or claim any such immunity with respect to its obligations, liabilities
or any other matter under or arising out of or in connection with this Agreement
or the subject matter hereof (including without limitation any obligation for
the payment of money). Each Party hereto is not subject to withdrawal in any
jurisdiction or under any statute, including, without limitation, the Foreign
Sovereign Immunities Act, 28 U.S.C. ss.ss. 1602 et seq. The foregoing waiver
shall constitute a present waiver of immunity at any time any action is
initiated against any Party hereto with respect to this Agreement or any of the
Related Agreements.
(d) The Parties hereby agree to exclude application of the following
instruments and documents: United Nations Convention on the International Sale
of Goods; 1990 International Chamber of Commerce Incoterms; Revised American
Foreign Trade Definitions; and UNCITRAL Arbitration Rules.
8.6. Dispute Resolution Procedures.
(a) All disputes between or among the Parties and/or any of their
Affiliates including the Joint Venture under this Agreement and the Related
Agreements shall be settled, if possible, through good faith negotiations
between the relevant parties. Prior to resolving any dispute by means of
arbitration or by means of any suit, action or legal proceeding permitted under
this Section 8.6, the relevant parties involved in such dispute shall refer such
dispute to their respective Chief Executive Officers or equivalent, who shall
meet in person to negotiate in good faith the possible resolution thereof on at
least two occasions within 30 days before any such party commences arbitration
or other litigation permitted under this Agreement (provided, that if any such
party fails or refuses to have a representative attend such meetings within such
thirty (30) day period, the procedures of Section 8.6(c) shall be applicable
after the conclusion of such thirty (30) day period); and further provided that
(i) any legal proceedings seeking interim equitable relief (including a
temporary restraining order or preliminary injunction) until such time as such
interim equitable relief can be addressed through arbitration; (ii) proceedings
for provisional relief contemplated by Section 8.6(k) below; and (iii) third
party legal proceedings under Section 8.6(b) below may be commenced immediately.
<PAGE>
(b) If a Party or any of its Affiliates including the Joint Venture is
subject to a claim, demand, action or legal proceeding by a third party and is
permitted by law or arbitral rules to join another Party to such proceeding,
this Section 8.6 shall not prevent such joinder. This Section shall also not
prevent either Party or any such Affiliate from pursuing any legal action
against a third party.
(c) In the event such good faith negotiations are unsuccessful, either
Party may, after 30 days' written notice to the other, submit any controversy or
claim arising out of, relating to or in connection with this Agreement, or the
breach thereof, to arbitration administered by the American Arbitration
Association ("AAA") in accordance with its then existing International
Arbitration rules except that Sections 29 and 31 of the Commercial Arbitration
Rules in effect on the date hereof, a copy of which is attached hereto as
Schedule 8.6, shall govern in the event of any conflict therewith (collectively,
the "AAA Rules") and judgment upon the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof.
(d) To the extent this Section is deemed a separate agreement,
independent from this Agreement, the remaining provisions of Article VIII shall
be incorporated herein by reference. Either Party (the "Initiating Party") may
commence an arbitration by submitting a Demand for Arbitration under the AAA
Rules ("Demand for Arbitration") and by notice to the other Party (the
"Respondent") in accordance with Section 8.9. Such notice shall set forth in
reasonable detail the basic operative facts upon which the Initiating Party
seeks relief and specific reference to the clauses of this Agreement, the amount
claimed, if any, and any nonmonetary relief sought against the Respondent. After
the Demand for Arbitration, response and counterclaim, if any, and reply to
counterclaim, if any, have been submitted, either Party may propose additional
issues for resolution in the pending proceedings only if expressly so ordered by
the arbitrators.
(e) The place of arbitration shall be New York, New York, and the award
shall be deemed a U.S. award for purposes of the Convention on the Recognition
and Enforcement of Foreign Arbitral Awards of 1958 (the "New York Convention").
(f) The Parties shall attempt, by agreement, to nominate a sole
arbitrator for confirmation by the AAA. If the Parties fail so to nominate a
sole arbitrator within 30 days from the date when the Initiating Party's Demand
for Arbitration has been communicated to the Respondent, a board of three
arbitrators shall be appointed by the Parties jointly or, if the Parties cannot
agree as to three arbitrators within 30 days after the commencement of the
arbitration proceeding, then one arbitrator shall be appointed by each of the
Initiating Party and the Respondent within 60 days after the commencement of the
arbitration proceeding and the third
<PAGE>
arbitrator shall be appointed by mutual agreement of such two arbitrators. If
such two arbitrators shall fail to agree within 75 days after commencement of
the arbitration proceeding upon the appointment of the third arbitrator, the
third arbitrator shall be appointed by the American Arbitration Association in
accordance with the AAA Rules. Notwithstanding the foregoing, if any Party shall
fail to appoint an arbitrator within the specified time period, such arbitrator
and the third arbitrator shall be appointed by the AAA in accordance with the
AAA Rules. For purposes of this Section, the "commencement of the arbitration
proceeding" shall be deemed to be the date upon which the Demand for Arbitration
has been delivered to the Parties in accordance with Section 8.9. Any award
shall be rendered by a majority of the arbitrators. A hearing on the matter in
dispute shall commence within 90 days following selection of the arbitrators,
and the decision of the arbitrators shall be rendered no later than 90 days
after commencement of such hearing.
(g) An award rendered in connection with an arbitration pursuant to
this Section shall be final and binding upon the Parties and the Parties agree
and consent that the arbitral award shall be conclusive proof of the validity of
the determinations of the arbitrations set forth in the award, and any judgment
upon such an award may be entered and enforced in any court of competent
jurisdiction.
(h) The Parties agree that the award of the arbitral tribunal will be
the sole and exclusive remedy between them regarding any and all claims and
counterclaims between them with respect to the subject matter of the arbitrated
dispute. The Parties hereby waive all in personam jurisdictional defenses in
connection with any arbitration hereunder or the enforcement of an order or
award rendered pursuant thereto (assuming that the terms and conditions of this
arbitration clause have been complied with).
(i) The Parties hereby agree that for purposes of the New York
Convention, the relationship between the Parties is commercial in nature, and
that any disputes between the Parties related to this Agreement shall be deemed
commercial.
(j) The arbitrators shall issue a written explanation of the reasons
for the award and a full statement of the facts as found and the rules of law
applied in reaching their decision to both Parties. The arbitrators shall
apportion to each Party all costs (including attorneys' fees and witness fees,
if any) incurred in conducting the arbitration in accordance with what the
arbitrators deem just and equitable under the circumstances. Any provisional
remedy which would be available to a court of law shall be available from the
arbitrators pending arbitration of the dispute. Either Party may make an
application to the arbitrators seeking injunctive or other interim relief, and
the arbitrators may take whatever interim measures they deem necessary in
respect of the subject matter of the dispute, including measures to maintain the
status quo until such time as the arbitration award is rendered or the
controversy is otherwise resolved. The arbitrator shall have the authority to
award any remedy or relief (except ex parte relief) that a court of the State of
New York could order or grant, including, without limitation, specific
performance of any obligation created under this Agreement, the issuance of an
injunction, or the imposition of sanctions for abuse or frustration of the
arbitration process, but specifically excluding punitive damages.
(k) The Parties may file an application in any proper court for a
provisional remedy in connection with an arbitrable controversy, but only upon
the ground that the award to which the application may be entitled may be
rendered ineffectual without
<PAGE>
provisional relief. The parties may also commence legal action in lieu of any
arbitration under this Section 8.6 in connection with any third party litigation
proceedings or any matter involving disputes related to Intellectual Property
Rights.
(l) After the appointment of the arbitrators, the parties to the
arbitration shall have the right to take depositions, ask interrogatories,
obtain documentation and to obtain other discovery regarding the subject matter
of the arbitration, and, to that end, to use and exercise all the same rights,
remedies, and procedures, and be subject to all of the same duties, liabilities,
and obligations in the arbitration with respect to the subject matter thereof,
as if the subject matter of the arbitration were pending in a civil action
before the United States District Court for the Southern District of New York
and such persons, documents, or other requested material were located in the
State of New York. The parties shall reach agreement with the arbitrator on a
streamlined and expedited discovery program in order to save costs and avoid
unnecessary delay in completing any arbitration and may present to the
arbitrator for a ruling any reasons for limiting such discovery in order to save
costs and avoid delay.
(m) All claims arising under this Agreement and all Related Agreements
brought by the Parties and/or their Affiliates (including the Joint Venture) at
substantially the same time shall be referred to a single arbitration to the
extent arbitrable under this Section 8.6.
8.7. Brokers.
Each of the Company and the Investor agrees that it shall indemnify and
hold harmless the other and its Affiliates from and against any and all claims,
liabilities, or obligations with respect to brokerage or finders' fees or
commissions or consulting fees in connection with the transactions contemplated
by this Agreement and the Related Agreements asserted by any Person on the basis
of any agreement, statement or representation alleged to have been made by such
Party.
8.8. Entire Agreement; Amendments.
This Agreement, the Related Agreements, Schedules and Exhibits hereto
and thereto and that certain side letter dated as of December 9, 1997 by and
between the parties hereto (the "Side Letter") collectively contain the entire
understanding of the Parties with respect to the matters referred to hereby and
thereby and, except as specifically set forth herein and therein, neither the
Company nor the Investor makes any representation, warranty, covenant or
undertaking with respect to such matters. No provision of this Agreement or any
of the Related Agreements or the Side Letter may be amended or supplemented
other than by a written instrument signed by the party against whom enforcement
of any such amendment or supplement is sought.
<PAGE>
8.9. Notices.
Any notice or other communication required or permitted to be given
here shall be in writing and shall be effective (a) upon hand delivery or
delivery by telex (with correct answerback received), telecopy or facsimile at
the address or number designated below (if delivered on a business day during
normal business hours where such notice is to be received), or the first
business day following such delivery (if delivered other than on a business day
during normal business hours where such notice is to be received) or (b) on the
third business day following the date of mailing by express courier service,
fully prepaid, addressed to such address, or upon actual receipt of such
mailing, whichever shall first occur. The addresses for such communications
shall be:
If to the Company:
Angeion Corporation
3650 Annapolis Lane, Suite 170
Plymouth, MN 55447-5434
Telephone: (612) 550-9388
Telecopier: (612) 509-9525
Attention: Chief Executive Officer
With a copy to:
Morrison & Foerster, LLP
425 Market Street
San Francisco, CA 94105
Telephone: (415) 268-7000
Telecopier: (415) 268-7522
Attention: Gavin B. Grover, Esq.
If to the Investor:
Synthelabo
22 Avenue Galilee
92350 Le Plessis Robinson
France
Telephone: (33)(1)45.37.56.67
Telecopier: (33)(1)45.37.58.04
Attention: General Counsel
<PAGE>
With copies to:
ELA Medical
Centre d'Affaires la Boursidiere
92357 Le Plessis Robinson
France
Telephone: (33)(1)46.01.33.01
Telecopier: (33)(1)46.01.33.15
Attention: President
and
Coudert Brothers
1114 Avenue of the Americas
New York, NY 10036-7703
Telephone: (212) 626-4400
Telecopier: (212) 626-4120
Attention: James C. Colihan, Esq.
Each Party may from time to time change its address for notices under this
Section 8.9 by giving at least 10 days' notice of such changed address to the
other Party.
8.10. No Waiver.
No waiver by either Party of any default with respect to any provision,
condition or requirement of this Agreement shall be deemed to be a continuing
waiver in the future hereof; or a waiver of any other provision, condition or
request hereof; nor shall any delay or omission of either Party to exercise any
right hereunder in any manner impair the exercise of any such right accruing to
it thereafter.
8.11. Heading.
The headings herein are for convenience only, do not constitute a part
of this Agreement and shall not be deemed to limit or affect any of the
provisions hereof.
8.12. Successors and Assigns.
This Agreement shall be binding upon and inure to the benefit of the
Parties and their successors and assigns. The Parties may amend this Agreement
without notice to or the consent of any Person. Neither Party shall assign this
Agreement or any rights or obligations hereunder without the prior written
consent of the other Party (which consent may be withheld for any reason in the
sole discretion of the Party from whom consent is given). The assignment by a
Party of this Agreement or any rights hereunder or thereunder shall not affect
the obligations of such Party under this Agreement.
<PAGE>
8.13. No Third Party Beneficiaries.
This Agreement is intended for the benefit of the Parties and their
respective permitted successors and assigns and are not for the benefit of, nor
may any provision hereof be enforced by, any other Person.
8.14. Governing Law.
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New York.
8.15. Further Assurances.
Each Party agrees to take such further actions, including the execution
of such further documents, as may be necessary or desirable, or reasonably
requested by the other, in order to carry out the provisions of this Agreement
including all reasonable action required to be taken by the Company to enable
the consummation of any Deferred Closing or the Supplemental Closing including
convening a meeting of the Company's shareholders.
8.16. English Language Controls.
The original and controlling version of this Agreement and the Related
Agreements shall be the version using the English language. All translations of
this Agreement or any of the Related Agreements into other languages shall be
for the convenience of the parties only, and shall not control the meaning or
application of this Agreement or any of the Related Agreements. All notices and
other communications required or permitted by this Agreement or any Related
Agreement must be in English, and the interpretation and application of such
notices and other communications shall be based solely upon the English language
version thereof.
8.17. Relationship of the Parties.
For all purposes of this Agreement and the Related Agreements, the
Investor, the Company, the Joint Venture and all of their respective Affiliates
shall be deemed to be independent entities and anything in this Agreement or the
Related Agreements to the contrary notwithstanding, except for the Joint
Venture, nothing herein shall be deemed to constitute the Investor and the
Company or any of their respective Affiliates as partners, joint venturers,
co-owners, an association or any entity separate and apart from each party
itself, nor shall this Agreement or any Related Agreement make any party hereto
an employee or agent, legal or otherwise, of the other parties for any purposes
whatsoever. None of the parties hereto or thereto is authorized to make any
statements or representations on behalf of the other parties or in any way
obligate the other parties, except as expressly authorized in writing by the
other parties. Anything in this Agreement or any Related Agreement to the
contrary notwithstanding, no party hereto or thereto shall
<PAGE>
assume nor shall be liable for any liabilities or obligations of the other
parties, whether past, present or future.
8.18. Confidentiality; Publicity.
(a) Each Party shall (and shall cause its Affiliates, agents and
representatives to), for the term of this Agreement and for six (6) years after
the expiration or termination of this Agreement for any reason, (i) keep
confidential, (ii) not disclose to others, (iii) use only for the purposes
provided for or permitted under this Agreement or any Related Agreement, and
(iv) use Best Efforts, and at least the same degree of care (but no less than a
reasonable degree of care) as it uses to protect its own Confidential
Information of like importance, to prevent unauthorized use, dissemination and
disclosure of, all of the other Party's Confidential Information, except as
expressly provided for or permitted by this Agreement or such Related Agreement.
All Confidential Information shall, as between the Parties, remain the sole
property of the disclosing Party. The receiving Party and its Affiliates, agents
and representatives shall have no rights to the Confidential Information of the
disclosing Party, except as provided in this Agreement. Nothing in this Section
8.18 shall prevent disclosure or use of information which is or becomes public
knowledge without the fault of the receiving Party and its Affiliates, agents
and representatives or information already known to, or proven by written
evidence to have been independently derived by, the receiving Party or received
from a third party having the right to convey it. Notwithstanding the foregoing,
such Confidential Information may be (i) disclosed to a Governmental Authority
and to others to the extent such disclosure may be required to be included in
regulatory filings permitted under the terms of this Agreement or any Related
Agreement or required under Applicable Law; (ii) published by the receiving
Party, if and to the extent such publication has been approved in writing by the
disclosing Party; or (iii) disclosed to the extent required by Applicable Law or
as ordered by a court or other regulatory body having competent jurisdiction. In
each of the foregoing cases, the receiving Party will use its Best Efforts to
limit the disclosure and maintain confidentiality of such Confidential
Information to the maximum extent practicable and prior to making any such
disclosure it shall use Best Efforts to consult with the disclosing Party
regarding the scope of any protective order or other confidentiality protections
that may be available to limit the extent of disclosure. Any disclosure of
Confidential Information to any Affiliates, agents or representatives of the
receiving Party shall be limited to a "need to know" basis for purposes related
to this Agreement; provided that (i) the receiving Party shall be responsible
and liable to the disclosing Party for any breach of the terms of this Section
8.18 by any Affiliate, agent or representative, and (ii) disclosure by the
receiving Party to any agent or representative shall be made pursuant to
appropriate confidentiality agreements.
The provisions of this Section 8.18 shall survive and shall remain in
full force and effect for six (6) years after the expiration or termination of
this Agreement or any Related Agreement for any reason. After any expiration or
termination of this Agreement or any Related Agreement, upon written request,
each Party shall promptly discontinue the use of, and return within thirty (30)
business days all originals and copies of, any requested
<PAGE>
Confidential Information that was disclosed by the other Party or is the
property of the other Party and that has been fixed in any tangible means of
expression. For purposes of this Section 8.18, L'Oreal shall be deemed an
Affiliate of Investor.
(b) Each Party agrees, and shall cause its Affiliates to, not to issue
any press release, disclosing the terms of, or relating to, this Agreement or
any Related Agreement, without the prior written consent of the other Party;
provided, however, that neither Party or its Affiliates shall be prevented from
complying with any duty of disclosure it may have pursuant to Applicable Laws.
Such disclosing Party shall use its Best Efforts to consult with the other Party
regarding the issuance of any such press release, or with regard to any public
statement disclosing the terms of this Agreement or any Related Agreement and
shall use its Best Efforts to obtain confidential treatment for any Confidential
Information where such press release or other public statement is required to be
made by Applicable Law.
8.19. Number and Gender of Words.
Whenever the singular number is used herein, the same shall include the
plural where appropriate, and shall apply to all of such number, and to each of
them, jointly and severally, and words of any gender shall include each other
gender where appropriate.
8.20. Interpretation.
When a reference is made in this Agreement or any Related Agreement to a
Section, Exhibit or Schedule, such reference shall be to a Section of, Exhibit
to or Schedule to this Agreement or such Related Agreement, unless otherwise
indicated. Any references to Applicable Laws or a subset thereof shall be deemed
to include any amendments or additions thereto from time to time or any
successor or similar Applicable Law.
8.21. Counterparts.
This Agreement may be executed in two or more counterparts, all of
which shall be considered one and the same Agreement, and shall become effective
when counterparts have been signed by each Party and delivered to the other
Party, it being understood that all Parties need not sign the same counterpart.
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the date hereof.
ANGEION CORPORATION
By: /s/ W.A. McFarlin
Name: W.A. McFarlin
Title: Chairman/ CEO
SYNTHELABO
By: /s/ Goupit Philippe
Name: Goupit Philippe
Title: Attorney-in-Fact
<PAGE>
SCHEDULE 2.3(a)
EXCEPTED FUTURE FINANCINGS
The Company is contemplating an offering of convertible debt
securities pursuant to Rule 144A of the Securities Act which offering shall be
completed by the first anniversary of the Initial Closing in an aggregate amount
of up to $60 million. Such offering may be undertaken pursuant to Regulation S,
Section 4(c) or such other exemption under the Securities Act as the Company may
determine or may be undertaken as a registered offering.
<PAGE>
SCHEDULES 2.4(f)(i)(A)(C) AND 2.4(f)(i)(B)(C)
EXCEPTED ISSUANCES AND SALES OF COMMON STOCK
AND CONVERTIBLE SECURITIES
That certain Common Stock Investment Agreement between
Promethean Investment Group L.L.C. ("Promethean") and the Company, dated as of
September 2, 1997, as amended (the "Promethean Agreement").
<PAGE>
SCHEDULE 3.1
COMPANY REPRESENTATIONS AND WARRANTIES
None, other than as listed in Schedules 3.1(c), 3.1(e),
3.1(j), 3.1(k) and 3.1(l).
<PAGE>
SCHEDULE 3.1(c)
COMPANY - CAPITALIZATION
As of October 8, 1997, there were 3,391,816 shares of Common
Stock issuable pursuant to outstanding options and 92,000 shares of Common Stock
issuable pursuant to outstanding warrants. Reservation of shares of Common Stock
for issuance with respect to such outstanding options and warrants has not been
made in all instances.
Each outstanding share of the Company's Common Stock has the
right to purchase one one-thousandth of a share of Series B Junior Preferred
Stock, par value $.01 per share, upon certain triggering events under the
Company's Rights Agreement, dated as of April 8, 1996, between the Company and
Norwest Bank Minnesota, N.A.
Under the Promethean Agreement (as defined in Schedule
2.4(f)(i)(A)(C)), the Company issued 100,000 shares of Common Stock and may, at
the Company's option, issue from time to time shares of Common Stock to
Promethean for an aggregate purchase price of up to $25 million, the issuance
price for such Common Stock to be at a discount to market value of the Common
Stock. Under the Promethean Agreement, the Company granted both demand and
incidental registration rights to Promethean on the 100,000 shares of Common
Stock previously issued to Promethean and the shares of Common Stock issuable to
Promethean under the Promethean Agreement.
Under a Stock Purchase Agreement (the "Stock Purchase
Agreement"), dated as of September 13, 1990, between the Company and Hanrow
Financial Group, Ltd. ("Hanrow Financial"), the Company agreed to use its
diligent efforts to elect to the Board a person designated by Hanrow Financial.
In addition, under the Stock Purchase Agreement, the Company granted Hanrow
Financial certain preemptive rights with respect to future issuances of shares
of the Company's Common Stock. By written waiver dated October 8, 1997, Hanrow
Financial has irrevocably waived such preemptive rights with respect to the
transactions contemplated under this Agreement.
<PAGE>
SCHEDULE 3.1(e)
COMPANY - NO CONFLICTS
(i) No exceptions, except as provided in sub-clause (ii) below.
(ii) The Company makes no representation and warranty with respect to
XXXXXXXXXXXXXXXXXXXXXXXXXX or XXXXXXXXXXXXXXXXXXXXXXXXXXXXX.
<PAGE>
SCHEDULE 3.1(j)
COMPANY - LIABILITIES
1. See Schedule 3.1(k).
2. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
3. Lease Agreement between Ryan Companies U.S., Inc. and the Company,
dated as of June 27, 1997 (80,000 square foot lease).
4. Lease Agreement in the United Kingdom among the Company, Angeion
Europe Ltd. and Orbit Investment (Properties) Limited, dated as of Summer 1997.
5. The Company has entered into various indemnification agreements and
insurance arrangements with its vendors and medical and research institutions
which are standard for the industry.
6. The Company has obligations under certain distribution arrangements
with the following entities:
a. Caledonian Medical Limited (U.K.)
b. NGIC S.R.L. Medical Equipment (Italy)
c. RIES Medizin Technik GMBH (Austria)
d. SALCOR AB (Sweden)
<PAGE>
SCHEDULE 3.1(k)
COMPANY - PROCEEDINGS
1. Angeion Corporation v. Cardiac Pacemakers, Inc., United States
District Court, District of Minnesota, Civil Action No. 97-1681-JRR/FLN. In
1996, the Company and Pacesetter, Inc. jointly sued Cardiac Pacemakers, Inc. in
the United States District Court, District of Minnesota, for patent infringement
of Pacesetter's bradycardia patents and the Company's tachycardia patents. In
connection with the Cross-License Agreement with St. Jude, and pursuant to a
court order in July, 1997, the Company is now the sole party to the litigation
involving the Company's tachycardia patents. Discovery is scheduled to be
completed by December, 1997 and trial is scheduled for March, 1998.
2. Mayfield International, Inc. v. Angeion Corporation, United States
District Court, District of Hennepin County, Civil Action No. 96-14270. On
August 16, 1996, Mayfield International, Inc. ("Mayfield International"),
Bennett Family Trust, and the William A. Johnson 1993 Irrevocable Trust
(collectively, "Plaintiffs") brought a claim against the Company in Hennepin
County District Court alleging a breach of contract between Plaintiffs and the
Company. For a period of time in the early 1990s, Mayfield International served
as a financial advisor to the Company. Pursuant to a Financial Advisory
Agreement between Mayfield International and the Company, dated as of June 13,
1990 (the "Financial Advisory Agreement"), the Company agreed to pay Mayfield
International a fee of $60,000.00 and issue warrants to purchase 250,000 shares
of Angeion common stock at an exercise price of $3.875 dollars per share upon
the Company obtaining financing through Mayfield International's efforts. The
exercise period for the warrants terminated thereafter, never having been
exercised. Mayfield International contends that, pursuant to certain
conversations between former officers of Mayfield International and the Company,
that it was appropriate to make adjustments to the warrants for Mayfield
International. The Company has answered the complaint and asserted that the
warrants expired of their own accord without any contractual or other legal
basis to extend the period of time for the exercise of the warrants. The
Company's answer also asserts the defense that all payments required to be made
pursuant to the Financial Advisory Agreement between Mayfield International and
the Company have been paid by the Company and that no additional sums are due
for these services.
<PAGE>
SCHEDULE 3.2(c)
INVESTOR - NO CONFLICTS
(i) No exceptions, except as provided in sub-clause (ii) below.
(ii) The Investor makes no representation and warranty with respect to
XXXXXXXXXXXXXXXXXXXXXX or XXXXXXXXXXXXXXXXXXXXXXXXXXXX.
<PAGE>
SCHEDULE 4.3(e)
XXXXXXXXXXXXXXXXXXX
XXXXXXXXXX
<PAGE>
SCHEDULE 5.3
XXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
<PAGE>
SCHEDULE 8.6
SECTIONS 29 AND 31 OF THE COMMERCIAL ARBITRATION RULES
29. ORDER OF PROCEEDINGS AND COMMUNICATION WITH ARBITRATOR
A hearing shall be opened by the filing of the oath of the arbitrator, where
required; by the recording of the date, time and place of the hearing, and the
presence of the arbitrator, the parties, and their representatives, if any, and
by the receipt by the arbitrator of the statement of the claim and the answering
statement, if any.
The arbitrator may, at the beginning of the hearing, ask for statements
clarifying the issues involved. In some cases, part or all of the above will
have been accomplished at the preliminary hearing conducted by the arbitrator
pursuant to Section 10.
The complaining party shall then present evidence to support its claim. The
defending party shall then present evidence supporting its defense. Witnesses
for each party shall submit to questions or other examination. The arbitrator
has the discretion to vary this procedure but shall afford a full and equal
opportunity to all parties for the presentation of any material and relevant
evidence.
Exhibits, when offered by either party, may be received in evidence by the
arbitrator.
The names and addresses of all witnesses and a description of the exhibits in
the order received shall be made a part of the record.
There shall be no direct communication between the parties and a neutral
arbitrator other than at oral hearing, unless the parties and the arbitrator
agree otherwise. Any other oral or written communication from the parties to the
neutral arbitrator shall be directed to the AAA for transmittal to the
arbitrator.
31. EVIDENCE
The parties may offer such evidence as is relevant and material to the dispute
and shall produce such evidence as the arbitrator may deem necessary to an
understanding and determination of the dispute. An arbitrator or other person
authorized by law to subpoena witnesses or documents may do so upon the request
of any party or independently.
The arbitrator shall be the judge of the relevance and materiality of the
evidence offered, and conformity to legal rules of evidence shall not be
necessary. All evidence shall be taken in the presence of all of the arbitrators
and all of the parties, except where any of the parties is absent in default or
has waived the right to be present.
<PAGE>
EXHIBIT E TO
INVESTMENT AGREEMENT
CARDIAC STIMULATION DEVICE PRODUCT
SUPPLY AGREEMENT
BETWEEN
ELA MEDICAL, INC., AS SUPPLIER
and
ANGELLAN MEDICAL SYSTEMS, LLC, AS PURCHASER
Note: Portions of this exhibit marked with "X's" have been omitted
pursuant to a request for confidentiality under Rule 24b-2 of
the Securities Exchange Act of 1934, as amended. A copy of
this exhibit in its entirety has been filed separately with
the Securities and Exchange Commission.
<PAGE>
TABLE OF CONTENTS
PAGE
1. Definitions........................................................... 1
2. Supply and Purchase................................................... 7
2.1. Agreement to Supply.......................................... 7
2.2. Exclusivity.................................................. 8
2.3. Existing Distributors of Supplier............................ 9
2.4. Other Cardiac-Related Devices................................ 9
3. Intellectual Property Matters......................................... 9
3.1. Use of Supplier's Trademarks on Products..................... 9
3.2 Use of Purchaser's Trademarks on Products.................... 10
3.3. Copyrights................................................... 10
3.4. Technical Information........................................ 10
3.5. Infringement of Intellectual Property Rights of Supplier..... 10
3.6. License of Technical Information............................. 11
4. Commercialization..................................................... 11
4.1. Diligence.................................................... 11
4.2. Reports and Sales Records.................................... 12
4.3. Promotional and Product Literature........................... 12
4.4. Technical Assistance......................................... 13
4.5. Labels and Markings.......................................... 13
5. Regulatory and Governmental Approvals................................. 14
5.1. Clinical Studies............................................. 14
5.2. Government Approvals......................................... 14
6. Pricing and Payments.................................................. 15
6.1. Transfer Prices.............................................. 15
6.2. Payment Terms................................................ 17
6.3. Financial and Related Books and Records...................... 17
6.4. Late Payments................................................ 18
7. Purchase and Supply of Product........................................ 18
7.1. Orders....................................................... 18
7.2. Effect of Late Payments...................................... 19
7.3. Inspection of Shipments...................................... 19
7.4. Purchase Forecasts........................................... 19
7.5. Return of Expired Products................................... 20
<PAGE>
8. Quality Assurance; Testing............................................ 20
8.1. Quality Control.............................................. 20
8.2. Testing...................................................... 21
8.3. Records and Traceability..................................... 21
9. Warranties and Indemnifications....................................... 22
9.1. Supplier Product Warranties.................................. 22
9.2. Recalls...................................................... 23
9.3. Indemnification for Third Party Claims....................... 23
9.4. Supplier Infringement Indemnification........................ 24
9.5. Limitation on Damages. ...................................... 25
9.6. Certain Covenants............................................ 25
9.7. Representations and Warranties of the Parties................ 25
9.8. Mitigation................................................... 27
9.9. Indemnification Procedure for Third Party Claims and
Infringement Claims........................................ 27
10. Term and Termination.................................................. 27
10.1. Term......................................................... 27
10.2. Events of Early Termination.................................. 28
10.3. Rights and Obligations on Expiration or Termination.......... 28
11. Confidentiality; Publicity; Non-Solicitation.......................... 30
11.1. Confidential Information..................................... 30
11.2. Publicity.................................................... 31
11.3. Non-Solicitation............................................. 31
12. Dispute Resolution Provisions......................................... 31
12.1. General Dispute Principles................................... 31
12.2. Arbitration of Other Disputes................................ 32
13. Miscellaneous......................................................... 35
13.1. Fees and Expenses.......................................... 35
13.2. Severability............................................... 35
13.3. Entire Agreement; Amendments............................... 35
13.4. Notices.................................................... 35
13.5. No Waiver.................................................. 37
13.6. Headings................................................... 37
13.7. Survival of Provisions..................................... 37
13.8. Successors and Assigns..................................... 37
13.9. No Third Party Beneficiaries............................... 38
13.10. Governing Law.............................................. 38
13.11. Insurance.................................................. 38
13.12. Waivers.................................................... 38
13.13. English Language Controls.................................. 38
<PAGE>
13.14. Relationship of the Parties................................ 39
13.15. Counterparts............................................... 39
13.16. Sovereign Immunity; Exclusions............................. 39
13.17. Force Majeure.............................................. 40
Schedule 1.13 - Existing Distributors
Schedule 1.41 - Related Agreements
Schedule 6.1(a) - Unit Transfer Prices for Initial Products
Schedule 8.2 - Testing Procedures
Schedule 9.7 - No Conflicts
Schedule 12.2 - AAA Rules
Schedule 13.11 - Insurance
<PAGE>
CARDIAC STIMULATION DEVICE PRODUCT
SUPPLY AGREEMENT
This Cardiac Stimulation Device Product Manufacturing and Supply
Agreement (the "Agreement") is entered into as of the 9th day of December, 1997
("Effective Date") by and between ELA Medical, Inc., a Delaware corporation
("Supplier"), and Angellan Medical Systems, LLC, a Delaware limited liability
company ("Purchaser").
Supplier can procure the manufacture of certain Cardiac Stimulation
Device (as hereinafter defined) products from its Affiliates (as hereinafter
defined), including without limitation, ELA Medical, a French societe anonyme,
which products shall be the subject of this Agreement.
Purchaser wishes to purchase certain Products (as hereinafter defined)
and Supplier wishes to procure the manufacture of and sell to Purchaser such
Products for resale in the Territory (as hereinafter defined) subject to the
terms and conditions of this Agreement.
NOW THEREFORE, in consideration of the mutual covenants and agreements
provided herein, the Parties agree as follows:
1. DEFINITIONS.
1.1. "AAA" shall mean the American Arbitration Association.
1.2. "Act" shall mean the United States Food, Drug and
Cosmetic Act of 1938, as amended from time to time (and any amendments or
additions thereto from time to time or any successor or similar Applicable Law).
1.3. "Adverse Device Events" shall mean any Product-related
event that is reportable (or that Purchaser or Supplier determines after Best
Efforts at mutual consultation should be reported) to (i) the FDA, or any local
ethics committee ("LEC") responsible for approving the protocols for any
clinical trials conducted upon the Products in the Territory or any other ethics
committee within the Territory with responsibilities analogous to a LEC; or (ii)
to any other Governmental Authority responsible for the regulation of medical
devices.
1.4. "Affiliate(s)" shall mean any corporation, association or
other entity which directly or indirectly controls, is controlled by or is under
common control with the Party in question, but only for so long as such
relationship exists. As used herein, the term "control" shall mean the ability
to direct the business of a company and shall be presumed in the case of
ownership, directly or indirectly, of shares of stock having at least fifty
percent (50%) of the voting power entitled to vote for the election of directors
in the case of a corporation, and at least fifty percent (50%) of the voting
power and interest in profits in the case of a business entity other than a
corporation, or only if less than fifty percent (50%) of the voting power and
interest in profits is permitted by Applicable Law, the maximum amount allowed
in the country in question (so long as the holder retains the ability to direct
the business of the entity). The Parties
<PAGE>
acknowledge and agree that neither L'Oreal nor the Purchaser nor any member of
Purchaser and such member's Affiliates shall be deemed to be included within the
term "Affiliate" for any purposes under this Agreement unless otherwise
expressly provided in this Agreement.
1.5. "Angeion" shall mean Angeion Corporation, a Minnesota
Corporation.
1.6. "Angeion Supply Agreement" shall mean that certain
Implantable Cardioverter Defibrillator Product Manufacturing and Supply
Agreement between Purchaser and Angeion dated the date hereof.
1.7. "Applicable Laws" shall mean all foreign, federal, state
and local laws, statutes, rules and regulations which have been enacted by a
Governmental Authority and are in force as of the date hereof or which are
enacted by a Governmental Authority and come into force during the term of this
Agreement, in each case to the extent that the same are applicable to the
performance by the Parties of their respective obligations under this Agreement.
Without limiting the foregoing, Applicable Laws shall include the Act (including
any applicable regulations under the Act governing manufacturing practices).
1.8. "Best Efforts" shall be determined under New York law and
shall mean such efforts as are consistent with efforts made by businesses of
similar size and resources in a similar circumstance and context to achieve a
particular result in a timely manner, but shall not require a Party to take
actions that would be commercially unreasonable to such Party in the
circumstances.
1.9 "Budgeted Sales Price" shall have the meaning set forth in
Section 6.1(b).
1.10. "Cardiac Stimulation Device" shall mean an implantable
medical device for electrically stimulating or shocking the heart which is
suitable for use by or with human patients. The term "Cardiac Stimulation
Device" includes, without limitation: cardiac pacemakers, antitachycardia
pacemakers, cardioverters and defibrillators, including combinations thereof
("such devices"), pulse generators and other waveform generators for such
devices; electronic and mechanical components, including without limitation
batteries and capacitors to the extent these components are used for or with
such devices; mechanisms for coupling such devices in a stimulating, shocking or
sensing relationship to the heart including without limitation leads,
electrodes, and sensors; and data dispensing, processing and gathering systems
for such devices, including without limitation programmers, pacing system
analyzers, defibrillation system analyzers, testers, encoders, decoders,
transmitters, receivers, and computer software- controlled systems, including
all related software; and internal, but not external, holter monitors used for
recording heart rhythms (even though such internal holter monitors do not
electrically stimulate the heart). The term "Cardiac Stimulation Device"
excludes, by way of example and not limitation, muscle stimulators, nerve
stimulators, bone growth stimulators, cardiomyoplasty stimulators and associated
devices, arrhythmia mapping devices, imaging technology, angioplasty devices,
catheter ablation systems, and temporary external pacemakers and defibrillators
and EKG monitors (other than pacing programmers) which are stand-alone,
non-ambulatory and not
<PAGE>
intended for transtelephonic monitoring.
1.11. "Confidential Information" shall mean technical and
business information relating to a Party's or its Affiliates' Intellectual
Property Rights, trade secret processes or devices, techniques, data, formula,
inventions (whether or not patentable) or products, research and development
(including research subjects, methods and results), production, manufacturing
and engineering processes, computer software, costs, profit or margin
information, pricing policies, confidential market information, finances,
customers, distribution, sales, marketing, and production and future business
plans and any other information of a "confidential" nature, specifically
including, without limitation, any information that is identified orally or in
writing by the disclosing party to be confidential, or that the receiving party
should reasonably understand under the circumstances to be a trade secret of the
disclosing party or information of a similar nature that is not generally known
to the public.
1.12. "Demand for Arbitration" shall have the meaning set
forth in Section 12.2(b).
1.13. "Existing Distributors" shall mean those third parties
having an existing distribution, sales representative or agency arrangement with
Supplier in the Territory, the list of which third parties is set forth in
Schedule 1.13.
1.14. "Expense Reimbursement Basis" shall mean a reimbursement
for all reasonable out-of-pocket costs and expenses plus an agreed upon hourly
or per diem amount for personnel and agreed upon amounts for reasonable overhead
allocation.
1.15. "FDA" shall mean the United States Food and Drug
Administration or any successor United States governmental agency performing
similar functions with respect to medical devices.
1.16. "FDA Tracking Information" shall mean the information
relating to the Products that must be maintained pursuant to 21 U.S. Code of
Federal Regulations Part 821 and any amendments or additions thereto.
1.17. "Firm Period" shall mean any three months (or six
months, as applicable) of a Forecast which are considered firm pursuant to
Section 7.4.
1.18. "Force Majeure" shall mean, in relation to either Party,
any circumstances beyond the reasonable control of that Party, including,
without limitation, any fire, storm, flood, earthquake, explosion, accident,
acts of the public enemy, war, rebellion, insurrection, sabotage, epidemic,
quarantine restrictions, acts of God or acts of any Governmental Authority,
labor disputes that result in work stoppages, transportation embargoes or
failure or delays of transportation, or inability to secure raw materials or
machinery for the manufacture of devices as a result of any of the foregoing. No
acts of a Governmental Authority resulting from any acts or omissions of
Purchaser or Supplier that are in breach of this Agreement shall constitute an
<PAGE>
event of Force Majeure for the breaching Party.
1.19. "Forecast" shall have the meaning set forth in Section
7.4.
1.20. "Government Approval" shall mean governmental marketing,
and other governmental authorization required from any Governmental Authority
before the Products may be commercially marketed in the Territory, including any
requirements for reimbursement and pricing approval.
1.21. "Governmental Authority" shall mean any nation or
government, any state, province or other political subdivision thereof or any
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, including the FDA.
1.22. "Infringement Claims" shall have the meaning set forth
in Section 9.4.
1.23. "Initiating Person" shall have the meaning set forth in
Section 12.2(b).
1.24. "Intellectual Property Rights" shall mean any patent,
copyright, registered design, trademark or other industrial or intellectual
property right owned or otherwise enforceable pursuant to license or otherwise
by any Person, and applications for any of the foregoing.
1.25. "Inventory" shall mean the Purchaser's inventory of
Products.
1.26. "IDE" shall mean an investigational device exemption
from the FDA for sale of Products in the United States prior to obtaining FDA
approval for commercial sale.
1.27. "Labels and Markings" shall mean labeling materials,
packaging, trade dress, logos, tradenames, trademarks and related materials used
for exterior packaging and exterior labeling of Products to be sold by Purchaser
(or any distributor or subdistributor thereof) under this Agreement, but shall
not include Promotional Materials or Technical Materials.
1.28. "LLC Agreement" shall mean the limited liability company
operating agreement between Supplier and Angeion relating to the operations and
governance of Purchaser dated the date hereof.
1.29. "Material Adverse Effect" means any material adverse
effect on the assets, results of operations, properties, business or financial
condition of the Supplier or Purchaser, as applicable, and its subsidiaries
taken as a whole.
1.30. "Order" shall mean a firm purchase order for the
Products made by Purchaser.
<PAGE>
1.31. "Other Cardiac-Related Devices" shall mean any
cardiac-related devices other than Cardiac Stimulation Devices.
1.32. "Party" shall mean each of Supplier and Purchaser and
"Parties" shall mean both of Supplier and Purchaser, in each case together with
each of their successors and permitted assigns.
1.33. "Person" shall mean any individual, general partnership,
limited partnership, limited liability company corporation, joint venture,
trust, business trust, cooperative or association, or any foreign trust or
foreign business organization or any Governmental Authority.
1.34. "Price Period" shall mean a six-month period beginning
on January 1 and July 1 of each year until December 31, 1999 and a one-year
period from January 1 to December 31 of each year of the term of this Agreement
thereafter; provided, that the first Price Period under this Agreement shall be
from the date of this Agreement through June 30, 1998.
1.35. "Product" and "Products" shall mean the entire current
and future Cardiac Stimulation Device product line developed or acquired,
directly or indirectly (including by Supplier or its Affiliates being acquired
by or becoming an Affiliate of a party not previously an Affiliate) by Supplier
and its Affiliates, and all subsequent modifications, components and
improvements used therein during the term of this Agreement; provided, however,
that any Products acquired by Supplier or its Affiliates, directly or
indirectly, that are subject to agreements or restrictions that prevent Supplier
or its Affiliates from complying with the terms hereof shall be excluded from
this Agreement only to the extent of such pre-existing agreements and only for
the remainder of the then existing term thereof.
1.36. "Promotional Materials" shall mean all promotional and
marketing materials used by Purchaser in connection with the marketing and
commercialization of the Products in the Territory, including but not limited to
sales aids, catalogues, sales brochures, sales manuals, advertisements (in
printed or electronic form), convention exhibits, protocols for clinical studies
after FDA approval of a Product and publications from such studies.
1.37. "Purchaser's Marks" shall mean the trademarks and logos
owned or licensed by Purchaser or its Affiliates (whether registered or not) as
Purchaser may, with Supplier's prior written consent, from time to time
designate to be used in marketing and selling the Products in the Territory
during the term of this Agreement; provided, however, that for purposes of this
Agreement, no Supplier's Marks shall be deemed to be Purchaser's Marks.
1.38. "Quarter" shall mean each calendar quarter ending March
31, June 30, September 30, or December 31 of each year during the term of this
Agreement.
1.39. "Recalls" shall mean any withdrawals of the Product from
the market in the Territory declared by Supplier or Purchaser, whether voluntary
or involuntary.
<PAGE>
1.40. "Regulatory Data" shall mean the medical, clinical and
other scientific data necessary to, required for, or included in any regulatory
filing to obtain or maintain any Government Approval to market the Products
including pre-approval and post-approval reports, filings and submissions, other
than reports of Adverse Device Events and related summaries.
1.41. "Related Agreements" shall mean the agreements listed on
Schedule 1.41.
1.42. "Respondent" shall have the meaning set forth in Section
12.2(b).
1.43. "Supplier's Marks" shall mean the trademarks and logos
owned or licensed by Supplier or its Affiliates (whether registered or not) as
Supplier may from time to time designate to be used in marketing and selling the
Products in the Territory during the term of this Agreement.
1.44. "Technical Information" shall mean know-how, trade
secrets, inventions, data, technology, processes and information, including
improvements and modifications to any thereof, relating to the Products,
disclosed by Supplier to Purchaser under this Agreement that are either
Confidential Information of Supplier or its Affiliates or are protected by
Intellectual Property Rights of Supplier or its Affiliates, including without
limitation, processes and analytical methodology used in development, testing,
analysis and manufacture and medical, clinical and other scientific data other
than those which (i) are already known to Purchaser at the time of disclosure or
are received from a third party with a right to convey it, or (ii) were
independently developed by Purchaser prior to the time of disclosure; provided,
that Purchaser shall bear the burden of proving either of the exceptions in (i)
or (ii) hereto.
1.45. "Technical Materials" shall mean all manuals,
programming guides, user guides and training manuals of an educational or
instructional nature which are distributed in conjunction with each Product,
including any information made available by Supplier to Purchaser to be used as
part of the content of the Promotional Materials.
1.46. "Territory" shall mean the United States of America and
any additional countries which may be added to the Territory by written
amendment of this Agreement executed by both Parties.
1.47. "Third Party Claims" shall have the meaning set forth in
Section 9.3(b).
1.48. "Trademark License" shall mean that certain Trademark
License Agreement between ELA and Purchaser contemplated by Section 11.2 of the
LLC Agreement.
1.49. "Unit" shall mean a specific model of Product that is
packaged, invoiced and sold as a unit by Supplier, such as an ICD Unit, a
pacemaker Units, a lead Unit, a programming Unit and an accessory Unit.
<PAGE>
1.50. "Unit Transfer Price" shall mean the transfer prices set
in accordance with Section 6.1.
Any reference in this Agreement to "writing" or cognate expressions
includes a reference to electronic or facsimile transmission or comparable means
of communications.
Any reference in this Agreement to any Applicable Law shall be
construed as a reference to the relevant Applicable Law (including any successor
provisions) as amended, re-enacted or extended at the time in question.
2. SUPPLY AND PURCHASE.
2.1. AGREEMENT TO SUPPLY.
(a) Subject to the terms and conditions of this
Agreement, Supplier shall procure the manufacture of and supply Products
exclusively to Purchaser for sale in the Territory on an exclusive basis as
specified in Section 2.2 and Purchaser shall purchase Products from Supplier for
sale in the Territory.
(b) During the term of this Agreement, Purchaser shall
not have any rights to obtain Products of Supplier or its Affiliates from any
Person other than Supplier or its Affiliates.
(c) Purchaser shall not sell, or cause to sell, (i)
Products to any Person located outside the Territory or (ii) Products to any
Person located in the Territory, if, to the knowledge of Purchaser, such Party
inside the Territory intends to resell the Products in any country outside the
Territory; provided, however, that subject to subclause (ii) above, Purchaser
will not be liable for any third party acts resulting in Products being sold
outside the Territory. Nothing herein shall be deemed to obligate Purchaser to
impose any restrictions upon the use or resale of any Product by a purchaser
thereof in the Territory to the extent that such a restriction would be in
violation of Applicable Law. Purchaser shall not be in breach of this Agreement
as a result of any use or resale of a Product outside the Territory by a
purchaser that is not bound by restrictions on such use or resale by virtue of
the provisions of the preceding sentence. To the maximum extent permissible
under Applicable Law, Purchaser shall cease all sales of Products to Persons it
has reason to believe are reselling Products outside the Territory whether or
not such resales are permissible under Applicable Law.
(d) Except as provided in Section 3.7, nothing herein
shall be construed to: (i) effect any sale or transfer of any Technical
Information or Intellectual Property Rights of Supplier to Purchaser; (ii) grant
any license to Purchaser to design, develop or manufacture the Products; or
(iii) grant to Purchaser any rights to the Intellectual Property Rights of
Supplier or its Affiliates.
(e) Subject to the terms of this subsection, Supplier
shall determine its
<PAGE>
offering of Products from time to time in its sole discretion, including setting
its development schedule for any new Product or the improvement or modification
of a Product. Notwithstanding the foregoing and subject to Section 9.4, Supplier
shall (i) give Purchaser written notice at least one (1) year in advance of any
discontinuance of the sale of an Implantable Cardioverter Defibrillator or
pacemaker Product in the Territory, or (ii) offer for sale to Purchaser an
improved Product for the same uses or indications unless otherwise agreed in
writing by the Parties. Supplier's discontinuance of the sale of a Product to
Purchaser hereunder shall not thereafter give Supplier the right to sell such
discontinued Product in the Territory, whether directly or through third
parties.
2.2. EXCLUSIVITY.
(a) Subject to the provisions of Sections 2.1(e) and
2.2(f) for the term of this Agreement, Supplier shall sell, or cause to be sold,
Products exclusively to Purchaser for marketing and sale in the Territory. In
furtherance hereof and subject to the terms of this Agreement, Purchaser shall
have the exclusive right to import, have imported, advertise, have advertised,
market, have marketed, promote, have promoted, sell, have sold and have
distributed the Products in the Territory.
(b) Supplier agrees not to take, or permit to be taken,
any action which is inconsistent with the exclusive rights granted to Purchaser
under Section 2.2(a). Without limiting the foregoing, but subject to Section
2.2(f), Supplier shall not, directly or indirectly, (i) sell, deliver or supply,
or cause to be sold, delivered or supplied, Products to any Person in the
Territory, under any label or trademark, (ii) make, manufacture or supply, or
cause to be made, manufactured or supplied, Products for the account of any
Person in the Territory, under any label or trademark, (iii) grant any
manufacturing or marketing rights with respect to the Products in the Territory,
under any labels or trademarks, or (iv) sell, deliver or supply, or cause to be
sold, delivered or supplied, Products to any Person outside the Territory, if,
to the knowledge of Supplier, such Person intends to resell the Products in the
Territory, provided however, that subject to the foregoing, Supplier will not be
liable for any third party acts resulting in Products being sold in the
Territory other than by Purchaser and its Purchaser Distributors. Nothing herein
shall be deemed to obligate Supplier to impose any restrictions upon the use or
resale of any Product by a purchaser thereof outside the Territory (other than a
distributor of Supplier) to the extent that such a restriction would be in
violation of Applicable Law. Supplier shall not be in breach of this Agreement
as a result of any use or resale of a Product in the Territory by a purchaser
that is not bound by restrictions on such use or resale by virtue of the
provisions of the preceding sentence. To the maximum extent permissible under
Applicable Law, Supplier shall cease all sales of Products to Persons it has
reason to believe are reselling Products in the Territory, whether or not such
resales are permissible under Applicable Law.
(c) If either Supplier or Purchaser learns of any sales
of Products in the Territory other than by Purchaser and its distributors, such
Party will provide written notice thereof to the other Party. The Parties shall
consult with each other in good faith concerning
<PAGE>
appropriate actions (consistent with Applicable Laws) to stop and thereafter
prevent such sales of the Products in the Territory. If the Parties are unable
to agree upon a joint course of action, each Party shall be free to take such
actions as it sees fit in its discretion, subject to compliance with Applicable
Law, provided that neither Party shall be under any obligation to take any such
action.
(d) Purchaser acknowledges that, subject to the
restrictions set forth herein, Supplier may sell Products, or otherwise enter
into agreements with third parties with respect to the manufacture, sale and
distribution of Products in countries outside the Territory.
(e) Supplier acknowledges that Purchaser has entered
into the Angeion Supply Agreement pursuant to which it may purchase and sell
Cardiac Stimulation Devices which may be now or in the future competitive with
the Products.
(f) Purchaser acknowledges and agrees that Supplier may
import, have imported, distribute, have distributed, sell and have sold Products
within the Territory for the limited purpose of obtaining any Government
Approval in accordance with the terms hereof.
2.3. EXISTING DISTRIBUTORS OF SUPPLIER.
Supplier has no Existing Distributors of the Products in the Territory
as of the date hereof except as set forth on Schedule 1.13. Purchaser further
acknowledges and agrees that Supplier may export and have exported Products
manufactured in the Territory for distribution or sale outside the Territory.
2.4. OTHER CARDIAC-RELATED DEVICES.
Prior to entering into any contract with any third party with regard to
the purchase, sale or distribution in the Territory of Other Cardiac-Related
Devices other than for research or clinical testing of such Other
Cardiac-Related Devices, each Party agrees to discuss in good faith with the
other the inclusion of Other Cardiac-Related Devices under this Agreement,
subject to mutually agreeable terms. Nothing in this Section 2.4 shall create an
obligation between the Parties to agree to include Other Cardiac-Related Devices
and any obligation to include Other Cardiac-Related Devices will arise only as
and to the extent that an agreement is reached between the Parties in writing.
3. INTELLECTUAL PROPERTY MATTERS
3.1. USE OF SUPPLIER'S TRADEMARKS ON PRODUCTS.
Unless otherwise agreed by the Parties in writing, the Products
supplied to Purchaser for sale in the Territory hereunder shall bear Supplier's
Marks, including the name and address of the manufacturer of the Products, in
such manner as Supplier may direct, consistent with Applicable Laws and
Government Approvals and pursuant to the Trademark License.
<PAGE>
3.2. USE OF PURCHASER'S TRADEMARKS ON PRODUCTS
Unless otherwise agreed by the Parties in writing, at Purchaser's
request, the Products may also be marked with Purchaser's Marks in connection
with Purchaser's marketing and sale of the Products hereunder, subject to
compliance with Applicable Law.
3.3. COPYRIGHTS.
With respect to all copyrights related to any tangible materials
produced for Purchaser by or under the direction of Supplier, including
Technical Materials, software and translated materials and Labels and Markings,
but excluding Promotional Materials, title in and to any copyrights for such
materials shall remain with the Supplier, and Purchaser shall have no right to
copy, reproduce or make derivative works thereof, unless otherwise specifically
agreed between the Parties in writing. All title in and to any copyrights in the
Promotional Materials shall rest with Purchaser, except that nothing herein
shall affect any right, title or interest of Supplier in the Technical Materials
(even if the Promotional Materials are derivative works thereof) and subject to
Section 11.5 of the LLC Agreement.
3.4. TECHNICAL INFORMATION.
As between Supplier and its Affiliates, on the one hand, Purchaser, and
its Affiliates (including with respect to Purchaser, Angeion), on the other
hand, all Technical Information and Regulatory Data, if any, generated by
Purchaser and its Affiliates pursuant to clinical studies or regulatory
approvals in the Territory shall be the property of Supplier. Purchaser, its
Affiliates and Purchaser Distributors shall have the right to use such Technical
Information and Regulatory Data solely in furtherance of the performance of
Purchaser's obligations under this Agreement. As the owner of the Technical
Information, Supplier shall have the right to use, disclose and license to any
Person all or any portion of such Technical Information.
3.5. INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS OF
SUPPLIER.
In the event that Purchaser becomes aware of the possibility of an
infringement of the Intellectual Property Rights of Supplier by a third party in
the Territory, Purchaser shall promptly notify Supplier of the circumstances
surrounding such infringement. Supplier may, in its sole discretion and at its
own expense and retaining all proceeds therefrom, take such actions as Supplier
deems appropriate with respect to any infringement identified by Purchaser, or
with respect to any other infringement of Intellectual Property Rights of
Supplier or its Affiliates in the Territory, as may be permitted by Applicable
Law.
3.6. LICENSE OF TECHNICAL INFORMATION.
Subject to the confidentiality provisions of this Agreement, Supplier
hereby grants a non-transferable, non-exclusive, royalty free license to
Purchaser of Technical Information for the
<PAGE>
sole purpose of allowing Purchaser's personnel to provide technical support to
customers and to develop the Promotional Materials.
4. COMMERCIALIZATION.
4.1. DILIGENCE.
(a) As soon as practicable after receipt of Government
Approval to market any Product in the Territory, Purchaser shall thereafter use
its Best Efforts to market, promote and commercialize such Product in the
Territory during the term of the Agreement.
(b) Purchaser shall promptly notify Supplier of any
inquiry (other than an order or potential order from a customer within the
Territory) from any Governmental Authority concerning the Products or Supplier.
(c) Purchaser shall notify Supplier promptly upon
Purchaser's receipt of any actual notice that the FDA intends to visit or
inspect Purchaser's facilities in the Territory for a purpose relevant to the
development or marketing of the Products and provide Supplier with copies of all
correspondence relating thereto and an opportunity to participate in any
inspection or regulatory comments or correspondence prepared by Purchaser in
response to such comments.
(d) Purchaser and Supplier shall promptly notify each
other of any and all Adverse Device Events, or any events that could reasonably
be expected to become an Adverse Device Event, of which it becomes aware and
will forward promptly to the other all written reports relating to such actual
or potential Adverse Device Event. Purchaser shall also forward to Supplier any
explanted Products, if available. Subject to Section 9.2, Supplier shall be
responsible, and bear the cost of, all other requirements, regulatory filings or
measures resulting from such Adverse Device Event.
(e) Purchaser shall not knowingly sell, lease, give or
otherwise dispose of any Product to any person or entity other than a duly
qualified medical practitioner or hospital and not knowingly sell, lease, give
or otherwise dispose of any Product for any use or application other than one
particularly authorized by Supplier in writing or in literature and labeling
accompanying the Product.
(f) Purchaser shall provide customer support services
in the Territory at levels consistent with Purchaser's Best Efforts obligation
to develop the market for the Products within the Territory, subject to industry
standards for customary levels of support services for similar products.
<PAGE>
4.2. REPORTS AND SALES RECORDS
(a) At least once per year, Supplier and Purchaser
shall consult with each other for the purpose of assessing the state of the
market in the Territory.
(b) Purchaser shall provide to Supplier copies of its
up-to-date price lists each time such lists are revised.
(c) Purchaser will provide Supplier monthly, or such
other interval as may be agreed, with a report (format to be agreed upon) on
sales, marketing activities, market and competitive developments, human
resources and Inventory of Products. Purchaser shall also supply an annual
statement within forty-five (45) days after the end of each calendar year
detailing annual sales figures (stated both in Units and local currency) and a
semi-annual statement of aging Inventory and the amount of Inventory on hand at
June 30 and December 31 of each year within forty-five (45) days after each such
date.
(d) Purchaser and Supplier shall meet at regular
intervals throughout the year to exchange information concerning marketing
projects and clinical studies in the Territory.
4.3. PROMOTIONAL AND PRODUCT LITERATURE.
(a) Supplier will prepare and supply Purchaser with
reasonable quantities of all Technical Materials, including any revisions or
updates thereof, for each Product in English, at Supplier's sole cost and
expense. Supplier shall indemnify and hold Purchaser harmless from any and all
claims, expenses, damages and liabilities arising out of the Technical
Materials.
(b) Purchaser will prepare and supply all Promotional
Materials for use in connection with sale of the Products in the Territory;
provided, however, (i) all Promotional Materials shall require the prior
approval of Supplier, which shall not be unreasonably withheld and shall be
communicated within a reasonable period of time, and Purchaser shall make all
changes therein as Supplier may reasonably request; (ii) Purchaser shall not
include any warranties in such materials that exceed the warranties provided to
Purchaser by Supplier hereunder in Section 9.1(a)(iii) and (iv) or on warranty
cards provided by Supplier; and (iii) subject to Section 9.3, Purchaser shall
indemnify and hold Supplier harmless from any and all claims, expenses, damages
and liabilities arising out of the Promotional Materials. If Purchaser desires
to design its own protocols for clinical studies after FDA approval of Products,
Purchaser shall submit such protocols for the prior approval of Supplier. All
publications of such studies must also be submitted to Supplier for approval
prior to publication.
(c) All Technical Materials, Promotional Materials and
Labels and Markings shall bear only Supplier's Marks, except to the extent that
Purchaser's Marks may be included in accordance with Section 3.2.
<PAGE>
(d) Supplier shall supply to Purchaser a copy of all
sales, promotional or marketing literature that Supplier has developed or used
for sale of the Products for Purchaser's information and, if agreed by the
Parties in writing, Purchaser may use such sales, promotional or marketing
literature in developing the Promotional Materials.
(e) Supplier and Purchaser shall use their Best Efforts
to work together to coordinate the generation and review of the Promotional
Materials.
4.4. TECHNICAL ASSISTANCE.
Supplier shall provide at no charge to Purchaser the services of one
qualified technician on a full-time basis during normal working hours for up to
four weeks each year during the term of this Agreement to provide training and
support at Supplier's French facility upon reasonable prior notice. At
Purchaser's option, Supplier shall provide such services at another location,
inside or outside the Territory; provided that Purchaser will reimburse Supplier
for its reasonable out-of-pocket expenses incurred in connection with providing
such services at another location (including airfare and hotel). If Purchaser
wishes to obtain additional technical support services beyond those set forth
above, Supplier shall provide such additional services as Purchaser may
reasonably request upon reasonable prior notice. Purchaser shall compensate
Supplier for any such additional services on an Expense Reimbursement Basis.
4.5. LABELS AND MARKINGS.
Supplier shall prepare all Labels and Markings for the Products
supplied to Purchaser hereunder, which Labels and Markings shall include
Supplier's Marks and model numbers. If agreed in accordance with Section 3.2,
such Labels and Markings shall also include Purchaser's Marks. Purchaser may
submit the format of such Labels and Markings to Supplier. Supplier shall submit
such Labels and Markings to Purchaser for its review and comment and shall make
such changes to the format or content thereof (other than Supplier's Marks) as
Purchaser may, in a timely manner, reasonably request, subject only to any
requirements under Applicable Law. Failure of Purchaser to object or request
changes to any Labels and Markings within 10 working days (in France) of receipt
thereof shall be deemed approval of such Labels and Markings. Purchaser shall
supply electronic or camera-ready art to Supplier for Purchaser's Marks to be
used on such Labels and Markings, and Supplier shall be responsible for affixing
such Labels and Markings to the Product. No Labels and Markings may be altered
without the prior written consent of Purchaser except as required by Applicable
Law or by order of a Governmental Authority. Purchaser shall indemnify and hold
Supplier harmless from and against any and all claims, expenses, damages and
liabilities arising out of the use of Purchaser's Marks on any such Labels and
Markings.
4.6. MARKETING ALLOWANCE AND ROYALTIES.
From time to time, Supplier may (but shall have no obligation to) pay
to Purchaser a
<PAGE>
marketing allowance or charge a royalty for the use of the Intellectual Property
Rights in any Products, each if and to the extent agreed by Supplier and
Purchaser in writing.
5. REGULATORY AND GOVERNMENTAL APPROVALS.
5.1. CLINICAL STUDIES.
(a) Supplier shall use its Best Efforts to initiate and
complete clinical trials or studies in the Territory for the purpose of
obtaining the all required Government Approvals, including without limitation,
from the FDA, for each Product after obtaining an IDE from the FDA for such
Product at its sole cost and expense. All such clinical trials shall be
conducted in accordance with Applicable Laws.
(b) Each of Supplier and Purchaser shall disclose to
the other all Regulatory Data in its possession or which it is responsible for
obtaining under this Agreement generated for the Products in the Territory (or
required by any Applicable Law to be made available in connection with the sale
of the Products in the Territory) and shall have the right to use, directly or
indirectly, all such information, including the right to cross-reference any and
all regulatory filings with respect to the Products, in connection with the
development and commercialization of the Products in accordance with this
Agreement. Each Party shall be solely responsible for its use of such Regulatory
Data. To assist in connection with commercialization of the Products in the
Territory pursuant to this Agreement, Supplier shall use its Best Efforts,
consistent with any legal or contractual limitations, to make available other
regulatory filings, clinical data and information regarding either the Products
or Supplier, including updating such information from time to time and upon
effecting any change by Supplier, for use by Purchaser solely for the purpose of
obtaining Government Approvals required to be obtained by Purchaser under
Applicable Law and commercializing the Products in the Territory.
5.2. GOVERNMENT APPROVALS.
(a) Supplier shall use its Best Efforts to obtain the
IDE, if required, and from the FDA and all other required or desirable
Government Approvals, including without limitation those required to be obtained
from the FDA for the clinical trials or studies and sale of each Product in the
Territory at its sole cost and expense after Supplier (or its relevant
Affiliate) has completed the validation of such Product for human implant.
(b) Supplier will be responsible for all requirements
of Applicable Law in the Territory concerning the sale of the Products in the
Territory, including all Product labeling (other than trade marks, tradenames,
trade dress, logos, layout design and similar matters) and local regulatory
requirements within the Territory.
(c) Supplier will upon submission or receipt (i) send
to Purchaser a copy of any document submitted to or other correspondence
regarding the Product with any Governmental Authority; and (ii) provide
Purchaser with copies of all Government Approvals
<PAGE>
within fifteen (15) days of receipt. Supplier will keep Purchaser informed, in
writing, of the status of its Government Approvals on a regular basis. Purchaser
will assist Supplier in connection with such activities, to the extent
reasonably requested by Supplier.
(d) After receipt of necessary Government Approvals and
thereafter throughout the term of this Agreement, Supplier will use its Best
Efforts to maintain such Government Approvals in effect at its own expense to
the extent it is commercially and economically viable.
(e) Unless otherwise required by Applicable Laws and
subject to the following sentence, Supplier shall be the holder of all
Government Approvals in the Territory. In the event that the Parties determine
that it is desirable, for legal or administrative reasons, for Purchaser or its
designee to hold any Government Approvals, Supplier will cooperate to permit
Purchaser to hold such Government Approvals.
(f) Supplier shall keep Purchaser advised of any
changes in Applicable Laws in the Territory, including material proposed changes
thereto, of which Supplier becomes aware in the course of performing its duties
hereunder that affect the Products.
(g) Purchaser shall permit Supplier or its designated
representative to perform, upon reasonable prior notice and at Supplier's sole
cost and expense, reasonable vendor audits or other audits required by
Applicable Laws on the facilities, procedures and records which are relevant to
such audits of Purchaser and, to the extent obtainable by Purchaser at no cost
to Purchaser, on facilities, procedures and records which are relevant to such
audits of other distributors or any other Persons with responsibility for any
aspect of selling the Products, on reasonable advance notice to Purchaser during
normal business hours.
6. PRICING AND PAYMENTS.
6.1. TRANSFER PRICES.
(a) For each Unit shipped by Supplier to Purchaser,
Purchaser shall pay a Unit Transfer Price as fixed and agreed for each Price
Period between Supplier and Purchaser prior to commencement of the relevant
Price Period. Unit Transfer Prices for the initial Products for the initial
Price Period are set forth in Schedule 6.1(a) attached hereto. xxx xxxxxxxx
xxxxxx xxx xxx xxxxxxxx xxxx xx xxxxxxxxxx xx xxxx xxxxx xxx xxxxxx xxxxxxx xxx
xxxxxxx xx x xxxxx xx xxxxx xxxxx. xxxxxxxx xxxxx xxxxxxxxx xxxxxx xxx xxx xxxx
xx xxxxxxxx xx xxx xxxxxxxxx.
(b) xxxxxx xxx xxxxxxxxxxx xxxxx xx xxx xxxxx xx
xxxxxxx xxxx xxxx xxxxxxxx xxxxxx xxxxxxxxxxx xxxx xxxx xx xxxx xxxxx xxxxxxx
xxx x xxxxx xxxxxx xx xxxxxxx xxxxxxxxxx xxxxxxx xxx xxx xxxxx xxxxxxx xxx xxx
xxxxxxxxx xxxxxxxx xxxxxxx xxx xxxxxx xxxx xxxxxxxx xxxxx xxxxx xxx xxxx xxxx xx
xxxxxxxxxx xxxx xxxxxxx xxx xx xxx xxx xxxxxxxxx xxx xxxxxx xxxx xxxxxxx xxx
xxxxxxxxx xxxxxxxxx xx
<PAGE>
xxxxxxx, xx xxx xxxxxx xx xxxxxxxxxx xxxx xxxxxxx xx
(c) Supplier and Purchaser shall agree upon the
"Budgeted Sales Price" for each Unit as a reference for determining the Unit
Transfer Prices prior to expiration of the then current Price Period, such
agreement to be reached in accordance with the provisions of this Section 6.1.
(d) With respect to programming Units, Unit Transfer
Prices shall provide Supplier with a target price equal to xxxxxxxxx xxxxx
xxxxxxxx xxxxxxxxxxxxx xxxx xxx xxxx xxxxxxxxxxx xxxx xxxx x xxxxxx xxxxxx xx
xxxxx xxxxxxx xx.
(e) If the Parties are not able to reach agreement on
any Unit Transfer Price (including any marketing allowance or royalty under
Section 4.6) for any Price Period, they shall negotiate in good faith to attempt
to resolve their differences. If such negotiations shall fail to result in an
agreement within thirty (30) days, the Parties shall each submit their Unit
Transfer Price proposals to the Chief Executive Officers (or equivalent officer)
of the Parties to attempt to resolve their differences. If such Chief Executive
Officers shall fail to reach agreement within fifteen (15) days, the Parties
shall submit their final proposals to an independent third party decisionmaker
who shall pick whichever of the final proposals more closely adheres to the
principles set forth in this Section 6.1 and Section 10.2 of the LLC Agreement
and the best available information presented by the Parties as to fair and
competitive prices in the Territory. The third party decisionmaker shall be
selected by joint agreement of the two Parties (or if they are unable to agree
within ten (10) days, then by the American Arbitration Association ("AAA");
provided, however, that the AAA shall not administer the proceedings). The
decision of such third party shall be final and non-appealable. The Person
selected to be the third party decisionmaker shall have experience in the
medical device industry and in distribution and other relevant commercial
matters in such industry. Preference shall be given to the selection of an
individual with experience as an arbitrator, but the individual need not be a
lawyer. The Parties shall each submit their final proposals to the independent
decisionmaker with supporting analyses and other information as they deem
appropriate within fifteen (15) days after selection of the decisionmaker. No
Party shall have EX PARTE communications with the decisionmaker during any time
period immediately relevant to the decisionmaker's actions in connection with
this Agreement. Each Party shall be entitled to rebut the presentation of the
other and to submit a final summary argument after review of the other Party's
rebuttal, in each case within fifteen (15) days after the final proposal
submissions. Each of the submissions of each Party (including their respective
final proposals) will be made concurrently to the independent decisionmaker and
will be opened simultaneously and provided to the other Party upon such opening.
(f) Pending resolution of any dispute regarding
applicable Unit Transfer Prices for any Price Period, the Parties shall continue
to purchase and sell Products based upon the prior Price Period's Unit Transfer
Prices (including any marketing allowance or royalty under Section 4.6).
<PAGE>
6.2. PAYMENT TERMS.
Supplier shall invoice Purchaser for the applicable Unit Transfer Price
promptly following shipment of Products by Supplier. All payments due hereunder
shall be paid in United States Dollars and are due xxx xxxxxx xx xxxx after the
invoice date during the first two (2) Price Periods after the Effective Date,
xxx xxxxxxxxx xx xxxx after the invoice date during the next two (2) Price
Periods after the Effective Date, and xxx xxxxx xx xxxx after the invoice date
for all Price Periods thereafter. Payment, unless otherwise agreed in writing,
shall be made by wire transfer to such bank as Supplier may designate in
writing, without set-off and free and clear of and without any deduction or
withholding for or on account of, any taxes, duties, levies, fees or charges of
any nature whatsoever. Once an Order has been accepted by Supplier, no shipment
of Product so ordered may thereafter be delayed at Purchaser's request.
6.3. FINANCIAL AND RELATED BOOKS AND RECORDS.
Each Party shall maintain accurate and complete books and records with
respect to the performance of such Party's obligations under this Agreement,
such records to be maintained in accordance with generally accepted accounting
principles in the United States. Such records (wherever located) shall be
maintained for at least four years after the date of creation thereof. Each
Party shall have the right during such four-year period, through its independent
auditors to conduct an audit, during normal business hours and following
reasonable prior notice to the other Party, to examine at the other Party's
location, all records of such other Party for the purpose of verifying the
payments or expenditures or performance of such Party hereunder. Information
provided to, and generated by, such auditors shall be considered Confidential
Information. If any such audit shows any underpayment or overcharge, the
auditing Party shall issue a written statement to the audited Party and a
correcting payment or refund shall be made within thirty (30) days after receipt
of the written statement described above unless the audited Party claims that
the statement is in error. The fees and expenses of the accountants performing
such verification shall be borne by the Party requesting the audit.
Notwithstanding the foregoing, if any such audit results in any underpayment or
overcharge with respect to any twelve-month period of more than $25,000, then
the Party being audited shall bear the reasonable costs of the accountants in
performing such audit. Upon request and in accordance with Applicable Law, each
Party shall provide to the other Party copies of such records reasonably
required by the requesting Party to comply with Applicable Laws at the sole cost
and expense of the requesting Party.
<PAGE>
6.4. LATE PAYMENTS.
All payments not made on a timely basis in accordance with this
Agreement shall bear interest at a rate of one percent per month (1%) or, if
lower, the maximum rate permitted by Applicable Law beginning on the date that
payment was due. Such interest is to be determined and compounded on a daily
basis from the date due until the date paid. Payment of such interest charges
will not excuse or cure any breach or default for late payment. If either Party
retains a collection agency, attorney or other Person to collect overdue
payments hereunder, all collection costs, including but not limited to
reasonable attorney's fees, will be payable by the non-paying Party.
7. PURCHASE AND SUPPLY OF PRODUCT.
7.1. ORDERS.
(a) Purchases and sales of Products shall be initiated
by means of an Order on a purchase order form from Purchaser to Supplier.
Subject to subsection (b) below, Supplier shall accept all such Orders promptly
and in no event later than ten (10) working days from the date of receipt by
Supplier; provided that such Orders do not exceed nor fall short of the Forecast
for the relevant Firm Period determined in accordance with Section 7.4 by more
than 20%. All Orders accepted by Supplier shall not thereafter be cancelable or
recoverable by Purchaser or Supplier. It is understood that each Party may, for
convenience, use its own standard pre-printed forms of invoice, purchase order,
acknowledgement or acceptance in the performance of its obligations hereunder;
provided, however, that any terms, conditions or provisions in such pre-printed
forms which are inconsistent with or which modify or supplement this Agreement
shall be null and void. This Agreement is not an Order of Purchaser and does not
request or authorize delivery of any Products, except pursuant to implementation
of the specific provisions of this Agreement.
(b) xx xxx xxxxx xx xxx xxxxxxxx xx xxx xxxxxxxx,
xxxxxxxx xxxxx xxxxxxxx xxxx xxxxxxxx xxxxx xxx xxxxxxxxx xxx xxxxxx xxxxxx xx
xx xx xxxx xx xxxxx xxxxx xxxxxxxx xx xxxxxxxxx xxxx xxx xxxxx xxxxxxxxx xxxxx
xxxx xxx xxxxx xxxxx xxxxxxxx xxxxxxx xx xxxxxxxxx xxx xxxx xxxxx xxxxxxxxx.
(c) Upon acceptance of each Order (but subject to
Sections 7.2(a) and 10.3(f)), Supplier shall promptly inform Purchaser of
Supplier's estimated shipment date for the Order. Supplier's obligation with
respect to accepted Orders shall be to use its Best Efforts to meet the delivery
date specified in Purchaser's Order unless Purchaser expressly agrees to a later
date. If Supplier anticipates any delays in the scheduled delivery date for any
Order, Supplier will provide prompt written notice to Purchaser and shall
cooperate with Purchaser to reschedule delivery at the earliest possible date so
as to minimize the impact on Purchaser. If Purchaser fails to make any purchases
or if Supplier fails to use its Best Efforts to meet the delivery date specified
in any accepted Order (or any later date agreed to by Purchaser as specified
above), the defaulting Party shall be responsible (subject to Section 9.5) for
the other Party's reasonable
<PAGE>
damages resulting therefrom but the non-defaulting Party shall be obligated to
take reasonable steps to mitigate such damages.
(d) All Products shall be shipped to locations
specified by Purchaser in the relevant Order in shipping packages specified or
supplied by Purchaser and using the Labels and Markings. All shipments shall be
FOB Supplier's plant.
7.2. EFFECT OF LATE PAYMENTS.
If the Purchaser fails to pay the full amount due with respect to any
invoice (other than any amounts that are subject to a bona fide dispute) after
the date such invoice becomes due, Supplier shall be entitled (without prejudice
to any other right or remedy it may have) to:
(a) cancel or suspend any further deliveries of the
Products to the Purchaser under any Order; and
(b) charge the Purchaser interest on the unpaid invoice
at the rate provided in Section 6.4 from the date the payment became due until
actual payment is made (irrespective of whether the date of payment is before or
after any judgment or award in respect of the same).
7.3. INSPECTION OF SHIPMENTS.
Supplier shall send to Purchaser prior to or concurrently with each
shipment a copy of any documentation for the relevant Product that has been
agreed by the Parties. Purchaser shall have the right to inspect the shipment of
the Products which are the subject of each Order for damage, defects, shortages
or other noncomformities within thirty (30) calendar days after receipt thereof
and shall notify Supplier as soon as possible of any damage, defects, shortages
or of any other failure of the Products to conform to this Agreement. Any
Products which are the subject of an Order not rejected by Purchaser by written
notice to Supplier within such thirty (30) day period shall be deemed accepted.
Purchaser's sole remedy with respect to any nonconformity after acceptance of a
shipment shall be those provided pursuant to the warranties set forth in Section
9.1. Upon Supplier's request, Purchaser shall provide Supplier with packing
slips, inspection reports and other documentation supporting its rejection of
any shipment. If such shortages or nonconformity existed at the time of delivery
of the Order, Supplier shall promptly deliver additional or substitute Products
to Purchaser in accordance with the delivery procedures set forth herein.
7.4. PURCHASE FORECASTS.
At least one calendar month prior to the first requested delivery of
Products hereunder, Purchaser shall notify Supplier in writing of the projected
total number of Products, broken down by each Product model or category, to be
purchased by Purchaser during each month of the succeeding twelve (12) calendar
month period ("Forecast"). The projections for the first six
<PAGE>
(6) months of such initial Forecast shall be firm and shall be accompanied by
Orders for such first six (6) months with respect to the models covered thereby.
Thereafter, Purchaser shall provide Supplier with a similar Forecast for any new
Product models or categories; the first six (6) months of such Forecast for new
Products shall be firm and shall be accompanied by Orders for such first six (6)
months for such new Products. All such Forecasts shall be updated on a monthly
basis by adding a twelfth month to replace the expired month (but not changing
any other month in the Forecast), with updates to be delivered not less than one
(1) calendar month in advance. The first three (3) months of each such updated
Forecast (beginning with the fifth month of the first Forecast period for each
Product) shall be firm and shall be accompanied by Orders for the Products in
the additional month of the Firm Period. The estimates for the remaining nine
(9) months shall be non-binding estimates for planning purposes only and
Purchaser shall have no liability therefor. Purchaser shall establish reasonable
Inventory levels to meet demand for the Products which shall be a minimum amount
equal to one month of anticipated demand for the Territory as evidenced by the
Forecast. To accommodate Supplier's procurement scheduling, the total Products
ordered for any three (3)-month or six (6)-month Firm Period will be limited to
a twenty percent (20%) maximum aggregate increase or twenty percent (20%)
maximum decrease in Units relative to the projection for such Firm Period
contained in the Forecast provided to Supplier for such Firm Period, unless
otherwise agreed by the Parties in writing.
7.5. RETURN OF EXPIRED PRODUCTS.
Purchaser shall, at its own expense, return to Manufacturer all
Products held in Inventory which have passed the "use before" date marked on the
sterile pack. Purchaser shall not be reimbursed or credited for any such expired
Inventory.
<PAGE>
8. QUALITY ASSURANCE; TESTING.
8.1. QUALITY CONTROL.
Supplier shall ensure that the Products are produced in accordance with
all Applicable Laws including requirements of the Act and the FDA's Good
Manufacturing Practice regulations in effect at the time of manufacture, and
applicable specifications for all models of the Products, including, without
limitation, those specified from time to time in the Technical Materials.
Supplier shall permit, shall cause its Affiliates and use its Best Efforts to
cause third party suppliers to permit, quality assurance representatives of
Purchaser promptly after signature of this Agreement, no more than once a year
thereafter, and prior to placing an initial Order for any new Product, to
inspect Supplier's or its Affiliates' manufacturing, testing and storage
facilities, and the manufacturing, testing and storage facilities of any third
parties who manufacture components for Supplier or its Affiliates, to conduct
quality assurance audits. Purchaser agrees that all arrangements for such audits
of third-party suppliers shall be made through Supplier and that Supplier may,
at its option, accompany Purchaser on any such audits. Such audits shall be
limited to inspection of the quality control systems and procedures of the
Person being audited and a review of Product validation files, clinical
documentation, and regulatory status, upon reasonable notice, during normal
business hours and pursuant to confidentiality agreements as described in
Section 11.1. Supplier shall permit, and cause its Affiliates and use its Best
Efforts to cause its third party suppliers to permit, any officials of any
Governmental Authority in the Territory to inspect its facilities as necessary
to comply with Applicable Laws. Supplier shall notify Purchaser of any FDA
inspection of its production or testing facilities for the Products and shall
provide Purchaser with copies of any reports (including Forms 483) issued as a
result thereof to the extent applicable to the Products.
8.2. TESTING.
In accordance with Applicable Laws, including the requirements of the
Act, Supplier shall test or cause to be tested each Unit to be supplied pursuant
to this Agreement before delivery of such Unit to Purchaser. Supplier
acknowledges that Purchaser is relying upon testing documentation or other
validation or verification documents showing Supplier's compliance with its
standard quality control procedures relating to the Products provided by
Supplier with each shipment as to the compliance of such shipment with all
applicable specifications. Purchaser agrees to conduct only such testing or
programming of any Unit prior to delivery to a customer or after explant of any
Unit from a patient as may be agreed by Supplier in writing, otherwise requested
by Supplier in writing or in accordance with procedures set forth on Schedule
8.2.
<PAGE>
8.3. RECORDS AND TRACEABILITY.
Supplier hereby covenants and agrees that for a minimum period of
fifteen (15) years after the sale and purchase of any Product hereunder, it
shall maintain complete and accurate records of the FDA Tracking Information for
all Products, and all components thereof, that are manufactured and sold under
this Agreement, to the extent necessary to meet or exceed all applicable FDA
requirements and other Applicable Laws. Purchaser hereby covenants and agrees
that for a minimum period of fifteen (15) years after the sale and purchase of
any Product hereunder, it shall maintain the FDA Tracking Information regarding
the sale of all Products manufactured for it by Supplier hereunder to the extent
necessary to meet or exceed all applicable FDA requirements and other Applicable
Laws in the Territory and, in the event of a dissolution or liquidation of
Purchaser, Purchaser shall transfer such FDA Tracking Information to Supplier.
The Parties agree to provide each other with reasonable access to and copies of
such records and information in the event of any Recall or other similar event
involving the Products described in Section 9.2 or as necessary for any
compliance with Applicable Laws. In furtherance and not in limitation of the
foregoing, upon reasonable prior written notice from Supplier, Purchaser shall
provide to Supplier the FDA Tracking Information at the end of each calendar
month (or earlier if required by relevant Applicable Law) if, and for so long
as, the provision of such FDA Tracking Information has become mandatory under
Applicable Law.
9. WARRANTIES AND INDEMNIFICATIONS.
9.1. SUPPLIER PRODUCT WARRANTIES.
(a) Supplier represents, warrants and covenants that:
(i) at the time of shipment of all Products
hereunder, such Products shall be new with xx xxxxx xxx xxxxxxxx xxxx
remaining prior to the expiration of the "use before" date and shall,
unless otherwise agreed in writing by the Parties, meet or exceed all
requirements under all Applicable Laws in the Territory;
(ii) Purchaser shall have good and valid title in
and to such Products, free and clear from any liens, security
interests, charges, claims or other encumbrances;
(iii) for a period of xxxxxxxx xx xxxxxx from date
of implant in a patient, each Product will be free from defects in
design, materials and workmanship (battery depletion within the limits
outlined in the specifications for such Product is not considered a
defect); and
(iv) for a period of xxxxxxxx xx xxxxxx from date
of implant in a patient, each Product will conform to the specification
for such Product established in accordance with this Agreement.
<PAGE>
The xxxxxxxx xxxxxxx periods referred to (iii) and (iv)
above apply only for the purposes of the warranty set forth in this Section 9.1.
Notwithstanding any provision of this Agreement, the Parties may agree to
shorten or lengthen the warranty periods set forth in Sections 9.1(a)(iii) or
(iv) from time to time to reflect competitive factors and if and to the extent
required by Applicable Law. Any such change shall be made in compliance with
Applicable Laws.
(b) In the event of any breach of the foregoing
warranties, Supplier shall, at its option, reprocess, if feasible, or supply a
replacement of, any Products or any components thereof which fail to meet the
terms of such warranties at no additional charge to Purchaser and Supplier shall
be responsible for transportation and insurance costs to ship such reprocessed
or replacement Products to Purchaser. Purchaser shall be responsible for
transportation and insurance costs to ship any claimed defective Product back to
Supplier's plant for Supplier's review. Supplier shall determine at Supplier's
cost at its factory whether such Product is in fact defective. If Purchaser does
not agree with Supplier's determination that such Product is not defective, the
Parties shall retain an appropriate expert to be mutually agreed fifteen (15)
days of Purchaser's receipt of Supplier's determination to judge ultimately
whether such Product is defective. If the Parties cannot agree on an appropriate
expert, each party shall submit two nominations to the AAA within ten (10) days
thereafter for the AAA to appoint an appropriate expert from such nominees;
provided, however, that the AAA will not administer the proceeding. If either
Party does not submit nominations as described above, the AAA shall appoint an
expert from the nominees it has received. The determination of the expert will
be final and binding on the Parties. The cost for retaining the expert shall be
borne by Supplier if such Product is judged defective and by Purchaser if such
Product is judged not to be defective. Any returned Products shall become the
property of Supplier. This warranty does not extend to any Products that have
been damaged or rendered defective as a result of: (i) misuse or negligence on
the part of Purchaser or failure of Purchaser or any of its customers to follow
instructions for proper use and care of the Product; (ii) external factors such
as fire and flood; (iii) accidents involving, or modification or alteration of,
the Product other than those caused by Supplier after delivery to Purchaser or
(iv) implantation after the "use before" date marked on the Product's sterile
pack.
(c) Purchaser and Supplier shall discuss in good faith
the nature and content of written product warranties to be extended by Purchaser
to customers with respect to the Products in the Territory. Without Supplier's
prior written consent, and except as may be required to comply with Applicable
Laws, Purchaser shall not extend to customers any warranties with respect to the
Products in the Territory which are inconsistent with those warranties being
extended by Supplier from time to time outside the Territory.
9.2. RECALLS.
Purchaser and Supplier each shall notify the other promptly if any
Product is the subject of a Recall or other similar event in any jurisdiction,
and the Parties shall reasonably cooperate
<PAGE>
in the handling and disposition of such Recall or other similar event; provided,
however, in the event of a disagreement as to any matters related to any
proposed Recall or other similar event, other than the determination of who
shall bear the costs as set forth in the immediately following sentence, each
Party shall have the right to cause a Recall or other similar event to be
undertaken. Supplier shall bear the reasonable costs (including without
limitation, the cost of locating and contacting by any means patients and
customers, the cost of explanting the recalled Products and implanting a
replacement Product, and the cost of such replacement Product ("Costs")) of all
Recalls of the Products except any voluntary Recall effected solely by
Purchaser, for which Purchaser shall initially bear all Costs. If subsequent to
such voluntary Recall by Purchaser, events show that Supplier wrongfully refused
to agree to such Recall, then Supplier shall reimburse Purchaser for all Costs
incurred by Purchaser in connection therewith. Notwithstanding the foregoing,
Purchaser shall pay the Costs of any Recall or other similar event if and to the
extent caused by (i) any unauthorized change to the Products by Purchaser which
directly results in the Recall, (ii) the failure of Purchaser to properly store,
label or otherwise handle the Products which directly results in the Recall or
(iii) any other breach of this Agreement by Purchaser which directly results in
the Recall.
9.3. INDEMNIFICATION FOR THIRD PARTY CLAIMS.
(a) Notwithstanding any other provision of this
Agreement, Supplier shall be responsible for, and shall assume the defense of
and indemnify and hold Purchaser and its Affiliates (including Angeion and its
Affiliates) harmless from and against, all Third Party Claims arising out of or
related to any Products or Technical Materials related thereto manufactured or
supplied by Supplier hereunder; provided that the indemnification obligations of
Supplier under this Section shall not apply to any Third Party Claim caused by
any misuse, willful misconduct or negligent act or negligent failure to act on
the part of Purchaser with respect to the Products including any modification or
alteration of the Product other than caused by Supplier after delivery to
Purchaser and any implantation after the "use before" date marked on the
Product's sterile pack.
(b) For purposes of this Agreement, the term "Third
Party Claims" shall mean any and all claims, lawsuits or actions asserted
against Purchaser or its Affiliates (including Angeion and its Affiliates) or
their respective directors, officers and agents under any and all Applicable
Laws arising out of or relating to any Product or Technical Materials
(including, without limitation, any data in the Technical Materials that are
properly included in the Promotional Materials with Supplier's prior written
approval) related thereto that are manufactured or supplied by Supplier or its
Affiliates, including, but not limited to, claims based on strict liability,
tort, negligence or breach of express or implied warranty and claims for
special, incidental, exemplary and consequential damages, in cases in which it
is alleged that personal injury (including, but not limited to, emotional
distress or disturbance), direct financial loss, death or property damage was
caused by a defect in design, material or manufacture of any of the Products or
the Technical Materials (including, without limitation, any data in the
Technical Materials that are properly included in the Promotional Materials with
Supplier's prior written approval) related thereto that are manufactured or
supplied by Supplier or its Affiliates
<PAGE>
hereunder including any misrepresentation or failure to warn in the Technical
Materials. "Third Party Claims" shall also include all losses, liabilities,
damages, judgments, awards and costs (including reasonable attorneys' fees)
arising out of or relating to the claims described in the preceding sentence.
9.4. SUPPLIER INFRINGEMENT INDEMNIFICATION.
Supplier shall indemnify and hold Purchaser and its Affiliates
(including Angeion and its Affiliates) harmless from and against any and all
liabilities, damages, costs or losses (including, without limitation, reasonable
attorneys' fees) arising out of or related to claims or suits asserted or
brought against Supplier or Purchaser under any and all Applicable Laws to the
extent such claim or suit is based on alleged infringement, unauthorized use or
misappropriation of patents, mask work rights, copyrights or other Intellectual
Property Rights of a third party in connection with the sale or use of Products
in the Territory (the "Infringement Claims"). In any event, Supplier has the
right at any time and in its sole discretion to modify the design of any Product
so that it becomes non-infringing, to obtain a license for such Products or to
cease to provide such Product to Purchaser, provided that all damages, losses,
costs, and expenses incurred by Purchaser that are directly related to such
modification shall be treated as indemnifiable expenses of Purchaser and its
Affiliates (including Angeion and its Affiliates) for purposes of this Section
9.4 and shall be borne by Supplier. Purchaser shall use its Best Efforts to
assist and cooperate with Supplier in the defense of any Infringement Claims to
the extent Purchaser is the beneficiary of any rights against the maker of such
Infringement Claims pursuant to any agreement the benefit of which may also
inure to the benefit of Supplier and its Affiliates; provided that such
cooperation shall be at the sole expense of Supplier and Purchaser shall not be
required to initiate or become a party to any litigation in connection
therewith.
9.5. LIMITATION ON DAMAGES.
Except as expressly provided in this Agreement, neither Purchaser nor
Supplier shall be liable to the other, for any special, incidental, exemplary or
consequential loss or damage (whether for loss of profit or otherwise and
whether occasioned by the negligence of a Party or its employees or agents or
otherwise) arising out of or in connection with any act or failure to act of
Supplier or Purchaser relating to the manufacture or supply of the Products or,
their sale by the Purchaser or arising out of the performance or non-performance
of this Agreement.
SUPPLIER'S WARRANTIES SET FORTH IN THIS SECTION 9 ARE ITS EXCLUSIVE
WARRANTIES TO PURCHASER WITH RESPECT TO THE PRODUCTS, AND ARE GIVEN AND ACCEPTED
IN LIEU OF ANY AND ALL OTHER WARRANTIES, GUARANTEES, CONDITIONS AND
REPRESENTATIONS, EXPRESS OR IMPLIED, CONCERNING THE PRODUCTS, WHETHER ARISING
UNDER ANY APPLICABLE LAW OR OTHERWISE INCLUDING, WITHOUT LIMITATION, ANY IMPLIED
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
<PAGE>
9.6. CERTAIN COVENANTS.
Purchaser represents, warrants and covenants that:
(a) Purchaser will not furnish purchasers of the
Products with any warranties, whether written or oral, beyond those given by
Supplier to Purchaser under Section 9.1(a)(iii) and (iv) or stated in any
warranty card or similar material provided by Supplier or included with the
Product;
(b) Purchaser shall comply with all Applicable Laws
concerning the use, handling, sale and disposition of the Products in the
Territory.
9.7. REPRESENTATIONS AND WARRANTIES OF THE PARTIES.
Each of Supplier and Purchaser hereby represents and warrants to the
other that as of the date hereof:
(a) Supplier is a corporation and Purchaser is a
limited liability company duly organized and existing in good standing under the
laws of the jurisdiction in which it is incorporated, and has the requisite
corporate power to own its properties and to carry on its business as now being
conducted. Each is duly qualified as a foreign corporation to do business and is
in good standing in every jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary and where
the failure to qualify would have a Material Adverse Effect with respect to such
Party.
(b) Each has the requisite corporate power and authority
to enter into and perform this Agreement and to perform in accordance with the
terms hereof. The execution and delivery of the Agreement and the consummation
of the transactions contemplated hereby have been duly authorized by its board
of directors and no further consent or authorization of its board of directors
or stockholders is required. The Agreement has been duly executed and delivered
by it. The Agreement constitutes a valid and binding obligation enforceable
against it in accordance with its terms, except as such enforceability may be
limited by applicable insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally the enforcement of, creditors'
rights and remedies or by equitable principles of general application.
(c) Except as set forth on Schedule 9.7, the execution,
delivery and performance of the Agreement and the consummation of the
transactions contemplated hereby do not (i) result in a violation of its
Articles of Incorporation, or By-laws, or (ii) conflict with, or constitute a
default (or an event which with material notice or lapse of time or both would
become a default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any material agreement, material indenture or
material instrument to which it is a party, or result in a violation of any law,
rule, regulation, order, judgment or decree applicable to it or by which any
property or asset of such Party is bound or affected (except in the case of
subclause (ii) above, for such conflicts, defaults, terminations, amendments,
accelerations,
<PAGE>
cancellations and violations as would not, individually or in the aggregate,
have a Material Adverse Effect). No action, suit, dispute or proceeding is
pending or, to the best knowledge of such Party, threatened against such Party
which, if adversely determined, would prevent such Party from carrying out its
obligations under this Agreement. Each Party's business is not being conducted
in violation of any law, ordinance or regulation of any Governmental Authority,
except for possible violations which either singly or in the aggregate do not
and will not have a Material Adverse Effect. Except as contemplated by this
Agreement, it is not required to obtain any consent, authorization or order of,
or make any filing or registration with, any court or Governmental Authority in
order for it to execute, deliver or perform any of its obligations under the
Agreement.
(d) Neither Party shall be deemed to have made any
representation or warranty to the other Party except as expressly made in
Sections 2.3, 9.1 and this Section 9.7. Without limiting the generality of the
foregoing, and without prejudice to any express representations and warranties
made to either Party in this Section 9.7, neither Party makes any representation
or warranty to the other with regard to any issues related to Intellectual
Property Rights, projections, estimates or budgets or other matters previously
delivered to or made available to the other with respect to future revenues,
expenses, expenditures or future results of operations. Nothing in this Section
9.7(d) shall limit any remedy that may be available to a Party pursuant to
Applicable Law.
9.8. MITIGATION.
In the event of any occurrence which may result in either Party
becoming liable for breach of this Agreement, each Party shall use its
reasonable efforts to take such actions as may be reasonably necessary to
mitigate the damages payable by the breaching Party.
9.9. INDEMNIFICATION PROCEDURE FOR THIRD PARTY CLAIMS AND
INFRINGEMENT CLAIMS.
If a Party seeks indemnification hereunder for a matter that involves a
claim by a third party including without limitation, Third Party Claims and
Infringement Claims, the Party seeking indemnification (an "Indemnitee") shall
promptly notify the indemnifying Party (the "Indemnitor") of and shall provide
reasonable information and details concerning the nature of such claim.
Indemnitor shall, to the extent applicable, have the right to assume the defense
at its expense of all third party claims and shall pay all costs and damages
finally awarded against the Indemnitor and the Indemnitee in conjunction with
such third party claims, provided that (i) the Indemnitee provides prompt
written notice to the Indemnitor of its receipt of service of any such claim;
(ii) the Indemnitor controls the defense of the third party claim on behalf of
all Parties; (iii) the Indemnitee consents to representation in such claims by
counsel selected by and representing the Indemnitor; provided, however, that if
outside counsel to the Indemnitee reasonably advises the Indemnitee and the
Indemnitor in a written opinion that such joint representation raises a
potential conflict of interest as between the Indemnitee and the Indemnitor
(other than a conflict concerning the right to indemnification under this
Agreement), then the
<PAGE>
Indemnitee shall have the right to retain separate counsel to represent its
interests in such third party claim and the reasonable costs, fees and expenses
thereof shall be borne equally by the Indemnitee and the Indemnitor; and (iv)
upon request of the Indemnitor, the Indemnitee uses its Best Efforts to
cooperate with the Indemnitor in defending such third party claim by providing
the Indemnitor with all necessary business information and relevant documents
under its control related to the third party claim and cooperating with such
other reasonable requests of the Indemnitor at the Indemnitor's expense in
accordance with Applicable Law. The Parties' indemnity obligations under this
Article 9 shall not apply to amounts paid in settlement of any loss, claim,
liability or action if such settlement is effected without the consent of the
Indemnitor, which consent shall not be unreasonably withheld. The Indemnitee's
failure to deliver notice to the Indemnitor within a reasonable time after the
commencement of any such action, if materially prejudicial to the Indemnitor's
ability to defend such action, shall relieve the Indemnitor of any liability to
the Indemnitee under this Article 9, but not any liability that it may have to
the Indemnitee otherwise than under this Article 9.
10. TERM AND TERMINATION.
10.1. TERM.
The term of this Agreement shall commence on the date hereof and
terminate on the expiration or termination of the LLC Agreement and shall
terminate upon the commencement of any dissolution or liquidation proceedings
with respect to the Purchaser; provided that, notwithstanding any expiration or
termination of the LLC Agreement or liquidation or dissolution of the Purchaser,
this Agreement shall continue in full force and effect with respect to
Supplier's then-current Products for the benefit of Purchaser, or Angeion, as
applicable, in accordance with Section 14.2(b)(ii) of the LLC Agreement.
10.2. EVENTS OF EARLY TERMINATION.
(a) This Agreement may be immediately terminated as to
the entire Territory by either Party, upon giving written notice to the other
Party, in the event that the other Party shall become insolvent or be declared
insolvent or bankrupt by a court of competent jurisdiction or shall be the
subject of any reorganization (other than a corporate reorganization effected in
the ordinary course of business and not arising out of any insolvency) or
winding up, receivership or dissolution, bankruptcy or liquidation proceeding,
or any proceeding or action similar to one or more of the above, in which case
termination shall be effective upon such written notice. The failure of either
Party to give notice of termination upon obtaining knowledge of any such event
shall not be interpreted as a waiver of such Party's rights under this Section
10.2, and such Party reserves the right to exercise any such rights at any time
after the occurrence of any such event.
(b) Subject to the further provisions of this Section
10.2(b), upon any material breach or default of this Agreement by either Party,
the non-breaching Party shall have the right to serve notice upon the breaching
Party of its intention to terminate this Agreement in
<PAGE>
its entirety upon the expiration of ninety (90) days after the date such notice
is given, unless the breaching Party shall cure any such breach or default
within said ninety (90) day period. Upon the expiration of the applicable cure
period, if the breaching Party shall not have cured the alleged breach to the
reasonable satisfaction of the non-breaching Party, and if the non- breaching
Party gives a notice of final termination, final termination of this Agreement
shall be effective on the date such notice is given. In the event of any dispute
as to the existence of a default or the adequacy of any cure thereof, the Party
charged with such alleged breach or failure to cure may require that the right
to terminate be determined by the dispute resolution mechanism pursuant to
Article 12.
10.3. RIGHTS AND OBLIGATIONS ON EXPIRATION OR TERMINATION.
Upon termination or expiration of this Agreement for any reason
whatsoever the following provisions shall apply:
(a) After the date which is three (3) months from the
date of termination or expiration, Purchaser shall cease to promote, market or
advertise the Products. Purchaser and Supplier shall each cooperate with the
other in an orderly winding up of their respective dealings.
(b) Except in the event of termination of this
Agreement by Purchaser in accordance with Section 10.2 or as a result of the
termination of the LLC Agreement pursuant to Section 14.1(b) thereof where
Supplier is deemed the Withdrawing Member (as defined therein), Purchaser shall
within thirty (30) days of expiration or receipt of notice of termination by
Supplier certify to Supplier the destruction at its own expense of all
Promotional Materials relating to the Products then in the possession of the
Purchaser and shall, if requested by Supplier, return, at its own expense, all
samples of Products if such samples have been provided free of charge to
Purchaser.
(c) In the event of termination of this Agreement by
Supplier in accordance with Section 10.2 or as a result of the termination of
the LLC Agreement pursuant to Section 14.1(b) thereof where Angeion is deemed
the Withdrawing Member (as defined therein), at Supplier's option, outstanding
unpaid invoices rendered by Supplier in respect of the Products shall become
immediately due and payable by Purchaser and invoices with respect to Products
ordered prior to termination but for which an invoice has not been submitted
shall be payable immediately upon submission of the invoice. In any event,
Purchaser shall continue to pay all amounts due hereunder prior to the effective
date of termination and all amounts due thereafter including amounts in respect
of the Product ordered by Purchaser prior to the date of termination and
delivered by Supplier.
(d) To the extent applicable, Purchaser shall provide
the FDA Tracking Information in the form and within the time limits specified in
this Agreement.
(e) Purchaser shall provide Supplier with such
information regarding
<PAGE>
patients in whom the Products have been implanted and at such times as
reasonably necessary to allow Supplier to service such Products and comply with
all Applicable Laws. Purchaser understands that Supplier or its designee may be
obligated to continue to contact Purchaser's customers after expiration or
termination of this Agreement to allow Supplier to comply with United States law
and regulatory requirements to collect and update periodically the FDA Tracking
Information throughout the time the Products are implanted in patients.
(f) In the event of termination of this Agreement in
accordance with Section 10.2 or as a result of the termination of the LLC
Agreement pursuant to Section 14.1(b) thereof, the terminating Party may at its
sole discretion cancel by prompt written notice any Orders for the Products
which are unshipped at the date of such termination.
(g) Subject to Section 3.3, upon termination or
expiration of this Agreement, each Party shall promptly return to the other
Party all documents, letters, records, notebooks, papers, writings, designs,
drawings, models, blueprints and all other materials and all copies thereof
embodying or showing any of the Technical Information provided by Supplier or
any Confidential Information disclosed by either Party, in each case which is
then in the Party's possession or under its control, by whomever prepared, and
all other property owned by one Party but in the possession of the other Party
shall be returned.
(h) Unless otherwise expressly provided in this
Agreement, upon the termination or expiration of this Agreement, neither Party
shall have any further duties or obligations to the other under this Agreement;
provided, however, that no such termination or expiration shall relieve either
Party from any liability for which it is otherwise responsible under this
Agreement (including liabilities under Article 9 of this Agreement) with respect
to any event, occurrence, transaction, act or omission which occurred prior to
the date of such termination or expiration or with respect to any losses,
liabilities or claims arising out of any breach or default under this Agreement.
11. CONFIDENTIALITY; PUBLICITY; NON-SOLICITATION.
11.1. CONFIDENTIAL INFORMATION.
(a) Each Party shall (and shall cause its Affiliates,
agents and representatives to), for the term of this Agreement and for six (6)
years after the expiration or termination of this Agreement for any reason, (i)
keep confidential, (ii) not disclose to others, (iii) use only for the purposes
provided for or permitted under this Agreement or the Related Agreements, and
(iv) use Best Efforts, and at least the same degree of care (but no less than a
reasonable degree of care) as it uses to protect its own Confidential
Information of like importance, to prevent unauthorized use, dissemination and
disclosure of, all of the other Party's and its Affiliates' Confidential
Information, except as expressly provided for or permitted by this Agreement.
All Confidential Information shall, as between the Parties and their Affiliates
remain the sole property of the disclosing party or the relevant Affiliate. The
receiving party and its Affiliates, agents and representatives shall have no
rights to the Confidential Information of the
<PAGE>
disclosing party and its Affiliates, except as provided in this Agreement.
Nothing in this Section 11.1 shall prevent disclosure or use of information
which is or becomes public knowledge without the fault of the receiving party
and its Affiliates, agents and representatives or information already known to,
or proven by written evidence to have been independently derived by, the
receiving party or its Affiliates or received from a third party having the
right to convey it. Notwithstanding the foregoing, such Confidential Information
may be (i) disclosed to a Governmental Authority and to others to the extent
such disclosure may be required to be included in regulatory filings permitted
under the terms of this Agreement or required under Applicable Law; (ii)
published by the receiving party or its Affiliates, if and to the extent such
publication has been approved in writing by the disclosing party; or (iii)
disclosed to the extent required by Applicable Law or as ordered by a court or
other regulatory body having competent jurisdiction. In each of the foregoing
cases, the receiving party will use its Best Efforts to limit the disclosure and
maintain confidentiality of such Confidential Information to the maximum extent
practicable and prior to making any such disclosure it shall use Best Efforts to
consult with the disclosing party regarding the scope of any protective order or
other confidentiality protections that may be available to limit the extent of
disclosure. Any disclosure of Confidential Information to any Affiliates, agents
or representatives of the receiving party shall be limited to a "need to know"
basis for purposes related to this Agreement; provided that (i) the receiving
party shall be responsible and liable to disclosing party for any breach of the
terms of this Section 11.1 by any Affiliate, agent or representative, and (ii)
disclosure by the receiving party to any agent or representative shall be made
pursuant to appropriate confidentiality agreements.
(b) The provisions of this Section 11.1 shall survive
and shall remain in full force and effect for six (6) years after the expiration
or termination or termination of this Agreement for any reason. For purposes of
this Section 11.1 and 11.2, Angeion and its Affiliates shall be deemed an
Affiliate of Purchaser and L'Oreal shall be deemed an Affiliate of Supplier.
11.2. PUBLICITY.
Each Party agrees, and shall cause its Affiliates to, not to issue any
press release disclosing the terms of, or relating to, this Agreement, without
the prior written consent of the other Party; provided; however, that neither
Party or its Affiliates shall be prevented from complying with any duty of
disclosure it may have pursuant to Applicable Law. Such disclosing party shall
use its Best Efforts to consult with the other Party regarding the issuance of
any such press release, or with regard to any public statement disclosing the
terms of this Agreement and shall use its Best Efforts to obtain confidential
treatment for any Confidential Information where such press release or other
public statement is required to be made by Applicable Law.
11.3. NON-SOLICITATION.
Except as otherwise agreed in writing by the Parties, during the term
of this Agreement and for one (1) year after termination or expiration hereof,
each Party shall refrain from soliciting the personnel of the other Party or its
Affiliates (including with respect to Purchaser,
<PAGE>
Angeion and its Affiliates), including without limitation, research and
development personnel.
12. DISPUTE RESOLUTION PROVISIONS.
12.1. GENERAL DISPUTE PRINCIPLES.
(a) All disputes between or among the Parties and/or
any of their Affiliates (including the Joint Venture) under this Agreement and
the Related Agreements shall be settled, if possible, through good faith
negotiations between the relevant parties.
(b) Disputes as to the specific matters referred to in
Section 6.1(e) and 9.1(b) shall be resolved as provided in such Sections. All
other disputes under this Agreement and the Related Agreements shall be resolved
as provided in Article 12.
(c) Prior to resolving any dispute by means of
arbitration or by means of any suit, action or legal proceeding permitted under
Section 12.2, the relevant parties involved in such dispute shall refer such
dispute to their respective Chief Executive Officers or equivalent, who shall
meet in person to negotiate in good faith the possible resolution thereof on at
least two occasions within 30 days before any such party commences arbitration
or other litigation permitted under this Agreement (provided that if any such
party fails or refuses to have a representative attend such meetings within such
thirty (30) day period, the procedures of Section 12.2 shall be applicable after
the conclusion of such thirty (30) day period); and further provided, that (i)
any legal proceedings seeking interim equitable relief (including a temporary
restraining order or preliminary injunction) until such time as such interim
equitable relief can be addressed through arbitration; (ii) proceedings for
provisional relief contemplated by Section 12.2(i) below; and (iii) third party
legal proceedings under Section 12.1(d) below may be commenced immediately.
(d) If a Party or any of its Affiliates (including in
the case of Purchaser Angeion and its Affiliates) is subject to a claim, demand,
action or proceeding by a third party and is permitted by law or arbitral rules
to join another party to such proceeding, this Article 12 shall not prevent such
joinder. This Article 12 shall also not prevent either Party or any such
Affiliate from pursuing any legal action against a third party.
12.2. ARBITRATION OF OTHER DISPUTES.
(a) In the event such good faith negotiations are
unsuccessful, either Party may, after 30 days written notice to the other,
submit any controversy or claim arising out of, relating to or in connection
with this Agreement, or the breach thereof, to arbitration administered by the
American Arbitration Association ("AAA") in accordance with its then existing
International Arbitration rules except that Sections 29 and 31 of the Commercial
Arbitration Rules in effect on the date hereof (a copy of which is attached
hereto as Schedule 12.2) shall govern in the event of any conflict therewith
(collectively, "AAA Rules") and judgment upon the award rendered by the
arbitrator may be entered in any court having
<PAGE>
jurisdiction thereof.
(b) To the extent this Section is deemed a separate
agreement, independent from this Agreement, Article 13 shall be incorporated
herein by reference. Either Party (the "Initiating Party") may commence an
arbitration by submitting a demand for arbitration ("Demand for Arbitration")
under the AAA Rules and by notice to the other Party (the "Respondent") in
accordance with Section 13.4. Such notice shall set forth in reasonable detail
the basic operative facts upon which the Initiating Party seeks relief and
specific reference to the clauses of this Agreement, the amount claimed, if any,
and any nonmonetary relief sought against the Respondent. After the Demand for
Arbitration, response and counterclaim, if any, and reply to counterclaim, if
any, have been submitted, either Party may propose additional issues for
resolution in the pending proceedings only if expressly so ordered by the
arbitrators.
(c) The place of arbitration shall be New York, New
York, and the award shall be deemed a U.S. award for purposes of the Convention
on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (the "New
York Convention").
(d) The Parties shall attempt, by agreement, to
nominate a sole arbitrator for confirmation by the AAA. If the Parties fail so
to nominate a sole arbitrator within 30 days from the date when the Initiating
Party's Demand for Arbitration has been communicated to the Respondent, a board
of three arbitrators shall be appointed by the Parties jointly or, if the
Parties cannot agree as to three arbitrators within 30 days after the
commencement of the arbitration proceeding, then one arbitrator shall be
appointed by each of the Initiating Party and the Respondent within 60 days
after the commencement of the arbitration proceeding and the third arbitrator
shall be appointed by mutual agreement of such two arbitrators. If such two
arbitrators shall fail to agree within 75 days after commencement of the
arbitration proceeding upon the appointment of the third arbitrator, the third
arbitrator shall be appointed by the AAA in accordance with the AAA Rules.
Notwithstanding the foregoing, if any Party shall fail to appoint an arbitrator
within the specified time period, such arbitrator and the third arbitrator shall
be appointed by the AAA in accordance with its then existing rules. For purposes
of this Section, the "commencement of the arbitration proceeding" shall be
deemed to be the date upon which the Demand for Arbitration has been delivered
to the Parties in accordance with Section 13.4. Any award shall be rendered by a
majority of the arbitrators. A hearing on the matter in dispute shall commence
within 90 days following selection of the arbitrators, and the decision of the
arbitrators shall be rendered no later than 90 days after commencement of such
hearing.
(e) An award rendered in connection with an arbitration
pursuant to this Section shall be final and binding upon the Parties, and the
Parties agree and consent that the arbitral award shall be conclusive proof of
the validity of the determinations of the arbitrators set forth in the award and
any judgment upon such an award may be entered and enforced in any court of
competent jurisdiction.
(f) The Parties agree that the award of the arbitral
tribunal will be the
<PAGE>
sole and exclusive remedy between them regarding any and all claims and
counterclaims between them with respect to the subject matter of the arbitrated
dispute. The Parties hereby waive all IN PERSONAM jurisdictional defenses in
connection with any arbitration hereunder or the enforcement of an order or
award rendered pursuant thereto (assuming that the terms and conditions of this
arbitration clause have been complied with).
(g) The Parties hereby agree that for purposes of the
New York Convention, the relationship between the Parties is commercial in
nature, and that any disputes between the Parties related to this Agreement
shall be deemed commercial.
(h) The arbitrators shall issue a written explanation
of the reasons for the award and a full statement of the facts as found and the
rules of law applied in reaching their decision to both Parties. The arbitrators
shall apportion to each Party all costs (including attorneys' and witness fees,
if any) incurred in conducting the arbitration in accordance with what the
arbitrators deem just and equitable under the circumstances. Any provisional
remedy which would be available to a court of law shall be available from the
arbitrators pending arbitration of the dispute. Either Party may make an
application to the arbitrators seeking injunctive or other interim relief, and
the arbitrators may take whatever interim measures they deem necessary in
respect of the subject matter of the dispute, including measures to maintain
the status quo until such time as the arbitration award is rendered or the
controversy is otherwise resolved. The arbitrator shall have the authority to
award any remedy or relief (except as ex parte relief) that a court of the State
of New York could order or grant, including, without limitation, specific
performance of any obligation created under this Agreement, the issuance of an
injunction, or the imposition of sanctions for abuse or frustration of the
arbitration process, but specifically excluding punitive damages.
(i) The Parties may file an application in any proper
court for a provisional remedy in connection with an arbitrable controversy, but
only upon the ground that the award to which the application may be entitled may
be rendered ineffectual without provisional relief. The Parties may also
commence legal action in lieu of any arbitration under this Section 12.2 in
connection with any third party litigation proceedings or for any matter
involving disputes related to Intellectual Property Rights.
(j) After the appointment of the arbitrators, the
parties to the arbitration shall have the right to take depositions, ask
interrogatories, obtain documentation and to obtain other discovery regarding
the subject matter of the arbitration, and, to that end to use and exercise all
the same rights, remedies, and procedures, and be subject to all of the same
duties, liabilities, and obligations in the arbitration with respect to the
subject matter thereof, as if the subject matter of the arbitration were pending
in a civil action before a United States District Court for the Southern
District of New York and such persons, documents or other requested material
were located in the State of New York. The parties shall reach agreement with
the arbitrator on a streamlined and expedited discovery program in order to save
costs and avoid unnecessary delay in completing any arbitration and may present
to the arbitrator for a ruling any reasons for limiting such discovery in order
to save costs and avoid delay.
<PAGE>
(k) For purposes of any suit, action, or legal
proceeding permitted under this Article 12, each party to this Agreement (a)
hereby irrevocably submits itself to and consents to the non-exclusive
jurisdiction of the United States District Court for the Southern District of
New York for the purposes of any suit, action or legal proceeding in connection
with this Agreement including to enforce an arbitral resolution, settlement,
order or award made pursuant to this Agreement (including pursuant to New York
Convention, the U.S. Arbitration Act, or otherwise), and (b) to the extent
permitted by Applicable Law, hereby waives, and agrees not to assert, by way of
motion, as a defense, or otherwise, in any such suit, action or legal proceeding
pending in such event, any claim that it is not personally subject to the
jurisdiction of such court, that the suit, action or legal proceeding is brought
in an inconvenient forum or that the venue of the suit, action or legal
proceeding is improper. Each party to this Agreement hereby agrees to the entry
of an order to enforce any resolution, settlement, order or award made pursuant
to this Section by the United States District Court for the Southern District of
New York and in connection therewith hereby waives, and agrees not to assert by
way of motion, as a defense, or otherwise, any claim that such resolution,
settlement, order or award is inconsistent with or violative of the laws or
public policy of the laws of the State of New York or any other jurisdiction.
(l) All claims arising under this Agreement and all
Related Agreements brought by the Parties and/or their Affiliates (including in
the case of Purchaser Angeion and its Affiliates) at substantially the same time
shall be referred to a single arbitration to the extent arbitrable under this
Article 12.
13. MISCELLANEOUS.
13.1. FEES AND EXPENSES.
Except as expressly set forth herein, each Party shall be solely
responsible for the payment of the fees and expenses of its advisers, counsel,
accountants and other experts, if any, and all other expenses incurred by such
Party incident to the negotiation, preparation, execution, delivery and
performance of this Agreement.
13.2. SEVERABILITY.
If any provision of this Agreement is held by a court of competent
jurisdiction or panel of arbitrators (including pursuant to enforcement of an
arbitration award under this Agreement) to be invalid, unlawful or
unenforceable, it shall be modified, if possible, to the minimum extent
necessary to make it valid, lawful, and enforceable or, if such modification is
not possible, it shall be stricken from this Agreement, and the remaining
provisions of this Agreement shall continue in full force and effect; provided,
however, that if a provision is so stricken and is of a nature so as to
fundamentally alter the economic arrangements of this Agreement, the Party
adversely affected may terminate this Agreement by giving to the other Person
sixty (60) days written notice of termination.
<PAGE>
13.3. ENTIRE AGREEMENT; AMENDMENTS.
This Agreement and the Schedules hereto, contain the entire
understanding of the Parties with respect to the matters referred to hereby and,
except as specifically set forth herein, neither the Purchaser nor the Supplier
makes any representation, warranty, covenant or undertaking with respect to such
matters. No provision of this Agreement may be amended or supplemented other
than by a written instrument signed by the Party against whom enforcement of any
such amendment or supplement is sought.
13.4. NOTICES.
Any notice or other communication required or permitted to be given
herein shall be in writing and shall be effective (a) upon hand delivery or
delivery by telecopy or facsimile at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the third business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be:
If to the Purchaser: With a copies to:
Angellan Medical Systems, LLC Angeion Corporation
2950 Xenium Lane 3650 Annapolis Lane, Suite 170
Plymouth, MN 55441 Plymouth, MN 55447-5434
Telephone: (612) 519-9400 Telephone: (612) 550-9388
Telecopier: (612) 519-9440 Telecopier: (612) 509-9521
Attention: Chief Executive Officer Attention: Chief Executive Officer
and
Morrison & Foerster, LLP
425 Market Street
San Francisco, CA 94105
Telephone: (415) 268-7000
Telecopier: (415) 268-7522
Attention: Gavin B. Grover, Esq.
If to the Supplier: With copies to:
ELA Medical, Inc. ELA Medical
2950 Xenium Lane Centre d'Affaires la Boursidiere
Plymouth, MN 55441 92357 Le Plessis Robinson
Telephone: (612) 519-9400 France
Telecopier: (612) 519-9440 Telephone: (33)(1)46.01.33.01
<PAGE>
Attention: Chief Executive Officer Telecopier: (33)(1)46.01.33.15
Attention: President
Synthelabo
22 Avenue Galilee
92350 Le Plessis Robinson
France
Telephone: (33)(1)45.37.56.67
Telecopier: (33)(1)45.37.58.04
Attention: General Counsel
and
Coudert Brothers
1114 Avenue of the Americas
New York, NY 10036-7703
Telephone: (212) 626-4400
Telecopier: (212-626-4120
Attention: James C. Colihan, Esq.
Any Party hereto may from time to time change its address for notices
under this Section 13.4 by giving at least ten (10) days' written notice of such
changed address to the other Party hereto.
13.5. NO WAIVER.
No waiver by either Party of any default with respect to any provision,
condition or requirement of this Agreement shall be deemed to be a continuing
waiver in the future of this Agreement; or a waiver of any other provision,
condition or request of this Agreement; nor shall any delay or omission of
either Party to exercise any right hereunder in any manner impair the exercise
of any such right accruing to it thereafter.
13.6. HEADINGS.
The headings herein are for convenience only, do not constitute a part
of this Agreement and shall not be deemed to limit or affect any of the
provisions of this Agreement.
13.7. SURVIVAL OF PROVISIONS.
The provisions of Sections 5.2(g), 6.3, 8.1, 8.3, 9.1, 9.2, 9.3, 9.4,
9.5, 9.9, 10.3, 11.1, 11.3, 12.1, 12.2 and Article 13 shall survive the
expiration or termination for any reason of this Agreement.
<PAGE>
13.8. SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and inure to the benefit of the
Parties and their successors and assigns. Neither this Agreement nor any
interest hereunder shall be assigned or transferred, whether directly or
indirectly, including by operation of law ("Assign" or "Assignment"), by any
Party without the prior express written consent of the other Party (which
consent may be withheld for any reason in the sole discretion of the Party from
whom consent is sought), and any such attempt at Assignment shall be null and
void. The assignment by a Party of this Agreement or any rights hereunder shall
not affect the obligations of such Party under this Agreement.
Notwithstanding the foregoing, either Party may Assign this Agreement
to an Affiliate (including in the case of Purchaser Angeion and its Affiliates)
of such Party so long as any assignment by Supplier is made to an Affiliate that
is directly or indirectly 100% owned by, or under 100% common control with,
Supplier.
Any permitted Assignment made pursuant to this Section shall be valid
only if (i) the assigning Party remains liable under this Agreement, and (ii)
the relevant Affiliate or other entity assumes in writing all of the assigning
Party's obligations under this Agreement.
13.9. NO THIRD PARTY BENEFICIARIES.
This Agreement is intended for the benefit of the Parties hereto and
their respective permitted successors and assigns and is not for the benefit of,
nor may any provision thereof be enforced by, any other Person.
13.10.GOVERNING LAW.
The Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New York.
13.11.INSURANCE.
Each of Purchaser and Supplier will maintain liability insurance for
Third Party Claims in amounts to be agreed upon, but subject to availability on
commercially reasonable terms. Schedule 13.11 sets forth the initial agreed upon
minimum amounts for such liability insurance, which amounts shall be effective
until a change in such amounts is mutually agreed in writing. Each of Purchaser
and Supplier shall provide copies of certificates of insurance evidencing
compliance with this Section on the date of execution hereof and within thirty
(30) days after the expiration of each policy during the term hereof.
13.12.WAIVERS.
<PAGE>
Each Party hereby waives, to the extent it is able to do so under
Applicable Law, any statutory or other rights it may have or acquire in respect
of the termination of the relationship established hereby pursuant to the terms
of this Agreement, and agrees that the rights available to it hereunder in the
event of such termination are adequate and reflect the agreement of the Parties.
Neither Party shall have any right to claim any indemnity for goodwill or lost
profits or any damages arising from the rightful termination of this Agreement
by the other Party in accordance with the terms of this Agreement.
13.13.ENGLISH LANGUAGE CONTROLS.
The original and controlling version of this Agreement shall be the
version using the English Language. All translations of this Agreement into
other languages shall be for the convenience of the Parties only, and shall not
control the meaning or application of this Agreement. All notices and other
communications required or permitted by this Agreement must be in English, and
the interpretation and application of such notices and other communications
shall be based solely upon the English language version thereof.
13.14.RELATIONSHIP OF THE PARTIES.
For all purposes of this Agreement, Purchaser and Supplier shall be
deemed to be independent entities and anything in this Agreement to the contrary
notwithstanding, nothing herein shall be deemed to constitute Purchaser and
Supplier as partners, joint venturers, co-owners, an association or any entity
separate and apart from each Party itself, nor shall this Agreement constitute
any Party hereto an employee or agent, legal or otherwise, of the other Person
for any purposes whatsoever. Neither Party hereto is authorized to make any
statements or representations on behalf of the other Party or in any way
obligate the other Party, except as expressly authorized in writing by the other
Party. Anything in this Agreement to the contrary notwithstanding, no Party
hereto shall assume nor shall be liable for any liabilities or obligations of
the other Party, whether past, present or future.
13.15.COUNTERPARTS.
This Agreement may be executed in two or more counterparts, all of
which shall be considered one and the same Agreement and shall become effective
when counterparts have been signed by each Party and delivered to the other
Party, it being understood that both Parties need not sign the same counterpart.
<PAGE>
13.16.SOVEREIGN IMMUNITY; EXCLUSIONS.
(a) Each Party hereto agrees that, to the extent that
it or any of its property is or becomes entitled at any time to any immunity on
the grounds of sovereignty or otherwise from any legal action, suit or
proceeding, from set off or counterclaim, from the jurisdiction of any set off
or counterclaim, from the jurisdiction of any competent court, from service of
process, from attachment prior to judgment, from attachment in aid of execution,
from execution prior to judgment or from any other legal process in any
jurisdiction, it, for itself and its property, expressly, irrevocably and
unconditionally waives, and agrees not to plead or claim any such immunity with
respect to its obligations, liabilities or any other matter under or arising out
of or in connection with this Agreement or the subject matter of this Agreement
(including without limitation any obligation for the payment of money). Each
Party hereto is not subject to withdrawal in any jurisdiction or under any
statute, including, without limitation, the Foreign Sovereign Immunities Act, 28
U.S.C. ss.ss. 1602 et seq. The foregoing waiver shall constitute a present
waiver of immunity at any time any action is initiated against any Party hereto
with respect to this Agreement.
(b) The Parties hereby agree to exclude application of
the following instruments and documents: United Nations Convention on the
International Sale of Goods, UNCITRAL Arbitration Rules and 1990 International
Chamber of Commerce Incoterms.
13.17.FORCE MAJEURE.
(a) Neither Party shall be responsible or liable to the
other hereunder for the failure or delay in the performance of this Agreement
due to any event of Force Majeure. In the event of the applicability of this
Section 13.17, the Party failing or delaying performance shall use its Best
Efforts to eliminate, cure and overcome any of such causes and resume the
performance of its obligations. If any event of Force Majeure continues for more
than 180 days, either Party shall have a right to eliminate from the Territory,
on a country by country basis, each country affected by such Force Majeure event
(or terminate this Agreement if all countries are affected) upon written notice
to the other Party delivered while such event of Force Majeure is continuing.
For the avoidance of doubt, in the event that any event of Force Majeure has
occurred and so long as it is continuing, excusing performance by one Party of
its obligations hereunder, the other Party shall also be excused from its
obligations hereunder to the extent its performance is dependent upon the
affected Party's performance.
(b) Upon the occurrence of an event of Force Majeure,
the Party failing or delaying performance shall promptly notify the other Party,
in writing, setting forth the nature of the occurrence, its expected duration
and how such Party's performance is affected. The failing or delaying Party
shall resume performance of its obligations hereunder as soon as practicable
after the Force Majeure event ceases.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have cause this Agreement to be
duly executed by their respective authorized officers as of the date of this
Agreement.
ELA MEDICAL, INC.
By: /s/ Philippe Baetz
-------------------------------
Name: Philippe Baetz
Title: Chairman of the Board
ANGELLAN MEDICAL SYSTEMS, LLC
by its Members
ANGEION CORPORATION
By: /s/ Whitney A. McFarlin
--------------------------
Name: Whitney A. McFarlin
Title: President & Chief Executive
Officer
ELA MEDICAL, INC.
By: /s/ Philippe Baetz
-----------------------
Name: Philippe Baetz
Title: Chairman of the Board
<PAGE>
SCHEDULE 1.13 - EXISTING DISTRIBUTORS
1. Agreement with John Hudak.
<PAGE>
SCHEDULE 1.41 - RELATED AGREEMENTS
1. The Amended and Restated Investment and Master Strategic Relationship
Agreement between Synthelabo and Angeion Corporation dated as of
October 9, 1997 (the "Investment Agreement").
2. The Warrants of Angeion Corporation issued or to be issued to
Synthelabo pursuant to the Investment Agreement.
3. The Implantable Cardioverter Defibrillator Product Manufacturing and
Supply Agreement between Angeion Corporation and Purchaser dated as of
December 9, 1997.
4. The Intercompany Services Agreement between Purchaser and Angeion
Corporation dated as of December 9, 1997.
5. The Trademark License Agreement between ELA Medical, Inc. and the
Purchaser dated December 9, 1997.
6. The Implantable Cardioverter Defibrillator Product Manufacturing and
Supply Agreement between Angeion Corporation and ELA Medical dated as
of December 9, 1997.
7. The Limited Liability Company Operating Agreement of Angellan Medical
Systems, LLC dated as of December 9, 1997.
8. Any other agreements contemplated by this Agreement.
<PAGE>
SCHEDULE 6.1(a) - UNIT TRANSFER PRICES FOR INITIAL PRODUCTS
xxxxxxxxx
xxxxxxxxx
xxxxxxxxx
xxxxxxxxx
xxxxxxxxx
xxxxxxxxx
xxxxxxxxx
xxxxxxxxx
xxxxxxxxx
<PAGE>
SCHEDULE 8.2 - TESTING PROCEDURES
None.
<PAGE>
SCHEDULE 9.7 - NO CONFLICTS
SUPPLIER
(i) No exceptions, except as provided in sub-clause (ii) below.
(ii) Supplier makes no representation and warranty with respect to
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX or XXXXXXXXX
XXXXXXXXXXXXXXX.
PURCHASER
(i) No exceptions, except as provided in sub-clause (ii) below.
(ii) Purchaser makes no representation and warranty with respect to
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX or XXXXXXXXX
XXXXXXXXXXXXXXX.
<PAGE>
SCHEDULE 12.2 - AAA RULES
29. ORDER OF PROCEEDINGS AND COMMUNICATION WITH ARBITRATOR
A hearing shall be opened by the filing of the oath of the arbitrator, where
required; by the recording of the date, time and place of the hearing, and the
presence of the arbitrator, the parties, and their representatives, if any, and
by the receipt by the arbitrator of the statement of the claim and the answering
statement, if any.
The arbitrator may, at the beginning of the hearing, ask for statements
clarifying the issues involved. In some cases, part or all of the above will
have been accomplished at the preliminary hearing conducted by the arbitrator
pursuant to Section 10.
The complaining party shall then present evidence to support its claim. The
defending party shall then present evidence supporting its defense. Witnesses
for each party shall submit to questions or other examination. The arbitrator
has the discretion to vary this procedure but shall afford a full and equal
opportunity to all parties for the presentation of any material and relevant
evidence.
Exhibits, when offered by either party, may be received in evidence by the
arbitrator.
The names and addresses of all witnesses and a description of the exhibits in
the order received shall be made a part of the record.
There shall be no direct communication between the parties and a neutral
arbitrator other than at oral hearing, unless the parties and the arbitrator
agree otherwise. Any other oral or written communication from the parties to the
neutral arbitrator shall be directed to the AAA for transmittal to the
arbitrator.
31. EVIDENCE
The parties may offer such evidence as is relevant and material to the dispute
and shall produce such evidence as the arbitrator may deem necessary to an
understanding and determination of the dispute. An arbitrator or other person
authorized by law to subpoena witnesses or documents may do so upon the request
of any party or independently.
The arbitrator shall be the judge of the relevance and materiality of the
evidence offered, and conformity to legal rules of evidence shall not be
necessary. All evidence shall be taken in the presence of all of the arbitrators
and all of the parties, except where any of the parties is absent in default or
has waived the right to be present.
<PAGE>
SCHEDULE 13.11 - INSURANCE
xxxx xxxxx xxxxx xxxxx xxx xxx xxxxxxx xxxxxxxxx xxxxxxxxx xxxx x
xxxxxxx xxxxxx xx xxx xxxxxxx xxx xxxxxxxxxx xxx xxxxxxx xx xxx xxxxxxxxx xxxx
xx xxxx xxxx xxx xxxxxxxx xxxxxxxxx. xx xxxxxxxx xxxx xxxxx xxxxx xxxxx
xxxxxxxxx xxx xxxxxxx xxxxxxx xxxx x xxxxxxx xxxxxx xx xx xxxxxxx xxx
xxxxxxxxxx.
<PAGE>
OPPENHEIMER WOLFF & DONNELLY
Plaza VII
45 South Seventh Street
Suite 3400
Minneapolis, MN 55402-1609
(612) 607-7000
FAX (612) 607-7100
December 9, 1997
Synthelabo
22 Avenue Galilee
92350 Le Plessis Robinson
France
Ladies and Gentlemen:
We have acted as counsel to Angeion Corporation, a Minnesota corporation (the
"Company"), in connection with the proposed sale and issuance of shares of
common stock, $0.01 par value per share, together with the preferred stock
purchase rights attached thereto (the "Common Stock"), and warrants to purchase
shares of Common Stock, pursuant to a certain Amended and Restated Investment
and Master Strategic Relationship Agreement (the "Agreement") dated as of
October 9, 1997, between the Company and Synthelabo, a societe anonyme (the
"Investor"). This opinion is being furnished to you pursuant to Section
2.1(b)(ii)(A)(7) of the Agreement. Capitalized terms used in this opinion are as
defined in the Agreement unless otherwise specifically provided herein.
In acting as counsel for the Company and arriving at the opinions expressed
below, we have examined and relied upon originals or copies, certified or
otherwise identified to our satisfaction, of such records of the Company,
agreements and other instruments, certificates of officers and representatives
of the Company, certificates of public officials and other documents we have
deemed necessary or appropriate as a basis for the opinions expressed herein,
including, without limitation, the Agreement, the Warrant Agreements and the
Rights Agreement, as amended pursuant to the First Amendment to Rights
Agreement, dated as of October 9, 1997, and the Second Amendment to Rights
Agreement, dated as of December 9, 1997 (the "Rights Agreement"). As to the
various questions of fact material to such opinions, we have, when relevant
facts were not independently established, relied upon officers of the Company
and upon statements contained in the Agreement, the Rights Agreement and the
Warrant Agreements.
In our examination of such documents, we have assumed, in addition to the other
assumptions set forth herein, the genuineness of all signatures and the
authenticity of all documents submitted to us as originals and the conformity to
authentic originals of all documents submitted to us as certified or photostatic
copies. In making our examination of documents executed by parties other than
the Company, we have assumed that such parties have all necessary power to enter
into and perform all of their obligations thereunder and have also assumed the
due authorization by all requisite action of the execution, delivery and
performance of such documents by such parties and that such documents are legal,
valid and binding on such parties in accordance with
<PAGE>
OPPENHEIMER WOLFF & DONNELLY
Synthelabo
December 9, 1997
Page 2
their respective terms. We have also assumed receipt by the Company of all the
consideration called for in its resolutions authorizing the issuance of Shares
of the Company.
Based on the foregoing, and subject to the qualifications and limitations stated
herein, it is our opinion that:
1. The Company's authorized capital stock consists of 50,000,000 shares
of Common Stock, $.01 par value per share, and 3,000,000 shares of Preferred
Stock, consisting of 600,000 shares of Series A Preferred Stock, $.01 par value
per share, 300,O00 shares of Series B Junior Preferred Stock, $.01 par value per
share, and 2,100,000 shares of Preferred Stock, the designation, rights and
preferences of which have not been determined. As of the date hereof and prior
to the issuance of the Initial Shares, there were 30,703,633 shares of Common
Stock outstanding and no shares of Series A Preferred Stock or Series B Junior
Preferred Stock outstanding, and all outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid and
nonassessable.
2. The Initial Shares, Supplemental Shares, Second Investment Shares,
Third Investment Shares and Fourth Investment Shares and the Supplemental Shares
(collectively, the "Investment Shares") and the shares of Common Stock issuable
upon exercise of the Initial Warrants, the Second Investment Warrants, the Third
Investment Warrants and the Fourth Investment Warrants (collectively, the
"Investment Warrants") have been duly authorized and reserved for issuance and,
when issued, delivered and paid for in accordance with the terms of the
Agreement or the Warrant Agreements, as the case may be, will be validly issued,
fully paid and nonassessable and will be free of any right of first refusal or
preemptive rights or any antidilution protections given by the Company to any
Person (including, without limitation, any stockholder, lender, warrant holder,
lessor and/or licensor).
3. Assuming that the Investor, together with all Affiliates and
Associates of the Investor, does not become the Beneficial Owner (as defined in
the Rights Agreement, as amended) of Common Shares (as defined in the Rights
Agreement, as amended) other than pursuant to and in accordance with Sections
2.1, 2.2, 2.3, 2.4, 4.1(d) or 4.2(b)(ii) of the Agreement, the Investor and its
Affiliates and Associates will not be deemed an "Acquiring Person" for purposes
of the Rights Agreement solely by virtue of actions taken pursuant to and in
accordance with the Agreement and the Warrant Agreements.
In addition to the qualifications and limitations set forth above, the opinions
expressed herein are subject to the following qualifications and limitations:
<PAGE>
OPPENHEIMER WOLFF & DONNELLY
Synthelabo
December 9, 1997
Page 3
(a) We express no opinion with respect to laws other than those of
the State of Minnesota and the federal laws of the United
States of America and we assume no responsibility as to the
applicability thereto, or the effect thereon, of the laws of
any other jurisdiction.
(b) With respect to our opinion set forth in paragraph 2 above,
such opinion assumes, with respect to the Investment Sbares
other than the Initial Shares and the shares of Common Stock
issuable upon exercise of the Investment Warrants other than
the Initial Investment Warrants (collectively, the "Deferred
Investment Shares"), and other than with respect to 5,000,000
shares of Common Stock reserved for issuance to the Investor
on December 9, 1997, that any necessary amendment to the
articles of incorporation of the Company to increase the
authorized shares of Company Stock is properly made and that
the Board of Directors of the Company properly reserves for
any Deferred Investment Shares.
(c) Where we render an opinion based upon factual matters "to our
knowledge," it is based solely upon inquiries of this firm's
attorneys who have worked on matters involving the Company, an
examination of our files and of documents made available to us
by the Company, and inquiries of officers of the Company. We
have relied on written statements of officers of the Company
covering certain of such matters.
We are furnishing the opinions contained in this letter to you solely for your
benefit in connection with the above-described transaction. It is not to be
used, circulated, quoted or otherwise referred to for any other purpose and no
one other than the addressee hereof is entitled to rely on the opinion. This
opinion speaks only as of the date above written, and we hereby expressly
disclaim any duty to update any of the statements made herein.
Very truly yours,
EXHIBIT 10.2
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
OF
ANGELLAN MEDICAL SYSTEMS, LLC
a Delaware Limited Liability Company
DATED DECEMBER 9, 1997
by and between
ANGEION CORPORATION
AND
ELA MEDICAL, INC.
Note: Portions of this exhibit marked with "X's" have been omitted
pursuant to a request for confidentiality under Rule 24b-2 of
the Securities Exchange Act of 1934, as amended. A copy of
this exhibit in its entirety has been filed separately with
the Securities and Exchange Commission.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I Definitions.............................................. 1
1.1 DEFINITIONS.............................................. 1
ARTICLE II Formation of Company..................................... 11
2.1 FORMATION................................................ 11
2.2 NAME..................................................... 11
2.3 PRINCIPAL PLACE OF BUSINESS.............................. 11
2.4 REGISTERED OFFICE AND REGISTRATION AGENT................. 11
2.5 TERM..................................................... 12
2.6 REQUIRED DOCUMENTS....................................... 12
ARTICLE III Nature of Business....................................... 12
3.1 PERMITTED BUSINESS....................................... 12
3.2 NO INDIVIDUAL AUTHORITY.................................. 13
3.3 NO RESPONSIBILITY FOR MEMBERS' COMMITMENTS............... 13
3.4 POWERS................................................... 13
ARTICLE IV Names and Addresses of Members........................... 13
ARTICLE V Rights and Duties of Directors and Officers.............. 13
5.1 THE BOARD................................................ 13
5.2 MEMBERSHIP OF THE BOARD.................................. 14
5.3 QUORUM................................................... 14
5.4 POWERS OF BOARD OF DIRECTORS............................. 14
5.5 MEETINGS................................................. 16
5.6 PARTICIPATION BY CONFERENCE TELEPHONE.................... 16
5.7 ACTION WITHOUT MEETINGS.................................. 16
5.8 LIABILITY OF DIRECTORS................................... 16
5.9 NO EXCLUSIVE DUTY........................................ 16
5.10 INDEMNIFICATION FOR ACTS OF EMPLOYEES AND OTHER AGENTS... 17
5.11 RESIGNATION.............................................. 17
5.12 REMOVAL.................................................. 17
5.13 VACANCIES................................................ 17
5.14 COMPENSATION OF DIRECTORS................................ 17
5.15 OFFICERS................................................. 17
5.16 STAFFING OF THE COMPANY.................................. 19
5.17 ANCILLARY AGREEMENTS..................................... 21
5.18 CONFLICTS OF INTEREST.................................... 21
ARTICLE VI Rights and Obligations of Members........................ 22
6.1 LIMITATION OF LIABILITY.................................. 22
6.2 RIGHTS AND DUTIES OF MEMBERS............................. 22
<PAGE>
6.3 APPROVAL OF MAJOR MATTERS................................ 23
6.4 COMPANY BOOKS............................................ 23
6.5 PRIORITY AND RETURN OF CAPITAL........................... 23
6.6 LIABILITY OF A MEMBER TO THE COMPANY..................... 24
6.7 CONFLICTS OF INTEREST, CONTRACT WITH MEMBERS OR
AFFILIATES............................................. 24
ARTICLE VII Actions by Members....................................... 24
7.1 MEETINGS OF MEMBERS...................................... 24
7.2 PLACE OF MEETINGS........................................ 24
7.3 NOTICE OF MEETINGS....................................... 24
7.4 NO NOTICE REQUIRED....................................... 24
7.5 MEMBER APPROVAL.......................................... 25
7.6 ACTION BY MEMBERS WITHOUT A MEETING...................... 25
7.7 WAIVER OF NOTICE......................................... 25
7.8 PARTICIPATION BY CONFERENCE TELEPHONE.................... 25
ARTICLE VIII Contributions to the Company and Capital Accounts........ 25
8.1 INITIAL CAPITAL CONTRIBUTIONS............................ 25
8.2 ADDITIONAL CONTRIBUTIONS................................. 26
8.3 CAPITAL ACCOUNTS......................................... 26
8.4 WITHDRAWAL OR REDUCTION OF CONTRIBUTIONS TO CAPITAL...... 27
ARTICLE IX Allocations, Income Tax, Distributions,
Elections, and Reports................................... 28
9.1 ALLOCATIONS OF NET PROFITS AND NET LOSSES................ 28
9.2 SPECIAL ALLOCATIONS...................................... 29
9.3 DISTRIBUTIONS............................................ 31
9.4 LIMITATION UPON DISTRIBUTIONS............................ 31
9.5 ACCOUNTING PRINCIPLES.................................... 31
9.6 INTEREST ON AND RETURN OF CAPITAL CONTRIBUTIONS.......... 31
9.7 LOANS TO COMPANY......................................... 32
9.8 RECORDS, AUDITS AND REPORTS.............................. 32
9.9 RETURNS AND OTHER ELECTIONS.............................. 32
9.10 TAX MATTERS PARTNER...................................... 32
ARTICLE X Operations; Product Purchases............................ 33
10.1 ANNUAL OPERATING BUDGETS................................. 33
10.2 SUPPLY AGREEMENTS........................................ 34
10.3 THIRD PARTY CLAIMS....................................... 34
ARTICLE XI Intellectual Property.................................... 35
11.1 GENERAL PRINCIPLES....................................... 35
11.2 MEMBER MARKS............................................. 35
11.3 COMPANY MARKS............................................ 36
11.4 PATENTS.................................................. 36
11.5 COPYRIGHTS............................................... 37
<PAGE>
11.6 EXCLUSIVITY.............................................. 37
11.7 DEVELOPMENT REPORTS...................................... 38
11.8 REGULATORY MATTERS....................................... 38
ARTICLE XII Transferability.......................................... 38
ARTICLE XIII Representations and Warranties........................... 38
ARTICLE XIV Dissolution and Winding Up............................... 39
14.1 DISSOLUTION.............................................. 39
14.2 CHANGE OF CONTROL........................................ 40
14.3 LIMITATION ON WITHDRAWALS................................ 42
14.4 WINDING UP, LIQUIDATION AND DISTRIBUTION OF ASSETS....... 42
14.5 CERTIFICATE OF CANCELLATION.............................. 44
14.6 RETURN OF CONTRIBUTION NONRECOURSE TO OTHER MEMBERS...... 44
14.7 NO RESIDUAL VALUE........................................ 44
ARTICLE XV Dispute Resolution....................................... 44
15.1 GENERAL DISPUTE PRINCIPLES............................... 44
15.2 ARBITRATION OF OTHER DISPUTES............................ 45
15.3 PARTICIPATION IN THIRD PARTY PROCEEDINGS................. 47
ARTICLE XVI Confidentiality; Publicity; Non Solicitation............. 48
16.1 CONFIDENTIAL INFORMATION................................. 48
16.2 PUBLICITY................................................ 49
16.3 NON SOLICITATION......................................... 49
ARTICLE XVII Miscellaneous Provisions................................. 49
17.1 AFFILIATES............................................... 49
17.2 NO AGENCY................................................ 49
17.3 SURVIVAL................................................. 50
17.4 ENTIRE AGREEMENT......................................... 50
17.5 NOTICES.................................................. 50
17.6 BOOKS OF ACCOUNTS AND RECORDS............................ 51
17.7 GOVERNING LAW............................................ 51
17.8 WAIVER OF ACTION FOR PARTITION........................... 51
17.9 AMENDMENTS............................................... 52
17.10 FURTHER ASSURANCES....................................... 52
17.11 CONSTRUCTION............................................. 52
17.12 HEADINGS................................................. 52
17.13 WAIVERS.................................................. 52
17.14 RIGHTS AND REMEDIES CUMULATIVE........................... 52
17.15 SEVERABILITY............................................. 52
17.16 HEIRS, SUCCESSORS, AND ASSIGNS........................... 52
17.17 RIGHTS OF CREDITORS AND THIRD PARTIES UNDER LLC
AGREEMENT.............................................. 52
17.18 COUNTERPARTS............................................. 52
<PAGE>
SCHEDULES
Schedule 1.1 Related Agreements
Schedule 10.3 Insurance
Schedule 13 No Conflicts
Schedule 15.2 AAA Rules
EXHIBITS
Exhibit A Initial Annual Budget and Three Year Strategic Plan
Exhibit B Form of Angeion Manufacturing and Supply Agreement
Exhibit C Form of ELA Manufacturing and Supply Agreement
Exhibit D Form of Intercompany Services Agreement
Exhibit E Initial Operating Budget
<PAGE>
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
OF
ANGELLAN MEDICAL SYSTEMS, LLC
A DELAWARE LIMITED LIABILITY COMPANY
Angeion Corporation, a Minnesota corporation ("Angeion"), and ELA
Medical, Inc., a Delaware corporation ("ELA"), hereby agree as follows:
WHEREAS, Angeion and ELA intend to establish a joint venture in the
United States in the form of a limited liability company (the "Company") to
market and sell cardiac stimulation and related devices manufactured by ELA and
Angeion; and
WHEREAS, Angeion and ELA have agreed that it is in their mutual best
interests to form the Company and are interested in pursuing the business
opportunities presented by such collaboration.
NOW THEREFORE, the Parties hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. The following terms used in this Limited
Liability Company Agreement, unless otherwise expressly provided herein, shall
have the following meanings.
(a) "ADVANCE FAILURE" shall have the meaning set forth in
Section 8.2 hereof.
(b) "AFFILIATE(S)" shall mean any corporation, association
or other entity which directly or indirectly controls, is controlled by or is
under common control with the Member in question, but only for so long as such
relationship exists. As used herein, the term "control" shall mean the ability
to direct the business of a company and shall be presumed in the case of
ownership, directly or indirectly, of shares of stock having at least fifty
percent (50%) of the voting power entitled to vote for the election of directors
in the case of a corporation, and at least fifty percent (50%) of the voting
power and interest in profits in the case of a business entity other than a
corporation, or only if less than fifty percent (50%) of the voting power and
interest in profits is permitted by Applicable Law, the maximum amount allowed
in the country in question (so long as the holder otherwise retains the ability
to direct the business of the entity). The Parties acknowledge and agree that
neither L'Oreal nor the Company shall be deemed to be included within the term
"Affiliate" for any purposes under this Agreement unless otherwise expressly
provided in this Agreement.
(c) "ANCILLARY AGREEMENTS" shall have the meaning set forth
in Section 5.17 hereof.
(d) "ANGEION SUPPLY AGREEMENT" shall mean that certain
Cardiac Stimulation
<PAGE>
Device Manufacturing and Supply Agreement of even date between Angeion and the
Company.
(e) "APPLICABLE LAWS" shall mean all foreign, federal,
state and local laws, statutes, rules and regulations which have been enacted by
a Governmental Authority and are in force as of the date hereof or which are
enacted by a Governmental Authority and come into force during the term of this
Agreement, in each case to the extent that the same are applicable to the
performance by the Members of their respective obligations under this Agreement.
(f) "APPROVED BUDGET" shall have the meaning set forth in
Section 10.1(a) hereof.
(g) "BANKRUPTCY" shall mean with respect to either Member
(A) the entry by a court having jurisdiction in the premises of (i) a decree or
order for relief in respect of such Member in an involuntary case or proceeding
under any applicable federal or state bankruptcy, insolvency, reorganization or
other similar law or (ii) a decree or order adjudging such Member a bankrupt or
insolvent, or approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of such Member under any
Applicable Law, or appointing a custodian, receiver, liquidator, assignee,
trustee, sequestrator or other similar official of such Member or of any
substantial part of such Member's property, or ordering the winding up or
liquidation of the affairs of such Member and the continuance of any such decree
or order for relief or any such other decree or order unstayed and in effect for
a period of 30 consecutive days or (B) the commencement by such Member of a
voluntary case or proceeding under any applicable federal or state bankruptcy,
insolvency, reorganization or other similar law or of any other case or
proceeding to be adjudicated a bankrupt or insolvent, or the consent by such
Member to the entry of a decree or order for relief in respect of such Member in
an involuntary case or proceeding under any applicable federal or state
bankruptcy, insolvency, reorganization or other similar law or to the
commencement of any bankruptcy or insolvency case or proceeding against it, or
the filing by such Member of a petition or answer or consent seeking
reorganization or relief under any Applicable Law, or the consent by such Member
to the filing of such petition or to the appointment of or taking possession by
a custodian, receiver, liquidator, assignee, trustee, sequestrator or similar
official of such Member or of any substantial part of such Member's property, or
the making by such Member of an assignment for the benefit of creditors, or the
admission by such Member in writing of its inability to pay its debts generally
as they become due, or the taking of corporate or other action by such Member in
furtherance of any such action or the calling of a meeting of creditors of the
Member or appointment of a committee of creditors or liquidating agents with
respect to such Member or its assets, or any offering of a composition of or
extension to creditors with respect to such Member or its assets, with or
without the consent or acquiescence of such Member.
(h) "BEST EFFORTS" shall be determined under New York law
and shall mean such efforts as are consistent with efforts made by businesses of
similar size and resources in a similar circumstance and context to achieve a
particular result in a timely manner, but shall not require a Member to take
actions that would be commercially unreasonable to such Member in the
circumstances.
(i) "BOARD" shall mean the Board of Directors of the
Company.
<PAGE>
(j) "BOARD APPROVAL" and "APPROVED BY THE BOARD" shall have
the meanings set forth in Section 5.3.
(k) "CAPITAL ACCOUNT" as of any given date shall mean the
separate account for each Member established and maintained according to the
provisions of Section 8.3.
(l) "CAPITAL CONTRIBUTION" shall mean any contribution by a
Member to the capital of the Company, whether in the form of cash or property.
(m) "CAPITAL TRANSACTION" shall have the meaning set forth
in Section 9.1(d) below.
(n) "CARDIAC STIMULATION DEVICE" shall mean an implantable
medical device for electrically stimulating or shocking the heart which is
suitable for use by or with human patients. The term "Cardiac Stimulation
Device" includes, without limitation: cardiac pacemakers, antitachycardia
pacemakers, cardioverters and defibrillators, including combinations thereof
("such devices"), pulse generators and other waveform generators for such
devices; electronic and mechanical components, including without limitation
batteries and capacitors to the extent these components are used for or with
such devices; mechanisms for coupling such devices in a stimulating, shocking or
sensing relationship to the heart including without limitation leads,
electrodes, and sensors; and data dispensing, processing and gathering systems
for such devices, including without limitation programmers, pacing system
analyzers, defibrillation system analyzers, testers, encoders, decoders,
transmitters, receivers, and computer software- controlled systems, including
all related software; and internal, but not external, holter monitors used for
recording heart rhythms (even though such internal holter monitors do not
electrically stimulate the heart). The term "Cardiac Stimulation Device"
excludes, by way of example and not limitation, muscle stimulators, nerve
stimulators, bone growth stimulators, cardiomyoplasty stimulators and associated
devices, arrhythmia mapping devices, imaging technology, angioplasty devices,
catheter ablation systems, and temporary external pacemakers and defibrillators
and EKG monitors (other than pacing programmers) which are stand-alone,
non-ambulatory and not intended for transtelephonic monitoring.
(o) "CERTIFICATE OF FORMATION" shall mean the Certificate
of Formation of the Company as filed with the Secretary of State of the State of
Delaware, as the same may be amended from time to time.
(p) "CHANGE OF CONTROL" shall be deemed to have occurred in
either of the following circumstances:
(i) with respect to Angeion, if: (A) any "person", as
such term is used in Sections 13(d) and 14(d) of the Exchange Act
(other than Angeion, an Affiliate of Angeion, any trustee or other
fiduciary holding securities under any compensatory benefit plan of
Angeion or an Affiliate of Angeion, or any entity owned directly or
indirectly by the stockholders of Angeion in substantially the same
proportions as their ownership of stock of Angeion), is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under
<PAGE>
the Exchange Act), directly or indirectly, of 30% or more of Angeion's
then outstanding Voting Securities; (B) during any period of two (2)
consecutive years (not including any period prior to the date hereof),
individuals who at the beginning of such period constituted the board
of directors of Angeion, together with any new director (other than a
director designated by a person who has entered into an agreement with
Angeion to effect a transaction described in clause (A), (C), or (D) of
this paragraph whose election by the board of directors of Angeion or
nomination for election by Angeion stockholders was approved by a vote
of at least two-thirds of the directors then still in office who either
were directors at the beginning of the two-year period or whose
election or nomination for election was previously so approved), cease
for any reason to constitute at least a majority of the board of
directors of Angeion; (C) a merger or consolidation of Angeion with any
other corporation which is not an Affiliate of Angeion is consummated,
other than a merger that would result in the Voting Securities of
Angeion outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 50% of the combined
voting power of the Voting Securities of Angeion (or the comparable
voting securities of such surviving entity) outstanding immediately
after such merger or consolidation; provided, however, that a merger or
consolidation effected to implement a recapitalization of Angeion or
such Affiliate (or similar transaction) in which no person acquires
more than 30% of the combined voting power of Angeion's then
outstanding Voting Securities shall not constitute a "Change in
Control" of Angeion; or (D) an agreement for the sale or disposition by
Angeion of all or substantially all of Angeion's assets is consummated;
and
(ii) with respect to ELA, if any Person, other than
Synthelabo or an Affiliate of Synthelabo, acquires, directly or
indirectly, all or substantially all of the Cardiac Stimulation Device
business of Synthelabo, whether through a merger or the acquisition of
stock and/or assets, as such business is currently conducted through
ELA Medical, a French societe anonyme ("ELA Medical"), and various
other Affiliates of Synthelabo, including ELA, and as such business may
hereafter be conducted through such entities or other Affiliates of
Synthelabo.
(q) "CHANGE OF CONTROL WITHDRAWAL" shall have the meaning
set forth in Section 14.2.
(r) "COMPANY" shall mean Angellan Medical Systems, LLC, a
limited liability company formed under the laws of the State of Delaware.
(s) "COMPANY-INDEMNIFIED THIRD PARTY CLAIMS" shall have the
meaning set forth in Section 10.3(b) hereof.
(t) "COMPANY MINIMUM GAIN" has the meaning specified in
Treas. Reg. ss.ss. 1.704-2(b)(2) and (d) and such additional amount as shall be
treated as Company Minimum Gain pursuant to Treas. Reg. ss. 1.704-2(j)(1)(iii).
(u) "COMPANY NONRECOURSE DEDUCTIONS" shall consist of those
deductions and
<PAGE>
in those amounts specified in Treas. Reg. ss.ss. 1.704-2(C).
(v) "COMPANY TRADEMARKS" shall have the meaning set forth
in Section 11.3 hereof.
(w) "CONFIDENTIAL INFORMATION" shall mean technical and
business information relating to a Member's Intellectual Property Rights, trade
secret processes or devices, techniques, data, formula, inventions (whether or
not patentable) or products, research and development (including research
subjects, methods and results), production, manufacturing and engineering
processes, computer software, costs, profit or margin information, pricing
policies, confidential market information, finances, customers, distribution,
sales, marketing, and production and future business plans and any other
information of a "confidential" nature, specifically including, without
limitation, any information that is identified orally or in writing by the
disclosing party to be confidential, or that the receiving party should
reasonably understand under the circumstances to be a trade secret of the
disclosing party or information of a similar nature that is not generally known
to the public.
(x) "CONTINUATION NOTICE" shall have the meaning set forth
in Section 14.2 hereof.
(y) "DEFAULTING MEMBER" shall have the meaning set forth in
Section 8.2 hereof.
(z) "DEFICIT CAPITAL ACCOUNT" shall mean, with respect to
either Member, the deficit balance, if any, in such Member's Capital Account as
of the end of any taxable year, after giving effect to the following
adjustments:
(i) Credit to such Capital Account any amount which
such Member is obligated to restore under Treas. Reg.
ss.1.704-1(b)(2)(ii)(c), as well as any addition thereto pursuant to
the next to last sentences of Treas. Regs. ss.ss.1.704-2(g)(1) and
1.704-2(i)(5), after taking into account thereunder any changes during
such year in Company Minimum Gain (as determined in accordance with
Treas. Reg. ss.1.704-2(d)) and the Member Nonrecourse Debt Minimum
Gain; and
(ii) Debit to such Capital Account the items described
in Treas. Reg. ss.ss.1.704-1(b)(2)(ii)(d)(4), (5) and (6).
The foregoing definition of Deficit Capital Account is intended to
comply with the provisions of Treas. Reg. ss.ss.1.704-1(b)(2)(ii)(d) and 1.704-2
and will be interpreted consistently with those provisions.
(aa) "DELAWARE ACT" shall mean the Delaware Limited
Liability Company Act, Title 6, ss.ss.18-101 to 18-1107, and all amendments
thereto.
(bb) "DEMAND FOR ARBITRATION" shall have the meaning set
forth in Section 15.2
<PAGE>
(b).
(cc) "DIRECTOR" shall mean any of the members of the Board,
as appointed from time to time by the Members pursuant to the terms hereof.
(dd) "DISINTERESTED MEMBER" shall have the meaning set forth
in Section 5.18 hereof.
(ee) "DISPUTED BUDGET ITEM" shall have the meaning set forth
in Section 10.1(c) hereof.
(ff) "ELA SUPPLY AGREEMENT" shall mean that certain Cardiac
Stimulation Device Manufacturing and Supply Agreement of even date between ELA
and the Company.
(gg) "ELA TRADEMARKS" shall have the meaning set forth in
Section 11.2 hereof.
(hh) "EXCHANGE ACT" shall mean the Securities Exchange Act
of 1934, as amended.
(ii) "EXECUTIVE OFFICERS" shall have the meaning set forth
in Section 5.15(a) below.
(jj) "FAIR MARKET VALUE" shall have the meaning set forth in
Section 14.2(e) below.
(kk) "FISCAL YEAR" shall mean the Company's fiscal year,
which shall be the calendar year, or such other fiscal year as the Company may
be required to use under the IRC or the Treasury Regulations thereunder.
(ll "GOVERNMENTAL AUTHORITY" shall mean any nation or
government, any state, province or other political subdivision thereof or any
entity exercising executive, legislative, regulatory or administrative functions
of or pertaining to government.
(mm) "GROSS ASSET VALUE" means, with respect to any asset of
the Company, the asset's adjusted tax basis, except that:
(i) the initial Gross Asset Value of any asset
contributed by either Member to the Company shall be the fair market
value of such asset on the date of contribution;
(ii) the Gross Asset Values of all Company assets shall
be adjusted to equal their respective gross fair market values at such
times as the Members' Capital Accounts are adjusted pursuant to Section
8.3 hereof;
(iii) the Gross Asset Value of any Company asset
distributed to either
<PAGE>
Member shall be the gross fair market value of such asset on the date
of distribution;
(iv) to the extent not otherwise reflected in the
Members' Capital Accounts, the Gross Asset Values of Company assets
shall be increased (or decreased) to appropriately reflect any
adjustments to the adjusted basis of such assets pursuant to IRC ss.
734(b) or IRC ss. 743(b); and
(v) if on the date of contribution of an asset or a
revaluation of an asset in accordance with (ii)-(iv) above, the
adjusted tax basis of such asset differs from its fair market value,
the Gross Asset Value of such asset shall thereafter be adjusted by
reference to the depreciation method described in Treas. Reg. ss.
1.704-1(b)(2)(iv)(g)(3).
(nn) "ICD" shall mean an implantable cardioverter
defibrillator.
(oo) "INITIAL CAPITAL CONTRIBUTION" shall have the meaning
set forth in Section 8.1(a) hereof.
(pp) "INITIAL TERM" shall have the meaning set forth in
Section 2.5 hereof.
(qq) "INTERESTED MEMBER" shall have the meaning set forth in
Section 5.18 hereof.
(rr) "INVOLUNTARY WITHDRAWAL" shall have the meaning set
forth in Section 14.1.
(ss) "INTELLECTUAL PROPERTY RIGHTS" shall mean any patent,
copyright, registered design, trademark or other industrial or intellectual
property right owned or otherwise enforceable pursuant to license or otherwise
by any Person, and applications for any of the foregoing.
(tt) "IRC" shall mean the Internal Revenue Code of 1986, as
amended, or corresponding provisions of subsequent superseding federal revenue
laws.
(uu) "LIQUIDATING MEMBER" shall have the meaning set forth
in Section 14.4 hereof.
(vv) "LLC AGREEMENT" or the "AGREEMENT" shall mean this
Limited Liability Company Operating Agreement, as amended from time to time.
(ww) "MATERIAL ADVERSE EFFECT" means any material adverse
effect on the assets, results of operations, properties, business or financial
condition of Angeion or ELA, as applicable, and its respective subsidiaries
taken as a whole.
(xx) "MEMBER" shall mean either Angeion or ELA, as
applicable, and "MEMBERS" shall mean Angeion and ELA.
<PAGE>
(yy) "MEMBER APPROVAL" and "APPROVED BY THE MEMBERS" shall
have the meanings set forth in Article VII below.
(zz) "MEMBER-INDEMNIFIED PRODUCT LIABILITY CLAIMS" shall
have the meaning set forth in Section 10.3(a) hereof.
(aaa) "MEMBER NONRECOURSE DEBT" means any Company nonrecourse
liability for which either Member bears the economic risk of loss within the
meaning of Treas. Reg. ss. 1.704-2(b)(4).
(bbb) "MEMBER NONRECOURSE DEBT MINIMUM GAIN" has the meaning
specified in Treas. Reg. ss. 1.704-2(i)(3), and such additional amount as shall
be treated as Member Nonrecourse Debt Minimum Gain pursuant to Treas. Reg. ss.
1.704-2(j)(1)(iii).
(ccc) "MEMBER NONRECOURSE DEDUCTIONS" shall consist of those
deductions and in those amounts specified in Treas. Reg. ss.ss. 1.704-2(i)(2).
(ddd) "MEMBER TRADEMARKS" shall have the meaning set forth in
Section 11.2 hereof.
(eee) "MEMBERSHIP INTEREST" shall mean each Member's entire
interest in the Company, including such Member's share of the Company's Net
Profits, Net Losses and distributions of the Company's assets and the right to
participate in the management of the business and affairs of the Company
pursuant to this LLC Agreement and the Delaware Act.
(fff) "NET PROFITS" and "NET LOSSES" means, for any Fiscal
Year, the Company's taxable income or loss for such period, determined in
accordance with IRC ss. 703(a) (for this purpose, all items of income, gain,
loss or deduction required to be stated separately pursuant to IRC ss. 703(a)(1)
shall be included in taxable income or loss), with the following adjustments:
(i) Any income of the Company that is exempt from
federal income tax and not otherwise taken into account in computing
Net Profits or Net Losses shall be applied to increase such taxable
income or reduce such loss;
(ii) any expenditure of the Company described in IRC
ss. 705(a)(2)(B), or treated as such pursuant to Treas. Reg. ss.
1.704-1(b)(2)(iv)(i) and not otherwise taken into account in computing
Net Profits and Net Losses shall be applied to reduce such taxable
income or increase such loss;
(iii) gain or loss resulting from a taxable
disposition of any asset of the Company shall be computed by reference
to the Gross Asset Value of such asset as reduced by the special
depreciation calculations described in Treas. Reg. ss. 1.704-
1(b)(2)(iv)(g), notwithstanding that the adjusted tax basis of such
asset may differ from its Gross Asset Value;
<PAGE>
(iv) in lieu of the depreciation, amortization, and
other cost recovery deductions taken into account in computing such
taxable income or loss for such Fiscal Year or period, there shall be
taken into account depreciation, amortization or other cost recovery
determined pursuant to the method described in Treas. Reg. ss. 1.704-
1(b)(2)(iv)(g)(3);
(v) if Gross Asset Values are adjusted pursuant to
Section 8.3, the net amount of such adjustment shall be treated as an
item of Net Profits or Net Losses, as the case may be; and
(vi) any items which are specially allocated pursuant
to Section 9.2(h) shall not be taken into account in computing Net
Profits or Net Losses.
(ggg) "NON-DEFAULTING MEMBER" shall have the meaning set
forth in Section 8.2 hereof.
(hhh) "NON-EXECUTIVE OFFICERS" shall have the meaning set
forth in Section 5.15(b) hereof.
(iii) "NON-RESIGNING MEMBER" shall have the meaning set forth
in Section 14.2 hereof.
(jjj) "NON-WITHDRAWING MEMBER" shall have the meaning set
forth in Section 14.1 hereof.
(kkk) "OTHER CARDIAC-RELATED DEVICES" shall mean any
cardiac-related devices other than Cardiac Stimulation Devices.
(lll) "PERCENTAGE INTEREST" shall mean, with respect to each
Member, the percentage interest set forth opposite such Member's name in Section
9.1.
(mmm) "PERMITTED WITHDRAWAL" shall have the meaning set forth
in Section 14.1(a) hereof.
(nnn) "PERSON" shall mean any individual, general
partnership, limited partnership, limited liability company, corporation, joint
venture, trust, business trust, cooperative or association, or any foreign trust
or foreign business organization or any Governmental Authority.
(ooo) "POTENTIAL TRANSFERRING EMPLOYEES" shall have the
meaning set forth in Section 5.16(b) hereof.
(ppp) "PPI ADJUSTMENT" shall have the meaning set forth in
Section 10.1(c) hereof.
(qqq) "PRODUCTS" shall mean any Cardiac Stimulation Devices
which are sold to
<PAGE>
the Company by either of the Members pursuant to the Supply Agreements during
the term of this Agreement.
(rrr) "PROPOSED BUDGET" shall have the meaning set forth in
Section 10.1(a) hereof.
(sss) "PUBLISHED WORKS" shall have the meaning set forth in
Section 11.5 hereof.
(ttt) "RELATED AGREEMENTS" shall mean the agreements listed
on Schedule 1.1.
(uuu) "RENEWAL TERM" shall have the meaning set forth in
Section 2.5 hereof.
(vvv) "RESERVES" shall mean, for any fiscal period, funds set
aside or amounts allocated during such period to financial reserves for such
purposes as are Approved by the Board.
(www) "RESIGNATION NOTICE" shall have the meaning set forth
in Section 14.2 hereof.
(xxx) "RESIGNING MEMBER" shall have the meaning set forth in
Section 14.2 hereof.
(yyy) "SUPPLY AGREEMENTS" shall mean the Angeion Supply
Agreement and the ELA Supply Agreement.
(zzz) "THIRD PARTY CLAIMS" shall mean any and all claims,
lawsuits or actions asserted against the Company or its directors, officers and
agents arising out of or related to any Product or Technical Materials, (as
defined in the Supply Agreements) (including, without limitations, any data in
the Technical Materials that are properly included in the Promotional Materials
with a Member's prior written approval) related thereto that are manufactured or
supplied by either Member or its Affiliates under the Supply Agreements,
including, but not limited to, claims based on strict liability, tort,
negligence or breach of express or implied warranty and claims for special,
incidental, exemplary and consequential damages, in cases in which it is alleged
that personal injury (including but not limited to, emotional distress or
disturbance), direct financial loss, death or property damage was caused by a
defect in design, material or manufacture of any of the Products or the
Technical Materials (including, without limitation, any data in the Technical
Materials that are properly included in the Promotional Materials with a
Member's prior written approval) related thereto that are manufactured or
supplied by either Member or its Affiliates under the Supply Agreements
including any misrepresentation or failure to warn in the Technical Materials.
"Third Party Claims" shall also include all losses, liabilities, damages,
judgements, awards and costs (including reasonable attorneys' fees) arising out
of or relating to the claims described in the preceding sentence.
(aaaa) "TREASURY REGULATIONS" and "TREAS. REG." shall mean the
proposed, temporary or final regulations promulgated under the IRC in effect as
of the date of filing the
<PAGE>
Certificate of Formation.
(bbbb) "TRANSFERRING EMPLOYEE" shall have the meaning set
forth in Section 5.16(b) below.
(cccc) "VOTING SECURITIES" shall mean any shares of any class
of Angeion's capital stock with voting rights generally to elect directors of
Angeion.
(dddd) "UNIT TRANSFER PRICE" shall have the meaning set forth
in Section 10.2 hereof.
(eeee) "WITHDRAWING MEMBER" shall have the meaning set forth
in Section 14.1 hereof.
Any reference in this Agreement to any Applicable Law shall be
construed as a reference to the Applicable Law (including any successor
provision) as amended, re-enacted or extended at the time in question.
ARTICLE II
FORMATION OF COMPANY
2.1 FORMATION. On October 3, 1997, the Members caused the Company
to be organized as a Delaware Limited Liability Company by executing and
delivering the Certificate of Formation to the Secretary of State of the State
of Delaware in accordance with and pursuant to the Delaware Act. The Company
shall be governed by and subject to the terms of this Agreement, which
supersedes the Limited Liability Company Operating Agreement of the Company
dated as of October 3, 1997.
2.2 NAME. The name of the Company is Angellan Medical Systems,
LLC.
2.3 PRINCIPAL PLACE OF BUSINESS. The principal place of business
of the Company shall be established by Board Approval. The Company may locate
its places of business and registered office at any other place or places as the
Board may from time to time deem advisable.
2.4 REGISTERED OFFICE AND REGISTRATION AGENT. The Company's
initial registered office shall be at the office of its registered agent at 1013
Centre Road, Wilmington, Delaware 19805- 1294, County of New Castle, and the
name of its initial registered agent at such address shall be Corporation
Service Company. The registered office and registered agent may be changed from
time to time by filing the address of the new registered office and/or the name
of the new registered agent with the Secretary of State of the State of Delaware
pursuant to the Delaware Act.
2.5 TERM. The term of the Company shall be seven (7) years
("Initial Term") from the date of filing of the Certificate of Formation with
the Secretary of State of the State of
<PAGE>
Delaware and shall be automatically extended for an additional three (3) years
("Renewal Term") unless (i) either Member notifies the other Member in writing
at least one year prior to the end of the Initial Term that it does not wish to
extend the term of the Company beyond the Initial Term, or (ii) the Company is
earlier dissolved in accordance with either the provisions of the Delaware Act
(unless the continuation of the term of the Company notwithstanding such
dissolution is Approved by the Members) or this LLC Agreement. At least one (1)
year prior to the end of the Renewal Term, the Members shall discuss in good
faith any further extension of the term of the Company, provided that, if such
proposed extension is not Approved by the Members at least six (6) months prior
to the end of the Renewal Term, the Company shall terminate at the end of such
Renewal Term. The term of this Agreement shall be the same as the term of the
Company.
2.6 REQUIRED DOCUMENTS. The Members shall cause to be executed,
filed, recorded or amended, as necessary, any documents required or desirable to
be executed, filed, recorded or amended in connection with the formation,
operation, termination or dissolution of the Company pursuant to the laws of the
State of Delaware or any other jurisdiction in which the Company's business is
conducted. The Members shall execute and acknowledge such documents as may be
necessary or desirable, as determined by the Board in its reasonable discretion,
to otherwise give effect to the terms of this Agreement.
ARTICLE III
NATURE OF BUSINESS
3.1 PERMITTED BUSINESS. The business of the Company shall be the
following:
(a) to purchase and take delivery of the Products
pursuant to the Supply Agreements for sale in the
United States;
(b) to market and sell in the United States for its own
account the Products supplied to it pursuant to the
Supply Agreements;
(c) to provide after-sale support of the Products in the
United States; and
(d) to undertake such other activities as are necessary
or appropriate to effect the foregoing purposes, to
the extent Approved by the Members.
The Company will not engage in any other business without Member Approval.
3.2 NO INDIVIDUAL AUTHORITY. Except as otherwise expressly
provided in this Agreement, neither Member nor its Affiliates, acting alone,
will have any authority to act for, undertake or assume any obligations or
responsibility on behalf of, the other Member or the
<PAGE>
Company.
3.3 NO RESPONSIBILITY FOR MEMBERS' COMMITMENTS. Unless Approved by
the Members, no liability, obligation or indebtedness incurred by either Member
or its Affiliates, whether prior to or after execution and delivery of this
Agreement, shall become the responsibility of the Company or the other Member or
its Affiliates.
3.4 POWERS. Subject to the provisions of this Agreement, the
Company shall possess and may exercise all the powers and privileges granted by
the Delaware Act or by any other law or by this LLC Agreement, together with any
powers incidental thereto, so far as such powers and privileges are necessary or
convenient to the conduct, promotion or attainment of the business, purposes or
activities of the Company.
ARTICLE IV
NAMES AND ADDRESSES OF MEMBERS
The names and addresses of the Members are as follows:
Angeion Corporation
3650 Annapolis Lane
Plymouth, Minnesota 55447
ELA Medical, Inc.
2950 Xenium Lane North
Plymouth, Minnesota 55441
ARTICLE V
RIGHTS AND DUTIES OF DIRECTORS AND OFFICERS
5.1 THE BOARD. The property, affairs and business of the Company
shall be managed by or under the direction of the Members. Except as otherwise
reserved to the Members hereunder, the Members hereby delegate all authority to
manage the property, affairs and business of the Company (i) to the Board and
(ii), except to the extent reserved to the Board, to the Chief Executive
Officer. The Board and the Chief Executive Officer will operate in accordance
with the procedures set forth in this Agreement. The Board shall also have the
right to delegate to the Chief Executive Officer and the other officers of the
Company such additional responsibilities, duties and powers as may be determined
from time to time by Board Approval.
5.2 MEMBERSHIP OF THE BOARD. The Board will consist of six (6)
Directors, three (3) of whom will be appointed by Angeion and three (3) of whom
will be appointed by ELA. Directors shall be natural persons. The Directors will
serve until their successors have been
<PAGE>
appointed by their appointing Member. In the event of a vacancy on the Board,
however created, the vacancy will be filled by the Member that appointed the
vacating Director by notifying the other Member. The Chairperson of the Board
from the date of this Agreement through December 31, 1998 shall be Whitney A.
McFarlin. Thereafter, Angeion will designate the Chairperson from among the
Directors for each even numbered Fiscal Year and ELA will designate the
Chairperson for each odd numbered Fiscal Year, commencing with the Fiscal Year
ending December 31, 1999. The Chairperson will have a term of one calendar year,
but can be reappointed in subsequent years. The Chairperson will preside at all
meetings of the Board, but will not take any action on behalf of the Company
without Board Approval and will not have a casting (i.e., controlling) vote in
any deadlock of the Board. The initial Board will consist of the following
persons:
Directors Appointed by Angeion: Whitney A. McFarlin (Chairperson)
David L. Christofferson
William Rissman
Directors Appointed by ELA: Philippe Baetz
Ian Bennett
George Liney
5.3 QUORUM. At all meetings of the Board, the presence of at least
four (4) Directors, two (2) appointed by Angeion and two (2) appointed by ELA,
will constitute a quorum for the transaction of business. Subject to the
presence of such necessary quorum in person or by telephonic participation
pursuant to Section 5.6, an absent Director may be represented at any meeting by
written proxy granted to one of the other Directors in attendance at such
meeting. The Members shall use Best Efforts to ensure that their respective
Board representatives attend all Board meetings or otherwise participate therein
either directly or through their proxies. A matter submitted to the Board for
its approval shall be deemed to have received "Board Approval," and to have been
"Approved by the Board," if:
(a) until such time as either of the following conditions is
satisfied, such matter shall have received the affirmative vote of a majority of
the directors present at a meeting with ELA's representatives having the casting
(i.e. controlling) vote in the case of deadlock;
(i) sales by the Company of Angeion's Products
in any calendar quarter xxxxx xx xxxxxx
xxxxxx xxxxxxx xxx of sales by the Company
of ELA's Products;
(ii) if condition (i) has not been satisfied
prior to xxx xxxxxxxx xxxxxxx xxxxxx xx
xxxxxxxx xx xxxx then sales by the Company
of Angeion's Products in such xxxxxxx xxxxxx
xxxxxxxx xx xxxx or any xxxxxxxxx thereafter
xxxxx xx xxxxxx xxx xxxxxxx xxx of sales by
the Company of ELA's Products; and
(b) at any time after either of the conditions set forth in
paragraph (a) above has been satisfied, such matter shall have received the
favorable vote of a majority of each
<PAGE>
Member's Board representatives who are present at such meeting. 55.15.25.3
5.4 POWERS OF BOARD OF DIRECTORS. Except as reserved to the
Members or delegated to the Chief Executive Officer, the Members hereby grant
full power and authority to the Board to manage the property, affairs and
business of the Company. In the exercise of the power and authority so granted,
the following matters shall require Board Approval:
(a) the consideration and approval (or disapproval) of each
Proposed Budget submitted to the Board by the Chief Executive Officer pursuant
to Section 10.1, together with approval (or disapproval) of quarterly budgets
and three-year strategic plans (the initial annual budget and three-year
strategic plan, as agreed by the Parties, are attached as Exhibit A hereto);
(b) the acquisition of any property or assets having a value
of $1.0 million or more, unless provided for in an Approved Budget;
(c) the borrowing of any amounts in excess of $1.0 million,
unless provided for in an Approved Budget, the granting of any security
interests, liens or other encumbrances over the Company's assets to secure such
indebtedness and the authorization of any employees or agents of the Company to
incur such indebtedness or grant such liens on behalf of the Company;
(d) approval of the opening of corporate bank accounts for the
Company and the establishment of signature authority for the operation of such
accounts by the officers of the Company;
(e) the retention and payment of independent auditing firms to
perform services for the Company;
(f) the execution and delivery of all other agreements,
mortgages, deeds of trust, financing statements, bills of sale, leases,
instruments or documents with a value or concerning a transaction in excess of
$1.0 million on behalf of the Company;
(g) subject to Section 5.18, the filing, prosecution and
defense of any lawsuits, claims or proceedings in the Company's name;
(h) capital improvement expenditures or projects having a
value of $1.0 million or more, unless provided for in an Approved Budget;
(i) the appointment of the Chief Executive Officer and any
other Executive Officers of the Company (provided that such other Executive
Officers shall be initially nominated by the Chief Executive Officer for Board
Approval);
(j) the execution, amendment or modification of on behalf of
the Company of the Ancillary Agreements or any other agreement between the
Company and either Member or its Affiliates; and
(k) the addition or deletion of any matters requiring Board
Approval as set
<PAGE>
forth above.
Without limiting the provisions of Section 5.15, the Chief
Executive Officer shall have authority to execute, implement and otherwise carry
out all matters which have been Approved by the Board pursuant to this Section
5.4 or have otherwise been delegated to the Chief Executive Officer. No Member
or Director shall have any individual power or authority to bind the Company in
the absence of Board Approval. Unless authorized to do so by this LLC Agreement
or by Board Approval, no attorney-in-fact, employee or other agent of the
Company shall have any power or authority to bind the Company in any way.
5.5 MEETINGS. Regular meetings of the Board will be held
periodically as Approved by the Board, at such times, on such dates and in such
places as the Board may designate, but no less often that four (4) times per
year. Unless otherwise Approved by the Board, meetings of the Board will be held
alternately in Minneapolis, Minnesota and Paris, France or in any other place
that may be Approved by the Board. The Chairperson or any Director may at any
time call a special meeting of the Board. Notice of any special meeting of the
Board may be given by personal delivery, by telephone or facsimile transmission
to each Director no later than ten (10) days prior to the day the meeting is to
be held and will state the date, place and time of the meeting, and the purpose
or purposes for which the meeting is called (provided that, unless objected to
by any Director representing either of the Members, such other business as may
be reasonably introduced by any Director shall be considered at any such
meeting). A notice of meeting will also be sent to the Chief Executive Officer
for all meetings unless any Director has requested that the Chief Executive
Officer not so attend. Notice of a meeting may be waived in writing by one or
more Directors before, during or after the meeting.
5.6 PARTICIPATION BY CONFERENCE TELEPHONE. The Directors may
participate in a Board meeting by means of telephone conference or similar means
of electronic communication provided that all persons participating in the
meeting can hear each other. Such telephonic or similar participation in a
meeting will constitute presence at such meeting.
5.7 ACTION WITHOUT MEETINGS. Any action required or permitted to
be taken at any meeting of the Board may be taken without a meeting, if a
written consent thereto is signed by all of the Directors eligible to vote
thereon and such written consent is filed with the minutes of the Board.
<PAGE>
5.8 LIABILITY OF DIRECTORS. Each Member shall cause the Directors
appointed by it to carry out the functions delegated to them in accordance with
the terms of this Agreement and Applicable Law. No individual Director shall
have any personal liability to the Company or to the other Member or its
Affiliates for such Director's actions or omissions hereunder, provided that the
Member that appointed a Director shall be fully responsible to the Company
and the other Member and its Affiliates for, and shall indemnify and hold
harmless the Company and the other Member and its Affiliates from and against,
any and all actions or omissions of the Directors appointed by such Member
hereunder. Notwithstanding any provision of the Delaware Act, the Member that
appointed a Director shall indemnify such Director for all acts or omissions of
such Director and the Company shall not be obligated to indemnify any Director
in connection with any such matters.
5.9 NO EXCLUSIVE DUTY. The Directors shall not be required to
manage the Company as their sole and exclusive function and they may have other
business interests and may engage in other activities in addition to those
relating to the Company. Neither the Company nor any Member shall have any
right, by virtue of this LLC Agreement, to share or participate in such other
investments or activities of the Directors or to the income or proceeds derived
therefrom. The Directors shall incur no liability to the Company or to any of
the Members as a result of engaging in any other business or venture. Each
Director shall, however, disclose to the Board any conflict of interest that he
or she may have.
5.10 INDEMNIFICATION FOR ACTS OF EMPLOYEES AND OTHER AGENTS. To the
maximum extent permitted under Section 18-108 of the Delaware Act, the Company
shall indemnify and hold harmless its officers, employees and other agents who
are not Directors to the fullest extent permitted by law, provided that the
indemnification in any given situation is Approved by the Members.
5.11 RESIGNATION. Any Director may resign at any time by giving
written notice to each of the Members. The resignation of any Director shall
take effect upon receipt of that notice or at such later time as shall be
specified in the notice; and, unless otherwise specified in such notice, the
acceptance of the resignation shall not be necessary to make it effective.
5.12 REMOVAL. A Director may be removed at any time, with or
without cause, by the Member that appointed such Director. Such removal shall be
effective upon written notice of removal from the relevant Member to the
Director being removed, the other Member and the Chief Executive Officer.
5.13 VACANCIES. Any vacancy occurring for any reason in the number
of Directors of the Company may be filled only in accordance with Section 5.2.
5.14 COMPENSATION OF DIRECTORS. Unless otherwise Approved by the
Members, the Directors shall not receive any salary or other compensation from
the Company and the expenses of each Director, whether in connection with
attendance at any meetings of the Board or of the Members or otherwise, shall be
borne by the Member appointing such Director.
5.15 OFFICERS.
<PAGE>
(a) Executive Officers. The executive officers of the Company
shall consist of the Chief Executive Officer and such other officers as may be
Approved by the Board as "executive officers" (the "Executive Officers") from
time to time. Each Executive Officer shall be appointed with Board Approval,
provided that all Executive Officers (other than the Chief Executive Officer)
shall be nominated by the Chief Executive Officer. Each Executive officer shall
be a natural person and shall hold his position until his replacement has been
selected by Board Approval or until his earlier death, resignation or other
removal. The same Executive Officer may hold two or more offices with the
Company, but may not be a Director.
(b) Non-Executive Officers. The Chief Executive Officer shall
have the right to nominate and appoint one or more non-executive officers
("Non-Executive Officers") of the Company with such duties, powers and
responsibilities as may be determined by the Chief Executive Officer in a manner
consistent with this Agreement. Subject to the foregoing, Board Approval shall
not be required for the appointment of any Non-Executive Officer of the Company.
Each Non-Executive Officer shall be a natural person and shall hold his position
until his replacement has been selected by the Chief Executive Officer or until
his earlier death, resignation or other removal. The same Non-Executive Officer
may hold two or more offices with the Company but may not be a Director.
(c) Resignation. Any officer may resign at any time by giving
written notice to the Board or the Chief Executive Officer, as applicable. Such
resignation shall be effective as of the giving of the notice or at such later
time, if any, as may be specified in the notice. Unless otherwise specified in
the notice, acceptance of an officer's resignation by the Board or the Chief
Executive Officer, as applicable, shall not be necessary to make it effective.
(d) Removal. The Board may remove any Executive Officer, at
any time, with or without cause and the Chief Executive Officer may remove any
Non-Executive Officer, at any time, with or without cause.
(e) Vacancies. Any vacancy in the position of any officer
occurring as the result of an officer's resignation, removal, death, disability
or any other reason whatsoever may be filled by the Board or the Chief Executive
Officer, as applicable. Each individual who has been selected to fill a vacancy
in an officer position shall hold his or her office until his or her successor
has been selected by the Board or the Chief Executive Officer, as applicable, or
until his earlier resignation, removal or other vacancy.
(f) Duties of Officers. (i) The Executive Officers shall
derive their duties, powers and authority pursuant to the terms of this LLC
Agreement and as may be Approved by the Board from time to time. Without
limiting the foregoing, the Chief Executive Officer shall be responsible for the
implementation of the policies and strategies Approved by the Board and, subject
to the oversight of the Board, shall conduct or supervise the day-to-day
business of the Company. The Chief Executive Officer shall be authorized to
implement and carry out (including making all necessary expenditures of Company
funds) each Approved Budget in accordance with its terms, including all monetary
limitations set forth therein, provided, however, that the Chief Executive
Officer shall be authorized to exceed budgeted items reflected
<PAGE>
in each Approved Budget by the aggregate amount of $1.0 million during any
Fiscal Year. Except as may be, or has been, delegated to the Chief Executive
Officer or Approved by the Board, the Executive Officers shall not have
authority to take any action which is specifically reserved to the Board
pursuant to Section 5.4. The Chief Executive Officer will attend meetings of the
Board unless any Director objects to such attendance. The Chief Executive
Officer will not be entitled to vote at any meeting of the Board.
(ii) The Non-Executive Officers shall have such
duties, powers and authorities as may be delegated to them by the Chief
Executive Officer from time to time, provided that such delegation does not
exceed the duties, powers and authorities granted to the Executive Officers
under this LLC Agreement or by Board Approval and otherwise consistent with the
terms of this Agreement.
(g) Initial Officers. The current officers as of the date
hereof are:
Dennis Selke Chief Executive Officer
5.16 STAFFING OF THE COMPANY.
(a) General. The Chief Executive Officer shall have general
responsibility for meeting the staffing needs of the Company, within the
policies and budgets established by the Board, including all decisions as to
hiring and firing. Such responsibilities shall include responsibility for
employment decisions with respect to officers of the Company other than the
Chief Executive Officer, whose employment shall be sole the responsibility of
the Board. The Board, in consultation with the Chief Executive Officer, may (i)
establish, amend, modify or terminate any employee benefit plans and other
compensation arrangements for the benefit of the employees, consultants and
contractors of the Company, including, without limitation, incentive and bonus
plans, pension, profit sharing, retirement savings plans, health and other
employee insurance and welfare benefit plans, qualified retirement plans,
welfare benefits, health insurance benefits (medical, dental and vision),
disability, life and accident insurance, sickness benefits, vacation and other
employee benefit plans (collectively, "Benefit Plans") as the Board may deem
appropriate, or (ii) adopt and join for the employees of the Company such
similar plans as may be maintained by a Member.
(b) Offers of Employment. It is contemplated that a portion of
the initial staffing needs of the Company shall be satisfied from the transfer
to the Company of existing Member employees to be identified by Member Approval
("Potential Transferring Employees"). For a period of sixty (60) days after the
date hereof, the Chief Executive Officer or his designated representatives shall
be given the opportunity by each Member to interview all of the Potential
Transferring Employees and to offer employment on behalf of the Company to such
number of Potential Transferring Employees as may be determined by the Chief
Executive Officer. Offers to such Potential Transferring Employees shall provide
for employment commencing on such terms and conditions as the Chief Executive
Officer shall determine. The Chief Executive Officer will promptly notify each
Member of acceptance of any such offer by such Member's Potential Transferring
Employees (any such acceptance shall constitute the employee a "Transferring
Employee"). The Chief Executive Officer shall be responsible for
<PAGE>
advising Transferring Employees of the terms and conditions of any offers and
for answering any questions relating thereto.
(c) Benefits. Upon commencement of employment, Transferring
Employees shall be eligible to participate in the Benefit Plans applicable to
such employee (subject to the terms and conditions of such plans) on the same
basis as all other employees of the Company.
(d) Severance Pay. Each Member shall be responsible for
severance pay and similar obligations, if any, that may become payable under
such Member's respective severance policies, as the same shall be established
from time to time, to any Potential Transferring Employee of such Member in
connection with the offers of employment contemplated hereby, whether or not
such individual becomes a Transferring Employee by accepting the Company's offer
of employment.
(e) Relocation Expenses. Each Member shall be responsible for
any relocation expenses that are offered to its respective Transferring
Employees who accept employment with the Company.
(f) Wages, Benefits, Etc. (i) Each Member shall be responsible
for timely payment as required by Applicable Law of all wages, salaries,
bonuses, if any, vacation benefits, and other compensation and benefits earned
or accrued by its respective Transferring Employees with respect to service
completed on or prior to such Transferring Employee's last date of employment by
such Member. Each Member shall be solely responsible for all liabilities and
obligations, whether or not contingent, arising under Applicable Law with
respect to the terms, conditions of employment, compliance with discrimination
and other employment laws, in respect of a Transferring Employee with respect to
the period ending with such Transferring Employee's last date of employment by a
Member.
(ii) To the extent of commitments that are made
to Transferring Employees in the Company's offers of employment, the Company
shall credit such Transferring Employees for their length of service with its
respective Member or any Affiliates of such Member for all purposes under any
Benefit Plans.
(iii) The Company shall be responsible for any
severance pay and similar obligations which may become payable to any
Transferring Employee who is terminated by the Company after the date employment
commences with the Company. Such payment shall be made pursuant to the Company's
severance policy, if any, as in effect from time to time and the Company shall
compute severance pay by giving all Transferring Employees full credit for all
years of service since their date of last hire with their respective Member.
(g) Payment of Claims. All medical, dental, vision, health,
sick pay, salary continuation and disability claims incurred by Transferring
Employees with respect to the period ending on or prior to the last date of
employment by their respective Member shall be determined under the provisions
of the Benefit Plans, and the Company shall not assume liability with respect to
such claims. All medical, dental, vision, health, sick pay, salary continuation
and disability claims incurred with respect to the period after the Transferring
Employee's employment commences with the Company shall be determined under the
provisions of the
<PAGE>
Benefit Plans and neither Member shall assume liability with respect to such
claims (except for any claims in respect of a qualified beneficiary that may be
available under such Member's health plan by virtue of Section 4980B of the Code
with respect to any qualifying event that occurs before an employee becomes
employed by the Company), but only to the extent that such provision makes
continuation of such Member's health plan applicable to any Transferring
Employee after the last date of employment by such Member. For all medical,
dental, vision, health, sick pay, salary continuation and disability claims
incurred with respect to any period of time during which a Transferring Employee
is covered under the provisions of the Benefit Plans as well as the respective
Member's benefit plans, the Company's plans shall be primary.
(h) Secondment of Employees. A Member may allow certain
employees of such Member to commence performing services for the Company prior
to commencement of employment by the Company. Any such secondment of employees
to the Company by a Member shall be on terms and conditions to be agreed by the
Chief Executive Officer and such Member.
(i) Continuing Employees. Notwithstanding any terms of this
Section 5.16 to the contrary, no Transferring Employees shall be third party
beneficiaries of this Section 5.16 and the Company shall have the sole right to
enforce any terms of this Section 5.16 against the applicable Member (subject to
Section 5.18) and each Member shall have the sole right to enforce any terms of
this Section 5.16 against the Company.
5.17 ANCILLARY AGREEMENTS. Simultaneously with the execution of
this Agreement, the Company will enter into the following agreements
(collectively, the "Ancillary Agreements") with the contracting Member in the
forms annexed as exhibits hereto:
Agreement Contracting Member Exhibit
- --------- ------------------ -------
Angeion Manufacturing and Supply Agreement Angeion B
ELA Manufacturing and Supply Agreement ELA C
Intercompany Services Agreement Angeion D
All services, products or facilities provided by the Members to the
Company, to the extent not expressly covered by this Agreement, shall be
provided on a commercial, arms-length basis, in each case subject to Board
Approval.
5.18 CONFLICTS OF INTEREST.
(a) It is acknowledged and agreed that potential conflicts of
interest may arise between the Company and each of the Members and their
Affiliates in connection with the performance and enforcement of the Ancillary
Agreements. Accordingly, if either Member (the "Disinterested Member") wishes to
cause the Company to take any action or to enforce any rights or remedies
against the other Member (the "Interested Member") or its Affiliates under
<PAGE>
any of the Ancillary Agreements, or to forebear from taking any such action or
from asserting such rights or remedies), and such action (or forbearance) is not
Approved by the Board, the provisions of this Section 5.18 shall become
applicable. In such event, prior to invoking the rights granted to it under
subclause (b) of this Section 5.18, the Members shall promptly meet with the
Chief Executive Officer to seek to resolve their differences. If mutual
agreement is not reached through such discussions within 10 days, then such
disputes shall be referred by the Members to their respective chief executive
officers, who shall meet to negotiate in good faith the possible resolution
thereof.
(b) If mutual agreement by such chief executive officers is
still not reached within a further 10 days, then the matter shall then be
referred back to the Board for further action on behalf of the Company. In
connection with such further action, the Disinterested Member, acting through
its representatives on the Board, shall thereafter have the right to exercise a
casting (i.e., controlling) vote on all matters considered by the Board with
respect to such matter. For the avoidance of doubt, the purpose of such casting
vote is to enable the Disinterested Member to control all deliberations of the
Board in connection with such matter, including the right to take any such
action (or to forebear from taking such action). Without limiting the foregoing,
such Disinterested Member, acting through its representatives on the Board,
shall be authorized, in the name and on behalf of the Company, to assert any
claim of breach by the Interested Member or its Affiliates of their respective
obligations under any of the Ancillary Agreements between the Interested Member
and the Company or to defend any assertion by the Interested Member or its
Affiliates that the Company has breached its obligations under any of the
Ancillary Agreements between the Interested Member and the Company.
ARTICLE VI
RIGHTS AND OBLIGATIONS OF MEMBERS
6.1 LIMITATION OF LIABILITY. Each Member's liability shall be
limited as set forth in this LLC Agreement, the Delaware Act and other
applicable law. The Company shall observe all corporate formalities and shall
maintain books and records and bank accounts separate from each of its Members.
The failure of the Company to observe the formalities or requirements relating
to the exercise of its powers or management of its business or affairs under
this LLC Agreement or the Delaware Act shall not be grounds for imposing
personal liability on the Members or their Affiliates or the Directors or
officers of the Company for liabilities of the Company. Except as otherwise
provided by law, a Member and its Affiliates will not be personally liable for
any debts, liabilities or losses of the Company, whether arising in contract,
tort or otherwise, beyond the Member's Capital Contributions and beyond any
obligation of the Member under Article VIII to make Capital Contributions.
6.2 RIGHTS AND DUTIES OF MEMBERS.
(a) The rights, duties and obligations of the Members shall be as set
forth in this Agreement and neither Member or its Affiliates shall be liable to
the other Member or its Affiliates in connection with the formation, operation
or dissolution of the Company, except as
<PAGE>
specifically provided by this Agreement. Without limiting the foregoing, the
parties specifically acknowledge and agree that neither Member shall have any
fiduciary duty to the other Member whether under the Delaware Act, whether
implied in law, or otherwise implied by the terms of this Agreement. Neither
Member nor its Affiliates shall assert in any litigation, controversy or
proceeding a position contrary to the foregoing or to the waivers and
limitations otherwise set forth in this Agreement. The Members intend that this
Section 6.2 shall be given the maximum effect permitted under applicable law,
including under Section 18-1101 of the Delaware Act.
(b) Notwithstanding the foregoing, the Agreement shall be without
prejudice to the rights, duties and obligations of the Members and their
Affiliates under the Ancillary Agreements and any other agreements between the
Members and their respective Affiliates.
6.3 APPROVAL OF MAJOR MATTERS. The following matters shall
require Member Approval:
(a) approval of the three year plan for the first three
Fiscal Years commencing January 1, 1998;
(b) the sale, exchange or other disposition of all, or
substantially all, of the Company's assets (other than in the ordinary course of
the Company's business), whether as part of a single transaction or a series of
transactions;
(c) entering into by the Company of any new line of
business not permitted under Section 3.1;
(d) calls for additional Capital Contributions pursuant
to Section 8.2;
(e) the adoption of any stock option, phantom stock; or
similar employee plan;
(f) the making of any distributions or the declaration of
any dividends to the Members pursuant to Section 9.3;
(g) any extension of the Initial Term or the Renewal Term
pursuant to Section 2.5;
(h) any modification of the provisions of Section 3.3;
(i) the lending of any amounts to the Company by the
Members pursuant to Section 9.7 (but not pursuant to Section 8.2(b)); and
(j) such other matters as may require Member Approval
under the terms of this Agreement.
6.4 COMPANY BOOKS. In accordance with Section 9.8, the Company
shall maintain and preserve (or cause to be maintained and preserved), during
the term of the Company and for
<PAGE>
four (4) years thereafter, all accounts, books and other relevant Company
documents. Upon reasonable request, each Member shall have the right, during
ordinary business hours, to inspect and copy those Company documents at the
expense of the requesting Member.
6.5 PRIORITY AND RETURN OF CAPITAL. Except as may be expressly
provided in Article IX, neither Member shall have priority over the other Member
for the return of Capital Contributions or for Net Profits, Net Losses or
distributions; provided that this Section 6.5 shall not apply to loans (as
distinguished from Capital Contributions) which a Member has made to the
Company.
6.6 LIABILITY OF A MEMBER TO THE COMPANY. Notwithstanding Section
6.1:
(a) a Member that rightfully receives the return in whole
or in part of its "contribution" (as defined in section 18-101(3) of the
Delaware Act) to the Company is nevertheless liable to the Company to the extent
now or hereafter provided by the Delaware Act; and
(b) a Member who receives a distribution made by the
Company which is in violation of this LLC Agreement or Applicable Law shall be
liable to the Company for the full amount of such distribution.
6.7 CONFLICTS OF INTEREST, CONTRACT WITH MEMBERS OR AFFILIATES.
Except for the Ancillary Agreements, each Member and its respective Affiliates
shall disclose to the Board and the other Member all conflicts of interest that
such Member or Affiliate may have with the Company with respect to any specific
transaction, agreement or other relationship with the Company (and any interest
any of them may have in any entity doing business with the Company), to the
extent that the transaction, agreement or relationship is subject to Board
Approval or Member Approval.
ARTICLE VII
ACTIONS BY MEMBERS
7.1 MEETINGS OF MEMBERS. The Members shall meet from time to time
as and when may be mutually agreed by them; provided, however, that if any
action requiring Member Approval is proposed by the Board or by either Member,
the Members shall meet as expeditiously as possible to consider and act upon
such matter. The presence in person of each Member (acting through its duly
appointed representatives) shall constitute a quorum at any such meeting of the
Members.
7.2 PLACE OF MEETINGS. The location of any meeting of the Members
shall be determined by Member Approval. If no designation is made by Member
Approval, the place of meeting shall alternate between the principal executive
office of the Company and Paris, France.
7.3 NOTICE OF MEETINGS. Except as provided in Section 7.4, written
notice stating the
<PAGE>
place, day and hour of the meeting and the purpose or purposes for which the
meeting is called shall be delivered to the other Member no fewer than ten (10)
nor more than fifty (50) days before the date of the meeting, either personally,
by facsimile, courier or by mail, by or at the direction of the Member(s) or
Director(s) calling the meeting.
7.4 NO NOTICE REQUIRED. If both of the Members shall meet at any
time and place, either within or outside of the State of Delaware, and consent
to the holding of a meeting at that time and place, the meeting shall be valid
without call or notice, and at the meeting lawful action may be taken; provided,
however, that in each such case the actions taken at such meeting are recorded
in a written consent prepared in accordance with Section 7.6 below.
7.5 MEMBER APPROVAL. It is acknowledged and agreed that each
Member shall have a 50% voting interest in the Company. Accordingly, a matter
submitted to the Members for their approval shall be deemed to have received
"Member Approval," and to have been "Approved by the Members", only if such
matter shall have received the affirmative vote of each Member (i.e., the
unanimous approval of both Members).
7.6 ACTION BY MEMBERS WITHOUT A MEETING. Any action that may be
taken at a meeting of Members may be taken without a meeting if the action is
evidenced by one or more written consents describing the action taken, signed by
each Member, and delivered to the Board for inclusion in the minutes or for
filing with the Company records. Any action taken under this section shall be
effective when each Member has signed the consent, unless the consent specifies
a different effective date.
7.7 WAIVER OF NOTICE. When any notice is required to be given to a
Member, a waiver of the notice in writing signed by the Member entitled to the
notice, whether before, at or after the time stated therein, shall be equivalent
to the giving of the notice.
7.8 PARTICIPATION BY CONFERENCE TELEPHONE. A Member may
participate in a meeting of the Members by means of a conference telephone or
similar communications equipment allowing representatives of each Member
participating in the meeting to hear each other at the same time. Participation
by such means shall constitute presence in person at a meeting.
ARTICLE VIII
CONTRIBUTIONS TO THE COMPANY
AND CAPITAL ACCOUNTS
8 8.1 INITIAL CAPITAL CONTRIBUTIONS.
(a) ELA and Angeion shall make an initial Capital Contribution
to the Company (the "Initial Capital Contribution") in the aggregate amount of
$12.0 million, with $6.0 million to be contributed by each. Such Initial Capital
Contributions shall be payable in cash in three (3) equal installments, to be
payable when determined by Board Approval. Interest shall not accrue or be
payable on any such subsequent installments. All such payments shall be credited
to the
<PAGE>
Capital Accounts of the Members.
(b) Notwithstanding the foregoing, if Approved by the Board,
each Member may transfer and convey to the Company, in partial satisfaction of
its obligation to make its Initial Capital Contribution, personal property or
equipment necessary for the conduct of the Company's business. All such personal
property or equipment shall be contributed on an "as is," "where is" basis. The
fair market value of such property (determined by Board Approval) shall be
credited against the remaining cash portion of the Initial Capital Contribution
then payable by the contributing Member.
8.2 ADDITIONAL CONTRIBUTIONS.
(a) Each Member shall have the obligation to make such
appropriate further Capital Contributions (in addition to the Initial Capital
Contribution) as are necessary to finance (or to secure the financing of) the
Company, as and when Approved by the Members, in order to achieve the three-year
plan Approved by the Members pursuant to Section 6.3(a) for the three Fiscal
Years commencing January 1, 1998. During the remainder of the term of this
Agreement, the Members shall use their Best Efforts to contribute such further
appropriate Capital Contributions as are necessary to finance (or to secure the
financing of) the Company, as and when Approved by the Members in accordance
with Section 6.3(d). Upon Member Approval of any such further Capital
Contributions, each Member shall pay to the Company its Percentage Interest
thereof, such payments to be made in immediately available funds on the dates
specified therefor by the Board as Approved by the Members with respect to such
further Capital Contribution. None of the terms, covenants, obligations or
rights contained in this Section 8.2 is or shall be deemed to be for the benefit
of any Person other than the Members and the Company, and no such third Person
shall under any circumstances have any right to compel any actions or payments
by the Directors or the Members. Nothing herein shall be construed as
prohibiting the Members from agreeing to fund capital needs of the Company in
the form of loans from the Members.
(b) If a Member (the "Defaulting Member") fails to advance to
the Company all or any portion of any Capital Contribution which such Defaulting
Member is obligated to make under the provisions of this Article VIII (an
"Advance Failure"), the other Member, provided it shall have previously advanced
the portion of such capital contribution required to be made by it under the
provisions of this Article VIII (the "Non-Defaulting Member"), in addition to
any other remedies it may have hereunder or at law, shall have the right, but
not the obligation, within thirty (30) days after the date specified in this
Agreement or by the Board for the payment of such Capital Contribution, to
contribute or lend all, or any portion of, the Defaulting Member's Capital
Contribution to the Company. In such event, the Non-Defaulting Member may, at
its option, elect to treat the amount so advanced as a demand loan to the
Defaulting Member, such loan to bear interest at a rate equal to 12% per annum
based on a year of 360 days through the date such loan is repaid in full.
<PAGE>
8.3 CAPITAL ACCOUNTS.
(a) The Company shall establish and maintain a separate
Capital Account for each Member. Each Member's Capital Account initially shall
be the amount of money and/or property initially contributed to capital pursuant
to Section 8.1.
(b) Each Member's Capital Account will be increased by (i) the
amount of any additional money contributed by such Member to the Company
pursuant to Section 8.2(a), (ii) the fair market value (which shall be agreed to
by the Members) of any property contributed by such Member to the Company (net
of liabilities secured by such contributed property that the Company is
considered to assume or take subject to under IRC ss. 752) and (iii) allocations
to such Member of Net Profits (or items thereof), and items of income and gain
specially allocated pursuant to Section 9.2 hereof (other than allocations
pursuant to Subsection (h) thereof).
(c) Each Member's Capital Account will be decreased by (i) the
amount of any money distributed to or on behalf of such Member by the Company,
(ii) the fair market value (which shall be agreed to by the Members) of any
property distributed to such Member by the Company (net of liabilities secured
by such distributed property that such Member is considered to assume or take
subject to under IRC ss. 752), and (iii) allocations to such Member of Net
Losses (or items thereof), and items of loss and deduction specially allocated
pursuant to Section 9.2 hereof (other than allocations pursuant to Subsection
(h) thereof).
(d) In the event of a permitted sale or exchange of a
Membership Interest in the Company pursuant to Article XII by a Member to an
Affiliate of such Member, the Capital Account of the transferor shall become the
Capital Account of the transferee to the extent it relates to the transferred
Membership Interest in accordance with Treas. Reg. ss. 1.704- 1(b)(2)(iv).
(e) For any taxable year in which the Company has an election
in effect under IRC ss. 754, the Capital Accounts shall be maintained in
accordance with Treas. Reg. ss. 1.704- 1(b)(2)(iv)(m).
(f) In the event of a distribution of Company assets (other
than a DE MINIMIS amount) in exchange for a Membership Interest of a continuing
Member or in liquidation of a Member's Interest, or the liquidation of the
Company, the Members' Capital Accounts shall be adjusted to reflect the
revaluation of Company assets on the books of the Company in accordance with
Treas. Reg. ss. 1.704-1(b)(2)(iv)(f) and shall be maintained in accordance with
Treas. Reg. ss. 1.704-1(b)(2)(iv)(g).
(g) Notwithstanding anything herein to the contrary, the
Members' Capital Accounts shall at all times be maintained in the manner
required by Treas. Reg. ss. 1.704- 1(b)(2)(iv), and any questions or ambiguities
arising hereunder shall be resolved by reference to such Regulations. Further,
such Regulations shall govern the maintenance of the Capital Accounts to the
extent this Agreement is silent as to the treatment of a particular item. In the
event Treas. Reg. ss. 1.704-1(b)(2)(iv) shall fail to provide guidance as to how
adjustments to the
<PAGE>
Capital Accounts should be made to reflect particular adjustments to Company
capital on the books of the Company, such Capital Account adjustments shall be
made in a manner that is consistent with the underlying economic arrangement of
the Members, and is based, wherever practicable, on federal tax accounting
principles.
(h) Except as otherwise required in the Delaware Act (and
subject to Section 8.2), no Member shall have any liability to restore all or
any portion of a deficit balance in the Member's Capital Account.
8.4 WITHDRAWAL OR REDUCTION OF CONTRIBUTIONS TO CAPITAL. Neither
Member shall receive out of the Company's property any part of its Capital
Contributions until all liabilities of the Company, except liabilities to
Members on account of their Capital Contributions, have been paid or there
remains property of the Company sufficient to pay them. A Member, irrespective
of the nature of its Capital Contribution, shall only have the right to demand
and receive cash in return for its Capital Contributions.
ARTICLE IX
ALLOCATIONS, INCOME TAX, DISTRIBUTIONS,
ELECTIONS, AND REPORTS
9.1 ALLOCATIONS OF NET PROFITS AND NET LOSSES.
(a) Net Profits and Net Losses for each Fiscal Year will be
allocated to the Members in accordance with their respective Percentage
Interests. The Percentage Interests shall be as follows:
Member: Percentage Interest:
Angeion 50%
ELA 50%
(b) Except as otherwise provided in this Agreement, whenever a
proportionate part of the Company's Net Profits or Net Losses is allocated to a
Member, every item of income, gain, loss or deduction entering into the
computation of such Net Profits or Net Losses, or arising from the transactions
with respect to which such Net Profits or Net Losses were realized, shall be
credited or charged, as the case may be, to such Member in the same proportion.
(c) Items of tax credit shall be allocated to the Members in
proportion to their respective Percentage Interests, but not credited or charged
to their respective Capital Accounts, in accordance with Treas. Reg. ss.
1.704-1(b)(4)(ii).
(d) As between a Member who has transferred all or part of its
Interest in the Company in accordance with Article XII and such Member's
transferee, Net Profits and Net Losses and items thereof (other than those
attributable to a Capital Transaction (as defined
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below)) for any year shall be apportioned on the basis of the number of days in
such year that each was the holder of such interest (making any adjustments
necessary to comply with the provisions of IRC ss. 706(d)(2)), without regard to
the results of the Company's operations during the period before and after the
date of such transfer; provided, however, that if both the transferor and
transferee approve and agree to pay the expenses of the Company in connection
therewith, a special closing of the Company's books shall be made as of the
effective date of such transfer and the apportionment of Net Profits and Net
Losses and items thereof shall be made on the basis of actual operating results.
Items attributable to a Capital Transaction shall be allocated to the transferee
or transferor, as the case may be, who was the Member on the date such Capital
Transaction occurred. For purposes hereof, the term "Capital Transaction" means,
with respect to any property of the Company: a financing or refinancing;
insurance recovery or condemnation award (other than for a temporary loss of
use); easement sale; sale, exchange or other disposition other than in the
ordinary course of business; or any other voluntary or involuntary disposition,
conversion or loss the proceeds of which, under normal tax accounting rules, are
considered to be capital in nature.
9.2 SPECIAL ALLOCATIONS. Except as otherwise provided, the
following overriding allocations shall be made prior to the allocations of Net
Profits and Net Losses provided for in Section 9.1 and shall be made in the
following order:
(a) Notwithstanding any other provision of this Article IX, if
there is a net decrease in Company Minimum Gain or in any Member Nonrecourse
Debt Minimum Gain during any Fiscal Year or other period, prior to any other
allocation pursuant hereto, each Member shall be specifically allocated items of
Company income and gain for such year (and, if necessary, subsequent years) in
an amount and manner required by Treas. Reg. ss.ss. 1.704-2(f) and 1.704-2(i)(4)
or any successor provisions. The items to be so allocated shall be determined in
accordance with Treas. Reg. ss. 1.704-2(j)(2) or any successor provision.
(b) Company Nonrecourse Deductions for any Fiscal Year or
other period shall be allocated to the Members in proportion to their respective
Percentage Interests.
(c) Member Nonrecourse Deductions for any Fiscal Year or other
period shall be allocated to the Member who made or guaranteed, or is otherwise
liable with respect to, the loan to which such Member Nonrecourse Deductions are
attributable in accordance with the principles of Treas. Reg. ss. 1.704-2(i) or
any successor provision.
(d) If in any Fiscal Year, any Member has a Deficit Capital
Account, whether resulting from an unexpected adjustment, allocation or
distribution described in Treas. Reg. ss. 1.704-1(b)(2)(ii)(d)(4), (5) or (6) or
otherwise, such Member shall be allocated items of Company income and gain
(consisting of a pro rata portion of each item of Company income, including
gross income, and gain for such Fiscal Year) sufficient to eliminate such
Deficit Capital Account as quickly as possible, to the extent required by such
Treasury Regulation. It is the intention of the parties that this allocation
provision constitute a "qualified income offset" within the meaning of Treas.
Reg. ss. 1.704-1(b)(2)(ii)(d).
(e) Any state, local or foreign taxes imposed on the Company
by reason of a
<PAGE>
Member being a citizen, resident or national of such state, locality or foreign
jurisdiction, to the extent the same gives rise to an item of tax income or tax
loss, shall be specially allocated to such Member.
(f) The amount of any adjustment (a "Section 482 Adjustment")
to the Company's taxable income resulting from a redistribution, reapportionment
or reallocation of gross income, deductions, credits or allowances between the
Company and a Member (or an Affiliate of such Member) effected pursuant to IRC
ss. 482 with respect to any transaction between the Company and such Member (or
such Affiliate) shall be specially allocated in full to such Member as of the
end of the taxable period with respect to which such Section 482 Adjustment was
made. If such Section 482 Adjustment results in an increase in the Company's
taxable income, then (i) the Member that is required to receive the related
special allocation shall indemnify and hold harmless the other Member, on an
after-tax basis, from and against any net additional taxes and interest,
penalties, charges or additions to tax payable by such other Member as a result
of such Section 482 Adjustment and (ii) the amount of such Section 482
Adjustment that has been specially allocated to the first Member pursuant to
this Section 9.2(f) shall be deemed to have been distributed to such Member as
of the end of the taxable period with respect to which such Section 482
Adjustment was made. If such Section 482 Adjustment results in a decrease in the
Company's taxable income, then (iii) the Member that is entitled to receive the
related special allocation shall be deemed to have contributed the amount of
such Section 482 Adjustment to the capital of the Company as of the end of the
taxable period with respect to which such Section 482 Adjustment was made and
(iv) the other Member shall pay to the first Member the amount of any tax
savings realized by such other Member as a result of such Section 482
Adjustment. For purposes of this Section 9.2(f), whenever a payment is required
to be made on an after-tax basis, the amount of such payment shall be increased
to an amount that, after deduction of all taxes required to be paid in respect
of the receipt of such increased amount, shall be equal to the required payment
amount. All recapture income or tax credit recapture resulting from a sale or
disposition of Company property shall be allocated to the Member or Members who
received allocations of the deductions or credits giving rise to such recapture
income or tax credit recapture.
(g) The special allocations provided for in subsections (a),
(b), (c) and (d) of this Section 9.2 are intended to comply with certain
requirements of Treas. Reg. ss.ss. 1.704-1 and 1.704-2. To the extent that any
of such special allocations shall have been made, subsequent allocations of
income, gains and losses and items thereof ("curative allocations") shall be
made as soon as possible and in a manner so as to cause, to the extent possible
without violating the requirements of Treasury Regulations ss.ss.1.704-1 and
1.704-2, the Capital Account balances to be as nearly as possible in the same
proportions in which they would have been had such special allocations not
occurred. In making such curative allocations, due regard shall be given to the
character of the Net Profits and Net Losses and items thereof and items of
income and gain that were originally allocated pursuant to subsections (a), (b),
(c) and (d) of this Section 9.2 in order to put the Members as nearly as
possible in the relative economic positions in which they would have been had
such special allocations not occurred. Without limiting the generality of the
foregoing, if, in any Fiscal Year, the allocations required under subsection (a)
of this Section 9.2 would cause a distortion in the economic arrangement among
the Members and it is not expected that the Company will have sufficient other
income to correct that distortion, the Board may in
<PAGE>
its discretion (and shall, if requested to do so by either Member) seek to have
the Internal Revenue service waive the minimum gain chargeback requirement in
accordance with Treas. Reg. ss. 1.704-2(f)(4).
(h) In accordance with IRC ss. 704(c) and the Treasury
Regulations thereunder, income, gain, loss, and deduction with respect to any
property contributed to the capital of the Company shall, solely for tax
purposes, be allocated among the Members so as to take account of any variation
between the adjusted basis of such property to the Company for federal income
tax purposes and its initial Gross Asset Value. In the event that the Gross
Asset Value of any Company asset is adjusted pursuant to subclause (ii) of the
definition of Gross Asset Value herein and Subsection (d) of Section 8.3 hereof,
subsequent allocations of income, gain, loss and deduction with respect to such
asset shall take account of any variation between the adjusted basis of such
asset for federal income tax purposes and the Gross Asset Value in a manner
consistent with the requirements of Treas. Reg. ss. 1.704-3(a)(6) or the
corresponding provision of successor Treasury Regulations. Any elections or
other decisions relating to such allocations shall be made in a manner that
reasonably reflects the purpose and intention of this Agreement. Allocations
pursuant to this subsection (h) are solely for purposes of federal, state, and
local taxes and shall not affect, or in any way be taken into account in
computing, any Member's Capital Account or share of Net Profits, Net Losses,
other items, or distributions pursuant to any provision of this Agreement.
9.3 DISTRIBUTIONS. All distributions of cash or other property
shall be made to the Members pro rata in proportion to their respective
Percentage Interests on the record date of the distribution. Subject to Section
9.4, all distributions of cash and property shall be made at such time as
determined by Member Approval. The Company shall at all times be entitled to
withhold or make payments to any Governmental Authority with respect to (i) any
Federal, state, local or foreign tax liability of any Member arising as a result
of such Member's participation in the Company or (ii) imposed on the Company by
reason of a Member being a citizen, resident or national of a state, locality or
foreign jurisdiction. Each such amount so withheld or paid shall be deemed to be
a distribution for purposes of this Article IX or Article XIV, as the case may
be, to the extent such Member is then entitled to a distribution. To the extent
that the amount of such withholdings or payments made with respect to any Member
exceeds such amount, the excess shall be treated as a demand loan, bearing
interest at a rate equal to 12% per annum, from the date of such payment or
withholding until such excess is repaid to the Company, by (i) deduction from
any distributions subsequently payable to such Member pursuant to this Agreement
or (ii) earlier payment of such excess and interest by such Member to the
Company. Such excess and interest shall in any case be payable not less than
thirty (30) days after demand therefor by the Chief Executive Officer. The
withholdings and payments referred to in this Section 9.3 shall be made at the
maximum applicable statutory rate under the applicable tax law unless the Chief
Executive Officer shall have received an opinion of counsel or other evidence,
satisfactory to the Chief Executive Officer, to the effect that a lower rate is
applicable, or that no withholding or payment is required.
9.4 LIMITATION UPON DISTRIBUTIONS. The Members shall not approve
any distribution that would render the Company insolvent.
<PAGE>
9.5 ACCOUNTING PRINCIPLES. The profits and losses of the Company
shall be determined in accordance with United States generally accepted
accounting principles applied on a consistent basis using the accrual method of
accounting. Each Member will report its share of each item of Company taxable
income and losses in a manner consistent with the Company's treatment of such
items for tax purposes.
9.6 INTEREST ON AND RETURN OF CAPITAL CONTRIBUTIONS. No Member
shall be entitled to interest on its Capital Contribution or to return of its
Capital Contribution, except as otherwise specifically provided for in this LLC
Agreement.
9.7 LOANS TO COMPANY. Nothing in this LLC Agreement shall prevent
any Member from making secured or unsecured loans to the Company, provided such
loan is Approved by the Members. If a Member or an Affiliate of a Member lends
any amounts to the Company, the loan shall be a debt of the Company to that
Member or Affiliate of that Member, not a Capital Contribution, and shall bear
interest and be repaid on terms Approved by the Members. In addition, any such
loans shall not be regarded as an increase in the lending Member's Capital
Account and shall not entitle that Member to any increased share of Company's
income, losses or distributions.
9.8 RECORDS, AUDITS AND REPORTS. At the expense of the Company,
the Board shall maintain records and accounts of all operations and expenditures
of the Company. At a minimum, the Company shall keep at its principal place of
business the following records:
(a) a current list of the full name and last known business,
residence or mailing address of each Member and Director, both past and present;
(b) a copy of the Certificate of Formation of the Company and
all amendments thereto, together with executed copies of any powers of attorney
pursuant to which any amendment has been executed;
(c) copies of the Company's Federal, state and local income
tax returns and reports, if any, for the four most recent years;
(d) copies of the currently effective LLC Agreement, copies of
any writings permitted or required with respect to a Member's obligation to
contribute cash or property to the Company, and copies of any financial
statements of the Company for the three most recent years;
(e) minutes of every annual meeting, special meeting and
court-ordered meeting of (i) the Members and (ii) the Board; and
(f) any written consents obtained from the Members or the
Directors for actions taken by the Members or the Board, as applicable, without
a meeting.
9.9 RETURNS AND OTHER ELECTIONS. The Board shall cause the
preparation and timely filing of all tax returns required to be filed by the
Company pursuant to the IRC and all other tax returns deemed necessary and
required in each jurisdiction in which the Company does business.
<PAGE>
Copies of such returns, or pertinent information from such returns, shall be
furnished to the Members within a reasonable time after the end of each Fiscal
Year. All elections permitted to be made by the Company under federal or state
laws shall be made by Board Approval.
9.10 TAX MATTERS PARTNER. Angeion is hereby designated as the
Member to serve as "tax matters partner" (as defined in Section 6231 of the IRC)
and, as such, is authorized and required to represent the Company in connection
with all examinations of the Company's affairs by tax authorities, including any
resulting judicial and administrative proceedings. Angeion shall provide ELA
with prompt written notice of all tax audits, litigation and other proceedings
and ELA shall be entitled to have a representative present at all such
proceedings or at any other meetings with tax authorities. No such proceeding or
matter shall be settled by Angeion without the prior written consent of ELA. In
its capacity as "tax matters partner," Angeion shall execute on behalf of the
Company all Federal, state and local income tax returns of the Company and
oversee the tax affairs of the Company in the overall best interests of the
Company. Angeion shall have the right to be reimbursed by the Company for any
reasonable out-of-pocket expenses incurred by it in the performance of its
duties as "tax matters partner."
ARTICLE X
OPERATIONS; PRODUCT PURCHASES
10.1 ANNUAL OPERATING BUDGETS.
(a) The Fiscal Year of the Company shall be the calendar year.
Not later than September 30 of each Fiscal Year (commencing on September 30,
1998), the Chief Executive Officer shall submit to the Board for its approval a
proposed operating budget (each a "Proposed Budget") for the subsequent Fiscal
Year. Each Proposed Budget shall include at least the following information for
the next succeeding Fiscal Year of the Company broken down on a quarterly basis:
(i) a projected profit and loss statement;
(ii) a projected balance sheet;
(iii) a projected cash flow statement;
(iv) projected capital expenditures; and
(v) provisions for contingencies.
Each Proposed Budget shall be subject to Board Approval (as so approved, an
"Approved Budget"). Exhibit E hereto sets forth the detailed operating budget
for the (i) balance of the current Fiscal Year (i.e., the Fiscal Year ending
December 31, 1997) and (ii) the first full Fiscal Year (i.e., the Fiscal Year
ending December 31, 1998).
<PAGE>
(b) Following Board Approval of any Proposed Budget, the Chief
Executive Officer shall have authority, subject to the remaining provisions of
this Agreement, to implement each Approved Budget; provided, however, that
notwithstanding any such prior approval of an Approved Budget, the Chief
Executive Officer shall not have authority, without obtaining prior Board
Approval, to effect any capital expenditure set forth in such Approved Budget
which exceeds the amount of $1.0 million or any other matter with respect to
which the Board has specifically required the Chief Executive Officer to obtain
further Board Approval prior to entering into the transaction.
(c) If a Proposed Budget is not Approved by the Board, the
Member objecting to any aspect of such Proposed Budget shall identify the
specific line items or amounts to which it objects (a "Disputed Budget Item").
In the event of such non-approval, the Chief Executive Officer shall implement
the Proposed Budget for the Fiscal Year in question for all items which are not
Disputed Budget Items. With respect to all Disputed Budget Items (and all items
which are to be expended only if a Disputed Budget Item is expended), such
Disputed Budget Items shall be replaced by the corresponding items contained in
the Approved Budget for the preceding year (or the Proposed Budget for such
preceding year, if the same did not become an Approved Budget), in each case
modified by a PPI Adjustment. For purposes hereof, a "PPI Adjustment" shall
mean, with respect to any item, the amount of such item multiplied by a
fraction, the numerator of which shall be the last Producer Price Index
published on or before the first day of the Fiscal Year to which such Proposed
Budget applies and the denominator of which shall be the last Producer Price
Index published on or before the first day of the immediately preceding Fiscal
Year. The Producer Price Index shall mean the Producer Price Index published by
the Bureau of Labor Statistics of the United States Department of Labor, All
Cities U.S. Average. All Items (1982-1984 = 100), or any successor index
thereto, appropriately adjusted. If the Producer Price Index ceases to be
published, and there is no successor thereto, such other index as is Approved by
the Board, as appropriately adjusted, shall be substituted for the Producer
Price Index.
(d) From time to time, the Chief Executive Officer shall
submit to the Board an updated forecast of cash flows and such other financial
information as the Board may request.
10.2 SUPPLY AGREEMENTS. xx xx xxxxxxxxxxxx xxx xxxxxx xxxx xxx
xxxxxxxxxxxxx xx xxxx xxxxxxxx xxxxxxx xxxxx xxx xxxxxx xxxxxxxxxx xx xxxxx
xxxxx xxx xxxxxxx xx xxx xxxxxx xxxxxxxxxx xxxxx xx xxxx xx xxxxxxxxxx xxxx xxx
xxxxxxxxx xxxxxxxx x xxxx xxxxxxxx xxxxxx xxxxx xx xxxxxxxxxxx xxxxx xxx xxxxxx
xxxxxxxxxx xx xx xxxxxx xxxxx xx xxxxxxxxxx xxxx xxx xxxxxx xxxxxxx xxxxx
xxxxxxx xxx xx xxxx xxxxxxxr xxxxxx xxxxx xx xxxxx xx xxxxxx xxxxxxxx xx xxxxx
xxxxxxxxx xxxxxx xxx xx xxxxxxxx xxxx xxxxxxx xxxxxxxxx xxxxxxx xxx xxxx xxxxxx
xxxxx xxxxx x xxxxxx xxxxx xxxxxx xxxxxx xxx xxx xxxxxxx xx xxx xxxxx xx xxx xx
xxx xxx xx xxx xxxxxx xxxxx xxxxxx xxxxxx xxxxx xx xxx xxxx xx xxx xxxxxxxxx xxx
xxxx xxxxxxx xxxxxxxx.
<PAGE>
10.3 THIRD PARTY CLAIMS.
(a) Subject to Section 10.3(b) below, it is acknowledged and
agreed that, as between the Members and their respective Affiliates, (i) ELA
shall be responsible for, and shall assume the defense of and indemnify and hold
harmless the Company, Angeion and Angeion's Affiliates from and against, all
Third Party Claims arising out of or related to any Products supplied to the
Company by ELA under the ELA Supply Agreement, and (ii) Angeion shall be
responsible for, and shall assume the defense of and indemnify and hold harmless
the Company, ELA and ELA's Affiliates from and against, all Third Party Claims
arising out of or related to any Products supplied to the Company by Angeion
under the Angeion Supply Agreement. The Third Party Claims described sub-clauses
(i) and (ii) of this Section 10.3(a) are referred to collectively as the
"Member-Indemnified Third Party Claims").
(b) Notwithstanding Section 10.3(a) above, it is further
acknowledged and agreed that, pursuant to the terms of the Supply Agreements,
the Company has agreed to indemnify ELA and Angeion, respectively, for certain
Third Party Claims which are directly caused by misuse, wilful misconduct or
negligent acts or negligent failures to act on the part of the Company
("Company-Indemnified Third Party Claims"), as further provided in the Supply
Agreements.
(c) If either Member receives information indicating that a
Company- Indemnified Third Party Claim or a Member-Indemnified Third Party Claim
exists or has been asserted, such Member shall immediately notify the other
Member and the Board in writing of such claim, together with reasonable
background information concerning the nature of such claim.
(d) The Members shall cooperate with each other, and shall
cause the Company to cooperate with each of them, in the investigation and
defense of any Member- Indemnified Third Party Claims or Company-Indemnified
Third Party Claims, as applicable. Each Member shall, when reasonably requested
by the other Member or the Company, provide records and information to the
Company and the other Member to assist the Company and such Member in the
investigation and defense of any such claims; provided, however, that the Member
and its Affiliates providing such assistance shall be reimbursed for the
reasonable out-of-pocket costs incurred in providing such assistance (i) by the
Company, in the case of Company-Indemnified Third Party Claims, or (ii) by ELA
or Angeion, as applicable, in the case of Member-Indemnified Third Party Claims.
(e) INSURANCE. The Company and each Member will maintain
insurance as set forth on Schedule 10.3(e).
<PAGE>
ARTICLE XI
INTELLECTUAL PROPERTY
11.1 GENERAL PRINCIPLES. All Products (as that term is defined in
the Supply Agreements) manufactured and supplied to the Company under the Supply
Agreements are being manufactured for the Company and, unless Approved by the
Board, shall bear only the ELA Trademarks or the Company Trademarks.
11.2 MEMBER MARKS. The Company shall have no rights to use any
trademark, service mark, logo or tradename of a Member or its Affiliates (the
"Member Trademarks") without a prior written license agreement with such Member
or Affiliate covering the use of such Member Trademarks in a form to be mutually
agreed by the Members, pursuant to which the Company shall be granted a
royalty-free license to such Member Trademarks during the term of this
Agreement. As soon as reasonably practicable after the execution and delivery of
this Agreement, ELA and the Company will enter into a license agreement in a
form mutually acceptable to the Members pursuant to which ELA will license to
the Company, for the term of this Agreement, for certain Member Trademarks of
ELA and its Affiliates (the "ELA Trademarks") in connection with the Company's
sale and distribution of Products under the Supply Agreements. It is
acknowledged and agreed that ELA and its Affiliates will retain the right to use
all ELA Trademarks in connection with existing and future sales of Cardiac
Stimulation Devices in all territories outside the United States. The Company
shall not use any other Member Trademarks in connection with the business of the
Company except upon Board Approval. In the event of a dissolution of the Company
or termination of this Agreement, each of the aforesaid trademark licenses shall
automatically terminate and all rights in and to the Member Trademarks covered
thereby shall revert to the Member that owns such marks, and the other Member or
its Affiliates shall not have any right to use, and hereby covenants and agrees
not to use, such Member Trademarks for any use or activity. For the avoidance of
doubt, the Member that owns such Member Trademarks shall retain the full and
unrestricted right, notwithstanding such dissolution of the Company or
termination of this Agreement, to continue to use such marks in the United
States and elsewhere in the world, whether in connection with the manufacture,
sale and distribution of Cardiac Stimulation Devices that such Member is
entitled to undertake or otherwise, following any dissolution of the Company or
termination of this Agreement. Except as otherwise set forth in any Ancillary
Agreement, as required to identify a Member as a Member of the Company, or as
may be required by a Governmental Authority to identify the manufacturer of any
product, the Company shall have no right to use the name of a Member or its
Affiliates.
11.3 COMPANY MARKS. The Company may own by adoption or acquisition
trademarks, service marks, logos or tradenames, other than any then-existing or
then-proposed Member Trademarks, for use in connection with the business of the
Company (the "Company Trademarks") only upon Board Approval. In the event of a
dissolution of the Company or termination of this Agreement, all of the Company
Trademarks shall be abandoned and neither Member nor its Affiliates shall have
any right to use, and each hereby covenants and agrees not to use, such Company
Trademarks for any use or activity: provided, however, that in the event
<PAGE>
of a Change of Control Withdrawal, the Non-Resigning Member may assign or
transfer any Company Trademarks to such Non-Resigning Member for any use or
activity.
11.4 PATENTS.
(a) Any and all patents and patent applications filed on
behalf of the Company with respect to any invention by an employee or contractor
of the Company which is required to be assigned to the Company shall be held by
the Company. The preparation and prosecution of any such patents and patent
applications shall be undertaken at the discretion of the Chief Executive
Officer by patent counsel designated by the Chief Executive Officer subject to
Board Approval, and the costs of such patents and patent applications shall be
borne by the Company.
(b) Upon any dissolution or termination of the Company:
(i) such Patents and patent applications shall
be assigned jointly to the Members;
(ii) each Member shall have the right as a joint
owner to exercise all rights with respect to
such patents and patent applications,
including, without limitation, the right to
make, use and sell, or authorize third
parties to make, use and sell, any products
derived from such patents and patent
applications;
(iii) licensees of the Members shall have the
right to grant further sublicenses;
(iv) Members and their licensees shall have the
right to take any action specified in (i)
above without any obligation to make any
payments to, provide an accounting to, or
obtain the consent of the other Member; and
(v) Each Member agrees and covenants to
cooperate reasonably with the other Member
with regard to any continuing prosecution of
such patents, to jointly share any fees and
costs of such patents and to consult with
the other Member concerning the enforcement
of such patents.
11.5 COPYRIGHTS. It is understood and agreed by the Members that
the Company may prepare materials in a fixed medium of expression regarding the
Products for dissemination to customers of the Company or the public (the
"Published Works"). The Company agrees to assign and does hereby assign its
copyright and all other right, title and interest in and to such Published Works
to the Member or its Affiliates who supplies the Product associated with such
Published Works, provided that the Company shall retain the right to freely
copy, publish and distribute such Published Works during the term of this
Agreement or with the express permission of such Member. In the event that a
Published Work is associated with Products of both Members or their Affiliates,
then the Members or their Affiliates shall jointly own such
<PAGE>
copyright. The Company shall provide each Member with copies of any Published
Works associated with the Products of such Member and its Affiliates prior to
publication for approval and any such material not approved by such Member shall
not be used.
11.6 EXCLUSIVITY. During the term of this Agreement, each Member
and its Affiliates shall supply such Products (as it is obligated under its
Supply Agreement) exclusively to the Company for sale in the United States and
shall not sell any such Products in the United States for its own account or to
any Person except as contemplated by the Supply Agreements. Prior to entering
into any contract with any third party with regard to the manufacture, purchase,
sale or distribution in the United States of any Other Cardiac-Related Devices
or other than for research or clinical testing of such Other Cardiac-Related
Devices, each Member agrees to discuss in good faith with the other the
inclusion of such Other Cardiac-Related Devices under the relevant Supply
Agreements, subject to mutually agreeable terms. Nothing in this Section 11.6
shall create an obligation between the Members to agree to include Other
Cardiac-Related Devices in the relevant Supply Agreements and any obligation to
include Other Cardiac-Related Devices will arise only as and to the extent that
an agreement is reached between the relevant Member and the Company in writing.
11.7 DEVELOPMENT REPORTS. Subject to Article XVI, each Member shall
report at least annually to the Board regarding the product development
activities of the Member and its Affiliates related to the Products and Other
Cardiac-Related Devices to the extent necessary to assist the Board in preparing
its budgets, forecasts and strategic plans.
11.8 REGULATORY MATTERS. Each Member shall be responsible for
obtaining any and all authorizations, consents and approvals (including all
clinical testing) from all Governmental Authorities required for the marketing,
sale and distribution in the United States of the Products supplied by such
Member to the Company pursuant to the Supply Agreements, with ELA responsible
therefor under the ELA Supply Agreement and Angeion responsible therefor under
the Angeion Supply Agreement. All other authorizations, consents and approvals,
if any, required by the Company shall be obtained by the Company.
ARTICLE XII
TRANSFERABILITY
Subject to Section 17.1, without unanimous consent of the Members,
neither Member shall have the right to:
(a) sell, assign, pledge, exchange or otherwise transfer for
consideration, (collectively, "sell") all or any part of its Membership
Interests;
(b) gift, bequeath or otherwise transfer for no consideration
(whether or not by operation of law, except in the case of bankruptcy) all or
part of its Membership Interest; or
<PAGE>
(c) resign or otherwise withdraw as a Member from the Company
prior to the dissolution and winding up of the Company, except as otherwise
provided in Section 15.4 hereof.
ARTICLE XIII
REPRESENTATIONS AND WARRANTIES
Each Member hereby represents and warrants to the other that as of the
date hereof:
(a) Each is a corporation duly organized and existing in good
standing under the laws of its respective jurisdiction of incorporation.
(b) Each has the requisite corporate power and authority to
execute, deliver, and perform its obligations in accordance with the terms of
this Agreement. This Agreement has been duly executed and delivered by it. The
Agreement constitutes a valid and binding obligation enforceable against it in
accordance with its terms, except as such enforceability may be limited by
applicable insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally the enforcement of, creditors' rights and
remedies or by equitable principles of general application.
(c) Except as set forth on Schedule 13, the execution,
delivery and performance of the Agreement and the consummation of the
transactions contemplated hereby do not (i) result in a violation of its
Articles of Incorporation or By-laws, as applicable or (ii) conflict with, or
constitute a default (or an event which with material notice or lapse of time or
both would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any material agreement, material
indenture or material instrument to which it is a party, or result in a
violation of any law, rule, regulation, order, judgment or decree applicable to
it or by which any property or asset of such Member is bound or affected (except
in the case of subclause (ii) above, for such conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations as would not,
individually or in the aggregate, have a Material Adverse Effect). No action,
suit, dispute or proceeding is pending or, to the best knowledge of such Member,
threatened against such Member which, if adversely determined, would prevent
such Member from carrying out its obligations under this Agreement.
(d) Each shall have good and marketable title in and to any
personal property that may be contributed to the Company pursuant to Section 8.1
and that, effective upon such transfer, the Company shall acquire good and
marketable title to such property, free and clear of any liens, claims or other
encumbrances of any nature whatsoever. Except as set forth in this subsection
(d), neither Member makes any warranties express or implied with respect to any
such personal property or equipment contributed by a Member, including, without
limitation, any implied warranty of merchantability or fitness for a particular
purpose.
(e) Neither Member shall be deemed to have made any
representation or
<PAGE>
warranty to the other Party except as expressly made in this Article XIII.
Without limiting the generality of the foregoing, and without prejudice to any
express representations and warranties made to either Member in this Article
XIII, neither Member makes any representation or warranty to the other with
regard to any issues related to Intellectual Property Rights, projections,
estimates or budgets or other matters previously delivered to or made available
to the other with respect to future revenues, expenses, expenditures or future
results of operations. Nothing in this Article XIII(d) shall limit any remedy
that may be available to a Member pursuant to Applicable Law.
ARTICLE XIV
DISSOLUTION AND WINDING UP
14.1 DISSOLUTION.
(a) The term of the Company shall end, and the Company shall
be dissolved, upon the occurrence of the following events (each a "Permitted
Withdrawal"):
(i) automatically upon expiration of the Initial
Term or the Renewal Term, as applicable, in
accordance with Section 2.5;
(ii) at any time upon Member Approval; or
(iii) by either Member, upon written notice to the
other Member, if the Products supplied by
the Member giving such notice under the
relevant Supply Agreement constitute less
than 10% of the Company's total sales of all
Products for any Fiscal Year, such written
notice to be provided to the other Member
within sixty (60) days of such Member's
receipt of financial statements for such
Fiscal Year.
(b) The term of the Company and this Agreement (subject to
Section 17.3) shall end, and the Company shall be dissolved, upon the election
of a Member (the "Non- Withdrawing Member") following the occurrence of either
of the following events (each an "Involuntary Withdrawal") with respect to the
other Member (the "Withdrawing Member"): (A) any Bankruptcy event involving the
Withdrawing Member or (B) any material breach of this Agreement or any of the
Ancillary Agreements by the Withdrawing Member, which material breach remains
uncured after written notice and a reasonable opportunity to cure (which shall
not exceed 90 days) such breach from the Non-Withdrawing Member.
<PAGE>
14.2 CHANGE OF CONTROL.
(a) Without limiting Section 14.1 above, if a Change of
Control has occurred with respect to either Member, such Member (the "Resigning
Member") may unilaterally withdraw from the Company by giving written notice (a
"Resignation Notice") of such withdrawal to the other Member (the "Non-Resigning
Member") within forty-five (45) days of the occurrence of such Change of
Control.
(b) If a Resigning Member submits a Resignation Notice to the
Non-Resigning Member to withdraw from the Company (a "Change of Control
Withdrawal"):
(i) The Non-Resigning Member shall have the
right, by written notice to the Resigning
Member (the "Continuation Notice") within
thirty (30) days of its receipt of the
Resignation Notice, to elect to continue the
Company. In such event, the Non-Resigning
Member shall pay to the Resigning Member, at
a closing to be held within thirty (30) days
of the Continuation Notice, an amount in
cash equal to 80% of the Fair Market Value
of the Membership Interest of the Resigning
Member as of the date of such closing. Such
payment may be offset against any other
amounts, if any, that are otherwise payable
to the Resigning Member in connection with
its withdrawal from the Company, whether
upon dissolution of the Company or the
Resigning Member's withdrawal therefrom.
From and after the closing date of such
transfer of the Resigning Member's
Membership Interest, the Resigning Member
shall have no further interest in the
Company. This Agreement shall terminate on
the date of such closing for all purposes
hereunder, subject to Section 17.3 and the
continued obligations of the Resigning
Member under Section 14.2(b)(ii) below.
(ii) If the Non-Resigning Member elects to
continue the Company by submitting a
Continuation Notice as aforesaid, the
Resigning Member shall continue
manufacturing its then-current Products for
the Company, pursuant to the relevant Supply
Agreement, for the remainder of the Initial
Term, or the remainder of the Renewal Term
if such Renewal Term has already begun at
the time of the Continuation Notice.
(c) The Non-Resigning Member shall also have the right, by
written notice to the Resigning Member within thirty (30) days of its receipt of
the Resignation Notice, to cause the dissolution of the Company as a result of
the Change of Control Withdrawal effected by such notice; provided, however,
that if the Non-Resigning Member fails to deliver a Continuation Notice within
the aforesaid thirty (30) day period, it shall be deemed to have elected to
dissolve the Company pursuant to this Section 14.2(c). In such event, the
Resigning Member shall pay to the Non-Resigning Member, at a closing to be held
within thirty (30) days of such election or
<PAGE>
deemed election (as applicable), an amount in cash equal to 120% of the Fair
Market Value of the Membership Interest of the Non-Resigning Member as of the
date of such election or deemed election (as applicable). Such amount may be
offset against any distributions from the Company in connection with the
dissolution of the Company due to the Resigning Member pursuant to Section 14.1.
(d) From and after any Change of Control Withdrawal, the
Resigning Member and its Affiliates shall refrain from soliciting employees of
the Non-Resigning Member, its Affiliates or the Company for a period of two (2)
years from the date of such Change of Control Withdrawal if the Company is
continued pursuant to Section 14.2(b) above. If the Company is liquidated
pursuant to Section 14.2(c) above, each Member and its Affiliates shall have the
right to solicit and make offers of employment to any individual who is or was
an employee of the Company as of the date of liquidation or within one (1) year
prior thereto; provided, that the maximum number of such former employees that
either Member shall have the right to employ (whether as employees, consultants
or otherwise and whether on a full- or part-time basis) during the period from
the date of liquidation until the second anniversary of such date shall be 50%
of such former employees.
(e) For purposes of this Section 14.2, the "Fair Market Value"
of a Membership Interest shall be agreed upon by the Members and shall be based
upon the goodwill, profits, sales and results of operations of the Company prior
to dissolution. Except as otherwise agreed by the Members, Fair Market Value of
the Company shall not be more than $10 million.
(f) If the Members are not able to reach agreement on the Fair
Market Value of a Membership Interest, they shall negotiate in good faith to
attempt to resolve their differences. If such negotiations shall fail to result
in an agreement within thirty (30) days, the Members shall each submit their
Fair Market Value proposals to the chief executive officers of the Members to
attempt to resolve their differences. If such chief executive officers shall
fail to reach agreement within fifteen (15) days, the Members shall submit their
final proposals to an independent third party decisionmaker who shall pick
whichever of the final proposals more closely adheres to the principles set
forth in Section 14.2(e). The third party decisionmaker shall be selected by
joint agreement of the two Members (or if they are unable to agree within ten
(10) days, then by the American Arbitration Association ("AAA"); provided,
however, that the AAA shall not administer the proceedings). The decision of
such third party shall be final and non-appealable. The Person selected to be
the third party decisionmaker shall have experience in the medical device
industry and in distribution and other relevant commercial matters in such
industry. Preference shall be given to the selection of an individual with
experience as an arbitrator, but the individual need not be a lawyer. The
Members shall each submit their final proposals to the independent decisionmaker
with supporting analyses and other information as they deem appropriate within
fifteen (15) days after selection of the decisionmaker. No Member shall have EX
PARTE communications with the decisionmaker during any time period immediately
relevant to the decisionmaker's actions in connection with this Agreement. Each
Member shall be entitled to rebut the presentation of the other and to submit a
final summary argument after review of the other Member's rebuttal, in each case
within fifteen (15) days after the final proposal submissions. Each of the
submissions of each Member (including their respective final proposals) will be
made concurrently to the independent decisionmaker and will be opened
<PAGE>
simultaneously and provided to the other Member upon such opening.
14.3 LIMITATION ON WITHDRAWALS. Except as expressly provided in
Sections 14.1 and 14.2, neither Member shall voluntarily withdraw or take any
other action which causes the dissolution of the Company. In connection with any
Involuntary Withdrawal, the Withdrawing Member shall be liable to the Company or
the Non-Withdrawing Member for any damages arising out of or related to any such
Involuntary Withdrawal. Any such damages duly determined to be payable by the
Withdrawing Member may be offset against any distributions due to the
Withdrawing Member from the Company upon its dissolution or otherwise. Any
damages arising out of any Involuntary Withdrawal shall be monetary damages only
(and not specific performance).
14.4 WINDING UP, LIQUIDATION AND DISTRIBUTION OF ASSETS. Upon
dissolution of the Company, for any reason under Sections 14.1 and 14.2, an
accounting shall be made by the Company's independent accountants of the
accounts of the Company and of the Company's assets, liabilities and operations
from the date of the last previous accounting until the date of dissolution. In
connection with any Permitted Withdrawal, the Members, acting through their
representatives on the Board, shall jointly oversee and control the dissolution
of the Company and the winding up of its affairs under this Article XIV. In
connection with any Involuntary Withdrawal or any Change of Control Withdrawal,
the Non-Withdrawing Member or the Non- Resigning Member, as applicable (the
"Liquidating Member"), shall oversee and control any related dissolution of the
Company. Subject to Section 14.2(b)(ii), if the Company is dissolved and its
affairs are wound up, then all licenses and other rights granted by the Members
to the Company hereunder and under the Ancillary Agreements shall terminate and
all rights thereunder shall revert to the grantor thereof, and the provisions of
Article XI shall govern the post-liquidation use of any Company Trademarks,
Member Trademarks and other intellectual property rights. Further, the Board or
the Liquidating Member, as applicable, shall, subject to Sections 14.1 and 14.2:
(a) Except as set forth above, sell or otherwise liquidate all
of the Company's assets as promptly as practicable (except to the extent the
Board or Liquidating Member may determine to distribute any assets to the
Members in kind).
(b) Allocate any profit or loss resulting from such sales to
the Members' Capital Accounts in accordance with Article IX.
(c) Discharge all liabilities of the Company, including
liabilities to any Member who is a creditor, to the extent otherwise permitted
by law, other than liabilities to Members for distributions, and establish such
Reserves as may be reasonably necessary to provide for contingencies or
liabilities of the Company (for purposes of determining the Capital Accounts of
the Members, the amounts of such Reserves shall be deemed to be an expense of
the Company).
(d) Distribute the remaining assets in the following order:
(i) if any assets of the Company are to be
distributed in kind, the net
<PAGE>
fair market value of those assets as of the
date of dissolution shall be determined by
independent appraisal or by agreement of the
Members; those assets shall be deemed to
have been sold as of the date of dissolution
for their fair market value, and the Capital
Accounts of the Members shall be adjusted
pursuant to the provisions of Article IX and
Section 8.3 of this LLC Agreement to reflect
such deemed sale; and
(ii) the positive balance (if any) of each
Member's Capital Account (as determined
after taking into account all Capital
Account adjustments for the Company's
taxable year during which the liquidation
occurs) shall be distributed to the Members,
either in cash or in kind, as determined by
Board Approval or by the Liquidating Member,
as applicable, with any assets distributed
in kind being valued for this purpose at
their fair market value as determined
pursuant to Section 8.3(c); any such
distributions to the Members in respect of
their Capital Accounts shall be made in
accordance with the time requirements set
forth in Treas. Reg.ss.
1.704-1(b)(2)(ii)(b)(2).
(e) Notwithstanding anything to the contrary in this LLC
Agreement, upon a liquidation within the meaning of Treas. Reg. ss.
1.704-1(b)(2)(ii)(g), if either Member has a Deficit Capital Account (after
giving effect to all contributions, distributions, allocations, and other
Capital Account adjustments for all taxable years, including the year during
which such liquidation occurs), the Member shall have no obligation to make any
Capital Contribution, and the negative balance of the Member's Capital Account
shall not be considered a debt owed by the Member to the Company or to any other
Person for any purpose whatsoever.
(f) The Board or the Liquidating Member, as applicable, shall
comply with any requirements of Applicable Law pertaining to the winding up of
the affairs of the Company and the final distribution of its assets.
14.5 CERTIFICATE OF CANCELLATION. A certificate of cancellation
shall be filed in the office of the Secretary of State to cancel the Certificate
of Formation upon the dissolution and winding up of the Company.
14.6 RETURN OF CONTRIBUTION NONRECOURSE TO OTHER MEMBERS. Except as
provided by law or as expressly provided in this LLC Agreement, upon
dissolution, each Member shall look solely to the assets of the Company for the
return of its Capital Contributions or any loans owed to it by the Company. If
the assets of the Company remaining after the payment or discharge of the debts
and liabilities of the Company are insufficient to return the Capital
Contributions of either Member, neither Member shall have any recourse against
the other Member.
14.7 NO RESIDUAL VALUE. Subject to Section 14.2(e), upon
liquidation or termination of the Company, neither Member shall have any
obligation to make any payment to the other Member in respect of goodwill or
other residual value of any kind of the Company or its
<PAGE>
property, business or assets.
ARTICLE XV
DISPUTE RESOLUTION
15.1 GENERAL DISPUTE PRINCIPLES.
(a) All disputes between or among the Members and/or
any of their Affiliates (including the Company) under this Agreement and the
Related Agreements shall be settled, if possible, through good faith
negotiations between the relevant parties.
(b) Disputes as to the specific matters referred to
in Section 14.2(f) shall be resolved as provided in such Section. All other
disputes under this Agreement and the Related Agreements shall be resolved as
provided in Section 15.2.
(c) Prior to resolving any dispute by means of
arbitration or by means of any suit, action or legal proceeding permitted under
Article 15.2, the relevant parties involved in such dispute shall refer such
dispute to their respective chief executive officers or equivalent, who shall
meet in person to negotiate in good faith the possible resolution thereof on at
least two occasions within 30 days before any such party commences arbitration
or such litigation (provided that if any such party fails or refuses to have a
representative attend such meetings within such thirty (30) day period, the
procedures of Section 15.2 shall be applicable after the conclusion of such
thirty (30) day period); and further provided, that (i) any legal proceedings
seeking interim equitable relief (including a temporary restraining order or
preliminary injunction) until such time as such interim equitable relief can be
addressed through arbitration; (ii) proceedings for provisional relief
contemplated by Section 15.2(i) below; and (iii) third party legal proceedings
under Section 15.1(d) below may be commenced immediately.
(d) If a Member or any of its Affiliates (including
the Company) is subject to a claim, demand, action or proceeding by a third
party and is permitted by law or arbitral rules to join another party to such
proceeding, this Article XV shall not prevent such joinder. This Article XV
shall also not prevent either Member or any such Affiliate from pursuing any
legal action against a third party.
<PAGE>
15.2 ARBITRATION OF OTHER DISPUTES.
(a) In the event such good faith negotiations are
unsuccessful, either Member may, after 30 days written notice to the other,
submit any controversy or claim arising out of, relating to or in connection
with this Agreement, or the breach thereof, to arbitration administered by the
American Arbitration Association ("AAA") in accordance with its then existing
International Arbitration rules (except that Sections 29 and 31 of the
Commercial Arbitration Rules in effect on the date hereof, a copy of which is
attached hereto as Schedule 15.2, shall govern in the event of any conflict
therewith (collectively, "AAA Rules") and judgment upon the award rendered by
the arbitrator may be entered in any court having jurisdiction thereof.
(b) To the extent this Section is deemed a separate
agreement, independent from this Agreement, Article XVII shall be incorporated
herein by reference. Either Member (the "Initiating Party") may commence an
arbitration by submitting a demand for arbitration ("Demand for Arbitration")
under the AAA Rules and by notice to the other Member (the "Respondent") in
accordance with Section 17.5. Such notice shall set forth in reasonable detail
the basic operative facts upon which the Initiating Party seeks relief and
specific reference to the clauses of this Agreement, the amount claimed, if any,
and any nonmonetary relief sought against the Respondent. After the Demand for
Arbitration, response and counterclaim, if any, and reply to counterclaim, if
any, have been submitted, either Member may propose additional issues for
resolution in the pending proceedings only if expressly so ordered by the
arbitrators.
(c) The place of arbitration shall be New York, New
York, and the award shall be deemed a U.S. award for purposes of the Convention
on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (the "New
York Convention").
(d) The Members shall attempt, by agreement, to
nominate a sole arbitrator for confirmation by the AAA. If the Members fail so
to nominate a sole arbitrator within 30 days from the date when the Initiating
Party's Demand for Arbitration has been communicated to the Respondent, a board
of three arbitrators shall be appointed by the Parties jointly or, if the
Members cannot agree as to three arbitrators within 30 days after the
commencement of the arbitration proceeding, then one arbitrator shall be
appointed by each of the Initiating Party and the Respondent within 60 days
after the commencement of the arbitration proceeding and the third arbitrator
shall be appointed by mutual agreement of such two arbitrators. If such two
arbitrators shall fail to agree within 75 days after commencement of the
arbitration proceeding upon the appointment of the third arbitrator, the third
arbitrator shall be appointed by the AAA in accordance with the AAA Rules.
Notwithstanding the foregoing, if any Member shall fail to appoint an arbitrator
within the specified time period, such arbitrator and the third arbitrator shall
be appointed by the AAA in accordance with its then existing rules. For purposes
of this Section, the "commencement of the arbitration proceeding" shall be
deemed to be the date upon which the Demand for Arbitration has been delivered
to the Members in accordance with Section 17.5. Any award shall be rendered by a
majority of the arbitrators. A hearing on the matter in dispute shall commence
within 90 days following selection of the arbitrators, and the decision of the
arbitrators shall be rendered no later than 90 days after
<PAGE>
commencement of such hearing.
(e) An award rendered in connection with an
arbitration pursuant to this Section shall be final and binding upon the
Members, and the Members agree and consent that the arbitral award shall be
conclusive proof of the validity of the determinations of the arbitrators set
forth in the award and any judgment upon such an award may be entered and
enforced in any court of competent jurisdiction.
(f) The Members agree that the award of the arbitral
tribunal will be the sole and exclusive remedy between them regarding any and
all claims and counterclaims between them with respect to the subject matter of
the arbitrated dispute. The Members hereby waive all IN PERSONAM jurisdictional
defenses in connection with any arbitration hereunder or the enforcement of an
order or award rendered pursuant thereto (assuming that the terms and conditions
of this arbitration clause have been complied with).
(g) The Members hereby agree that for purposes of the
New York Convention, the relationship between the Members is commercial in
nature, and that any disputes between the Members related to this Agreement
shall be deemed commercial.
(h) The arbitrators shall issue a written explanation
of the reasons for the award and a full statement of the facts as found and the
rules of law applied in reaching their decision to both Members. The arbitrators
shall apportion to each Member all costs (including attorneys' and witness fees,
if any) incurred in conducting the arbitration in accordance with what the
arbitrators deem just and equitable under the circumstances. Any provisional
remedy which would be available to a court of law shall be available from the
arbitrators pending arbitration of the dispute. Either Member may make an
application to the arbitrators seeking injunctive or other interim relief, and
the arbitrators may take whatever interim measures they deem necessary in
respect of the subject matter of the dispute, including measures to maintain the
status quo until such time as the arbitration award is rendered or the
controversy is otherwise resolved. The arbitrator shall have the authority to
award any remedy or relief (except as ex parte relief) that a court of the State
of New York could order or grant, including, without limitation, specific
performance of any obligation created under this Agreement, the issuance of an
injunction, or the imposition of sanctions for abuse or frustration of the
arbitration process, but specifically excluding punitive damages.
(i) The Members may file an application in any proper
court for a provisional remedy in connection with an arbitrable controversy, but
only upon the ground that the award to which the application may be entitled may
be rendered ineffectual without provisional relief. The Members may also
commence legal action in lieu of any arbitration under this Section 15.2 in
connection with any third party litigation proceedings or for any matter
involving disputes related to Intellectual Property Rights.
(j) After the appointment of the arbitrators, the
parties to the arbitration shall have the right to take depositions, ask
interrogatories, obtain documentation and to obtain other discovery regarding
the subject matter of the arbitration, and, to that end to use and exercise all
the same rights, remedies, and procedures, and be subject to all of the same
<PAGE>
duties, liabilities, and obligations in the arbitration with respect to the
subject matter thereof, as if the subject matter of the arbitration were pending
in a civil action before a United States District Court for the Southern
District of New York and such persons, documents or other requested material
were located in State of New York. The parties shall reach agreement with the
arbitrator on a streamlined and expedited discovery program in order to save
costs and avoid unnecessary delay in completing any arbitration and may present
to the arbitrator for a ruling any reasons for limiting such discovery in order
to save costs and avoid delay.
(k) For purposes of any suit, action, or legal
proceeding permitted under this Article XV, each Member (a) hereby irrevocably
submits itself to and consents to the non-exclusive jurisdiction of the United
States District Court for the Southern District of New York for the purposes of
any suit, action or legal proceeding in connection with this Agreement including
to enforce an arbitral resolution, settlement, order or award made pursuant to
this Agreement (including pursuant to the New York Convention, the U.S.
Arbitration Act, or otherwise), and (b) to the extent permitted by Applicable
Law, hereby waives, and agrees not to assert, by way of motion, as a defense, or
otherwise, in any such suit, action or legal proceeding pending in such event,
any claim that it is not personally subject to the jurisdiction of such court,
that the suit, action or legal proceeding is brought in an inconvenient forum or
that the venue of the suit, action or legal proceeding is improper. Each Member
hereby agrees to the entry of an order to enforce any resolution, settlement,
order or award made pursuant to this Section by the United States District Court
for the Southern District of New York and in connection therewith hereby waives,
and agrees not to assert by way of motion, as a defense, or otherwise, any claim
that such resolution, settlement, order or award is inconsistent with or
violative of the laws or public policy of the laws of the State of New York or
any other jurisdiction.
(l) All claims arising under this Agreement and all
Related Agreements brought by the Member and/or their Affiliates (including the
Joint Venture) at substantially the same time shall be referred to a single
arbitration to the extent arbitrable under this Article XV.
15.3 PARTICIPATION IN THIRD PARTY PROCEEDINGS.
(a) To the extent that the Company shall have the
right to join in any arbitration or legal proceeding initiated by or against a
Member or its Affiliates with any third party, the Member not a party to such
proceeding, acting through its representatives on the Board, shall have the
right but not the obligation to exercise a casting (i.e. controlling) vote on
any decision of the Company relating to such proceeding and the designation of
representatives of the Company in any such proceeding. Nothing in this Section
shall be construed as giving the Member not a party to such proceeding or the
Company any right to direct or control the conduct or defense of any such
proceeding. In the event the Company elects not to join in such proceeding, the
Member a party to such proceeding shall provide such documents or other
information relating to such proceeding as the Company (with the non-party
Member having the casting vote) may reasonably request to the extent such
disclosure is not prohibited and would not otherwise cause a breach of the
duties or obligations of the Member a party to such proceeding and would not
violate any Applicable Laws.
<PAGE>
ARTICLE XVI
CONFIDENTIALITY; PUBLICITY; NON SOLICITATION
16.1 CONFIDENTIAL INFORMATION.
(a) Each Member shall (and shall cause its
Affiliates, agents and representatives to), for the term of this Agreement and
for six (6) years after the expiration or termination of this Agreement for any
reason, (i) keep confidential, (ii) not disclose to others, (iii) use only for
the purposes provided for or permitted under this Agreement or the Related
Agreements and (iv) use Best Efforts, and at least the same degree of care (but
no less than a reasonable degree of care) as it uses to protect its own
Confidential Information of like importance, to prevent unauthorized use,
dissemination and disclosure of, all of the other Member's or its Affiliates'
Confidential Information, except as expressly provided for or permitted by this
Agreement. All Confidential Information shall, as between the Members and their
Affiliates remain the sole property of the disclosing party or the relevant
Affiliate. The receiving party and its Affiliates, agents and representatives
shall have no rights to the Confidential Information of the disclosing party and
its Affiliates, except provided in this Agreement. Nothing in this Section 16.1
shall prevent disclosure or use of information which is or becomes public
knowledge without the fault of the receiving party and its Affiliates, agents
and representatives or information already known to, or proven by written
evidence to have been independently derived by, the receiving party or its
Affiliates or received from a third party having the right to convey it.
Notwithstanding the foregoing, such Confidential Information may be (i)
disclosed to a Governmental Authority and to others to the extent such
disclosure may be required to be included in regulatory filings permitted under
the terms of this Agreement or required under Applicable Law; (ii) published by
the receiving party or its Affiliates, if and to the extent such publication has
been approved in writing by the disclosing party; or (iii) disclosed to the
extent required by Applicable Law or as ordered by a court or other regulatory
body having competent jurisdiction. In each of the foregoing cases, the
receiving Party will use its Best Efforts to limit the disclosure and maintain
confidentiality of such Confidential Information to the maximum extent
practicable and prior to making any such disclosure it shall use Best Efforts to
consult with the disclosing party regarding the scope of any protective order or
other confidentiality protections that may be available to limit the extent of
disclosure. Any disclosure of Confidential Information to any Affiliates, agents
or representatives of the receiving party shall be limited to a "need to know"
basis for purposes related to this Agreement; provided that (i) the receiving
party shall be responsible and liable to disclosing party for any breach of the
terms of this Section 16.1 by any Affiliate, agent or representative, and (ii)
disclosure by the receiving party to any agent or representative shall be made
pursuant to appropriate confidentiality agreements.
(b) The provisions of this Section 16.1 shall survive
and shall remain in full force and effect for six (6) years after the expiration
or termination or termination of this Agreement for any reason. After any
expiration or termination of this Agreement, upon written request, each Party
shall promptly discontinue the use of, and return within thirty (30) business
<PAGE>
days all originals and copies of, any requested Confidential Information that
was disclosed by the other Party or is the property of the other Party and that
has been fixed in any tangible means of expression. For purposes of this Section
16.1 and 16.2, L'Oreal shall be deemed an Affiliate of ELA. The Members shall
cooperate with each other to ensure that the Company abides by the terms of this
Section 16.1 and 16.2 below.
16.2 PUBLICITY. Each Member agrees and shall cause its Affiliates
to not to issue any press release disclosing the terms of, or relating to, this
Agreement, without the prior written consent of the other Member or its
Affiliates; provided; however, that neither Member shall be prevented from
complying with any duty of disclosure it may have pursuant to Applicable Law.
Such disclosing party shall use its Best Efforts to consult with the other
Member regarding the issuance of any such press release, or with regard to any
public statement disclosing the terms of this Agreement and shall use its Best
Efforts to obtain confidential treatment for any Confidential Information where
such press release or other public statement is required to be made by
Applicable Law.
16.3 NON SOLICITATION. Subject to Section 14.2, during the term of
this Agreement and for two (2) years after termination or expiration hereof,
each Member shall refrain from soliciting the personnel of the other Member,
including, without limitation, research and development personnel.
ARTICLE XVII
MISCELLANEOUS PROVISIONS
17.1 AFFILIATES. Any and all activities to be performed by any
Member hereunder may be performed by officers or employees of one or more
Affiliates of such Member provided that all actions taken by such persons on
behalf of such Member in connection with this Agreement will be the
responsibility of such Member who shall be liable to the other Member and the
Company therefor. Either Member may assign this Agreement to an Affiliate of
such Member, provided that such Affiliate is directly or indirectly 100% owned
by or 100% under common control with the assigning Member and the assigning
Member shall remain liable to the other Member for the performance of this
Agreement by such Affiliate.
17.2 NO AGENCY. Nothing contained in this Agreement will be deemed
to authorize or permit any Member to bind any other Member in any respect.
17.3 SURVIVAL. The provisions of Articles I, IX, XIV, XV, XVI and
XVII, and Sections 6.1 and 11.2 to 11.5 will survive any expiration or
termination of this Agreement or the dissolution of the Company.
17.4 ENTIRE AGREEMENT. This LLC Agreement, the Ancillary
Agreements, and the Investment and Master Strategic Relationship Agreement and
the "Related Agreements" referred to therein represent the entire agreement
among all the Members and the Company.
<PAGE>
17.5 NOTICES. Any notice or other communication required or
permitted to be given by any provision of this LLC Agreement shall be in writing
and shall be effective (a) upon hand delivery or delivery by telecopy or
facsimile at the address or number designated below (if delivered on a business
day during normal business hours where such notice is to be received), or the
first business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to be received)
or (b) on the third business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur. The addresses for such
communications shall be:
If to Angeion:
Angeion Corporation
3650 Annapolis Lane, Suite 170
Plymouth, MN 55447-5434
Telephone: (612) 550-9388
Telecopier: (612) 519-9521
Attention: Chief Executive Officer
With a copy to:
Morrison & Foerster, LLP
425 Market Street
San Francisco, CA 94105
Telephone: (415) 268-7000
Telecopier: (415) 268-7522
Attention: Gavin B. Grover, Esq.
If to the ELA:
ELA Medical, Inc.
2950 Xenium Lane North
Plymouth, MN 55441
Telephone: (612) 519-9400
Telecopier: (612) 519-9440
Attention: Chief Executive Officer
With a copies to:
Synthelabo
22 Avenue Galilee
92350 Le Plessis Robinson
FRANCE
Telephone: 33 (1) 45.37.56.67
Telecopier: 33 (1) 45.37.58.04
Attention: General Counsel
<PAGE>
and
Coudert Brothers
1114 Avenue of the Americas
New York, NY 10036-7703
Telephone: (212) 626-4400
Telecopier: (212) 626-4120
Attention: James C. Colihan, Esq.
Any party hereto may from time to time change its address for notices under this
Section 18.6 by giving at least 10 days' notice of such changed address to the
other party hereto.
17.6 BOOKS OF ACCOUNTS AND RECORDS. Proper and complete records and
books of account shall be kept or shall be caused to be kept by the Board in
which shall be entered fully and accurately all transactions and other matters
relating to the Company's business in the detail and completeness customary and
usual for business of the type engaged in by the Company. The books and records
shall be maintained as provided in Section 9.8. The books and records shall at
all times be maintained at the principal executive office of the Company and
shall be open to the reasonable inspection and examination of the Members or
their duly authorized representatives during normal business hours upon
reasonable notice.
17.7 GOVERNING LAW. This LLC Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York,
except that all matters relating to the internal governance of the Company shall
be governed exclusively by the terms of this LLC Agreement and by the laws of
the State of Delaware, and specifically the Delaware Act. To the maximum extent
permissible under applicable law, the terms of this Agreement shall prevail over
all contrary provisions of the Delaware Act and each Member irrevocably waives
and eliminates the application of all such provisions of the Delaware Act
including without limitation the entire application of Sections 18-1001,
18-1002, 18-1003, 18-1004, 18-210 and 18-604 of the Delaware Act. The Members
further shall not assert in any litigation, controversy or proceeding a position
contrary to the waivers and limitations set forth herein.
17.8 WAIVER OF ACTION FOR PARTITION. Each Member irrevocably waives
during the term of the Company any right that it may have to maintain any action
for partition with respect to the property of the Company.
17.9 AMENDMENTS. This LLC Agreement may not be amended except by
the unanimous written agreement of all of the Members.
17.10 FURTHER ASSURANCES. Each of the Members agrees to take all
reasonably necessary steps to do all such further acts and things as may be
necessary to carry out the purposes and intentions of this LLC Agreement.
17.11 CONSTRUCTION. Whenever the singular number is used in this LLC
Agreement and when required by the context, the same shall include the plural
and vice versa,
<PAGE>
and the masculine gender shall include the feminine and neuter genders and vice
versa.
17.12 HEADINGS. The headings in this LLC Agreement are for
convenience only and are in no way intended to describe, interpret, define or
limit the scope, extent or intent of this LLC Agreement or any of its
provisions.
17.13 WAIVERS. The failure of any party to seek redress for
violation of or to insist upon the strict performance of any covenant or
condition of this LLC Agreement shall not prevent a subsequent act, that would
have originally constituted a violation, from having the effect of an original
violation.
17.14 RIGHTS AND REMEDIES CUMULATIVE. The rights and remedies
provided by this LLC Agreement are cumulative and the use of any one right or
remedy by any party shall not preclude or waive the right to use any or all
other remedies. Said rights and remedies are given in addition to any other
rights the parties may have by law, statute, ordinance or otherwise.
17.15 SEVERABILITY. If any provision of this LLC Agreement or its
application to any person or circumstance shall be invalid, illegal, or
unenforceable to any extent, the remainder of this LLC Agreement and its
application shall not be affected and shall be enforceable to the fullest extent
permitted by law.
17.16 HEIRS, SUCCESSORS, AND ASSIGNS. Each and all of the covenants,
terms, provisions, and agreements contained in this LLC Agreement shall be
binding upon and inure to the benefit of the parties hereto and, to the extent
permitted by this LLC Agreement, their respective permitted successors and
assigns.
17.17 RIGHTS OF CREDITORS AND THIRD PARTIES UNDER LLC AGREEMENT.
This LLC Agreement is entered into among the Company and the Members for the
exclusive benefit of the Company, its Members and their successors and
assignees. This LLC Agreement is expressly not intended for the benefit of any
creditor of the Company or any other Person, including, without limitation, any
employees of the Company or either Member. No such creditor or third party
shall have any rights under this LLC Agreement or any agreement between the
Company and any Member with respect to any Capital Contribution or otherwise.
17.18 COUNTERPARTS. This LLC Agreement may be executed in
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
this ____ day of ________________, 1997.
MEMBERS:
ANGEION CORPORATION
<PAGE>
By: /s/ Whitney A. McFarlin
--------------------------------------
Name: Whitney A. McFarlin
Title: Chief Executive Officer
ELA MEDICAL, INC.
By: /s/ Philippe Baetz
--------------------------------------
Name: Philippe Baetz
Title: Chairman of the Board
<PAGE>
SCHEDULE 1.1 - RELATED AGREEMENTS
1. The Amended and Restated Investment and Master Strategic Relationship
Agreement between Synthelabo and Angeion dated as of October 9, 1997
(the "Investment Agreement").
2. The Warrants of Angeion issued or to be issued to Synthelabo pursuant
to the Investment Agreement.
3. The Manufacturing and Supply Agreement between Ela Medical and Angeion
dated December 9, 1997.
4. The Ancillary Agreements.
5. Any other agreements contemplated by this Agreement.
<PAGE>
SCHEDULE 10.3(e) - INSURANCE
xxx xxxxxxx xxxx xxxxxxxx xxxxxxx xxxxxxxxx xxxxxxxxx xxxx x xxxxxxx xxxxxx xx
xx xxxxxxx xxx xxxxxxxxxx xx xxxxxxxx xx xxx xxxxxxxxx xxxx xx xxxx xxxx x xx
xxxxxxxx xxxxxxxxxx. xx xxxxxxxx xxxx xxxxxx xxxxx xxxxx xxx xxx xxxxxxx
xxxxxxxxx xxxxxxxxx xxxx x xxxxxxx xxxxxx xx xx xxxxxxx xxx xxxxxxxxxx xx
xxxxxxx xx xxx xxxxxxxxx xxxx xx xxxx xxxx xx xxxxxxxx xxxxxxxxxx. xx xxxxxxxx
xxxx xxxxxx xxx xxx xxxxxxx xxxxx xxxxx xxxxxxxxx xxx xxxxxxx xxxxxxx xxxx x
xxxxxxx xxxxxx xx x xxxxxxx xxx xxxxxxxxxx.
<PAGE>
SCHEDULE 13 - NO CONFLICTS
ANGEION
(i) No exceptions, except as provided in sub-clause (ii) below.
(ii) Angeion makes no representation and warranty with respect to
xxxxxxxxxxxx xxxxxxxx xxxxxx or xxx xxxxxxxxxx xxxxxxxx xx xxxxxxxxxxxx xxxxxxxx
xxxxxx.
ELA
(i) No exceptions, except as provided in sub-clause (ii) below.
(ii) ELA makes no representation and warranty with respect to xxxxxxxxxxxx
xxxxxxxx xxxxxx or xxx xxxxxxxxxx xxxxxxxx xx xxxxxxxxxxxx xxxxxxxx xxxxxx.
<PAGE>
SCHEDULE 15.2 - AAA RULES
29. ORDER OF PROCEEDINGS AND COMMUNICATION WITH ARBITRATOR
A hearing shall be opened by the filing of the oath of the arbitrator, where
required; by the recording of the date, time and place of the hearing, and the
presence of the arbitrator, the parties, and their representatives, if any, and
by the receipt by the arbitrator of the statement of the claim and the answering
statement, if any.
The arbitrator may, at the beginning of the hearing, ask for statements
clarifying the issues involved. In some cases, part or all of the above will
have been accomplished at the preliminary hearing conducted by the arbitrator
pursuant to Section 10.
The complaining party shall then present evidence to support its claim. The
defending party shall then present evidence supporting its defense. Witnesses
for each party shall submit to questions or other examination. The arbitrator
has the discretion to vary this procedure but shall afford a full and equal
opportunity to all parties for the presentation of any material and relevant
evidence.
Exhibits, when offered by either party, may be received in evidence by the
arbitrator.
The names and addresses of all witnesses and a description of the exhibits in
the order received shall be made a part of the record.
There shall be no direct communication between the parties and a neutral
arbitrator other than at oral hearing, unless the parties and the arbitrator
agree otherwise. Any other oral or written communication from the parties to the
neutral arbitrator shall be directed to the AAA for transmittal to the
arbitrator.
31. EVIDENCE
The parties may offer such evidence as is relevant and material to the dispute
and shall produce such evidence as the arbitrator may deem necessary to an
understanding and determination of the dispute. An arbitrator or other person
authorized by law to subpoena witnesses or documents may do so upon the request
of any party or independently.
The arbitrator shall be the judge of the relevance and materiality of the
evidence offered, and conformity to legal rules of evidence shall not be
necessary. All evidence shall be taken in the presence of all of the arbitrators
and all of the parties, except where any of the parties is absent in default or
has waived the right to be present.
<PAGE>
EXHIBIT A
ANGELLAN MEDICAL SYSTEMS, LLC
THREE YEAR PROJECTIONS
XXXXXXXXXX
<PAGE>
EXHIBIT B
FORM OF MANUFACTURING AND SUPPLY AGREEMENT - ANGEION
<PAGE>
EXHIBIT C
FORM OF MANUFACTURING AND SUPPLY AGREEMENT - ELA
<PAGE>
EXHIBIT D
INTERCOMPANY SERVICES AGREEMENT
THIS INTERCOMPANY SERVICES AGREEMENT ("Agreement"), is entered into on
December 9, 1997, by and between ANGEION CORPORATION, a Minnesota corporation
(along with its Affiliates (defined below), "Angeion") and ANGELLAN MEDICAL
SYSTEMS, LLC, a Delaware limited liability company ("Angellan").
R E C I T A L S:
A. Angeion and Synthelabo, a societe anonyme ("Synthelabo"), have
entered into that certain Amended and Restated Investment and Master Strategic
Relationship Agreement dated as of October 9, 1997 providing for an investment
in Angeion by Synthelabo and various other commercial arrangements between
Angeion and Affiliates of Synthelabo including the formation of Angellan of
which Angeion and ELA Medical, Inc., a Delaware corporation ("ELA"), are the
members.
B. Angellan will be engaged in the business of marketing and selling
certain products manufactured by Angeion and Affiliates of ELA and doing all
things necessary or related to these purposes as may be determined from time to
time by Angellan in accordance with the Limited Liability Company Operating
Agreement, dated December 9, 1997, by and between Angeion and ELA (the "Joint
Venture Agreement").
C. In connection with Angellan's formation, the parties desire to set
forth the terms and conditions under which Angellan may retain Angeion to
perform certain services (the "Services") on behalf of Angellan.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements, provisions and covenants contained in this Agreement, the parties
hereby agree as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.01 AFFILIATE(S)
"Affiliates" shall mean any corporation, association or other entity
which directly or indirectly controls, is controlled by or is under common
control with the party in question, but only for so long as such relationship
exists. As used herein, the term "control" shall mean the ability to direct the
business of a company and shall be presumed in the case of ownership, directly
or indirectly, of shares of stock having at least fifty percent (50%) of the
voting power entitled to vote for the election of directors in the case of a
corporation, and at least fifty percent (50%) of the voting power and interest
in profits in the case of a business entity other than a corporation, or only if
less than fifty percent (50%) of the voting power and interest in profits is
permitted by Applicable Law, the maximum amount allowed in the country in
question (so long as the holder retains the ability to direct the business of
the entity). The parties acknowledge and
<PAGE>
agree that no member of Angellan nor such member's Affiliates shall be deemed to
be included within the term "Affiliate" with respect to Angellan for any
purposes under this Agreement unless otherwise expressly provided in this
Agreement.
SECTION 1.02 APPLICABLE LAWS
"Applicable Laws" shall mean all foreign, federal, state and local
laws, statutes, rules and regulations which have been enacted by a Governmental
Authority and are in force as of the date hereof or which are enacted by a
Governmental Authority and come into force during the term of this Agreement, in
each case to the extent that the same are applicable to the performance by the
parties of their respective obligations under this Agreement.
SECTION 1.03 BEST EFFORTS
"Best Efforts" shall be determined under New York law and shall mean
such efforts as are consistent with efforts made by businesses of similar size
and resources in a similar circumstance and context to achieve a particular
result in a timely manner, but shall not require a party to take actions that
would be commercially unreasonable to such party in the circumstances.
SECTION 1.04 FORCE MAJEURE
"Force Majeure" shall mean, in relation to either party, any
circumstances beyond the reasonable control of that party, including, without
limitation, any fire, storm, flood, earthquake, explosion, accident, acts of the
public enemy, war, rebellion, insurrection, sabotage, epidemic, quarantine
restrictions, acts of God or acts of any Governmental Authority, labor disputes
that result in work stoppages, transportation embargoes or failure or delays of
transportation, or inability to secure materials necessary for the provision of
Services as a result of any of the foregoing. No acts of a Governmental
Authority resulting from any acts or omissions of Angeion or Angellan that are
in breach of this Agreement shall constitute an event of Force Majeure for the
breaching party.
SECTION 1.05 GOVERNMENTAL AUTHORITY
"Governmental Authority" shall mean any nation or government, any
state, province or other political subdivision thereof or any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, including the Federal Food and Drug Administration.
<PAGE>
ARTICLE II.
PROVISION OF SERVICES
SECTION 2.01 TYPES OF SERVICES
Angellan hereby engages and retains Angeion as a preferred provider to
Angellan of the Services set forth below, upon the terms and conditions
hereinafter set forth:
(i) administrative and in-house legal services;
(ii) tax advice and services, including, without limitation,
assistance in the preparation of federal, state, local and foreign tax
returns;
(iii) accounting, payroll and bookkeeping advice and
services;
(iv) financial advice and services, including, without
limitation, assistance with respect to cash management, treasury and
risk management;
(v) human resources and personnel policies, including,
without limitation, wage and salary, administrative, employee relations
and administration of employee insurance plans, pension plans and other
employee benefits plans;
(vi) purchasing services, and assistance in the purchase or
leasing of equipment and supplies, including where possible and
acceptable to Angeion making available to Angellan volume purchase
discount arrangements and group rates for purchasing insurance and
other supplies and services;
(vii) facilities services, including mail, telephone, supply,
food service and employee services;
(viii) management information, supplemental data processing,
telecommunications, computer programming and other computer systems
services; and
such other services, advice and assistance as may be reasonably
requested by Angellan and agreed to by Angeion from time to time.
SECTION 2.02 PERFORMANCE
(a) All Services provided hereunder shall be diligently performed in a
professional manner by Angeion only at the request and under the general
direction of Angellan. Angeion shall not have any power to act independently on
behalf of Angellan in performing Services hereunder other than as specifically
authorized hereunder or as requested from time to time by Angellan. Neither
Angeion nor its employees, vendors, agents, Affiliates or suppliers shall be
deemed to be agents, representatives, employees or servants of Angellan, except
to the extent expressly provided pursuant to the authority granted under this
Agreement.
<PAGE>
(b) The specified Services to be provided to Angellan by Angeion, and
the specified terms and conditions under which they shall be provided, shall be
set forth in separate annual schedules to this Agreement (each a "Schedule of
Services" the terms and conditions of which are expressly incorporated by
reference into this Agreement), which shall become effective only upon its
execution by Angeion (or an Affiliate of Angeion) and Angellan, in each case
subject to any approval as is necessary under the Joint Venture Agreement.
(c) Any Services provided to Angellan by Angeion may be performed by
Angeion or by such Affiliates thereof as Angellan may approve, provided that
Angeion shall be responsible for the performance of any Affiliate. If during the
course of performing the Services, Angeion is asked to perform additional
Services that are outside of the scope of those agreed to under the applicable
Schedule of Services then in effect, the parties shall separately agree in
writing, either by amending the existing Schedule of Services, or by entering
into an additional Schedule of Services, upon the terms by which such additional
Services are to be provided, including the Fee (as defined below) to be charged
by Angeion therefor.
(d) Angeion shall, in its sole discretion, determine which individuals
will render a particular Service, provided that those Services provided to
Angellan hereunder shall (except as otherwise agreed by Angellan) generally be
performed by those employees of Angeion who perform comparable services for
Angeion in the normal course of their employment.
SECTION 2.03 COMPENSATION; REIMBURSEMENTS
(a) Angellan shall pay to Angeion, with respect to the Services
performed by Angeion hereunder, a fee (the "Fee"), the exact amount of which
shall be agreed to by Angellan and Angeion and shall be set forth in each
Schedule of Services hereto. In addition to the Fee, Angeion shall be entitled
to reimbursement of the costs of goods or materials purchased on behalf of
Angellan and paid for by Angeion. The parties agree that each party will
negotiate the relevant Fee in good faith and use its Best Efforts to establish a
Fee which (i) reimburses Angeion for its applicable overhead in providing
Services to Angellan and (ii) is competitive with fees charged by third parties
in the relevant geographic marketplace.
(b) As a preferred provider, Angeion shall be entitled, at its option,
to submit a proposed Fee for any particular Schedule of Services for the next
calendar year and, unless Angellan can demonstrate that the proposed Fee is more
than ten percent (10%) above a fee which would be charged to Angellan by third
parties in the relevant geographic marketplace for similar services, Angellan
must negotiate to contract with Angeion for such Service.
(c) Subject to Section 2.03(b), if (i) Angellan does not retain Angeion
to perform particular Services, (ii) Angellan terminates a particular Schedule
of Services pursuant to Section 2.04(b), (iii) Angellan does not renew a
particular Schedule of Services pursuant to Section 2.04(c) or (iv) if Angeion
notifies Angellan that it will not continue to perform certain Services pursuant
to Section 2.04(c), Angellan shall be free to obtain such Services from a third
party.
<PAGE>
SECTION 2.04 TERM AND TERMINATION
(a) This Agreement shall remain in effect until such time as neither
Angeion nor any of Angeion's Affiliates remain a party to the
Joint Venture Agreement, whereupon this Agreement shall terminate
and have no further force and effect except as set forth in
Section 4.15 hereto.
(b) Either party may terminate a Schedule of Services upon thirty (30)
days written notice to the other party of a material breach of a
Schedule of Services by the other party or its relevant Affiliates
if such other party fails to cure such material breach within the
thirty (30) days from the date of the written notice.
(c) Each Schedule of Services shall be automatically renewed for
additional one year terms, contingent upon the mutual agreement
of the parties on the Fee for each additional renewal term, such
mutual agreement to be reached at least ninety (90) days prior to
the expiration of a given term and subject to Section 2.03(b) and
(c) and provided that Angeion shall not be obligated to make
available any services to Angellan that Angeion does not perform
with respect to its own operations, or that Angeion deems are not
in Angeion's best interest to make available to Angellan;
provided further that Angeion shall be obligated to continue to
perform any Services specified in a fully-executed Schedule of
Services until such Schedule of Services expires or is
terminated.
SECTION 2.05 BOOKS AND RECORDS
Angeion shall keep, or cause to be kept, accurate books and records with
respect to the costs and expenses incurred in connection with the Services, and
Angellan and its auditors shall be permitted from time to time upon reasonable
notice to inspect the books and records with respect to such costs and expenses.
ARTICLE III.
STANDARD OF CARE
SECTION 3.01 STANDARD OF CARE
(a) For purposes of this Article III, "Angeion" shall be deemed to
include any of its Affiliates that provide Services pursuant to this Agreement.
(b) Nothing in this Agreement shall require Angeion to provide or
develop additional support or to render any Service which it does not
specifically agree to provide pursuant to the terms hereof, or to render any
Service in a manner or pursuant to methods different from that provided herein,
or in a Schedule of Services hereto.
(c) Angeion will use its Best Efforts to provide any and all Services
to be provided hereunder with the same degree of care as it provides the same
Services to its own operations,
<PAGE>
but in no event in less than a commercially reasonable manner in accordance with
the customs of the industry.
(d) Subject to Section 3.01(c), Angeion shall not be liable to
Angellan or any other person for any loss, damage or expense which may result
therefrom or from Angeion's changing its manner of rendering the Services if
Angeion deems that such change is necessary or desirable in the conduct of its
own operations.
(e) Neither Angeion, nor its officers and employees shall be liable to
any third party, including governmental agencies, for any claims, damages or
expenses relating to the Services provided pursuant to this Agreement at the
express direction of Angellan and in compliance with this Agreement and any
Schedule of Services hereto, except where such claims, damages or expenses are
the result of the gross negligence or willful misconduct of Angeion or any
officer, director, employee or agent of Angeion.
(f) Neither Angeion nor its Affiliates, nor any of its or their
respective directors, officers, employees or agents shall have any liability to
Angellan and its Affiliates (including ELA and its Affiliates) for any special,
incidental or consequential damages, including but not limited to such damages
resulting from the loss of opportunity or loss of revenue or profit, in
connection with or arising out of this Agreement, any Schedule of Services
hereto or the Services provided hereunder.
(g) Neither Angellan nor its Affiliates (including ELA and its
Affiliates), nor any of its or their respective directors, officers, employees
or agents shall have any liability to Angeion for any special, incidental or
consequential damages, including but not limited to such damages resulting from
the loss of opportunity or loss of revenue or profit, in connection with or
arising out of this Agreement, any Schedule of Services hereto or the Services
provided hereunder.
ARTICLE IV.
MISCELLANEOUS
SECTION 4.01 ASSIGNMENTS
This Agreement shall be binding upon and inure to the benefit of the
successors in interest of the respective parties. Neither this Agreement nor any
interest hereunder shall be assignable by any party without the written consent
of the other party; provided, however, that a party may assign this Agreement or
any of its rights or obligations hereunder to any Affiliate or to any third
party with which it may merge or consolidate, or to which it may transfer all or
substantially all of its assets to which this Agreement relates, without
obtaining the consent of the other party, provided the assigning party remains
liable under this Agreement and that the third party assignee or surviving
entity assumes in writing all of the assigning party's obligations under this
Agreement. Any attempted assignment in contravention of this Section 4.1 shall
be void and of no effect.
<PAGE>
SECTION 4.02 FEES AND EXPENSES
Each party shall be solely responsible for the payment of the fees and
expenses of its advisers, counsel, accountants and other experts, if any, and
all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement.
SECTION 4.03 SEVERABILITY
If any provision of this Agreement is held by a court of competent
jurisdiction (including pursuant to enforcement of any arbitration award under
this Agreement) or panel of arbitrators to be invalid, unlawful or
unenforceable, it shall be modified, if possible, to the minimum extent
necessary to make it valid, lawful and enforceable or, if such modification is
not possible, it shall be stricken from this Agreement and the remaining
provisions of this Agreement shall continue in full force and effect; provided,
however, that if a provision is so stricken and is of a nature so as to
fundamentally alter the economic arrangements of this Agreement the party
adversely affected may terminate this Agreement by giving to the other party
sixty days written notice of termination.
SECTION 4.04 CONSENT TO JURISDICTION
For purposes of any suit, action, or legal proceeding permitted under
this Agreement, each party to this Agreement (a) hereby irrevocably submits
itself to and consents to the non-exclusive jurisdiction of the United States
District Court for the Southern District of New York for the purposes of any
such suit, action or legal proceeding in connection with this Agreement
including to enforce an arbitral resolution, settlement, order or award made
pursuant to this Agreement (including pursuant to the New York Convention, the
U.S. Arbitration Act, or otherwise), and (b) to the extent permitted by
Applicable Law, hereby waives, and agrees not to assert, by way of motion, as a
defense, or otherwise, in any such suit, action, or legal proceeding pending in
such event, any claim that it is not personally subject to the jurisdiction of
such court, that the suit, action or legal proceeding is brought in an
inconvenient forum or that the venue of the suit, action or legal proceeding is
improper. Each party to this Agreement hereby agrees to the entry of an order to
enforce any resolution, settlement, order or award made pursuant to this Section
by the United States District Court for the Southern District of New York and in
connection therewith hereby waives, and agrees not to assert by way of motion,
as a defense, or otherwise, any claim that such resolution, settlement, order or
award is inconsistent with or violative of the laws or public policy of the laws
of the State of New York or any other jurisdiction.
SECTION 4.05 DISPUTE RESOLUTION PROCEDURES
(a) All disputes between or among the parties and/or any of their
Affiliates under this Agreement shall be settled, if possible, through good
faith negotiations between the relevant parties. Prior to resolving any dispute
by means of arbitration or by means of any suit, action or legal proceeding
permitted under this Section 4.5, the relevant parties involved in such dispute
shall refer such dispute to their respective Chief Executive Officers or
equivalent, who shall meet
<PAGE>
in person to negotiate in good faith the possible resolution thereof on at least
two occasions within 30 days before any such party commences arbitration or
other litigation permitted under this Agreement (provided, that if any such
party fails or refuses to have a representative attend such meetings within such
thirty (30) day period, the procedures of Section 4.5 shall be applicable after
the conclusion of such thirty (30) day period); and further provided that (i)
any legal proceedings seeking interim equitable relief (including a temporary
restraining order or preliminary injunction) until such time as such interim
equitable relief can be addressed through arbitration; (ii) proceedings for
provisional relief contemplated by Section 4.5 below; and (iii) third party
legal proceedings under Section 4.5(b) below may be commenced immediately.
(b) If a party or any of its Affiliates is subject to a claim, demand,
action or legal proceeding by a third party and is permitted by law or arbitral
rules to join another party to such proceeding, this Section 4.5 shall not
prevent such joinder. This Section shall also not prevent either party or any
such Affiliate from pursuing any legal action against a third party.
(c) In the event such good faith negotiations are unsuccessful, either
party may, after 30 days written notice to the other, submit any controversy or
claim arising out of, relating to or in connection with this Agreement, or the
breach thereof, to arbitration administered by the American Arbitration
Association ("AAA") in accordance with its then existing International
Arbitration rules except that Sections 29 and 31 of the Commercial Arbitration
Rules in effect on the date hereof shall govern in the event of any conflict
therewith (collectively, the "AAA Rules") and judgment upon the award rendered
by the arbitrator may be entered in any court having jurisdiction there.
(d) To the extent this Section is deemed a separate agreement,
independent from this Agreement, the remaining provisions of Article IV shall be
incorporated herein by reference. Either party (the "Initiating Party") may
commence an arbitration by submitting a Demand for Arbitration under the AAA
Rules ("Demand for Arbitration") and by notice to the other party (the
"Respondent") in accordance with Section 4.7. Such notice shall set forth in
reasonable detail the basic operative facts upon which the Initiating Party
seeks relief and specific reference to the clauses of this Agreement, the amount
claimed, if any, and any nonmonetary relief sought against the Respondent. After
the Demand for Arbitration, response and counterclaim, if any, and reply to
counterclaim, if any, have been submitted, either party may propose additional
issues for resolution in the pending proceedings only if expressly so ordered by
the arbitrators.
(e) The place of arbitration shall be New York, New York, and the award
shall be deemed a U.S. award for purposes of the Convention on the Recognition
and Enforcement of Foreign Arbitral Awards of 1958 (the "New York Convention").
(f) The parties shall attempt, by agreement, to nominate a sole
arbitrator for the confirmation by the AAA. If the parties fail so to nominate a
sole arbitrator within 30 days from the date when the Initiating Party's Demand
for Arbitration has been communicated to the Respondent, a board of three
arbitrators shall be appointed by the parties jointly or, if the parties cannot
agree as to three arbitrators within 30 days after the commencement of the
arbitration proceeding, then one arbitrator shall be appointed by each of the
Initiating Party and the
<PAGE>
Respondent within 60 days after the commencement of the arbitration proceeding
and the third arbitrator shall be appointed by mutual agreement of such two
arbitrators. If such two arbitrators shall fail to agree within 75 days after
commencement of the arbitration proceeding upon the appointment of the third
arbitrator, the third arbitrator shall be appointed by the American Arbitration
Association in accordance with the AAA Rules. Notwithstanding the foregoing, if
any party shall fail to appoint an arbitrator within the specified time period,
such arbitrator and the third arbitrator shall be appointed by the AAA in
accordance with the AAA Rules. For purposes of this Section, the "commencement
of the arbitration proceeding" shall be deemed to be the date upon which the
Demand for Arbitration has been delivered to the parties in accordance with
Section 4.7. Any award shall be rendered by a majority of the arbitrators. A
hearing on the matter in dispute shall commence within 90 days following
selection of the arbitrators, and the decision of the arbitrators shall be
rendered no later than 90 days after commencement of such hearing.
(g) An award rendered in connection with an arbitration pursuant to
this Section shall be final and binding upon the parties and the parties agree
and consent that the arbitral award shall be conclusive proof of the validity of
the determinations of the arbitrations set forth in the award, and any judgment
upon such an award may be entered and enforced in any court of competent
jurisdiction.
(h) The parties agree that the award of the arbitral tribunal will be
the sole and exclusive remedy between them regarding any and all claims and
counterclaims between them with respect to the subject matter of the arbitrated
dispute. The parties hereby waive all in personam jurisdictional defenses in
connection with any arbitration hereunder or the enforcement of an order or
award rendered pursuant thereto (assuming that the terms and conditions of this
arbitration clause have been complied with).
(i) The parties hereby agree that for purposes of the New York
Convention, the relationship between the parties is commercial in nature, and
that any disputes between the parties related to this Agreement shall be deemed
commercial.
(j) The arbitrators shall issue a written explanation of the reasons
for the award and a full statement of the facts as found and the rules of law
applied in reaching their decision to both parties. The arbitrators shall
apportion to each party all costs (including attorneys' fees and witness fees,
if any) incurred in conducting the arbitration in accordance with what the
arbitrators deem just and equitable under the circumstances. Any provisional
remedy which would be available to a court of law shall be available from the
arbitrators pending arbitration of the dispute. Either party may make an
application to the arbitrators seeking injunctive or other interim relief, and
the arbitrators may take whatever interim measures they deem necessary in
respect of the subject matter of the dispute, including measures to maintain the
status quo until such time as the arbitration award is rendered or the
controversy is otherwise resolved. The arbitrator shall have the authority to
award any remedy or relief (except ex parte relief) that a court of the State of
New York could order or grant, including, without limitation, specific
performance of any obligation created under this Agreement, the issuance of an
injunction, or the
<PAGE>
imposition of sanctions for abuse or frustration of the arbitration process, but
specifically excluding punitive damages.
(k) The parties may file an application in any proper court for a
provisional remedy in connection with an arbitrable controversy, but only upon
the ground that the award to which the application may be entitled may be
rendered ineffectual without provisional relief.
(l) After the appointment of the arbitrators, the parties to the
arbitration shall have the right to take depositions, ask interrogatories,
obtain documentation and to obtain other discovery regarding the subject matter
of the arbitration, and, to that end, to use and exercise all the same rights,
remedies, and procedures, and be subject to all of the same duties, liabilities,
and obligations in the arbitration with respect to the subject matter thereof,
as if the subject matter of the arbitration were pending in a civil action
before the United States District Court for the Southern District of New York
and such persons, documents, or other requested material were located in the
State of New York. The parties shall reach agreement with the arbitrator on a
streamline and expedited discovery program in order to save costs and avoid
unnecessary delay in completing any arbitration and may present to the
arbitrator for a ruling any reasons for limiting such discovery in order to save
costs and avoid delay.
(m) All claims arising under this Agreement brought by the parties
and/or their Affiliates at substantially the same time shall be referred to a
single arbitration to the extent arbitrable under this Section 4.5.
SECTION 4.06 ENTIRE AGREEMENT; AMENDMENTS
This Agreement and the Schedules of Services hereto collectively
contain the entire understanding of the parties with respect to the matters
referred to hereby and, except as specifically set forth herein and therein,
neither Angeion nor Angellan makes any representation, warranty, covenant or
undertaking with respect to such matters. No provision of this Agreement may be
amended or supplemented other than by a written instrument signed by the party
against whom enforcement of any such amendment or supplement is sought.
SECTION 4.07 NOTICES AND DELIVERIES
All notices, requests, demands, consents and other communications given
or required to be given under this Agreement and under the related documents
shall be in writing and delivered to the applicable party at the address
indicated below:
If to Angeion: Angeion Corporation
3650 Annapolis Lane, Suite 170
Plymouth, MN 55447-5434
Attention: Whitney A. McFarlin
Tel: (612) 550-9388
Fax: (612) 519-9519
<PAGE>
With a copy to: Morrison & Foerster, LLP
425 Market Street
San Francisco, CA 94105
Attention: Gavin B. Grover, Esq.
Tel: (415) 268-7000
Fax: (415) 268-7522
If to Angellan: Angellan Medical Systems, LLC
2950 Xenium Lane
Plymouth, MN 55441
Attention: Chief Executive Officer
Tel: (612) 519-9400
Fax: (612) 519-9440
With a copy to: ELA Medical, Inc.
2950 Xenium Lane North
Plymouth, MN 55441
Attention: Chief Executive Officer
Tel: (612) 519-9400
Fax: (612) 519-9440
ELA Medical
Centre d'Affaires la Boursidiere
92357 Le Plessis Robinson
France
Attention: President
Tel: (33)(1)46.01.33.01
Fax: (33)(1)46.01.33.15
<PAGE>
and
Synthelabo
22 Avenue Galilee
92350 Le Plessis Robinson
FRANCE
Attention: General Counsel
Tel: 33 (1) 45.37.56.67
Fax: 33 (1) 45.37.58.04
and
Coudert Brothers
1114 Avenue of the Americas
New York, NY 10036-7703
Attention: James C. Colihan, Esq.
Tel: (212) 626-4400
Fax: (212) 626-4120
or, as to each party at such other address as shall be designated by such party
in a written notice to the other parties complying as to delivery with the terms
of this Section. Any notices shall be in writing, including telegraphic or
facsimile communication, and may be sent by registered or certified mail, return
receipt requested, postage prepaid, by fax or by overnight delivery service.
Notice shall be effective upon actual receipt thereof.
SECTION 4.08 NO WAIVER
No waiver by either party of any default with respect to any provision,
condition or requirement of this Agreement shall be deemed to be a continuing
waiver in the future hereof; or a waiver of any other provision, condition or
request hereof; nor shall any delay or omission of either party to exercise any
right hereunder in any manner impair the exercise of any such right accruing to
it thereafter.
SECTION 4.09 HEADINGS
The headings herein are for convenience only, do not constitute a part
of this Agreement and shall not be deemed to limit or affect any of the
provisions hereof.
SECTION 4.10 NO THIRD PARTY BENEFICIARIES
This Agreement is intended for the benefit of the parties and their
respective permitted successors and assigns and are not for the benefit of, nor
may any provision hereof be enforced by, any other person.
<PAGE>
SECTION 4.11 GOVERNING LAW
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New York.
SECTION 4.12 RELATIONSHIP OF THE PARTIES
For all purposes of this Agreement, Angeion, Angellan, ELA and all of
their respective Affiliates shall be deemed to be independent entities and
anything in this Agreement to the contrary notwithstanding, nothing herein shall
be deemed to constitute Angeion, Angellan or ELA or any of their respective
Affiliates as partners, joint venturers, co-owners, an association or any entity
separate and apart from each party itself, nor shall this Agreement make any
party hereto an employee or agent, legal or otherwise, of the other parties for
any purposes whatsoever. None of the parties hereto or thereto is authorized to
make any statements or representations on behalf of the other parties or in any
way obligate the other parties, except as expressly authorized in writing by the
other parties. Anything in this Agreement to the contrary notwithstanding, no
party hereto shall assume nor shall be liable for any liabilities or obligations
of the other parties, whether past, present or future.
SECTION 4.13 CONFIDENTIALITY; PUBLICITY
(a) Each party shall (and shall cause its Affiliates, agents and
representatives to), for the term of this Agreement and for six (6) years after
the expiration or termination of this Agreement for any reason, (i) keep
confidential, (ii) not disclose to others, (iii) use only for the purposes
provided for or permitted under this Agreement, and (iv) use Best Efforts, and
at least the same degree of care (but no less than a reasonable degree of care)
as it uses to protect its own Confidential Information of like importance, to
prevent unauthorized use, dissemination and disclosure of, all of the other
party's and its Affiliates' Confidential Information, except as expressly
provided for or permitted by this Agreement. All Confidential Information shall,
as between the Parties and their Affiliates, remain the sole property of the
disclosing party or the relevant Affiliate. The receiving party and its
Affiliates, agents and representatives shall have no rights to the Confidential
Information of the disclosing party and its Affiliates, except as provided in
this Agreement. Nothing in this Section 4.13 shall prevent disclosure or use of
information which is or becomes public knowledge without the fault of the
receiving party and its Affiliates, agents and representatives or information
already known to, or proven by written evidence to have been independently
derived by, the receiving party or its Affiliates or received from a third party
having the right to convey it. Notwithstanding the foregoing, such Confidential
Information may be (i) disclosed to a Governmental Authority and to others to
the extent such disclosure may be required to be included in regulatory filings
permitted under the terms of this Agreement or required under Applicable Law;
(ii) published by the receiving party, if and to the extent such publication has
been approved in writing by the disclosing party or its Affiliates; or (iii)
disclosed to the extent required by Applicable Law or as ordered by a court or
other regulatory body having competent jurisdiction. In each of the foregoing
cases, the receiving party will use its Best Efforts to limit the disclosure and
maintain confidentiality of such Confidential Information to the maximum extent
practicable and prior to making any such
<PAGE>
disclosure it shall use Best Efforts to consult with the disclosing party
regarding the scope of any protective order or other confidentiality protections
that may be available to limit the extent of disclosure. Any disclosure of
Confidential Information to any Affiliates, agents or representatives of the
receiving party shall be limited to a "need to know" basis for purposes related
to this Agreement; provided that (i) the receiving party shall be responsible
and liable to the disclosing party for any breach of the terms of this Section
4.13 by any Affiliate, agent or representative, and (ii) disclosure by the
receiving party to any agent or representative shall be made pursuant to
appropriate confidentiality agreements.
The provisions of this Section 4.13 shall survive and shall remain in
full force and effect for six (6) years after the expiration or termination of
this Agreement for any reason. For purposes of this Section 4.13, ELA and ELA's
Affiliates shall be deemed an Affiliate of Angellan.
(b) Each party agrees, and shall cause its Affiliates to, not to issue
any press release, disclosing the terms of, or relating to, this Agreement,
without the prior written consent of the other party; provided, however, that
neither party or its Affiliates shall be prevented from complying with any duty
of disclosure it may have pursuant to Applicable Law. Such disclosing party
shall use its Best Efforts to consult with the other party regarding the
issuance of any such press release, or with regard to any public statement
disclosing the terms of this Agreement or any Related Agreement and shall use
its Best Efforts to obtain confidential treatment for any Confidential
Information where such press release or other public statement is required to be
made by Applicable Law.
SECTION 4.14 NUMBER AND GENDER OF WORDS
Whenever the singular number is used herein, the same shall include the
plural where appropriate, and shall apply to all of such number, and to each of
them, jointly and severally, and words of any gender shall include each other
gender where appropriate.
SECTION 4.15 INTERPRETATION
When a reference is made in this Agreement to a Section or Schedule,
such reference shall be to a Section of or Schedule to this Agreement, unless
otherwise indicated. Any references to Applicable Laws or a subset thereof shall
be deemed to include any amendments or additions thereto from time to time or
any successor or similar Applicable Law.
SECTION 4.16 FURTHER ASSURANCES
Each party hereto agrees to take such further actions including the
execution of such further documents as may be necessary or desirable, or
reasonably requested by the other, in order to carry out the provisions of this
Agreement.
<PAGE>
SECTION 4.17 FORCE MAJEURE
(a) Neither party shall be responsible or liable to the other
hereunder for the failure or delay in the performance of this Agreement due to
any event of Force Majeure. In the event of the applicability of this Section
4.17, the party failing or delaying performance shall use its Best Efforts to
eliminate, cure and overcome any of such causes and resume the performance of
its obligations. If any event of Force Majeure continues for more than 180 days,
either party shall have the right to terminate any Service which has been
interrupted by such event of Force Majeure upon written notice to the other
party delivered while such event of Force Majeure is continuing. For the
avoidance of doubt, in the event that any event of Force Majeure has occurred
and so long as it is continuing, excusing performance by one party of its
obligations hereunder, the other party shall also be excused from its
obligations hereunder to the extent its performance is dependent upon the
affected party's performance.
(b) Upon the occurrence of an event of Force Majeure, the party
failing or delaying performance shall promptly notify the other party, in
writing, setting forth the nature of the occurrence, its expected duration and
how such party's performance is affected. The failing or delaying party shall
resume performance of its obligations hereunder as soon as practicable after the
Force Majeure event ceases.
SECTION 4.18 COUNTERPARTS
This Agreement may be executed in two or more counterparts, all of which shall
be considered one and the same Agreement, and shall become effective when
counterparts have been signed by each party and delivered to the other party, it
being understood that all Parties need not sign the same counterpart.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
ANGEION CORPORATION
By: /s/ Whitney A. McFarlin
-------------------------------------
Name: Whitney A. McFarlin
Title: President & C.E.O.
ANGELLAN MEDICAL SYSTEMS, LLC,
By its Members
ANGEION CORPORATION
By: /s/ Whitney A. McFarlin
--------------------------------
Name: Whitney A. McFarlin
Title: President & C.E.O.
ELA MEDICAL, INC.
By /s/ Philippe Baetz
--------------------------------
Name: Philippe Baetz
Title: Chairman of the Board
<PAGE>
EXHIBIT E
OPERATING BUDGET FOR THE BALANCE OF THE CURRENT FISCAL YEAR AND THE
FIRST FULL FISCAL YEAR OF THE COMPANY
TO BE AGREED BEFORE DECEMBER 31, 1997
/s/ Oppenheimer Wolff & Donnelly
Securities and Exchange Act of 1934, as amended.
** Incorporated by reference to the original Form 10-Q filed by the Company on
December 15, 1997.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ANGEION CORPORATION
By: /s/ James B. Hickey, Jr.
-------------------------------------
James B. Hickey, Jr.
President and Chief Executive Officer
EXHIBIT 10.3
IMPLANTABLE CARDIOVERTER DEFIBRILLATOR PRODUCT
MANUFACTURING AND SUPPLY AGREEMENT
BETWEEN
ANGEION CORPORATION, AS MANUFACTURER
AND
ELA MEDICAL, AS PURCHASER
NOTE: PORTIONS OF THIS EXHIBIT MARKED WITH "X'S" HAVE BEEN OMITTED
PURSUANT TO A REQUEST FOR CONFIDENTIALITY UNDER RULE 24b-2 OF
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. A COPY OF
THIS EXHIBIT IN ITS ENTIRETY HAS BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C> <C>
Definitions..................................................................................................... 1
2. Manufacture and Purchase............................................................................... 8
2.1. Agreement to Manufacture.................................................................. 8
2.2. Exclusivity............................................................................... 9
2.3. Existing Distributors of Manufacturer..................................................... 10
2.4. Purchaser Distributors.................................................................... 11
2.5. xxxxxxxxx xx xxxxxxxxxx xxxxxxxxx......................................................... 12
2.6. Other Cardiac-Related Devices............................................................. 13
3. Intellectual Property Matters.......................................................................... 13
3.1. Use of Purchaser's Trademarks on Products................................................. 13
3.2. Use of Manufacturer's Name on Products.................................................... 13
3.3. No Use of Manufacturer's Trademarks....................................................... 13
3.4. Copyrights................................................................................ 13
3.5. Technical Information..................................................................... 14
3.6. Infringement of Intellectual Property Rights of Manufacturer.............................. 14
3.7. License of Technical Information.......................................................... 14
4. Commercialization...................................................................................... 15
4.1. Diligence................................................................................. 15
4.2. Reports and Sales Records................................................................. 16
4.3. Promotional and Product Literature........................................................ 16
4.4. Technical Assistance...................................................................... 17
4.5. Labels and Markings....................................................................... 17
5. Regulatory and Governmental Approvals.................................................................. 18
5.1. Clinical Studies; Custom Devices.......................................................... 18
5.2. Government Approvals...................................................................... 18
6. Pricing and Payments................................................................................... 20
6.1. Transfer Prices........................................................................... 20
6.2. Payment Terms............................................................................. 22
6.3. Financial and Related Books and Records................................................... 23
6.4. Late Payments............................................................................. 23
6.5. Currency Conversion....................................................................... 23
7. Purchase and Supply of Product......................................................................... 24
7.1. Orders.................................................................................... 24
7.2. Effect of Late Payments................................................................... 25
<PAGE>
7.3. Inspection of Shipments................................................................... 25
7.4. Purchase Forecasts........................................................................ 25
7.5. Minimum Purchase Requirements. ........................................................... 26
7.6. Orders by Affiliates...................................................................... 27
7.7. Return of Expired Products................................................................ 28
8. Quality Assurance; Testing............................................................................. 28
8.1. Quality Control........................................................................... 28
8.2. Testing................................................................................... 28
8.3. Records and Traceability.................................................................. 29
9. Warranties and Indemnifications........................................................................ 29
9.1. Manufacturer Product Warranties........................................................... 29
9.2. Recalls................................................................................... 31
9.3. Indemnification for Third Party Claims.................................................... 31
9.4. Manufacturer Infringement Indemnification................................................. 32
9.5. Limitation on Damages. ................................................................... 32
9.6. Certain Covenants......................................................................... 33
9.7. Representations and Warranties of the Parties............................................. 33
9.8. Mitigation................................................................................ 34
9.9. Indemnification Procedure for Third Party Claims and Infringement
Claims.................................................................................... 34
10. Term and Termination................................................................................... 35
10.1. Term...................................................................................... 35
10.2. Events of Early Termination............................................................... 36
10.3. Elimination of One or More Countries...................................................... 36
10.4. Rights and Obligations on Expiration or Termination....................................... 37
11. Confidentiality; Publicity; Non-Solicitation........................................................... 38
11.1. Confidential Information.................................................................. 38
11.2. Publicity................................................................................. 39
11.3. Non-Solicitation.......................................................................... 40
12. Dispute Resolution Provisions.......................................................................... 40
12.1. General Dispute Principles................................................................ 40
12.2. Arbitration of Other Disputes............................................................. 40
13. Certain Legal Restrictions............................................................................. 43
13.1. Export Controls........................................................................... 43
13.2. Foreign Corrupt Practices Act............................................................. 44
13.3. Block Exemption........................................................................... 44
<PAGE>
14. Miscellaneous.......................................................................................... 44
14.1. Fees and Expenses......................................................................... 44
14.2. Severability.............................................................................. 44
14.3. Entire Agreement; Amendments.............................................................. 45
14.4. Notices................................................................................... 45
14.5. No Waiver................................................................................. 46
14.6. Headings.................................................................................. 46
14.7. Survival of Provisions.................................................................... 46
14.8. Successors and Assigns.................................................................... 47
14.9. No Third Party Beneficiaries.............................................................. 47
14.10. Governing Law............................................................................. 47
14.11. Insurance................................................................................. 47
14.12. Waivers................................................................................... 47
14.13. English Language Controls................................................................. 48
14.14. Relationship of the Parties............................................................... 48
14.15. Counterparts.............................................................................. 48
14.16. Sovereign Immunity; Exclusions............................................................ 48
14.17. Force Majeure............................................................................. 49
</TABLE>
Schedule 1.4 - xxxxxxxxxx xxxxxxxxx
Schedule 1.18 - Existing Distributors
Schedule 1.45 - Purchaser Distributors
Schedule 1.49 - Region
Schedule 1.51 - Related Agreements
Schedule 6.1(a) - Unit Transfer Prices for Initial Products
Schedule 7.5(a) - Projections
Schedule 7.5(b) - Aggregate Minimum Purchases for each Region
Schedule 8.2 - Testing Procedures
Schedule 9.7 - No Conflicts
Schedule 12.2 - AAA Rules
Schedule 14.11 - Insurance
<PAGE>
IMPLANTABLE CARDIOVERTER DEFIBRILLATOR PRODUCT
MANUFACTURING AND SUPPLY AGREEMENT
This Implantable Cardioverter Defibrillator Product Manufacturing and
Supply Agreement (the "Agreement") is entered into as of the 9th day of
December, 1997 ("Effective Date") by and between Angeion Corporation, a
Minnesota corporation ("Manufacturer"), and ELA Medical, a societe anonyme
organized under the laws of France ("Purchaser").
Manufacturer has the expertise in the manufacture of certain
Implantable Cardioverter Defibrillator ("ICD") products which shall be the
subject of this Agreement.
Purchaser wishes to have made certain Products (as hereinafter defined)
and Manufacturer wishes to manufacture and sell to Purchaser such Products for
resale in the Territory (as hereinafter defined) subject to the terms and
conditions of this Agreement.
NOW THEREFORE, in consideration of the mutual covenants and agreements
provided herein, the Parties agree as follows:
1. DEFINITIONS.
1.1. "AAA" shall mean the American Arbitration
Association.
1.2. "Act" shall mean the United States Food, Drug and
Cosmetic Act of 1938, as amended from time to time (and any amendments or
additions thereto from time to time or any successor or similar Applicable Law).
1.3. "AIMD" shall mean Directive 90/385/EEC Relating to Active
Implantable Medical Devices and all regulations, guidelines or guidance issued
thereunder (and any amendments or additions thereto from time to time).
1.4. "Additional Countries" shall mean those countries listed
on Schedule 1.4 as Additional Countries.
1.5. "Adverse Device Events" shall mean any Product-related
event that is reportable (or that Purchaser or Manufacturer determines after
Best Efforts at mutual consultation should be reported) to (i) the FDA, a
Notified Body, a Competent Authority, or any local regional ethics committee
("LREC") responsible for approving the protocols for any clinical trials
conducted upon the Products in the Territory or any other ethics committee
within the Territory with responsibilities analogous to a LREC; or (ii) to any
other Governmental Authority responsible for the regulation of medical devices.
1.6. "Affiliate(s)" shall mean any corporation, association or
other entity which directly or indirectly controls, is controlled by or is under
common control with the Party in
<PAGE>
question, but only for so long as such relationship exists. As used herein, the
term "control" shall mean the ability to direct the business of a company and
shall be presumed in the case of ownership, directly or indirectly, of shares of
stock having at least fifty percent (50%) of the voting power entitled to vote
for the election of directors in the case of a corporation, and at least fifty
percent (50%) of the voting power and interest in profits in the case of a
business entity other than a corporation, or only if less than fifty percent
(50%) of the voting power and interest in profits is permitted by Applicable
Law, the maximum amount allowed in the country in question (so long as the
holder retains the ability to direct the business of the entity). The Parties
acknowledge and agree that neither L'Oreal nor the Joint Venture shall be deemed
to be included within the term "Affiliate" for any purposes under this Agreement
unless otherwise expressly provided in this Agreement.
1.7. "Aggregate Minimum Purchases" shall mean the minimum
sales levels as set forth in Schedule 7.5(b).
1.8. "Applicable Laws" shall mean all foreign, federal, state
and local laws, statutes, rules and regulations which have been enacted by a
Governmental Authority and are in force as of the date hereof or which are
enacted by a Governmental Authority and come into force during the term of this
Agreement, in each case to the extent that the same are applicable to the
performance by the Parties of their respective obligations under this Agreement.
Without limiting the foregoing, Applicable Laws shall include the AIMD, the Act
(including any applicable regulations under the Act governing manufacturing
practices) and the MDD.
1.9. "Baseline" shall have the meaning set forth in Section
7.5(a) of this Agreement.
1.10. "Best Efforts" shall be determined under New York law
and shall mean such efforts as are consistent with efforts made by businesses of
similar size and resources in a similar circumstance and context to achieve a
particular result in a timely manner, but shall not require a Party to take
actions that would be commercially unreasonable to such Party in the
circumstances.
1.11. "Budgeted Sales Price" shall have the meaning set forth
in Section 6.1(b) of this Agreement.
1.12. "CE Marking" shall mean the authorization to put the
symbol "CE" on any of the Products in accordance with the provisions of EC
Directive 93/68 (OJ 1993 L220/1) by an appropriate European standardization
body, such as CEN (Comite Europeen de Normalisation: European Committee for
Standardisation) or CENELEC (Comite Europeen de Normalisation Electrotechnique:
European Committee for Electrotechnical Standardisation), indicating such
Product's conformity with the harmonized European standards applicable to such
Product.
<PAGE>
1.13. "Cardiac Stimulation Device" shall mean an implantable
medical device for electrically stimulating or shocking the heart which is
suitable for use by or with human patients. The term "Cardiac Stimulation
Device" includes, without limitation: cardiac pacemakers, antitachycardia
pacemakers, cardioverters and defibrillators, including combinations thereof
("such devices"), pulse generators and other waveform generators for such
devices; electronic and mechanical components, including without limitation
batteries and capacitors to the extent these components are used for or with
such devices; mechanisms for coupling such devices in a stimulating, shocking or
sensing relationship to the heart including without limitation leads,
electrodes, and sensors; and data dispensing, processing and gathering systems
for such devices, including without limitation programmers, pacing system
analyzers, defibrillation system analyzers, testers, encoders, decoders,
transmitters, receivers, and computer software-controlled systems, including all
related software; and internal, but not external, holter monitors used for
recording heart rhythms (even though such internal holter monitors do not
electrically stimulate the heart). The term "Cardiac Stimulation Device"
excludes, by way of example and not limitation, muscle stimulators, nerve
stimulators, bone growth stimulators, cardiomyoplasty stimulators and associated
devices, arrhythmia mapping devices, imaging technology, angioplasty devices,
catheter ablation systems, and temporary external pacemakers and defibrillators
and EKG monitors (other than pacing programmers) which are stand-alone,
non-ambulatory and not intended for transtelephonic monitoring.
1.14. "Commission" shall mean the Commission of the European
Union.
1.15. "Competent Authority" shall mean the authority, if any,
in each member state of the European Union in the Territory responsible for
enforcement of the AIMD and the MDD from time to time.
1.16. "Confidential Information" shall mean technical and
business information relating to a Party's or its Affiliates' Intellectual
Property Rights, trade secret processes or devices, techniques, data, formula,
inventions (whether or not patentable) or products, research and development
(including research subjects, methods and results), production, manufacturing
and engineering processes, computer software, costs, profit or margin
information, pricing policies, confidential market information, finances,
customers, distribution, sales, marketing, and production and future business
plans and any other information of a "confidential" nature, specifically
including, without limitation, any information that is identified orally or in
writing by the disclosing party to be confidential, or that the receiving party
should reasonably understand under the circumstances to be a trade secret of the
disclosing party or information of a similar nature that is not generally known
to the public.
1.17. "Demand for Arbitration" shall have the meaning set
forth in Section 12.2(b).
1.18. "Existing Distributors" shall mean those third parties
having an existing distribution arrangement with Manufacturer in countries in
the Territory, the list of which third
<PAGE>
parties is set forth in Schedule 1.18. Schedule 1.18 further identifies any
third parties having an existing distribution arrangement with Manufacturer in
the Additional Countries.
1.19. "Expense Reimbursement Basis" shall mean a reimbursement
for all reasonable out-of-pocket costs and expenses plus an agreed upon hourly
or per diem amount for personnel and agreed upon amounts for reasonable overhead
allocation.
1.20. "FDA" shall mean the United States Food and Drug
Administration or any successor United States governmental agency performing
similar functions with respect to medical devices.
1.21. "FDA Tracking Information" shall mean the information
relating to the Products that must be maintained pursuant to 21 U.S. Code of
Federal Regulations Part 821 and any amendments or additions thereto.
1.22. "Firm Period" shall mean any three months (or six
months, as applicable) of a Forecast which are considered firm pursuant to
Section 7.4.
1.23. "Force Majeure" shall mean, in relation to either Party,
any circumstances beyond the reasonable control of that Party, including,
without limitation, any fire, storm, flood, earthquake, explosion, accident,
acts of the public enemy, war, rebellion, insurrection, sabotage, epidemic,
quarantine restrictions, acts of God or acts of any Governmental Authority,
labor disputes that result in work stoppages, transportation embargoes or
failure or delays of transportation, or inability to secure raw materials or
machinery for the manufacture of devices as a result of any of the foregoing. No
acts of a Governmental Authority resulting from any acts or omissions of
Purchaser or Manufacturer that are in breach of this Agreement shall constitute
an event of Force Majeure for the breaching Party.
1.24. "Forecast" shall have the meaning set forth in Section
7.4.
1.25. "Foreign Corrupt Practices Act" shall mean the U.S.
Foreign Corrupt Practices Act of 1977, as amended.
1.26. "Government Approval" shall mean governmental marketing,
and other governmental authorization required from any Governmental Authority or
Notified Body before the Products may be commercially marketed in any country of
the Territory, including any requirements for reimbursement and pricing
approval.
1.27. "Governmental Authority" shall mean any nation or
government, any state, province or other political subdivision thereof or any
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, including Competent Authorities and
the FDA.
<PAGE>
1.28. "ICD" shall have the meaning set forth in the recitals
hereto.
1.29. "Infringement Claims" shall have the meaning set forth
in Section 9.4.
1.30. "Initiating Person" shall have the meaning set forth in
Section 12.2(b).
1.31. "Intellectual Property Rights" shall mean any patent,
copyright, registered design, trademark or other industrial or intellectual
property right owned or otherwise enforceable pursuant to license or otherwise
by any Person, and applications for any of the foregoing.
1.32. "Inventory" shall mean the Purchaser's inventory of
Products.
1.33. "Joint Venture" shall mean the limited liability company
contemplated by the Limited Liability Operating Agreement between Manufacturer
and Ela Medical, Inc.
1.34. "Labels and Markings" shall mean labeling materials,
packaging, trade dress, logos, tradenames, trademarks and related materials used
for exterior packaging and exterior labeling of Products to be sold by
Purchaser, any Purchaser Distributor (or any subdistributor thereof) under this
Agreement, but shall not include Promotional Materials or Technical Materials.
1.35. "MDD" shall mean Directive 93/42/EEC Concerning Medical
Devices and any laws, regulations, guides, guidelines or guidance documents or
standards issued thereunder including any amendments made thereto.
1.36. "Material Adverse Effect" means any material adverse
effect on the assets, results of operations, properties, business or financial
condition of the Manufacturer or Purchaser, as applicable, and its subsidiaries
taken as a whole.
1.37. "Notified Body" shall mean any standards, testing or
certification body appointed by a member state of the European Union and
notified by the Commission as competent to assess a medical device's conformity
to one or more of the annexes in the AIMD or MDD.
1.38. "Order" shall mean a firm purchase order for the
Products made by Purchaser.
1.39. "Other Cardiac-Related Devices" shall mean any
cardiac-related devices other than Cardiac Stimulation Devices.
1.40. "Party" shall mean each of Manufacturer and Purchaser
and "Parties" shall mean both of Manufacturer and Purchaser, in each case
together with each of their
<PAGE>
successors and permitted assigns.
1.41. "Person" shall mean any individual, general partnership,
limited partnership, limited liability company corporation, joint venture,
trust, business trust, cooperative or association, or any foreign trust or
foreign business organization or any Governmental Authority.
1.42. "Price Period" shall mean a six-month period beginning
on January 1 and July 1 of each year until December 31, 1999 and a one-year
period from January 1 to December 31 of each year of the term of this Agreement
thereafter; provided, that the first Price Period under this Agreement shall be
from the date of this Agreement through June 30, 1998.
1.43. "Product" and "Products" shall mean the entire current
and future ICD product line, including, without limitation, mechanisms for
coupling such devices in a stimulating, shocking or sensing relationship to the
heart including, without limitation, leads, electrodes and sensors; and data
dispensing, processing and gathering systems for such devices including, without
limitation, programmers, defibrillation system analyzers, testers, encoders,
decoders, transmitters, receivers and computer software-controlled systems,
including all related software, that are developed or acquired, directly or
indirectly (including by Manufacturer being acquired by or becoming an Affiliate
of a party not previously an Affiliate) by Manufacturer and its Affiliates, and
all subsequent modifications, components and improvements used therein during
the term of this Agreement; provided, however, that any Products acquired by
Manufacturer, directly or indirectly, that are subject to agreements or
restrictions that prevent Manufacturer from complying with the terms hereof
shall be excluded from this Agreement only to the extent of such pre-existing
agreements and only for the remainder of the then existing term thereof.
1.44. "Promotional Materials" shall mean all promotional and
marketing materials used by Purchaser in connection with the marketing and
commercialization of the Products in the Territory, including but not limited to
sales aids, catalogues, sales brochures, sales manuals advertisements (in
printed or electronic form), convention exhibits, protocols for clinical studies
after obtaining the CE Marking for a Product and publications from such studies.
1.45. "Purchaser Distributors" shall mean any Affiliates of
Purchaser, existing distributors of Purchaser as listed on Schedule 1.45, or
such other Persons as enter into an agreement with Purchaser to sell or
distribute the Products in all or a portion of the Territory in accordance with
the terms and conditions of Section 2.4.
1.46. "Purchaser's Marks" shall mean the trademarks and logos
owned or licensed by Purchaser or its Affiliates (whether registered or not) as
Purchaser may from time to time designate to be used in marketing and selling
the Products in the Territory during the term of this Agreement.
<PAGE>
1.47. "Quarter" shall mean each calendar quarter ending March
31, June 30, September 30, or December 31 of each year during the term of this
Agreement.
1.48. "Recalls" shall mean any withdrawals of the Product from
the market in the Territory declared by Manufacturer or Purchaser, whether
voluntary or involuntary.
1.49. "Region" shall mean each of (i) Japan and (ii) those
countries of Europe as set forth in Schedule 1.49, which Schedule may be amended
in writing from time to time by mutual agreement of the Parties.
1.50. "Regulatory Data" shall mean the medical, clinical and
other scientific data necessary to, required for, or included in any regulatory
filing to obtain or maintain any Government Approval to market the Products
including pre-approval and post-approval reports, filings and submissions, other
than reports of Adverse Device Events and related summaries.
1.51. "Related Agreements" shall mean the agreements listed on
Schedule 1.51.
1.52. "Respondent" shall have the meaning set forth in Section
12.2(b).
1.53. "Technical Information" shall mean know-how, trade
secrets, inventions, data, technology, processes and information, including
improvements and modifications to any thereof, relating to the Products,
disclosed by Manufacturer to Purchaser under this Agreement that are either
Confidential Information of Manufacturer or its Affiliates or are protected by
Intellectual Property Rights of Manufacturer or its Affiliates, including
without limitation, processes and analytical methodology used in development,
testing, analysis and manufacture and medical, clinical and other scientific
data other than those which (i) are already known to Purchaser at the time of
disclosure or are received from a third party with a right to convey it, or (ii)
were independently developed by Purchaser prior to the time of disclosure;
provided, that Purchaser shall bear the burden of proving either of the
exceptions in (i) or (ii) hereto.
1.54. "Technical Materials" shall mean all manuals,
programming guides, user guides and training manuals of an educational or
instructional nature which are distributed in conjunction with each Product,
including any information made available by Manufacturer to Purchaser to be used
as part of the content of the Promotional Materials.
1.55. "Territory" shall mean, subject to Section 10.3, all of
the countries listed in Schedule 1.49 and, if applicable, any Additional
Countries listed in Schedule 1.49 which may be added to Schedule 1.49 by written
amendment of such Schedule executed by both Parties.
1.56. "Third Party Claims" shall have the meaning set forth in
Section 9.3(b).
1.57. "Unit" shall mean a specific model of Product that is
packaged, invoiced and sold as a unit by Manufacturer, such as an ICD Unit, a
lead Unit, a programming Unit and
<PAGE>
an accessory Unit.
1.58. "Unit Transfer Price" shall mean the transfer prices set
in accordance with Section 6.1.
Any reference in this Agreement to "writing" or cognate expressions
includes a reference to electronic or facsimile transmission or comparable means
of communications.
Any reference in this Agreement to any Applicable Law shall be
construed as a reference to the relevant Applicable Law (including any successor
provisions) as amended, re-enacted or extended at the time in question.
2. MANUFACTURE AND PURCHASE.
2.1. AGREEMENT TO MANUFACTURE.
(a) Subject to the terms and conditions of this
Agreement, Manufacturer shall manufacture and supply Products to be labeled
under Purchaser's Marks to Purchaser for sale in the Territory and Purchaser
shall purchase Products to be labeled under Purchaser's Marks from Manufacturer
for sale in the Territory.
(b) During the term of this Agreement, Purchaser
shall not have any rights to obtain the Products of Manufacturer from any Person
other than Manufacturer or its Affiliates.
(c) Purchaser shall not sell, or cause to sell, (i)
Products to any Person located outside the Territory or (ii) Products to any
Person located in the Territory, if, to the knowledge of Purchaser, such Party
inside the Territory intends to resell the Products in any country outside the
Territory; provided, however, that subject to subclause (ii) above, Purchaser
will not be liable for any third party acts resulting in Products being sold
outside the Territory. Nothing herein shall be deemed to obligate Purchaser to
impose any restrictions upon the use or resale of any Product by a purchaser
thereof in the Territory (other than a Purchaser Distributor) to the extent that
such a restriction would be in violation of Applicable Law. Purchaser shall not
be in breach of this Agreement as a result of any use or resale of a Product
outside the Territory by a purchaser that is not bound by restrictions on such
use or resale by virtue of the provisions of the preceding sentence. To the
maximum extent permissible under Applicable Law, Purchaser shall cease all sales
of Products to Persons it has reason to believe are reselling Products outside
the Territory whether or not such resales are permissible under Applicable Law.
(d) Except as provided in Section 3.7, nothing herein
shall be construed to: (i) effect any sale or transfer of any Technical
Information or Intellectual Property Rights of Manufacturer to Purchaser; (ii)
grant any license to Purchaser to design, develop or
<PAGE>
manufacture the Products; or (iii) grant to Purchaser any rights to the
Intellectual Property Rights of Manufacturer or its Affiliates.
(e) Subject to the terms of this subsection,
Manufacturer shall determine its offering of Products from time to time in its
sole discretion, including setting its development schedule for any new Product
or the improvement or modification of a Product.
Notwithstanding the foregoing and subject to Section 9.4, to the extent
Manufacturer's obligations to sell and Purchaser's right to purchase Products
under this Section 2.1 have not been affected for such Region or country in the
Territory as contemplated by Sections 7.5 (b) or 10.3, Manufacturer shall (i)
give Purchaser written notice at least one (1) year in advance of any
discontinuance of the sale of an ICD Product in any country or Region in the
Territory, or (ii) offer for sale to Purchaser an improved Product for the same
uses or indications. To the extent that any discontinuance of an ICD Product by
Manufacturer, causes Purchaser not to meet any Aggregate Minimum Purchases set
forth on Schedule 7.5(b) for a Region, the Aggregate Minimum Purchases shall be
deemed waived for that Region for the year in question. Manufacturer's
discontinuance of the sale of a Product shall not thereafter give Manufacturer
the right to sell such discontinued Product in the Territory, whether directly
or through third parties.
2.2. EXCLUSIVITY.
(a) Subject to the provisions of Sections 2.1(e),
2.2(f), 2.3 and 7.5, for the term of this Agreement, Manufacturer shall sell, or
cause to be sold, Products exclusively to Purchaser for marketing and sale in
the Territory. In furtherance hereof and subject to the terms of this Agreement,
Purchaser shall have the exclusive right to import, have imported, advertise,
have advertised, market, have marketed, promote, have promoted, sell, have sold
and have distributed the Products in the Territory.
(b) Manufacturer agrees not to take, or permit to be
taken, any action which is inconsistent with the exclusive rights granted to
Purchaser under Section 2.2(a). Without limiting the foregoing, but subject to
Sections 2.2(f), 2.3 and 7.5, Manufacturer shall not, directly or indirectly,
(i) sell, deliver or supply, or cause to be sold, delivered or supplied,
Products to any Person in the Territory, under any label or trademark, (ii)
make, manufacture or supply, or cause to be made, manufactured or supplied,
Products for the account of any Person in the Territory, under any label or
trademark, (iii) grant any manufacturing or marketing rights with respect to the
Products in the Territory, under any labels or trademarks, or (iv) sell, deliver
or supply, or cause to be sold, delivered or supplied, Products to any Person
outside the Territory, if, to the knowledge of Manufacturer, such Person intends
to resell the Products in the Territory, provided however, that subject to the
foregoing, Manufacturer will not be liable for any third party acts resulting in
Products being sold in the Territory other than by Purchaser and its Purchaser
Distributors. Nothing herein shall be deemed to obligate Manufacturer to impose
any restrictions upon the use or resale of any Product by a purchaser thereof
outside the Territory (other than a distributor of Manufacturer) to the extent
that such a restriction would be in violation of Applicable Law. Manufacturer
shall not be in breach of this Agreement as a
<PAGE>
result of any use or resale of a Product in the Territory by a purchaser that
is not bound by restrictions on such use or resale by virtue of the provisions
of the preceding sentence. To the maximum extent permissible under Applicable
Law, Manufacturer shall cease all sales of Products to Persons it has reason to
believe are reselling Products in the Territory, whether or not such resales are
permissible under Applicable Law. Except as set forth in Section 2.5(c), the
foregoing restrictions shall apply with respect to each of the Additional
Countries until the provisions of Section 2.5 have been satisfied by
Manufacturer with respect to such Additional Country.
(c) If either Manufacturer or Purchaser learns of any
sales of Products in the Territory other than by Purchaser and its Purchaser
Distributors, such Party will provide written notice thereof to the other Party.
The Parties shall consult with each other in good faith concerning appropriate
actions (consistent with Applicable Laws) to stop and thereafter prevent such
sales of the Products in the Territory. If the Parties are unable to agree upon
a joint course of action, each Party shall be free to take such actions as it
sees fit in its discretion, subject to compliance with Applicable Law, provided
that neither Party shall be under any obligation to take any such action.
(d) Purchaser acknowledges that, subject to the
restrictions set forth herein, Manufacturer may sell Products, or otherwise
enter into agreements with third parties with respect to the manufacture, sale
and distribution of Products in countries outside the Territory.
(e) Manufacturer acknowledges that Purchaser has
developed and is continuing the development of its own line of Cardiac
Stimulation Devices which Cardiac Stimulation Devices may be now or in the
future competitive with the Products.
(f) Purchaser acknowledges and agrees that
Manufacturer may import, have imported, distribute, have distributed, sell and
have sold Products in countries within the Territory for the limited purpose of
obtaining any Government Approval, including the CE Marking, that it may be
entitled to obtain in accordance with the terms hereof.
2.3. EXISTING DISTRIBUTORS OF MANUFACTURER.
xxx xx xxxxxxxxxxxxx xxxxxxxx xxxxxxxxxxxx xx xxx xxxxxxxs xx xxx xxxx
xxxxxx xxx xxx xxxxx xx xxxxxxxx xxx. xx xxxxx xxxxxxxxx xxxxx xxxxxxxxxxxx
xxxxxxxxx xxx xx xxxxxxxx xxxxxxxxxxxx xxxxxxxxxxxx xxxx xxx xxx xxxx xxxxxxx xx
xxxxxxxxx xxxxx xxxxxxxxxx xx xxx xxxxxxxx xxxxxxxx xxxx. xxxxxxx xxxxxxxxxxx xx
xxx xxxx xxxxxxxx xxxxxxxxxxx xxx xxxx xxxxxxxx xxxxxx xxxxxxxxxx xxxxx xxxxxxx
xx xx xxxx xxxxxxxxx xx xxx xxxxxx xxxxxx xxxxx xx xxx xxxxxxxxx xxxx xx xxxx
xxxxxxxxxxx xxxxx xx xxxxxxx xx xxx xxxxxxxxx xxxxxxxxx xxxxx xxxxx xx
xxxxxxxxxx:
x xxx xxxxxxx xx xx xxx xxxxxxxx xxxxx xxxxx xxxxx xx
<PAGE>
xxxxxxxxxxx xx xxxxxxxxxxxxx xxxxxxxx xxxxxxxxxxx xxx xxxxx xxx
x xxxx xxxxxxx xx xx xxx xxxxxxxx xxxxx xxxxx
xxxxx xx xxxxxxxxxxx xx xxxxxxxxxxxxx xxxxxxxx xxxxxxxxxxx xxx xxx xxxxxx
xxxxxxx xxxxxxxx xxxx xxxx xxxxxx xxxxx xx xxxxxxx xx xxx xxxxxxx xx xx xxx
xxxxx xxxx xxxxxxxxxxxxx xxxxxxxx xxxxxxxxxxx xxx xxx xxxxxx xxxxxxx xxxxxxxx xx
x xxxxxxxxxxxx xxxxxxxxxxx.
2.4. PURCHASER DISTRIBUTORS.
The right of Purchaser to appoint a third party to market, sell or
distribute Products under this Agreement is limited to those entities that are
or become Purchaser Distributors in accordance with the terms of this Section
2.4. Any distribution arrangement between Purchaser and a Purchaser Distributor
shall be subject to the following terms and conditions:
(a) The appointment of any Purchaser Distributor
shall not relieve Purchaser of any obligations under this Agreement except to
the extent required by Applicable Laws.
(b) The Purchaser shall consult with the Manufacturer
regarding any proposed Purchaser Distributor (or any subdistributor thereof) and
shall provide such information as Manufacturer may reasonably request in
connection with such proposed appointment. Manufacturer shall have a right to
object to the appointment of any proposed Purchaser Distributor (or any
subdistributor thereof) if Manufacturer has reasonable grounds for objection, in
which case the Parties shall negotiate in good faith to resolve Manufacturer's
concerns. If such concerns cannot be resolved within thirty (30) days of
Purchaser's initial consultation with Manufacturer, Purchaser shall have the
freedom to appoint such Purchaser Distributors as it deems appropriate.
(c) Each Purchaser Distributor shall agree with
Purchaser that its rights to sell the Product(s) are subject to the terms of
this Agreement, including without limitation Purchaser's or Manufacturer's
rights to terminate or convert this Agreement into a non-exclusive arrangement
to the extent provided for herein, and shall agree with Purchaser that its
agreement with Purchaser automatically terminates with respect to the Products
upon expiration of this Agreement or upon any valid termination of this
Agreement. If this Agreement is terminated only as to specified portions of the
Territory or as to specified Products, then the termination of such other
agreement(s) with a Purchaser Distributor (or subdistributor thereof) shall be
terminated to the same extent. Purchaser shall provide Manufacturer with copies
of such documents as shall evidence each Purchaser Distributor's agreement to
the obligations specified in this Agreement for Purchaser Distributors.
(d) Purchaser shall use its Best Efforts to enforce
its rights under any agreement with a Purchaser Distributor and to require any
Purchaser Distributor to enforce its rights against any subdistributor to the
extent necessary for Purchaser's compliance with the
<PAGE>
terms of this Agreement. In furtherance, and not in limitation of the foregoing,
without the prior written consent of Manufacturer, Purchaser shall not waive any
default or breach of any Purchaser Distributor which would materially adversely
affect Manufacturer.
2.5. XXXXXXXXX XX XXXXXXXXXX XXXXXXXXX.
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2.6. OTHER CARDIAC-RELATED DEVICES.
Prior to entering into any contract with any third party with regard to
the purchase, sale or distribution in the Territory of Other Cardiac-Related
Devices other than for research or clinical testing of such Other
Cardiac-Related Devices, each Party agrees to discuss in good faith with the
other the inclusion of Other Cardiac-Related Devices under this Agreement,
subject to mutually agreeable terms. Nothing in this Section 2.6 shall create an
obligation between the Parties to agree to include Other Cardiac-Related Devices
and any obligation to include Other Cardiac-Related Devices will arise only as
and to the extent that an agreement is reached between the Parties in writing.
3. INTELLECTUAL PROPERTY MATTERS
3.1. USE OF PURCHASER'S TRADEMARKS ON PRODUCTS.
Unless otherwise agreed by the Parties in writing, the Products
manufactured and supplied to Purchaser for sale in the Territory hereunder shall
bear only Purchaser's Marks in such manner as Purchaser may direct, consistent
with Applicable Laws and Government Approvals.
3.2. USE OF MANUFACTURER'S NAME ON PRODUCTS.
Solely if and to the extent necessary to obtain or comply with a
Government Approval, or to comply with Applicable Law or where the Parties
otherwise mutually agree, including in response to advice or guidance from a
Governmental Authority, the Products, Promotional Materials, Labels and Markings
and Technical Materials covered by this Agreement shall bear the name and, if
also required, the address of Manufacturer solely as a designation of the
identity
<PAGE>
of the manufacturer of such Product, and Manufacturer hereby grants to
Purchaser the right to use Manufacturer's name solely for such purposes subject
to such reasonable procedures to protect the name and any related Intellectual
Property Rights of Manufacturer as the Parties may agree.
3.3. NO USE OF MANUFACTURER'S TRADEMARKS.
Subject to the provisions of Section 3.2, nothing in this Agreement
shall give Purchaser any right to use any trademarks or tradenames of
Manufacturer or its Affiliates in connection with the Products being
manufactured for Purchaser hereunder.
3.4. COPYRIGHTS.
With respect to all copyrights related to any tangible materials
produced for Purchaser by or under the direction of Manufacturer, including
Technical Materials, software and translated materials and Labels and Markings
(other than Purchaser's Marks included therein), but excluding Promotional
Materials, title in and to any copyrights for such materials shall remain with
the Manufacturer, and Purchaser shall have no right to copy, reproduce or make
derivative works thereof, unless otherwise specifically agreed between the
Parties in writing. All title in and to any copyrights in the Promotional
Materials shall rest with Purchaser and Manufacturer shall have no right to copy
or reproduce the Promotional Materials unless otherwise specifically agreed
between the Parties in writing. Nothing herein shall affect any right, title or
interest of Manufacturer in the Technical Materials (even if the Promotional
Materials are derivative works thereof).
3.5. TECHNICAL INFORMATION.
As between Manufacturer and its Affiliates, on the one hand, Purchaser,
its Affiliates and Purchaser Distributors, on the other hand, all Technical
Information and Regulatory Data generated by Purchaser, its Affiliates and
Purchaser Distributors pursuant to clinical studies or regulatory approvals in
the Territory shall be the property of Manufacturer. Purchaser, its Affiliates
and Purchaser Distributors shall have the right to use such Technical
Information and Regulatory Data solely in furtherance of the performance of
Purchaser's obligations under this Agreement. As the owner of the Technical
Information, Manufacturer shall have the right to use, disclose and license to
any Person all or any portion of such Technical Information.
3.6. INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS OF
MANUFACTURER.
In the event that Purchaser becomes aware of the possibility of an
infringement of the Intellectual Property Rights of Manufacturer by a third
party in the Territory, Purchaser shall promptly notify Manufacturer of the
circumstances surrounding such infringement. Manufacturer may, in its sole
discretion and at its own expense and retaining all proceeds therefrom, take
such actions as Manufacturer deems appropriate with respect to any infringement
<PAGE>
identified by Purchaser, or with respect to any other infringement of
Intellectual Property Rights of Manufacturer or its Affiliates in the Territory,
as may be permitted by Applicable Law. In the event Manufacturer refuses to
prosecute an infringement action following notice thereof by Purchaser, to the
extent that Purchaser demonstrates that such failure to prosecute resulted in
Purchaser's failure to meet Aggregate Minimum Purchases set forth on Schedule
7.5(b) for a Region, then the Aggregate Minimum Purchases shall be deemed waived
for that Region for the year in question.
3.7. LICENSE OF TECHNICAL INFORMATION.
Subject to the confidentiality provisions of this Agreement,
Manufacturer hereby grants a non-transferable, non-exclusive, royalty free
license to Purchaser of Technical Information for the sole purpose of allowing
Purchaser's personnel to provide technical support to customers and to develop
the Promotional Materials. Purchaser shall have the right to sub-license such
Technical Information to Purchaser Distributors (and any subdistributor thereof)
on the same terms and conditions as set forth herein, provided that such
Purchaser Distributors execute confidentiality and sublicense agreements in form
reasonably satisfactory to Manufacturer and Purchaser which shall specify that
Manufacturer is a third party beneficiary of such agreement.
4. COMMERCIALIZATION.
4.1. DILIGENCE.
(a) As soon as practicable after receipt of
Government Approval to market any Product in any country in the Territory,
Purchaser shall thereafter use its Best Efforts to market, promote and
commercialize such Product in such country during the term of the Agreement.
(b) Purchaser agrees to use its Best Efforts to
obtain in writing any waivers that may be necessary under any Applicable Laws in
the Territory (or outside the Territory to the extent informed thereof by
Manufacturer).
(c) Purchaser shall promptly notify Manufacturer of
any inquiry (other than an order or potential order from a customer within the
Territory) from any Governmental Authority (including the Commission, a
Competent Authority, a Notified Body or the FDA) concerning the Products or
Manufacturer.
(d) Purchaser shall notify Manufacturer promptly upon
Purchaser's receipt of any actual notice that a Notified Body, a Competent
Authority or the FDA intends to visit or inspect Purchaser's facilities in the
Territory for a purpose relevant to the development or marketing of the Products
and provide Manufacturer with copies of all correspondence relating thereto and
an opportunity to participate in any inspection or regulatory comments or
correspondence prepared by Purchaser in response to such comments.
<PAGE>
(e) Purchaser and Manufacturer shall promptly notify
each other of any and all Adverse Device Events, or any events that could
reasonably be expected to become an Adverse Device Event, of which it becomes
aware and will forward promptly to the other all written reports relating to
such actual or potential Adverse Device Event. Purchaser shall also forward to
Manufacturer any explanted Products, if available. Subject to Section 9.2,
Purchaser shall be responsible for, and bear the cost of, any correspondence
with Governmental Authorities in the Territory related to any such Adverse
Device Event to the extent related to any Government Approval in the Territory
for which Purchaser is responsible hereunder. Subject to Section 9.2,
Manufacturer shall be responsible, and bear the cost of, all other requirements,
regulatory filings or measures resulting from such Adverse Device Event.
(f) Purchaser shall not knowingly sell, lease, give
or otherwise dispose of any Product to any person or entity other than a duly
qualified medical practitioner or hospital and not knowingly sell, lease, give
or otherwise dispose of any Product for any use or application other than one
particularly authorized by Manufacturer in writing or in literature and labeling
accompanying the Product.
(g) Purchaser shall provide customer support services
in the Territory at levels consistent with Purchaser's Best Efforts obligation
to develop the market for the Products within the Territory, subject to industry
standards for customary levels of support services for similar products.
4.2. REPORTS AND SALES RECORDS
(a) At least once per year, Manufacturer and
Purchaser shall consult with each other for the purpose of assessing the state
of the market in the Territory.
(b) Purchaser shall provide to Manufacturer copies of
its up-to-date price lists each time such lists are revised.
(c) Purchaser will provide Manufacturer with a
monthly report (format to be agreed upon) on implants/use of Products. Purchaser
shall also supply an annual statement within forty-five (45) days after the end
of each calendar year detailing annual sales figures (stated both in Units and
local currency) and a semi-annual statement of aging Inventory and the amount of
Inventory on hand at June 30 and December 31 of each year within forty-five (45)
days after each such date.
4.3. PROMOTIONAL AND PRODUCT LITERATURE.
(a) Manufacturer will prepare and supply Purchaser
with reasonable quantities of all Technical Materials, including any revisions
or updates thereof, for each Product in English, at Manufacturer's sole cost and
expense, and such other languages as Purchaser may
<PAGE>
reasonably request, for which Purchaser shall bear the cost of translation.
Subject to the foregoing, Manufacturer shall be solely responsible for the
translation of the Technical Materials into such other languages; provided that
Manufacturer shall provide the manuscripts of such Technical Materials and any
translations thereof to Purchaser for its review prior to printing and shall
make such changes therein as Purchaser may, in a timely manner, reasonably
request; provided further, however, that Manufacturer shall determine and
control the final content of such Technical Materials. Manufacturer shall
indemnify and hold Purchaser harmless from any and all claims, expenses, damages
and liabilities arising out of the Technical Materials.
(b) Purchaser will prepare and supply all Promotional
Materials in all languages for use in connection with sale of the Products in
the Territory; provided, however, (i) any such materials shall be provided to
Manufacturer for its prior information, and Purchaser shall make all changes
therein as Manufacturer may, in a timely manner, reasonably request; provided
further, however, that Purchaser shall determine and control the final content
of all Promotional Materials used by it in the marketing, sale and distribution
of the Products, including any translations made by Purchaser; (ii) Purchaser
shall not include any warranties in such materials that exceed the warranties
provided to Purchaser by Manufacturer in Sections 9.1(a) (iii) and (iv) or on
warranty cards provided by Manufacturer; and (iii) subject to Section 9.3,
Purchaser shall indemnify and hold Manufacturer harmless from any and all
claims, expenses, damages and liabilities arising out of the Promotional
Materials. If Purchaser desires to design its own protocols for clinical studies
after obtaining the CE Marking for a Product, Purchaser shall submit such
protocols for the prior approval of Manufacturer. All publications of such
studies must also be submitted to Manufacturer for approval prior to
publication.
(c) Unless otherwise agreed by the Parties in
writing, all Technical Materials, Promotional Materials and Labels and Markings
shall bear only Purchaser's Marks, except to the extent that Manufacturer's name
is required to be included in accordance with Section 3.2.
(d) Manufacturer shall supply to Purchaser a copy of
all sales, promotional or marketing literature that Manufacturer has developed
or used for sale of the Products for Purchaser's information and, if agreed by
the Parties in writing, Purchaser may use such sales, promotional or marketing
literature in developing the Promotional Materials.
4.4. TECHNICAL ASSISTANCE.
Manufacturer shall provide at no charge to Purchaser the services of
one qualified technician on a full-time basis during normal working hours for up
to four weeks each year during the term of this Agreement to provide training
and support at Manufacturer's Minnesota facility upon reasonable prior notice.
At Purchaser's option, Manufacturer shall provide such services at another
location, including any place in the Territory; provided that Purchaser will
reimburse Manufacturer for its reasonable out-of-pocket expenses incurred in
connection with providing such services at another location (including airfare
and hotel). If Purchaser wishes to
<PAGE>
obtain additional technical support services beyond those set forth above,
Manufacturer shall provide such additional services as Purchaser may reasonably
request upon reasonable prior notice. Purchaser shall compensate Manufacturer
for any such additional services on an Expense Reimbursement Basis.
4.5. LABELS AND MARKINGS.
Manufacturer shall prepare all Labels and Markings for the Products
manufactured for Purchaser hereunder, which Labels and Markings shall include
Manufacturer's model numbers and Purchaser's Marks. Purchaser may submit the
format of such Labels and Markings to Manufacturer. Manufacturer shall submit
all Labels and Markings to Purchaser for its review and comment and shall make
such changes thereto as Purchaser may, in a timely manner, reasonably request,
subject only to any requirements of Applicable Law. Failure of Purchaser to
object or request changes to any Labels and Markings within 10 working days (in
France) of receipt of such Labels and Markings shall be deemed approval thereof.
Purchaser shall supply electronic or camera-ready art to Manufacturer for
Purchaser's Marks to be used on the Labels and Markings, and Manufacturer shall
be responsible for affixing such Labels and Markings to the Product. No Labels
and Markings may be altered without the prior written consent of Purchaser
except as required by Applicable Law or by order of a Governmental Authority.
Purchaser shall indemnify and hold Manufacturer harmless from and against any
and all claims, expenses, damages and liabilities arising out of the use of
Purchaser's Marks on any such Labels and Markings.
5. REGULATORY AND GOVERNMENTAL APPROVALS.
5.1. CLINICAL STUDIES; CUSTOM DEVICES.
(a) Manufacturer shall use its Best Efforts to
initiate and complete clinical trials or studies in the Territory for the
purpose of obtaining the CE Marking for each Product at its sole cost and
expense after Manufacturer has completed validation of such Product required for
human implant. All such clinical trials shall be conducted in accordance with
Applicable Laws.
(b) Purchaser shall be responsible at its own cost
for conducting and monitoring any clinical trials which may be required to
obtain Government Approvals other than the CE Marking for the sale of Products
in the Territory. The Parties will discuss the extent of any clinical studies to
be conducted prior to submission for any such Government Approval, other than
the CE Marking, in the Territory and Purchaser shall use its Best Efforts to
initiate and complete such clinical studies. All such clinical trials shall be
conducted in compliance with Applicable Laws.
(c) To the extent permitted under Applicable Laws,
Manufacturer shall have the right to review and comment upon (i) all proposed
protocols and related documents (for
<PAGE>
example, investigator agreements) for any clinical studies of the Products to be
conducted by or on behalf of Purchaser, and (ii) any regulatory filings to be
made in connection therewith.
(d) Each of Manufacturer and Purchaser shall disclose
to the other all Regulatory Data in its possession or which it is responsible
for obtaining under this Agreement generated for the Products in the Territory
(or required by any Applicable Law to be made available in connection with the
sale of the Products in the Territory) and shall have the right to use, directly
or indirectly, all such information, including the right to cross-reference any
and all regulatory filings with respect to the Products, in connection with the
development and commercialization of the Products in accordance with this
Agreement. Each Party shall be solely responsible for its use of such Regulatory
Data. To assist in connection with commercialization of the Products in the
Territory pursuant to this Agreement, Manufacturer shall use its Best Efforts,
consistent with any legal or contractual limitations, to make available other
regulatory filings, clinical data and information regarding either the Products
or Manufacturer, including updating such information from time to time and upon
effecting any change by Manufacturer, for use by Purchaser solely for the
purpose of obtaining Government Approvals and commercializing the Products in
the Territory.
5.2. GOVERNMENT APPROVALS.
(a) Manufacturer shall use its Best Efforts to obtain
the CE Marking for the sale of each Product at its sole cost and expense after
Manufacturer has completed the validation of such Product required for human
implant.
(b) Purchaser will be responsible for all other
requirements of Applicable Law in the Territory concerning the sale of the
Products in the Territory, including all Product labeling and local regulatory
requirements within the Territory. Purchaser shall use its Best Efforts to
initiate and pursue all Government Approvals in the Territory except for the CE
Marking; provided, however, that if Purchaser does not obtain a required
Government Approval for a Product in a country in the Territory within x
xxxxxxxx xxxxxx xx xxx xxxx xx xxxxxxxxx xx xxx xxxxxxxxx xxxx xxxxxxxxx xxx xx
xxxxxxx xx xx xxx xxxxx xxx xxx xxxxx xxxxxxxxx xx xxx xxxxxxxxx xxxx xxx xxxxxx
xx x xxx xxxxxxxxx xxxx x xxx xxxx xx xxxxx xxx xxxxxxxxxxxx xxxxxxxx xxx xx
xxxxxxx xxx xxxx xxxxxxx xxx x xxxx xxxxxxx xx xxx xxxxxxxxxx xxxxxxx xxx xxxx
xxxx xxxxxxxxxx xxxxxxx xxxxxxx xxxx xx xxx xxxxxxxxx then, unless Purchaser's
failure to obtain any Government Approval has been caused by Manufacturer's
breach of this Agreement or failure to supply any information reasonably
requested by Purchaser that is available to Manufacturer and not otherwise
available to Purchaser on reasonable terms, Manufacturer shall have the right to
seek such Governmental Approval for such Product at its own cost and expense in
which case Manufacturer may elect to hold such Governmental Approval in its own
name or in the name of its designee, in each case to the extent permitted under
Applicable Law.
(c) Purchaser will upon submission or receipt (i)
send to Manufacturer
<PAGE>
a copy of any document submitted to or other correspondence regarding the
Product with any Governmental Authority or Notified Body in the Territory; and
(ii) provide Manufacturer with copies of all Government Approvals within fifteen
(15) days of receipt, with English translations to follow thereafter in the
event the Government Approval is not in English. Purchaser will keep
Manufacturer informed, in writing, of the status of its Government Approvals on
a regular basis. Manufacturer will assist Purchaser in connection with such
activities, to the extent reasonably requested by Purchaser and will provide
Purchaser with such information as set forth in Section 5.1(d) required for
Purchaser to submit in connection with any Government Approval. To the extent
Purchaser requests Manufacturer to undertake or perform any analytical or other
work in support of obtaining Government Approvals in the Territory, Manufacturer
will use its Best Efforts to perform such work and Purchaser shall reimburse
Manufacturer for such activities on an Expense Reimbursement Basis.
(d) After receipt of necessary Government Approvals
and thereafter throughout the term of this Agreement, Purchaser will use its
Best Efforts to maintain such Government Approvals in effect at its own expense
to the extent it is commercially and economically viable.
(e) Unless otherwise required by Applicable Laws, and
subject to Section 5.2(a) and the following sentence, Purchaser shall be the
holder of all Government Approvals in the Territory. In the event that the
Parties determine that it is desirable, for legal or administrative reasons, for
Manufacturer or its designee to hold any Government Approvals, Purchaser will
cooperate to permit Manufacturer to hold such Governmental Approvals.
(f) Purchaser shall use its Best Efforts to cooperate
in the issuance or reissuance of any Governmental Approval obtained by Purchaser
hereunder in the name of Manufacturer or Manufacturer's designee at no cost to
Manufacturer upon the partial or complete termination of this Agreement,
including any loss of Purchaser's exclusivity at Manufacturer's request in
accordance with Section 7.5(b) or 10.3. The foregoing requirements shall not be
applicable in the event that Purchaser has terminated this Agreement in
accordance with Section 10.2.
(g) Purchaser further agrees that it will take no
action to allow any Person to have any right in or license of any such
Government Approval other than Manufacturer or a Purchaser Distributor appointed
by Purchaser to distribute the Product in accordance with this Agreement,
provided that such Purchaser Distributor shall agree in writing to hold the
Government Approval subject to the terms and conditions set forth in this
Section 5.2. Purchaser agrees to provide Manufacturer with copies of any
agreement with a Purchaser Distributor entered into by Purchaser with such
Purchaser Distributor in order to comply with this Section 5.2.
(h) In furtherance and not in limitation of the
obligations of Purchaser under Section 5.2(b), Purchaser shall keep Manufacturer
advised of any changes in Applicable
<PAGE>
Laws in the Territory, including material proposed changes thereto, of which
Purchaser becomes aware in the course of performing its duties hereunder that
affect the Products. In furtherance and not in limitation of the obligations of
Manufacturer under Section 5.2(a), Manufacturer will keep Purchaser advised
regarding any changes in the Applicable Laws outside the Territory, including
material proposed changes thereto, of which Manufacturer becomes aware in the
course of performing its duties hereunder that affect the Products.
(i) Purchaser will permit Manufacturer or its
designated representative to perform, upon reasonable prior notice and at
Manufacturer's sole cost and expense, reasonable vendor audits or other audits
required by Applicable Laws on the facilities, procedures and records which are
relevant to such audits of Purchaser and Purchaser's Affiliates and, to the
extent obtainable by Purchaser at no cost to Purchaser, on facilities,
procedures and records which are relevant to such audits of other Purchaser
Distributors, or any other Persons with responsibility for any aspect of selling
the Products, on reasonable advance notice to Purchaser during normal business
hours.
6. PRICING AND PAYMENTS.
6.1. TRANSFER PRICES.
(a) For each Unit shipped by Manufacturer to
Purchaser, Purchaser shall pay a Unit Transfer Price as fixed and agreed between
Manufacturer and Purchaser prior to commencement of the relevant Price Period
for each Region for each Price Period. Subject to Section 2.3, Unit Transfer
Prices for the initial Products for each Region for the initial Price Period are
set forth in Schedule 6.1(a) attached hereto. xxxx xxxxxxxx xxxxxx xxx xxx
xxxxxxxx xxxx xx xxxxxxxxxx xx xxxx xxxxx xxx xxxxxx xxxxxxx xxx xxxxxxx xx x
xxxxx xx xxxxx xxxxx xxx xxxx xxxxxx. xxxxxxxxx xxxxx xxxxxxxxx xxxxxx xxx xxx
xxxx xx xxxxxxxx xx xxx xxxxxxxxx.
x xxxxxx xxx xxxxxxxxxxx xxxxx xx xxx xxxxx
xx xxxxxxx xx xx xxxx xxxxxxxx xxxxxx xxxxx xxxxxxx xxx x xxxxx xxxxxx xx xxxxx
xxxxxxx xxx xxx xxxxxxxxx xxxxxxxx xxxxxxx xxx xxxxxx xxxx xxxxxxxx xxxxx xxxxx
xxx xxxx xxxx.
(c) Manufacturer and Purchaser shall agree upon the
"Budgeted Sales Price" for each Unit as a reference for determining the Unit
Transfer Prices prior to expiration of the then current Price Period, such
agreement to be reached in accordance with the provisions of this Section 6.1.
(d) The Unit Transfer Price for the Products
established in accordance with this Section for any given Price Period shall be
reduced for the remainder of any calendar year based on the annual volume of
purchases of ICD Units by Purchaser and Purchaser Distributors on the following
basis:
<PAGE>
Corresponding
ICD Unit Annual Purchase Volume (all models) % of Budgeted Sales Price
-------------------------------------------- -------------------------
xxxx xxxx
xxxx
xxxx
xxxx
xxxx
xxxx
xxxx
At such time (if any) as each relevant purchase threshold (such threshold to be
prorated for the initial and final Price Periods) has been exceeded, the
applicable Unit Transfer Price for all models shall automatically be reduced by
the percentage of the Budgeted Sales Price shown for the corresponding level of
purchases above. Such reduction shall be applied to each incremental Unit of any
Product purchased by Purchaser or Purchaser Distributors. Such reduction shall
cease to be applicable for the next calendar year unless and until purchases for
such next calendar year exceed the relevant thresholds pursuant to this Section
6.1(d).
(e). With respect to programming Units, Unit Transfer Prices
shall provide Manufacturer with a target price equal to xxxxxxxxxxxxx xxxxx
xxxxxxxx xxxxxxxxxxxxx xxxx xxx xxxx xxxxxxxxxxx xxxx xxxx x xxxxxx xxxxxx xx
xxxxx xxxxxxx xx.
(f). If the Parties are not able to reach agreement on any
Unit Transfer Price for any Price Period, they shall negotiate in good faith to
attempt to resolve their differences. If such negotiations shall fail to result
in an agreement within thirty (30) days, the Parties shall each submit their
Unit Transfer Price proposals to the Chief Executive Officers of the Parties to
attempt to resolve their differences. If such Chief Executive Officers shall
fail to reach agreement within fifteen (15) days, the Parties shall submit their
final proposals to an independent third party decisionmaker who shall pick
whichever of the final proposals more closely adheres to the principles set
forth in this Section 6.1 and the best available information presented by the
Parties as to fair and competitive prices in the Region. The third party
decisionmaker shall be selected by joint agreement of the two Parties (or if
they are unable to agree within ten (10) days, then by the American Arbitration
Association ("AAA"); provided, however, that the AAA shall not administer the
proceedings). The decision of such third party shall be final and
non-appealable. The Person selected to be the third party decisionmaker shall
have experience in the medical device industry and in distribution and other
relevant commercial matters in such industry. Preference shall be given to the
selection of an individual with experience as an arbitrator, but the individual
need not be a lawyer. The Parties shall each submit their final proposals to the
independent decisionmaker with supporting analyses and other
<PAGE>
information as they deem appropriate within fifteen (15) days after selection of
the decisionmaker. No Party shall have EX PARTE communications with the
decisionmaker during any time period immediately relevant to the decisionmaker's
actions in connection with this Agreement. Each Party shall be entitled to rebut
the presentation of the other and to submit a final summary argument after
review of the other Party's rebuttal, in each case within fifteen (15) days
after the final proposal submissions. Each of the submissions of each Party
(including their respective final proposals) will be made concurrently to the
independent decisionmaker and will be opened simultaneously and provided to the
other Party upon such opening.
(g). Pending resolution of any dispute regarding applicable
Unit Transfer Prices for any Price Period, the Parties shall continue to
purchase and sell Products based upon the prior Price Period's Unit Transfer
Prices.
6.2. PAYMENT TERMS.
Manufacturer shall invoice Purchaser for the applicable Unit Transfer
Price promptly following shipment of Products by Manufacturer. All payments due
hereunder shall be paid in United States Dollars and are due net xxxxxxxxxxxxxx
after the invoice date during the first two (2) Price Periods after the
Effective Date, xxxxxxxxxxxxxxx after the invoice date during the next two (2)
Price Periods after the Effective Date, and xxxxxxxxxxxxxx after the invoice
date for all Price Periods thereafter. Payment, unless otherwise agreed in
writing, shall be made by wire transfer to such bank as Manufacturer may
designate in writing, without set-off and free and clear of and without any
deduction or withholding for or on account of, any taxes, duties, levies, fees
or charges of any nature whatsoever. If restrictions on the transfer of currency
exist in any country such as to prevent Purchaser from making payments in the
United States, Purchaser shall take all reasonable steps to obtain a waiver of
such restrictions or otherwise to enable Purchaser to make such payments,
failing which Purchaser shall, or shall cause an Affiliate to, pay Manufacturer
the amounts due in such country. Once an Order has been accepted by
Manufacturer, no shipment of Product so ordered may thereafter be delayed at
Purchaser's request.
<PAGE>
6.3. FINANCIAL AND RELATED BOOKS AND RECORDS.
Each Party shall maintain accurate and complete books and records with
respect to the performance of such Party's obligations under this Agreement,
such records to be maintained in accordance with generally accepted accounting
principles in the United States and France, respectively, for Manufacturer and
Purchaser. Such records (wherever located) shall be maintained for at least four
years after the date of creation thereof. Each Party shall have the right during
such four-year period, through its independent auditors to conduct an audit,
during normal business hours and following reasonable prior notice to the other
Party, to examine at the other Party's location, all records of such other Party
for the purpose of verifying the payments or expenditures or performance of such
Party hereunder. Information provided to, and generated by, such auditors shall
be considered Confidential Information. If any such audit shows any underpayment
or overcharge, the auditing Party shall issue a written statement to the audited
Party and a correcting payment or refund shall be made within thirty (30) days
after receipt of the written statement described above unless the audited Party
claims that the statement is in error. The fees and expenses of the accountants
performing such verification shall be borne by the Party requesting the audit.
Notwithstanding the foregoing, if any such audit results in any underpayment or
overcharge with respect to any twelve-month period of more than $25,000, then
the Party being audited shall bear the reasonable costs of the accountants in
performing such audit. Upon request and in accordance with Applicable Law, each
Party shall provide to the other Party copies of such records reasonably
required by the requesting Party to comply with Applicable Laws at the sole cost
and expense of the requesting Party.
6.4. LATE PAYMENTS.
All payments not made on a timely basis in accordance with this
Agreement shall bear interest at a rate of one percent per month (1%) or, if
lower, the maximum rate permitted by Applicable Law beginning on the date that
payment was due. Such interest is to be determined and compounded on a daily
basis from the date due until the date paid. Payment of such interest charges
will not excuse or cure any breach or default for late payment. If either Party
retains a collection agency, attorney or other Person to collect overdue
payments hereunder, all collection costs, including but not limited to
reasonable attorney's fees, will be payable by the non-paying Party.
6.5. CURRENCY CONVERSION.
All payments under this Agreement shall be made in United States
Dollars. To the extent that any amount used in connection with this Agreement is
denominated in a currency other than United States Dollars, such amount shall be
converted directly into United States Dollars using the average month-end rates
of exchange for the relevant period as published in The Wall Street Journal (or,
if The Wall Street Journal shall no longer publish such exchange rates, as
determined by a method that is mutually agreed upon in writing by the Parties).
<PAGE>
7. PURCHASE AND SUPPLY OF PRODUCT.
7.1. ORDERS.
(a) Purchases and sales of Products shall be
initiated by means of an Order on a purchase order form from Purchaser to
Manufacturer. Subject to subsection (b) below, Manufacturer shall accept all
such Orders promptly and in no event later than ten (10) working days from the
date of receipt by Manufacturer; provided that such Orders do not exceed nor
fall short of the Forecast for the relevant Firm Period as determined in
accordance with Section 7.4, by more than 20%. All Orders accepted by
Manufacturer shall not thereafter be cancelable or recoverable by Purchaser or
Manufacturer. It is understood that each Party may, for convenience, use its
own standard pre-printed forms of invoice, purchase order, acknowledgement or
acceptance in the performance of its obligations hereunder; provided, however,
that any terms, conditions or provisions in such pre-printed forms which are
inconsistent with or which modify or supplement this Agreement shall be null and
void. This Agreement is not an Order of Purchaser and does not request or
authorize delivery of any Products, except pursuant to implementation of the
specific provisions of this Agreement.
(b) xx xxx xxxxx xx xxx xxxxxxxx xx xxx xxxxxxxx
xxxxxxxxxxxx xxxxx xxxxxxxx xxxx xxxxxxxx xxxxx xxx xxxxxxxxx xxx xxxxxx xxxxxx
xx xx xx xxxx xx xxxxx xxxxx xxxxxxxx xx xxxxxxxxx xxxx xxx xxxxx xxxxxxxxx
xxxxx xxxx xxx xxxxx xxxxx xxxxxxxx xxxxxxx xx xxxxxxxxx xxx xxxx xxxxx
xxxxxxxxx.
(c) Upon acceptance of each Order (but subject to
Sections 7.2(a) and 10.4(g) ), Manufacturer shall promptly inform Purchaser of
Manufacturer's estimated shipment date for the Order. Manufacturer's obligation
with respect to accepted Orders shall be to use its Best Efforts to meet the
delivery date specified in Purchaser's Order unless Purchaser expressly agrees
to a later date. If Manufacturer anticipates any delays in the scheduled
delivery date for any Order, Manufacturer will provide prompt written notice to
Purchaser and shall cooperate with Purchaser to reschedule delivery at the
earliest possible date so as to minimize the impact on Purchaser. If Purchaser
fails to make any purchases or if Manufacturer fails to use its Best Efforts to
meet the delivery date specified in any accepted Order (or any later date agreed
to by Purchaser as specified above), the defaulting Party shall be responsible
(subject to Section 9.5) for the other Party's reasonable damages resulting
therefrom but the non-defaulting Party shall be obligated to take reasonable
steps to mitigate such damages.
(d) All Products shall be shipped to locations
specified by Purchaser in the relevant Order in shipping packages specified or
supplied by Purchaser and using the Labels and Markings. All shipments shall be
FOB Manufacturer's plant.
(e) Purchaser shall obtain any necessary import
licenses, certificates of origin or other requisite documents, and pay all
applicable customs duties and taxes in respect of
<PAGE>
the importation of the Products and their sale in the Territory. Manufacturer
shall obtain any necessary export licenses, certificates or other requisite
documents in respect of exporting the Products from the United States.
7.2. EFFECT OF LATE PAYMENTS.
If the Purchaser fails to pay the full amount due with respect to any
invoice (other than any amounts that are subject to a bona fide dispute) after
the date such invoice becomes due, Manufacturer shall be entitled (without
prejudice to any other right or remedy it may have) to:
(a) cancel or suspend any further deliveries of the
Products to the Purchaser under any Order; and
(b) charge the Purchaser interest on the unpaid
invoice at the rate provided in Section 6.4 from the date the payment became due
until actual payment is made (irrespective of whether the date of payment is
before or after any judgment or award in respect of the same).
7.3. INSPECTION OF SHIPMENTS.
Manufacturer shall send to Purchaser prior to or concurrently with each
shipment a copy of any documentation for the relevant Product that has been
agreed by the Parties. Purchaser shall have the right to inspect the shipment of
the Products which are the subject of each Order for damage, defects, shortages
or other noncomformities within thirty (30) calendar days after receipt thereof
and shall notify Manufacturer as soon as possible of any damage, defects,
shortages or of any other failure of the Products to conform to this Agreement.
Any Products which are the subject of an Order not rejected by Purchaser by
written notice to Manufacturer within such thirty (30) day period shall be
deemed accepted. Purchaser's sole remedy with respect to any nonconformity after
acceptance of a shipment shall be those provided pursuant to the warranties set
forth in Section 9.1. Upon Manufacturer's request, Purchaser shall provide
Manufacturer with packing slips, inspection reports and other documentation
supporting its rejection of any shipment. If such shortages or nonconformity
existed at the time of delivery of the Order, Manufacturer shall promptly
deliver additional or substitute Products to Purchaser in accordance with the
delivery procedures set forth herein.
7.4. PURCHASE FORECASTS.
At least one calendar month prior to the first requested delivery of
Products hereunder, Purchaser shall notify Manufacturer in writing of the
projected total number of Products, broken down by each Product model or
category, to be purchased by Purchaser during each month of the succeeding
twelve (12) calendar month period ("Forecast"). The projections for the first
six (6) months of such initial Forecast shall be firm and shall be accompanied
by Orders for such first six (6) months with respect to the models covered
thereby. Thereafter, Purchaser shall provide Manufacturer with a similar
Forecast for any new Product models or categories; the first six (6) months of
such Forecast for new Products shall be firm and shall be accompanied by
<PAGE>
Orders for such first six (6) months for such new Products. All such Forecasts
shall be updated on a monthly basis by adding a twelfth month to replace the
expired month (but not changing any other month in the Forecast), with updates
to be delivered not less than one (1) calendar month in advance. The first three
(3) months of each such updated Forecast (beginning with the fifth month of the
first Forecast period for each Product) shall be firm and shall be accompanied
by Orders for the Products in the additional month of the Firm Period. The
estimates for the remaining nine (9) months shall be non-binding estimates for
planning purposes only and Purchaser shall have no liability therefor. Purchaser
shall establish reasonable Inventory levels to meet demand for the Products
which shall be a minimum amount equal to one month of anticipated demand for the
Territory as evidenced by the Forecast. To accommodate Manufacturer's production
scheduling, the total Products ordered for any three (3)-month or six (6)-month
Firm Period will be limited to a twenty percent (20%) maximum aggregate increase
or twenty percent (20%) maximum decrease in Units relative to the projection for
such Firm Period contained in the Forecast provided to Manufacturer for such
Firm Period, unless otherwise agreed by the Parties in writing.
7.5. MINIMUM PURCHASE REQUIREMENTS.
(a) Purchaser will prepare annually at least ninety
(90) days prior to December 31, a projection for its sales of Products in each
country in the Territory in the next three (3) calendar years. The first year of
each such projection with respect to ICD Units shall constitute a baseline (the
"Baseline") and shall be subject to mutual agreement by Manufacturer and
Purchaser by October 31 of each year. If the Parties have not so agreed, the
Baseline for such year shall be determined in accordance with the procedures set
forth in Section 7.5(e). It is the objective of the Parties that Purchaser will
achieve market penetration over time comparable to that attained for the
Products in other markets, particularly the U.S. The first such projection is
attached hereto as Schedule 7.5(a).
(b) During each calendar year of the term hereof
beginning January 1, 1998, Purchaser shall submit Orders for ICD Units at least
equal to the respective Aggregate Minimum Purchases for each Region as set forth
on Schedule 7.5(b) (ii) and upon Purchaser's failure to do so, Manufacturer may
at its option and subject to Section 10.3(b), terminate this Agreement with
respect to the Region for which Purchaser has failed to submit Orders for such
Aggregate Minimum Purchase. In addition, should Purchaser fail to submit Orders
in any year of the term hereof for ICD Units at least equal to the Aggregate
Minimum Purchases for each Region set forth on Schedule 7.5(b) (i), at
Manufacturer's option and subject to Section 10.3(b), the obligation of
Manufacturer to sell and Purchaser to purchase hereunder shall become
non-exclusive with respect to the Region for which Purchaser has failed to
submit sufficient Orders and Manufacturer shall have the right to import, have
imported, advertise, have advertised, market, have marketed, promote, have
promoted, sell, have sold and have distributed the Products in the Region on a
non-exclusive basis. Notwithstanding the foregoing, to the extent that
Manufacturer fails to accept Purchaser's Orders in accordance with the terms of
this Agreement, and such failure causes Purchaser not to meet any Aggregate
Minimum Purchases
<PAGE>
set forth on Schedule 7.5(b), for a Region, the Aggregate Minimum Purchases
shall be deemed waived for that Region for the year in question.
(c) The Baseline sales projections shall be
determined based upon all of the relevant factors affecting the market inside or
outside the Territory for ICD Units including (i) overall growth factors in the
market; (ii) market penetration achieved by the ICD Units; (iii) relative
competitive factors affecting the market including competing products; and (iv)
marketing and sales efforts that have been or are being used. Subject to the
foregoing, it is the expectation of the Parties that the Baseline amounts will
increase over the long-term at least in accordance with the underlying growth
characteristics of the marketplace.
(d) Purchaser's performance with respect to the
Aggregate Minimum Purchases for each Region shall be determined by Manufacturer
within thirty (30) days after the end of each calendar year (the first such
determination to take place in January 1999) based on Orders received by
Manufacturer during the respective calendar year. Manufacturer may, at its
option, notify Purchaser in writing during such thirty (30) day period of a
failure to meet the applicable Aggregate Minimum Purchases for each Region and
of any exercise of Manufacturer's options set forth in Section 7.5(b) of this
Agreement as a result thereof. Purchaser shall have thirty (30) days after
receipt of any such notice in which to establish by copies of Orders any errors
in the determination by Manufacturer as to Aggregate Minimum Purchases, in which
case, Manufacturer's notice shall be deemed revoked. If Purchaser does not
produce evidence of such Orders in the thirty (30) day period, Manufacturer's
notice of termination shall take effect from and after such thirtieth day.
(e) If the Parties are not able to reach agreement on
the Baseline for any calendar year as specified in Section 7.5(a) above, they
shall negotiate in good faith to attempt to resolve their differences. If such
negotiations shall fail to result in an agreement within thirty (30) days, the
Parties shall follow the same procedures as set forth in Section 6.1(f) with
respect to Unit Transfer Prices to resolve such dispute, applying the principles
set forth in Section 7.5(c) rather than those in Section 6.1 in making any
determination.
(f) Notwithstanding any exercise by Manufacturer of
its options under Sections 7.5(b) or 10.3(b) as a result of Purchaser's failure
to submit Orders meeting the relevant Aggregate Minimum Purchases, Purchaser
shall retain the exclusive rights in all Purchaser's Marks under which the
Products have been sold in any portion of the Territory and Manufacturer shall
acquire no right, title or license to use Purchaser's Marks.
7.6. ORDERS BY AFFILIATES.
All Orders and estimates for particular countries throughout the
Territory must be made and processed by Purchaser or a single designated
Purchaser Affiliate who will coordinate with Manufacturer all Orders of
Purchaser Distributors; payment for all such Orders will be coordinated by
Purchaser or such single designated Purchaser Affiliate and paid directly to
<PAGE>
Manufacturer.
7.7. RETURN OF EXPIRED PRODUCTS.
Purchaser shall, at its own expense, return to Manufacturer all
Products held in Inventory which have passed the "use before" date marked on the
sterile pack. Purchaser shall not be reimbursed or credited for any such expired
Inventory.
8. QUALITY ASSURANCE; TESTING.
8.1. QUALITY CONTROL.
Manufacturer shall produce the Products in accordance with all
Applicable Laws including requirements of the Act and the FDA's Good
Manufacturing Practice regulations in effect at the time of manufacture, and
applicable specifications for all models of the Products, including, without
limitation, those specified from time to time in the Technical Materials.
Manufacturer shall permit, shall cause its Affiliates and use its Best Efforts
to cause third party suppliers to permit, quality assurance representatives of
Purchaser promptly after signature of this Agreement, no more than once a year
thereafter, and prior to placing an initial Order for any new Product, to
inspect Manufacturer's or its Affiliates' manufacturing, testing and storage
facilities, and the manufacturing, testing and storage facilities of any third
parties who manufacture components for Manufacturer or its Affiliates, to
conduct quality assurance audits. Purchaser agrees that all arrangements for
such audits of third-party suppliers shall be made through Manufacturer and that
Manufacturer may, at its option, accompany Purchaser on any such audits. Such
audits shall be limited to inspection of the quality control systems and
procedures of the Person being audited and a review of Product validation files,
clinical documentation, and regulatory status, upon reasonable notice, during
normal business hours and pursuant to confidentiality agreements as described in
Section 11.1. Manufacturer shall permit, and cause its Affiliates and use its
Best Efforts to cause its third party suppliers to permit, any officials of any
Governmental Authority in the Territory to inspect its facilities as necessary
to comply with Applicable Laws. Manufacturer shall notify Purchaser of any FDA
inspection of its production or testing facilities for the Products and shall
provide Purchaser with copies of any reports (including Forms 483) issued as a
result thereof to the extent applicable to the Products.
8.2. TESTING.
In accordance with Applicable Laws, including the requirements of the
Act, Manufacturer shall test or cause to be tested each Unit to be supplied
pursuant to this Agreement before delivery of such Unit to Purchaser.
Manufacturer acknowledges that Purchaser is relying upon testing documentation
or other validation or verification documents showing Manufacturer's compliance
with its standard quality control procedures relating to the Products provided
by Manufacturer with each shipment as to the compliance of such shipment with
all applicable specifications. Purchaser agrees to conduct only such testing or
programming of any
<PAGE>
Unit prior to delivery to a customer or after explant of any Unit from a patient
as may be agreed by Manufacturer in writing, otherwise requested by Manufacturer
in writing or in accordance with procedures set forth on Schedule 8.2.
8.3. RECORDS AND TRACEABILITY
Manufacturer hereby covenants and agrees that for a minimum period of
fifteen (15) years after the sale and purchase of any Product hereunder, it
shall maintain complete and accurate records of the FDA Tracking Information for
all Products, and all components thereof, that are manufactured and sold under
this Agreement, to the extent necessary to meet or exceed all applicable FDA
requirements and other Applicable Laws. Purchaser hereby covenants and agrees
that for a minimum period of fifteen (15) years after the sale and purchase of
any Product hereunder, it shall maintain the FDA Tracking Information regarding
the sale of all Products manufactured for it by Manufacturer hereunder to the
extent necessary to meet or exceed all applicable FDA requirements and other
Applicable Laws in the Territory. The Parties agree to provide each other with
reasonable access to and copies of such records and information in the event of
any Recall or other similar event involving the Products described in Section
9.2 or as necessary for any compliance with Applicable Laws. In furtherance and
not in limitation of the foregoing, upon reasonable prior written notice from
Manufacturer, Purchaser shall provide to Manufacturer the FDA Tracking
Information at the end of each calendar month (or earlier if required by
relevant Applicable Law) if, and for so long as, the provision of such FDA
Tracking Information has become mandatory under Applicable Law.
9. WARRANTIES AND INDEMNIFICATIONS.
9.1. MANUFACTURER PRODUCT WARRANTIES.
(a) Manufacturer represents, warrants and covenants
that:
(i) at the time of shipment of all Products
hereunder, such Products shall be new with xxxxxxxxxxxxxxxxxxxxxxxxxxx
remaining prior to the expiration of the "use before" date and shall,
unless otherwise agreed in writing by the Parties, meet or exceed all
requirements necessary for the CE Marking and all Applicable Laws in
the Territory of which Manufacturer is aware or of which Purchaser
specifically informs Manufacturer;
(ii) Purchaser shall have good and valid
title in and to such Products, free and clear from any liens, security
interests, charges, claims or other encumbrances;
(iii) for a period of xxxxxxxxxxxxxxxxxxxxx
from date of implant in a patient, each Product will be free from
defects in design, materials and workmanship (battery depletion within
the limits outlined in the specifications for such Product is not
considered a defect); and
<PAGE>
(iv) for a period of xxxxxxxxxxxxxxxxxx
from date of implant in a patient, each Product will conform to the
specification for such Product established in accordance with this
Agreement.
xxxxxxxxxxxxxxxxxxxxxxx referred to (iii) and (iv)
above apply only for the purposes of the warranty set forth in this Section 9.1.
Notwithstanding any provision of this Agreement, the Parties may agree to
shorten or lengthen the warranty periods set forth in Sections 9.1(a) (iii) or
(iv) from time to time to reflect competitive factors and if and to the extent
required by Applicable Law. Any such change shall be made in compliance with
Applicable Laws.
(b) In the event of any breach of the foregoing
warranties, Manufacturer shall, at its option, reprocess, if feasible, or supply
a replacement of, any Products or any components thereof which fail to meet the
terms of such warranties at no additional charge to Purchaser and Manufacturer
shall be responsible for transportation and insurance costs to ship such
reprocessed or replacement Products to Purchaser. Purchaser shall be responsible
for transportation and insurance costs to ship any claimed defective Product
back to Manufacturer's plant for Manufacturer's review. Manufacturer shall
determine at Manufacturer's cost at its factory whether such Product is in fact
defective. If Purchaser does not agree with Manufacturer's determination that
such Product is not defective, the Parties shall retain an appropriate expert to
be mutually agreed fifteen (15) days of Purchaser's receipt of Manufacturer's
determination to judge ultimately whether such Product is defective. If the
Parties cannot agree on an appropriate expert, each party shall submit two
nominations to the AAA within ten (10) days thereafter for the AAA to appoint an
appropriate expert from such nominees; provided, however, that the AAA will not
administer the proceeding. If either Party does not submit nominations as
described above, the AAA shall appoint an expert from the nominees it has
received. The determination of the expert will be final and binding on the
Parties. The cost for retaining the expert shall be borne by Manufacturer if
such Product is judged defective and by Purchaser if such Product is judged not
to be defective. Any returned Products shall become the property of
Manufacturer. This warranty does not extend to any Products that have been
damaged or rendered defective as a result of: (i) misuse or negligence on the
part of Purchaser or any Purchaser Distributors or failure of Purchaser,
Purchaser Distributor or any of their respective customers to follow
instructions for proper use and care of the Product; (ii) external factors such
as fire and flood; (iii) accidents involving, or modification or alteration of,
the Product other than those caused by Manufacturer after delivery to Purchaser
or (iv) implantation after the "use before" date marked on the Product's sterile
pack.
(c) Purchaser and Manufacturer shall discuss in good
faith the nature and content of written product warranties to be extended by
Purchaser to customers with respect to the Products in the Territory. Without
Manufacturer's prior written consent, and except as may be required to comply
with Applicable Laws, Purchaser shall not extend to customers any warranties
with respect to the Products in the Territory which are inconsistent with those
<PAGE>
warranties being extended by Manufacturer from time to time outside the
Territory.
9.2. RECALLS.
Purchaser and Manufacturer each shall notify the other promptly if any
Product is the subject of a Recall or other similar event in any jurisdiction,
and the Parties shall reasonably cooperate in the handling and disposition of
such Recall or other similar event; provided, however, in the event of a
disagreement as to any matters related to any proposed Recall or other similar
event, other than the determination of who shall bear the costs as set forth in
the immediately following sentence, each Party shall have the right to cause a
Recall or other similar event to be undertaken. Manufacturer shall bear the
reasonable costs (including without limitation, the cost of locating and
contacting by any means patients and customers, the cost of explanting the
recalled Products and implanting a replacement Product, and the cost of such
replacement Product ("Costs") ) of all Recalls of the Products except any
voluntary Recall effected solely by Purchaser, for which Purchaser shall
initially bear all Costs. If subsequent to such voluntary Recall by Purchaser,
events show that Manufacturer wrongfully refused to agree to such Recall, then
Manufacturer shall reimburse Purchaser for all Costs incurred by Purchaser in
connection therewith. Notwithstanding the foregoing, Purchaser shall pay the
Costs of any Recall or other similar event if and to the extent caused by (i)
any unauthorized change to the Products by Purchaser or by a Purchaser
Distributor which directly results in the Recall, (ii) the failure of Purchaser
or a Purchaser Distributor to properly store, label or otherwise handle the
Products which directly results in the Recall or (iii) any other breach of this
Agreement by Purchaser or an act committed by a Purchaser Distributor that, had
such act been committed by Purchaser, would have been a breach of this Agreement
which directly results in the Recall.
9.3. INDEMNIFICATION FOR THIRD PARTY CLAIMS.
(a) Notwithstanding any other provision of this
Agreement, Manufacturer shall be responsible for, and shall assume the defense
of and indemnify and hold Purchaser, its Affiliates and Purchaser Distributors
harmless from and against, all Third Party Claims arising out of or related to
any Products or Technical Materials related thereto manufactured or supplied by
Manufacturer hereunder; provided that the indemnification obligations of
Manufacturer under this Section shall not apply to any Third Party Claim caused
by any misuse, willful misconduct or negligent act or negligent failure to act
on the part of Purchaser or any Purchaser Distributor with respect to the
Products including any modification or alteration of the Product other than
caused by Manufacturer after delivery to Purchaser and any implantation after
the "use before" date marked on the Product's sterile pack.
(b) For purposes of this Agreement, the term "Third
Party Claims" shall mean any and all claims, lawsuits or actions asserted
against Purchaser, its Affiliates or Purchaser Distributors or their respective
directors, officers and agents under any and all Applicable Laws arising out of
or relating to any Product or Technical Materials (including, without
limitation, any data in the Technical Materials that are properly included in
the
<PAGE>
Promotional Materials with Manufacturer's prior written approval) related
thereto that are manufactured or supplied by Manufacturer or its Affiliates,
including, but not limited to, claims based on strict liability, tort,
negligence or breach of express or implied warranty and claims for special,
incidental, exemplary and consequential damages, in cases in which it is alleged
that personal injury (including, but not limited to, emotional distress or
disturbance), direct financial loss, death or property damage was caused by a
defect in design, material or manufacture of any of the Products or the
Technical Materials (including, without limitation, any data in the Technical
Materials that are properly included in the Promotional Materials with
Manufacturer's prior written approval) related thereto that are manufactured or
supplied by Manufacturer or its Affiliates hereunder including any
misrepresentation or failure to warn in the Technical Materials. "Third Party
Claims" shall also include all losses, liabilities, damages, judgments, awards
and costs (including reasonable attorneys' fees) arising out of or relating to
the claims described in the preceding sentence.
9.4. MANUFACTURER INFRINGEMENT INDEMNIFICATION.
Manufacturer shall indemnify and hold Purchaser, its Affiliates and
Purchaser Distributors harmless from and against any and all liabilities,
damages, costs or losses (including, without limitation, reasonable attorneys'
fees) arising out of or related to claims or suits asserted or brought against
Manufacturer or Purchaser under any and all Applicable Laws to the extent such
claim or suit is based on alleged infringement, unauthorized use or
misappropriation of patents, mask work rights, copyrights or other Intellectual
Property Rights of a third party in connection with the sale or use of Products
in the Territory (the "Infringement Claims"). In any event, Manufacturer has the
right at any time and in its sole discretion to modify the design of any Product
so that it becomes non-infringing, to obtain a license for such Products or to
cease to provide such Product to Purchaser, provided that all damages, losses,
costs, and expenses incurred by Purchaser that are directly related to such
modification shall be treated as indemnifiable expenses of Purchaser, its
Affiliates and Purchaser Distributors for purposes of this Section 9.4 and shall
be borne by Manufacturer. Purchaser shall use its Best Efforts to assist and
cooperate with Manufacturer in the defense of any Infringement Claims to the
extent Purchaser is the beneficiary of any rights against the maker of such
Infringement Claim pursuant to any agreement with such third party, the benefit
of which may also inure to the benefit of Manufacturer; provided that such
cooperation shall be at the sole expense of Manufacturer and Purchaser shall not
be required to initiate or become a party to any litigation in connection
therewith.
9.5. LIMITATION ON DAMAGES.
Except as expressly provided in this Agreement, neither Purchaser nor
Manufacturer shall be liable to the other, for any special, incidental,
exemplary or consequential loss or damage (whether for loss of profit or
otherwise and whether occasioned by the negligence of a Party or its employees
or agents or otherwise) arising out of or in connection with any act or failure
to act of Manufacturer or Purchaser relating to the manufacture or supply of the
Products
<PAGE>
or, their sale by the Purchaser or arising out of the performance or
non-performance of this Agreement.
MANUFACTURER'S WARRANTIES SET FORTH IN THIS SECTION 9 ARE ITS EXCLUSIVE
WARRANTIES TO PURCHASER WITH RESPECT TO THE PRODUCTS, AND ARE GIVEN AND ACCEPTED
IN LIEU OF ANY AND ALL OTHER WARRANTIES, GUARANTEES, CONDITIONS AND
REPRESENTATIONS, EXPRESS OR IMPLIED, CONCERNING THE PRODUCTS, WHETHER ARISING
UNDER ANY APPLICABLE LAW OR OTHERWISE INCLUDING, WITHOUT LIMITATION, ANY IMPLIED
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
9.6. CERTAIN COVENANTS.
Purchaser represents, warrants and covenants that:
(a) Purchaser will not furnish purchasers of the
Products with any warranties, whether written or oral, beyond those given by
Manufacturer to Purchaser under Section 9.1(a) (iii) and (iv) or stated in any
warranty card or similar material provided by Manufacturer or included with the
Product;
(b) Purchaser shall comply with all Applicable Laws
concerning the use, handling, sale and disposition of the Products in the
Territory.
9.7. REPRESENTATIONS AND WARRANTIES OF THE PARTIES.
Each of Manufacturer and Purchaser hereby represents and warrants to
the other that as of the date hereof:
(a) Each is a corporation duly organized and existing in good
standing under the laws of the jurisdiction in which it is incorporated, and has
the requisite corporate power to own its properties and to carry on its business
as now being conducted. Each is duly qualified as a foreign corporation to do
business and is in good standing in every jurisdiction in which the nature of
the business conducted or property owned by it makes such qualification
necessary and where the failure to qualify would have a Material Adverse Effect
with respect to such Party.
(b) Each has the requisite corporate power and authority to
enter into and perform this Agreement and to perform in accordance with the
terms hereof. The execution and delivery of the Agreement and the consummation
of the transactions contemplated hereby have been duly authorized by its board
of directors and no further consent or authorization of its board of directors
or stockholders is required. The Agreement has been duly executed and delivered
by it. The Agreement constitutes a valid and binding obligation enforceable
against it in accordance with its terms, except as such enforceability may be
limited by applicable insolvency,
<PAGE>
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and remedies or by
equitable principles of general application.
(c) Except as set forth on Schedule 9.7, the execution,
delivery and performance of the Agreement and the consummation of the
transactions contemplated hereby do not (i) result in a violation of its
Articles of Incorporation, or By-laws, or (ii) conflict with, or constitute a
default (or an event which with material notice or lapse of time or both would
become a default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any material agreement, material indenture or
material instrument to which it is a party, or result in a violation of any law,
rule, regulation, order, judgment or decree applicable to it or by which any
property or asset of such Party is bound or affected (except in the case of
subclause (ii) above, for such conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations as would not, individually or in the
aggregate, have a Material Adverse Effect). No action, suit, dispute or
proceeding is pending or, to the best knowledge of such Party, threatened
against such Party which, if adversely determined, would prevent such Party from
carrying out its obligations under this Agreement. Each Party's business is not
being conducted in violation of any law, ordinance or regulation of any
Governmental Authority, except for possible violations which either singly or in
the aggregate do not and will not have a Material Adverse Effect. Except as
contemplated by this Agreement, it is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
Governmental Authority in order for it to execute, deliver or perform any of its
obligations under the Agreement.
(d) Neither Party shall be deemed to have made any
representation or warranty to the other Party except as expressly made in
Sections 2.3, 9.1 and this Section 9.7. Without limiting the generality of the
foregoing, and without prejudice to any express representations and warranties
made to either Party in this Section 9.7, neither Party makes any representation
or warranty to the other with regard to any issues related to Intellectual
Property Rights, projections, estimates or budgets or other matters previously
delivered to or made available to the other with respect to future revenues,
expenses, expenditures or future results of operations. Nothing in this Section
9.7(d) shall limit any remedy that may be available to a Party pursuant to
Applicable Law.
9.8. MITIGATION.
In the event of any occurrence which may result in either Party
becoming liable for breach of this Agreement, each Party shall use its
reasonable efforts to take such actions as may be reasonably necessary to
mitigate the damages payable by the breaching Party.
9.9. INDEMNIFICATION PROCEDURE FOR THIRD PARTY CLAIMS AND
INFRINGEMENT CLAIMS.
If a Party seeks indemnification hereunder for a matter that involves a
claim by a third
<PAGE>
party including without limitation, Third Party Claims and Infringement Claims,
the Party seeking indemnification (an "Indemnitee") shall promptly notify the
indemnifying Party (the "Indemnitor") of and shall provide reasonable
information and details concerning the nature of such claim. Indemnitor shall,
to the extent applicable, have the right to assume the defense at its expense of
all third party claims and shall pay all costs and damages finally awarded
against the Indemnitor and the Indemnitee in conjunction with such third party
claims, provided that (i) the Indemnitee provides prompt written notice to the
Indemnitor of its receipt of service of any such claim; (ii) the Indemnitor
controls the defense of the third party claim on behalf of all Parties; (iii)
the Indemnitee consents to representation in such claims by counsel selected by
and representing the Indemnitor; provided, however, that if outside counsel to
the Indemnitee reasonably advises the Indemnitee and the Indemnitor in a written
opinion that such joint representation raises a potential conflict of interest
as between the Indemnitee and the Indemnitor (other than regarding the right to
indemnification under this Agreement), then the Indemnitee shall have the right
to retain separate counsel to represent its interests in such third party claim
and the reasonable costs, fees and expenses thereof shall be borne equally by
the Indemnitee and the Indemnitor; and (iv) upon request of the Indemnitor, the
Indemnitee uses its Best Efforts to cooperate with the Indemnitor in defending
such third party claim by providing the Indemnitor with all necessary business
information and relevant documents under its control related to the third party
claim and cooperating with such other reasonable requests of the Indemnitor at
the Indemnitor's expense in accordance with Applicable Law. The Parties'
indemnity obligations under this Article 9 shall not apply to amounts paid in
settlement of any loss, claim, liability or action if such settlement is
effected without the consent of the Indemnitor, which consent shall not be
unreasonably withheld. The Indemnitee's failure to deliver notice to the
Indemnitor within a reasonable time after the commencement of any such action,
if materially prejudicial to the Indemnitor's ability to defend such action,
shall relieve the Indemnitor of any liability to the Indemnitee under this
Article 9, but not any liability that it may have to the Indemnitee otherwise
than under this Article 9.
10. TERM AND TERMINATION.
10.1. TERM.
The initial term of this Agreement shall be seven (7) years from the
Effective Date and Purchaser may at its sole option renew this Agreement for an
additional three (3) years if the Minimum Aggregate Purchase requirements set
forth on Schedule 7.5(b) (i) have been met or waived in all Regions in all years
prior to the end of the initial term, provided that such extension is in
accordance with Applicable Laws. Otherwise, the Parties may, by mutual written
agreement, agree to extend this Agreement for one successive three (3) year
term. Not less than one year prior to the scheduled expiration of the ten-year
term, if applicable, the Parties shall commence good faith negotiations
regarding a possible extension of such term on mutually acceptable terms,
provided that, unless the Parties shall have reached mutual written agreement on
the terms and conditions of such an extension prior to the scheduled expiration
date of the ten-year term, if applicable, the term of this Agreement shall
automatically expire upon completion
<PAGE>
of such ten-year term.
10.2. EVENTS OF EARLY TERMINATION.
(a) This Agreement may be immediately terminated as
to the entire Territory by either Party, upon giving written notice to the other
Party, in the event that the other Party shall become insolvent or be declared
insolvent or bankrupt by a court of competent jurisdiction or shall be the
subject of any reorganization (other than a corporate reorganization effected in
the ordinary course of business and not arising out of any insolvency) or
winding up, receivership or dissolution, bankruptcy or liquidation proceeding,
or any proceeding or action similar to one or more of the above, in which case
termination shall be effective upon such written notice. The failure of either
Party to give notice of termination upon obtaining knowledge of any such event
shall not be interpreted as a waiver of such Party's rights under this Section
10.2, and such Party reserves the right to exercise any such rights at any time
after the occurrence of any such event.
(b) Subject to the further provisions of this Section
10.2(b), upon any material breach or default of this Agreement by either Party,
the non-breaching Party shall have the right to serve notice upon the breaching
Party of its intention to terminate this Agreement in its entirety upon the
expiration of ninety (90) days after the date such notice is given, unless the
breaching Party shall cure any such breach or default within said ninety (90)
day period, except that, in the case of a breach of a payment obligation
hereunder, the applicable cure period shall be thirty (30) days. Upon the
expiration of the applicable cure period, if the breaching Party shall not have
cured the alleged breach to the reasonable satisfaction of the non-breaching
Party, and if the non-breaching Party gives a notice of final termination, final
termination of this Agreement shall be effective on the date such notice is
given. In the event of any dispute as to the existence of a default or the
adequacy of any cure thereof, the Party charged with such alleged breach or
failure to cure may require that the right to terminate be determined by the
dispute resolution mechanism pursuant to Article 12.
10.3. ELIMINATION OF ONE OR MORE COUNTRIES.
(a) Purchaser may, at any time during the term of
this Agreement, upon at least 90 days prior written notice to Manufacturer,
eliminate any country from the Territory.
(b) In addition to any rights it may have under
Section 7.5(b), Manufacturer may, at any time during the term of this
Agreement, upon at least 90 days prior written notice to Purchaser, eliminate
any country from the Territory upon the occurrence of the following
circumstances:
(i) failure by Purchaser to file for
Government Approvals of the Product in such country within agreed upon
time periods set forth in Section 5.2(b) unless such failure resulted
from Manufacturer's breach of this Agreement or failure to supply any
<PAGE>
information reasonably requested by Purchaser that is available to
Manufacturer and not otherwise available to Purchaser on reasonable
terms; or
(ii) failure by Purchaser to meet the
Minimum Aggregate Purchase requirements set forth on Schedule 7.5(b)
(ii) for the Region in which such country is located unless such
Aggregate Minimum Purchase requirements have been waived.
10.4. RIGHTS AND OBLIGATIONS ON EXPIRATION OR TERMINATION.
Upon termination or expiration of this Agreement for any reason
whatsoever the following provisions shall apply (if the rights and obligations
under Section 2.1 are terminated with respect to any country or Region in the
Territory in accordance with this Agreement the following provisions shall apply
to such country or Region of the Territory):
(a) To the extent permitted under Applicable Law,
Purchaser shall provide to Manufacturer within thirty (30) days a complete
listing of all Government Approvals and shall comply with Section 5.2(f) hereof
with respect thereto.
(b) After the date which is three (3) months from the
date of termination or expiration, Purchaser shall cease to promote, market or
advertise the Products. Purchaser and Manufacturer shall each cooperate with the
other in an orderly winding up of their respective dealings.
(c) Except in the event of termination of this
Agreement by Purchaser in accordance with Section 10.2, Purchaser shall within
thirty (30) days of expiration or receipt of notice of termination by
Manufacturer certify to Manufacturer the destruction at its own expense of all
Promotional Materials relating to the Products then in the possession of the
Purchaser, any Purchaser Distributor (or any subdistributor thereof) and shall,
if requested by Manufacturer, return, at its own expense, all samples of
Products if such samples have been provided free of charge to Purchaser.
(d) In the event of termination of this Agreement by
Manufacturer in accordance with Section 10.2, at Manufacturer's option,
outstanding unpaid invoices rendered by Manufacturer in respect of the Products
shall become immediately due and payable by Purchaser and invoices with respect
to Products ordered prior to termination but for which an invoice has not been
submitted shall be payable immediately upon submission of the invoice. In any
event, Purchaser shall continue to pay all amounts due hereunder prior to the
effective date of termination and all amounts due thereafter including amounts
in respect of the Product ordered by Purchaser prior to the date of termination
and delivered by Manufacturer.
(e) To the extent applicable, Purchaser shall provide
the FDA Tracking Information in the form and within the time limits specified in
this Agreement.
<PAGE>
(f) Purchaser shall provide Manufacturer with such
information regarding patients in whom the Products have been implanted and at
such times as reasonably necessary to allow Manufacturer to service such
Products and comply with all Applicable Laws. Purchaser understands that
Manufacturer or its designee may be obligated to continue to contact Purchaser's
customers after expiration or termination of this Agreement to allow
Manufacturer to comply with United States law and regulatory requirements to
collect and update periodically the FDA Tracking Information throughout the time
the Products are implanted in patients. Manufacturer agrees to use such FDA
Tracking Information and any information regarding customers or patients
provided to Manufacturer by Purchaser hereunder only to the extent required for
Manufacturer's compliance with Applicable Laws and Manufacturer shall not
provide or make any such information available to its sales force, distributors
or sales agents or representatives unless this Agreement has been terminated by
Manufacturer in accordance with Section 10.2(b).
(g) In the event of termination of this Agreement
pursuant to Sections 10.2 (but not any expiration under Section 10.1), the
terminating Party may at its sole discretion cancel by prompt written notice any
Orders for the Products which are unshipped at the date of such termination.
(h) Subject to Section 3.5, upon termination or
expiration of this Agreement, each Party shall promptly return to the other
Party all documents, letters, records, notebooks, papers, writings, designs,
drawings, models, blueprints and all other materials and all copies thereof
embodying or showing any of the Technical Information provided by Manufacturer
or any Confidential Information disclosed by either Party, in each case which is
then in the Party's possession or under its control, by whomever prepared, and
all other property owned by one Party but in the possession of the other Party
shall be returned.
(i) Unless otherwise expressly provided in this
Agreement, upon the termination or expiration of this Agreement, neither Party
shall have any further duties or obligations to the other under this Agreement;
provided, however, that no such termination or expiration shall relieve either
Party from any liability for which it is otherwise responsible under this
Agreement (including liabilities under Article 9 of this Agreement) with respect
to any event, occurrence, transaction, act or omission which occurred prior to
the date of such termination or expiration or with respect to any losses,
liabilities or claims arising out of any breach or default under this Agreement.
<PAGE>
11. CONFIDENTIALITY; PUBLICITY; NON-SOLICITATION.
11.1. CONFIDENTIAL INFORMATION.
(a) Each Party shall (and shall cause its Affiliates,
agents and representatives to), for the term of this Agreement and for six (6)
years after the expiration or termination of this Agreement for any reason, (i)
keep confidential, (ii) not disclose to others, (iii) use only for the purposes
provided for or permitted under this Agreement or the Related Agreements, and
(iv) use Best Efforts, and at least the same degree of care (but no less as a
reasonable degree of care) as it uses to protect its own Confidential
Information of like importance, to prevent unauthorized use, dissemination and
disclosure of, all of the other Party's and its Affiliates' Confidential
Information, except as expressly provided for or permitted by this Agreement.
All Confidential Information shall, as between the Parties and their Affiliates
remain the sole property of the disclosing party or the relevant Affiliate. The
receiving party and its Affiliates, agents and representatives shall have no
rights to the Confidential Information of the disclosing party and its
Affiliates, except as provided in this Agreement. Nothing in this Section 11.1
shall prevent disclosure or use of information which is or becomes public
knowledge without the fault of the receiving party and its Affiliates, agents
and representatives or information already known to, or proven by written
evidence to have been independently derived by, the receiving party or its
Affiliates or received from a third party having the right to convey it.
Notwithstanding the foregoing, such Confidential Information may be (i)
disclosed to a Governmental Authority and to others to the extent such
disclosure may be required to be included in regulatory filings permitted under
the terms of this Agreement or required under Applicable Law; (ii) published by
the receiving party or its Affiliates, if and to the extent such publication has
been approved in writing by the disclosing party; or (iii) disclosed to the
extent required by Applicable Law or as ordered by a court or other regulatory
body having competent jurisdiction. In each of the foregoing cases, the
receiving party will use its Best Efforts to limit the disclosure and maintain
confidentiality of such Confidential Information to the maximum extent
practicable and prior to making any such disclosure it shall use Best Efforts to
consult with the disclosing party regarding the scope of any protective order or
other confidentiality protections that may be available to limit the extent of
disclosure. Any disclosure of Confidential Information to any Affiliates, agents
or representatives of the receiving party shall be limited to a "need to know"
basis for purposes related to this Agreement; provided that (i) the receiving
party shall be responsible and liable to disclosing party for any breach of the
terms of this Section 11.1 by any Affiliate, agent or representative, and (ii)
disclosure by the receiving party to any agent or representative shall be made
pursuant to appropriate confidentiality agreements.
(b) The provisions of this Section 11.1 shall survive
and shall remain in full force and effect for six (6) years after the expiration
or termination or termination of this Agreement for any reason. For purposes of
this Section 11.1 and 11.2, L'Oreal shall be deemed an Affiliate of Purchaser.
<PAGE>
11.2. PUBLICITY.
Each Party agrees, and shall cause its Affiliates to, not to issue any
press release disclosing the terms of, or relating to, this Agreement, without
the prior written consent of the other Party; provided; however, that neither
Party or its Affiliates shall be prevented from complying with any duty of
disclosure it may have pursuant to Applicable Law. Such disclosing party shall
use its Best Efforts to consult with the other Party regarding the issuance of
any such press release, or with regard to any public statement disclosing the
terms of this Agreement and shall use its Best Efforts to obtain confidential
treatment for any Confidential Information where such press release or other
public statement is required to be made by Applicable Law.
11.3. NON-SOLICITATION.
During the term of this Agreement and for one (1) year after
termination or expiration hereof, each Party shall refrain from soliciting the
personnel of the other Party or its Affiliates, including without limitation,
research and development personnel.
12. DISPUTE RESOLUTION PROVISIONS.
12.1. GENERAL DISPUTE PRINCIPLES.
(a) All disputes between or among the Parties and/or
any of their Affiliates (including the Joint Venture) under this Agreement and
the Related Agreements shall be settled, if possible, through good faith
negotiations between the relevant parties.
(b) Disputes as to the specific matters referred to
in Section 6.1(f), 7.5(e) and 9.1(b) shall be resolved as provided in such
Sections. All other disputes under this Agreement shall be resolved as provided
in Article 12.
(c) Prior to resolving any dispute by means of
arbitration or by means of any suit, action or legal proceeding permitted under
Section 12.2, the relevant parties involved in such dispute shall refer such
dispute to their respective Chief Executive Officers or equivalent, who shall
meet in person to negotiate in good faith the possible resolution thereof on at
least two occasions within 30 days before any such party commences arbitration
or other litigation permitted under this Agreement (provided that if any such
party fails or refuses to have a representative attend such meetings within such
thirty (30) day period, the procedures of Section 12.2 shall be applicable after
the conclusion of such thirty (30) day period); and further provided, that (i)
any legal proceedings (including a temporary restraining order or preliminary
injunction) until such time as such interim equitable relief can be addressed
through arbitration; (ii) proceedings for provisional relief contemplated by
Section 12.2(i) below; and (iii) third party legal proceedings under Section
12.1(d) below may be commenced immediately.
(d) If a Party or any of its Affiliates (including
the Joint Venture) is subject
<PAGE>
to a claim, demand, action or proceeding by a third party and is permitted by
law or arbitral rules to join another party to such proceeding, this Article 12
shall not prevent such joinder. This Article 12 shall also not prevent either
Party or any such Affiliate from pursuing any legal action against a third
party.
12.2. ARBITRATION OF OTHER DISPUTES.
(a) In the event such good faith negotiations are
unsuccessful, either Party may, after 30 days written notice to the other,
submit any controversy or claim arising out of, relating to or in connection
with this Agreement, or the breach thereof, to arbitration administered by the
American Arbitration Association ("AAA") in accordance with its then existing
International Arbitration rules except that Sections 29 and 31 of the Commercial
Arbitration Rules in effect on the date hereof (a copy of which is attached
hereto as Schedule 12.2) shall govern in the event of any conflict therewith
(collectively, "AAA Rules") and judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof.
(b) To the extent this Section is deemed a separate
agreement, independent from this Agreement, Article 14 shall be incorporated
herein by reference. Either Party (the "Initiating Party") may commence an
arbitration by submitting a demand for arbitration ("Demand for Arbitration")
under the AAA Rules and by notice to the other Party (the "Respondent") in
accordance with Section 14.4. Such notice shall set forth in reasonable detail
the basic operative facts upon which the Initiating Party seeks relief and
specific reference to the clauses of this Agreement, the amount claimed, if any,
and any nonmonetary relief sought against the Respondent. After the Demand for
Arbitration, response and counterclaim, if any, and reply to counterclaim, if
any, have been submitted, either Party may propose additional issues for
resolution in the pending proceedings only if expressly so ordered by the
arbitrators.
(c) The place of arbitration shall be New York, New
York, and the award shall be deemed a U.S. award for purposes of the Convention
on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (the "New
York Convention").
(d) The Parties shall attempt, by agreement, to
nominate a sole arbitrator for confirmation by the AAA. If the Parties fail so
to nominate a sole arbitrator within 30 days from the date when the Initiating
Party's Demand for Arbitration has been communicated to the Respondent, a board
of three arbitrators shall be appointed by the Parties jointly or, if the
Parties cannot agree as to three arbitrators within 30 days after the
commencement of the arbitration proceeding, then one arbitrator shall be
appointed by each of the Initiating Party and the Respondent within 60 days
after the commencement of the arbitration proceeding and the third arbitrator
shall be appointed by mutual agreement of such two arbitrators. If such two
arbitrators shall fail to agree within 75 days after commencement of the
arbitration proceeding upon the appointment of the third arbitrator, the third
arbitrator shall be appointed by the AAA in accordance with the AAA Rules.
Notwithstanding the foregoing, if any Party shall fail to
<PAGE>
appoint an arbitrator within the specified time period, such arbitrator and the
third arbitrator shall be appointed by the AAA in accordance with its then
existing rules. For purposes of this Section, the "commencement of the
arbitration proceeding" shall be deemed to be the date upon which the Demand for
Arbitration has been delivered to the Parties in accordance with Section 14.4.
Any award shall be rendered by a majority of the arbitrators. A hearing on the
matter in dispute shall commence within 90 days following selection of the
arbitrators, and the decision of the arbitrators shall be rendered no later than
90 days after commencement of such hearing.
(e) An award rendered in connection with an
arbitration pursuant to this Section shall be final and binding upon the
Parties, and the Parties agree and consent that the arbitral award shall be
conclusive proof of the validity of the determinations of the arbitrators
set forth in the award and any judgment upon such an award may be entered and
enforced in any court of competent jurisdiction.
(f) The Parties agree that the award of the arbitral
tribunal will be the sole and exclusive remedy between them regarding any and
all claims and counterclaims between them with respect to the subject matter of
the arbitrated dispute. The Parties hereby waive all IN PERSONAM jurisdictional
defenses in connection with any arbitration hereunder or the enforcement of an
order or award rendered pursuant thereto (assuming that the terms and conditions
of this arbitration clause have been complied with).
(g) The Parties hereby agree that for purposes of the
New York Convention, the relationship between the Parties is commercial in
nature, and that any disputes between the Parties related to this Agreement
shall be deemed commercial.
(h) The arbitrators shall issue a written explanation
of the reasons for the award and a full statement of the facts as found and the
rules of law applied in reaching their decision to both Parties. The arbitrators
shall apportion to each Party all costs (including attorneys' and witness fees,
if any) incurred in conducting the arbitration in accordance with what the
arbitrators deem just and equitable under the circumstances. Any provisional
remedy which would be available to a court of law shall be available from the
arbitrators pending arbitration of the dispute. Either Party may make an
application to the arbitrators seeking injunctive or other interim relief, and
the arbitrators may take whatever interim measures they deem necessary in
respect of the subject matter of the dispute, including measures to maintain the
status quo until such time as the arbitration award is rendered or the
controversy is otherwise resolved. The arbitrator shall have the authority to
award any remedy or relief (except as ex parte relief) that a court of the State
of New York could order or grant, including, without limitation, specific
performance of any obligation created under this Agreement, the issuance of an
injunction, or the imposition of sanctions for abuse or frustration of the
arbitration process, but specifically excluding punitive damages.
(i) The Parties may file an application in any proper
court for a provisional remedy in connection with an arbitrable controversy, but
only upon the ground that the award to
<PAGE>
which the application may be entitled may be rendered ineffectual without
provisional relief. The Parties may also commence legal action in lieu of any
arbitration under this Section 12.2 in connection with any third party
litigation proceedings or for any matter involving disputes related to
Intellectual Property Rights.
(j) After the appointment of the arbitrators, the
parties to the arbitration shall have the right to take depositions, ask
interrogatories, obtain documentation and to obtain other discovery regarding
the subject matter of the arbitration, and, to that end to use and exercise all
the same rights, remedies, and procedures, and be subject to all of the same
duties, liabilities, and obligations in the arbitration with respect to the
subject matter thereof, as if the subject matter of the arbitration were pending
in a civil action before a United States District Court for the Southern
District of New York and such persons, documents or other requested material
were located in the State of New York. The parties shall reach agreement with
the arbitrator on a streamlined and expedited discovery program in order to save
costs and avoid unnecessary delay in completing any arbitration and may present
to the arbitrator for a ruling any reasons for limiting such discovery in order
to save costs and avoid delay.
(k) For purposes of any suit, action, or legal
proceeding permitted under this Article 12, each party to this Agreement (a)
hereby irrevocably submits itself to and consents to the non-exclusive
jurisdiction of the United States District Court for the Southern District of
New York for the purposes of any suit, action or legal proceeding in connection
with this Agreement including to enforce an arbitral resolution, settlement,
order or award made pursuant to this Agreement (including pursuant to New York
Convention, the U.S. Arbitration Act, or otherwise), and (b) to the extent
permitted by Applicable Law, hereby waives, and agrees not to assert, by way of
motion, as a defense, or otherwise, in any such suit, action or legal proceeding
pending in such event, any claim that it is not personally subject to the
jurisdiction of such court, that the suit, action or legal proceeding is brought
in an inconvenient forum or that the venue of the suit, action or legal
proceeding is improper. Each party to this Agreement hereby agrees to the entry
of an order to enforce any resolution, settlement, order or award made pursuant
to this Section by the United States District Court for the Southern District of
New York and in connection therewith hereby waives, and agrees not to assert by
way of motion, as a defense, or otherwise, any claim that such resolution,
settlement, order or award is inconsistent with or violative of the laws or
public policy of the laws of the State of New York or any other jurisdiction.
(l) All claims arising under this Agreement and all
Related Agreements brought by the Parties and/or their Affiliates (including the
Joint Venture) at substantially the same time shall be referred to a single
arbitration to the extent arbitrable under this Article 12.
<PAGE>
13. CERTAIN LEGAL RESTRICTIONS.
13.1. EXPORT CONTROLS.
(a) It is understood and acknowledged that each Party
is subject to regulation by Governmental Authorities, including the U.S.
Department of Commerce, which prohibit export or diversion of certain products
and technology to certain countries. Any and all obligations of the Parties
under this Agreement shall be subject in all respects to such laws and
regulations as shall from time to time govern the export of technology and
products abroad by persons subject to the jurisdiction of such Governmental
Authorities, including the U.S. Export Administration Act of 1979, as amended,
any successor legislation, and the U.S. Export Administration Regulations
("EAR") issued by the U.S. Department of Commerce, International Trade
Administration, Bureau of Export Administration ("BXA"). Each Party warrants
that it will comply in all material respects with all export and re-export
restrictions applicable to the Products shipped to Purchaser hereunder.
(b) Without limiting the foregoing, Purchaser agrees
that it shall not knowingly export, re-export or transship, directly or
indirectly, to countries identified in Part 746 of the EAR which are subject to
comprehensive BXA controls (currently consisting of: Cuba, Iraq, Iran, Libya,
and North Korea) any Products provided to Purchaser hereunder.
13.2. FOREIGN CORRUPT PRACTICES ACT.
Purchaser will not knowingly take any action which would cause
Manufacturer to be in violation of the United States Foreign Corrupt Practices
Act concerning payments to government officials, political Parties or
candidates.
13.3. BLOCK EXEMPTION.
Immediately prior to the expiration of Regulation 1983/83 of the
Commission of the European Union (the "Block Exemption"), the Parties agree to
examine the Agreement to determine whether the Agreement will fall within the
new Block Exemption. Should any of the provisions of the Agreement not fall
within the Block Exemption, during the term of this Agreement, the Parties agree
either to amend the Agreement to fall within the Block Exemption or the new
Block Exemption or to notify the Agreement to the Commission, with each Party to
bear one-half of the reasonable costs of making the notification.
14. MISCELLANEOUS.
14.1. FEES AND EXPENSES.
Except as expressly set forth herein, each Party shall be solely
responsible for the payment of the fees and expenses of its advisers, counsel,
accountants and other experts, if any,
<PAGE>
and all other expenses incurred by such Party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement.
14.2. SEVERABILITY.
If any provision of this Agreement is held by a court of competent
jurisdiction or panel of arbitrators (including pursuant to enforcement of an
arbitration award under this Agreement) to be invalid, unlawful or
unenforceable, it shall be modified, if possible, to the minimum extent
necessary to make it valid, lawful, and enforceable or, if such modification is
not possible, it shall be stricken from this Agreement, and the remaining
provisions of this Agreement shall continue in full force and effect; provided,
however, that if a provision is so stricken and is of a nature so as to
fundamentally alter the economic arrangements of this Agreement, the Party
adversely affected may terminate this Agreement by giving to the other Person
sixty (60) days written notice of termination.
14.3. ENTIRE AGREEMENT; AMENDMENTS.
This Agreement and the Schedules hereto, contain the entire
understanding of the Parties with respect to the matters referred to hereby and,
except as specifically set forth herein, neither the Purchaser nor the
Manufacturer makes any representation, warranty, covenant or undertaking with
respect to such matters. No provision of this Agreement may be amended or
supplemented other than by a written instrument signed by the Party against whom
enforcement of any such amendment or supplement is sought.
14.4. NOTICES.
Any notice or other communication required or permitted to be given
herein shall be in writing and shall be effective (a) upon hand delivery or
delivery by telecopy or facsimile at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the third business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be:
If to the Manufacturer: With a copy to:
Angeion Corporation Morrison & Foerster, LLP
3650 Annapolis Lane, Suite 170 425 Market Street
Plymouth, MN 55447-5434 San Francisco, CA 94105
Telephone: (612) 550-9388 Telephone: (415) 268-7000
Telecopier: (612) 509-9521 Telecopier: (415) 268-7522
Attention: Chief Executive Officer Attention: Gavin B. Grover, Esq.
<PAGE>
If to the Purchaser: With copies to:
ELA Medical Synthelabo
Centre d'Affaire la Boursidiere 22 Avenue Galilee
92357 Le Plessis Robinson 92350 Le Plessis Robinson
France France
Telephone: (33) (1) 46.01.33.01 Telephone: (33) (1) 45.37.56.67
Telecopier: (33) (1) 46.01.33.15 Telecopier: (33) (1) 45.37.58.04
Attention: President Attention: General Counsel
and
Coudert Brothers
1114 Avenue of the Americas
New York, NY 10036-7703
Telephone: (212) 626-4400
Telecopier: (212-626-4120
Attention: James C. Colihan, Esq.
Any Party hereto may from time to time change its address for notices
under this Section 14.4 by giving at least ten (10) days' written notice of such
changed address to the other Party hereto.
14.5. NO WAIVER.
No waiver by either Party of any default with respect to any provision,
condition or requirement of this Agreement shall be deemed to be a continuing
waiver in the future of this Agreement; or a waiver of any other provision,
condition or request of this Agreement; nor shall any delay or omission of
either Party to exercise any right hereunder in any manner impair the exercise
of any such right accruing to it thereafter.
14.6. HEADINGS.
The headings herein are for convenience only, do not constitute a part
of this Agreement and shall not be deemed to limit or affect any of the
provisions of this Agreement.
14.7. SURVIVAL OF PROVISIONS.
The provisions of Sections 2.4(d), 5.2(f), 5.2(i), 6.3, 8.1, 8.3, 9.1,
9.2, 9.3, 9.4, 9.5, 9.9, 10.4, 11.1, 11.3, 12.1, 12.2, Article 13 and Article 14
shall survive the expiration or termination for any reason of this Agreement.
<PAGE>
14.8. SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and inure to the benefit of the
Parties and their successors and assigns. Neither this Agreement nor any
interest hereunder shall be assigned or transferred, whether directly or
indirectly, including by operation of law ("Assign" or "Assignment"), by any
Party without the prior express written consent of the other Party (which
consent may be withheld for any reason in the sole discretion of the Party from
whom consent is sought), and any such attempt at Assignment shall be null and
void. The assignment by a Party of this Agreement or any rights hereunder shall
not affect the obligations of such Party under this Agreement.
Notwithstanding the foregoing, either Party may Assign this Agreement
to an Affiliate of such Party so long as any assignment by Manufacturer is made
to an Affiliate that is directly or indirectly 100% owned by, or under 100%
common control with, Manufacturer.
Any permitted Assignment made pursuant to this Section shall be valid
only if (i) the assigning Party remains liable under this Agreement, and (ii)
the relevant Affiliate or other entity assumes in writing all of the assigning
Party's obligations under this Agreement.
14.9. NO THIRD PARTY BENEFICIARIES.
This Agreement is intended for the benefit of the Parties hereto and
their respective permitted successors and assigns and is not for the benefit of,
nor may any provision thereof be enforced by, any other Person.
14.10. GOVERNING LAW.
The Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New York.
14.11. INSURANCE.
Each of Purchaser and Manufacturer will maintain liability insurance
for Third Party Claims in amounts to be agreed upon, but subject to availability
on commercially reasonable terms. Schedule 14.11 sets forth the initial agreed
upon minimum amounts for such liability insurance. Each of Purchaser and
Manufacturer shall provide copies of certificates of insurance evidencing
compliance with this Section on the date of execution hereof and within thirty
(30) days after the expiration of each policy during the term hereof.
14.12. WAIVERS.
Each Party hereby waives, to the extent it is able to do so under the
law of every country
<PAGE>
in the Territory and other Applicable Law, any statutory or other rights it may
have or acquire in respect of the termination of the relationship established
hereby pursuant to the terms of this Agreement, and agrees that the rights
available to it hereunder in the event of such termination are adequate and
reflect the agreement of the Parties. Neither Party shall have any right to
claim any indemnity for goodwill or lost profits or any damages arising from the
rightful termination of this Agreement by the other Party in accordance with the
terms of this Agreement.
14.13. ENGLISH LANGUAGE CONTROLS.
The original and controlling version of this Agreement shall be the
version using the English Language. All translations of this Agreement into
other languages shall be for the convenience of the Parties only, and shall not
control the meaning or application of this Agreement. All notices and other
communications required or permitted by this Agreement must be in English, and
the interpretation and application of such notices and other communications
shall be based solely upon the English language version thereof.
14.14. RELATIONSHIP OF THE PARTIES.
For all purposes of this Agreement, Purchaser and Manufacturer shall be
deemed to be independent entities and anything in this Agreement to the contrary
notwithstanding, nothing herein shall be deemed to constitute Purchaser and
Manufacturer as partners, joint venturers, co-owners, an association or any
entity separate and apart from each Party itself, nor shall this Agreement
constitute any Party hereto an employee or agent, legal or otherwise, of the
other Person for any purposes whatsoever. Neither Party hereto is authorized to
make any statements or representations on behalf of the other Party or in any
way obligate the other Party, except as expressly authorized in writing by the
other Party. Anything in this Agreement to the contrary notwithstanding, no
Party hereto shall assume nor shall be liable for any liabilities or obligations
of the other Party, whether past, present or future.
14.15. COUNTERPARTS.
This Agreement may be executed in two or more counterparts, all of
which shall be considered one and the same Agreement and shall become effective
when counterparts have been signed by each Party and delivered to the other
Party, it being understood that both Parties need not sign the same counterpart.
<PAGE>
14.16. SOVEREIGN IMMUNITY; EXCLUSIONS.
(a) Each Party hereto agrees that, to the extent that
it or any of its property is or becomes entitled at any time to any immunity on
the grounds of sovereignty or otherwise from any legal action, suit or
proceeding, from set off or counterclaim, from the jurisdiction of any set off
or counterclaim, from the jurisdiction of any competent court, from service of
process, from attachment prior to judgment, from attachment in aid of execution,
from execution prior to judgment or from any other legal process in any
jurisdiction, it, for itself and its property, expressly, irrevocably and
unconditionally waives, and agrees not to plead or claim any such immunity with
respect to its obligations, liabilities or any other matter under or arising out
of or in connection with this Agreement or the subject matter of this Agreement
(including without limitation any obligation for the payment of money). Each
Party hereto is not subject to withdrawal in any jurisdiction or under any
statute, including, without limitation, the Foreign Sovereign Immunities Act, 28
U.S.C. ss.ss. 1602 et seq. The foregoing waiver shall constitute a present
waiver of immunity at any time any action is initiated against any Party hereto
with respect to this Agreement.
(b) The Parties hereby agree to exclude application
of the following instruments and documents: United Nations Convention on the
International Sale of Goods, UNCITRAL Arbitration Rules and 1990 International
Chamber of Commerce Incoterms.
14.17. FORCE MAJEURE.
(a) Neither Party shall be responsible or liable to
the other hereunder for the failure or delay in the performance of this
Agreement due to any event of Force Majeure. In the event of the applicability
of this Section 14.17, the Party failing or delaying performance shall use its
Best Efforts to eliminate, cure and overcome any of such causes and resume the
performance of its obligations. If any event of Force Majeure continues for more
than 180 days, either Party shall have a right to eliminate from the Territory,
on a country by country basis, each country affected by such Force Majeure event
(or terminate this Agreement if all countries are affected) upon written notice
to the other Party delivered while such event of Force Majeure is continuing.
For the avoidance of doubt, in the event that any event of Force Majeure has
occurred and so long as it is continuing, excusing performance by one Party of
its obligations hereunder, the other Party shall also be excused from its
obligations hereunder to the extent its performance is dependent upon the
affected Party's performance.
(b) Upon the occurrence of an event of Force Majeure,
the Party failing or delaying performance shall promptly notify the other Party,
in writing, setting forth the nature of the occurrence, its expected duration
and how such Party's performance is affected. The failing or delaying Party
shall resume performance of its obligations hereunder as soon as practicable
after the Force Majeure event ceases.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have cause this Agreement to be
duly executed by their respective authorized officers as of the date of this
Agreement.
ANGEION CORPORATION
By:
Name:
Title:
ELA MEDICAL
By:
Name:
Title:
<PAGE>
SCHEDULE 1.4 XXXXXXXXXX XXXXXXXXXX
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SCHEDULE 1.18 - EXISTING DISTRIBUTORS
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SCHEDULE 1.45 - PURCHASER DISTRIBUTORS
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SCHEDULE 1.49 - REGIONS
European Region Japanese Region
Andorra Japan
Austria
Belgium
Czech Republic
Denmark
Finland
France
Germany
Greece
Hungary
Ireland
Italy
Liechtenstein
Luxembourg
Monaco
Netherlands
Norway
Portugal
San Marino
Slovakia
Spain
Sweden
Switzerland
Turkey
United Kingdom
Vatican City
<PAGE>
SCHEDULE 1.51 - RELATED AGREEMENTS
1. The Amended and Restated Investment and Master Strategic Relationship
Agreement between Synthelabo and Manufacturer dated as of October 9,
1997 (the "Investment Agreement").
2. The Warrants of Manufacturer issued or to be issued to Synthelabo
pursuant to the Investment Agreement.
3. The Limited Liability Company Operating Agreement between Ela Medical,
Inc. and Manufacturer dated as of December 9, 1997..
4. The Intercompany Services Agreement between the Joint Venture and
Manufacturer dated as of December 9, 1997.
6. The Implantable Cardioverter Defibrillator Product Manufacturing and
Supply Agreement between the Joint Venture and Manufacturer as of
December 9, 1997.
7. The Cardiac Stimulation Device Product Supply Agreement between the
Joint Venture and ELA Medical, Inc. dated as of December 9, 1997.
8. Any other agreements contemplated by this Agreement.
<PAGE>
SCHEDULE 6.1(a) - UNIT TRANSFER PRICES FOR INITIAL PRODUCTS
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SCHEDULE 7.5(a) - PROJECTIONS
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SCHEDULE 7.5(b) - AGGREGATE MINIMUM PURCHASES FOR EACH REGION
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<PAGE>
SCHEDULE 8.2 - TESTING PROCEDURES
NONE.
<PAGE>
SCHEDULE 9.7 - NO CONFLICTS
MANUFACTURER
(i) No exceptions, except as provided in sub-clause (ii) below.
(ii) Manufacturer makes no representation and warranty with respect to
xxxxxxxxxxxx xxxxxxxx xxxxxx or xxx xxxxxxxxxx xxxxxxxx xx xxxxxxxxxxxx xxxxxxxx
xxxxxx.
PURCHASER
(i) No exceptions, except as provided in sub-clause (ii) below.
(ii) Purchaser makes no representation and warranty with respect to xxxxxxxxxxxx
xxxxxxxx xxxxxx or xxx xxxxxxxxxx xxxxxxxx xx xxxxxxxxxxxx xxxxxxxx xxxxxx.
<PAGE>
SCHEDULE 12.2 - AAA RULES
See attachment hereto.
<PAGE>
SCHEDULE 14.11 - INSURANCE
xxxx xxxxx xxxxx xxxxx xxx xxx xxxxxxx xxxxxxxxx xxxxxxxxx xxxx x
xxxxxxx xxxxxx xx xx xxxxxxx xxx xxxxxxxxxx xx xxxxxxx xx xxx xxxxxxxxx xxxx xx
xxxx xxxx xx xxxxxxxx xxxxxxxxxx. xx xxxxxxxx xxxx xxxxx xxxxx xxxxx xxxxxxxxx
xxx xxxxxxx xxxxxxx xxxx x xxxxxxx xxxxxx xx x xxxxxxx xxx xxxxxxxxxx.
EXHIBIT 10.4
IMPLANTABLE CARDIOVERTER DEFIBRILLATOR PRODUCT
MANUFACTURING AND SUPPLY AGREEMENT
BETWEEN
ANGEION CORPORATION, AS MANUFACTURER
AND
ANGELLAN MEDICAL SYSTEMS, LLC, AS PURCHASER
NOTE: PORTIONS OF THIS EXHIBIT MARKED WITH "X'S" HAVE BEEN
OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIALITY UNDER
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED. A COPY OF THIS EXHIBIT IN ITS ENTIRETY HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
Definitions........................................................................................... 1
2. Manufacture and Purchase.................................................................. 7
2.1. Agreement to Manufacture................................................ 7
2.2. Exclusivity............................................................. 8
2.3. Existing Distributors of Manufacturer................................... 9
2.4. Other Cardiac-Related Devices........................................... 9
3. Intellectual Property Matters............................................................. 10
3.1. Use of Purchaser's Trademarks on Products............................... 10
3.2. Use of Manufacturer's Name on Products.................................. 10
3.3. No Use of Manufacturer's Trademarks..................................... 10
3.4. Copyrights.............................................................. 10
3.5. Technical Information................................................... 10
3.6. Infringement of Intellectual Property Rights of Manufacturer............ 11
3.7. License of Technical Information........................................ 11
4. Commercialization......................................................................... 11
4.1. Diligence............................................................... 11
4.2. Reports and Sales Records............................................... 12
4.3. Promotional and Product Literature...................................... 12
4.4. Technical Assistance.................................................... 13
4.5. Labels and Markings..................................................... 14
4.6. Marketing Allowance and Royalties....................................... 14
5. Regulatory and Governmental Approvals..................................................... 14
5.1. Clinical Studies........................................................ 14
5.2. Government Approvals.................................................... 15
6. Pricing and Payments...................................................................... 16
6.1. Transfer Prices......................................................... 16
6.2. Payment Terms........................................................... 17
6.3. Financial and Related Books and Records................................. 17
6.4. Late Payments........................................................... 18
7. Purchase and Supply of Product............................................................ 18
7.1. Orders.................................................................. 18
7.2. Effect of Late Payments................................................. 19
7.3. Inspection of Shipments................................................. 19
7.4. Purchase Forecasts...................................................... 20
7.5. Return of Expired Products.............................................. 20
<PAGE>
8. Quality Assurance; Testing................................................................ 21
8.1. Quality Control......................................................... 21
8.2. Testing................................................................. 21
8.3. Records and Traceability................................................ 21
9. Warranties and Indemnifications........................................................... 22
9.1. Manufacturer Product Warranties......................................... 22
9.2. Recalls................................................................. 23
9.3. Indemnification for Third Party Claims.................................. 24
9.4. Manufacturer Infringement Indemnification............................... 25
9.5. Limitation on Damages. ................................................. 25
9.6. Certain Covenants....................................................... 26
9.7. Representations and Warranties of the Parties........................... 26
9.8. Mitigation.............................................................. 27
9.9. Indemnification Procedure for Third Party Claims and Infringement
Claims.................................................................. 27
10. Term and Termination...................................................................... 28
10.1. Term.................................................................... 28
10.2. Events of Early Termination............................................. 28
10.3. Rights and Obligations on Expiration or Termination..................... 29
11. Confidentiality; Publicity; Non-Solicitation.............................................. 30
11.1. Confidential Information................................................ 30
11.2. Publicity............................................................... 31
11.3. Non-Solicitation........................................................ 31
12. Dispute Resolution Provisions............................................................. 32
12.1. General Dispute Principles.............................................. 32
12.2. Arbitration of Other Disputes........................................... 32
13. Miscellaneous............................................................................. 35
13.1. Fees and Expenses....................................................... 35
13.2. Severability............................................................ 35
13.3. Entire Agreement; Amendments............................................ 36
13.4. Notices................................................................. 36
13.5. No Waiver............................................................... 37
13.6. Headings................................................................ 38
13.7. Survival of Provisions.................................................. 38
13.8. Successors and Assigns.................................................. 38
13.9. No Third Party Beneficiaries............................................ 38
13.10. Governing Law........................................................... 38
13.11. Insurance............................................................... 39
<PAGE>
13.12. Waivers................................................................. 39
13.13. English Language Controls............................................... 39
13.14. Relationship of the Parties............................................. 39
13.15. Counterparts............................................................ 40
13.16. Sovereign Immunity; Exclusions.......................................... 40
13.17. Force Majeure........................................................... 40
</TABLE>
Schedule 1.13 - Existing Distributors
Schedule 1.42 - Related Agreements
Schedule 4.6 - Marketing Allowance
Schedule 6.1(a) - Unit Transfer Prices for Initial Products
Schedule 8.2 - Testing Procedures
Schedule 9.7 - No Conflicts
Schedule 12.2 - AAA Rules
Schedule 13.11 - Insurance
<PAGE>
IMPLANTABLE CARDIOVERTER DEFIBRILLATOR PRODUCT
MANUFACTURING AND SUPPLY AGREEMENT
This Implantable Cardioverter Defibrillator Product Manufacturing and
Supply Agreement (the "Agreement") is entered into as of the 9th day of
December, 1997 ("Effective Date") by and between Angeion Corporation, a
Minnesota corporation ("Manufacturer"), and Angellan Medical Systems, LLC, a
Delaware limited liability company ("Purchaser").
Manufacturer has the expertise in the manufacture of certain
Implantable Cardioverter Defibrillator ("ICD") products which shall be the
subject of this Agreement.
Purchaser wishes to have made certain Products (as hereinafter defined)
and Manufacturer wishes to manufacture and sell to Purchaser such Products for
resale in the Territory (as hereinafter defined) subject to the terms and
conditions of this Agreement.
NOW THEREFORE, in consideration of the mutual covenants and agreements
provided herein, the Parties agree as follows:
1. DEFINITIONS.
1.1. "AAA" shall mean the American Arbitration Association.
1.2. "Act" shall mean the United States Food, Drug and
Cosmetic Act of 1938, as amended from time to time (and any amendments or
additions thereto from time to time or any successor or similar Applicable Law).
1.3. "Adverse Device Events" shall mean any Product-related
event that is reportable (or that Purchaser or Manufacturer determines after
Best Efforts at mutual consultation should be reported) to (i) the FDA, or any
local ethics committee ("LEC") responsible for approving the protocols for any
clinical trials) conducted upon the Products in the Territory or any other
ethics committee within the Territory with responsibilities analogous to a LEC;
or (ii) to any other Governmental Authority responsible for the regulation of
medical devices.
1.4. "Affiliate(s)" shall mean any corporation, association or
other entity which directly or indirectly controls, is controlled by or is under
common control with the Party in question, but only for so long as such
relationship exists. As used herein, the term "control" shall mean the ability
to direct the business of a company and shall be presumed in the case of
ownership, directly or indirectly, of shares of stock having at least fifty
percent (50%) of the voting power entitled to vote for the election of directors
in the case of a corporation, and at least fifty percent (50%) of the voting
power and interest in profits in the case of a business entity other than a
corporation, or only if less than fifty percent (50%) of the voting power and
interest in profits is permitted by Applicable Law, the maximum amount allowed
in the country in
<PAGE>
question (so long as the holder retains the ability to direct the business of
the entity). The Parties acknowledge and agree that neither the Purchaser nor
any member of Purchaser or such member's Affiliates shall be deemed to be
included within the term "Affiliate" for any purposes under this Agreement
unless otherwise expressly provided in this Agreement.
1.5. "Applicable Laws" shall mean all foreign, federal, state
and local laws, statutes, rules and regulations which have been enacted by a
Governmental Authority and are in force as of the date hereof or which are
enacted by a Governmental Authority and come into force during the term of this
Agreement, in each case to the extent that the same are applicable to the
performance by the Parties of their respective obligations under this Agreement.
Without limiting the foregoing, Applicable Laws shall include the Act (including
any applicable regulations under the Act governing manufacturing practices).
1.6. "Best Efforts" shall be determined under New York law and
shall mean such efforts as are consistent with efforts made by businesses of
similar size and resources in a similar circumstance and context to achieve a
particular result in a timely manner, but shall not require a Party to take
actions that would be commercially unreasonable to such Party in the
circumstances.
1.7. "Budgeted Sales Price" shall have the meaning set forth
in Section 6.1(b) of this Agreement.
1.8. "Cardiac Stimulation Device" shall mean an implantable
medical device for electrically stimulating or shocking the heart which is
suitable for use by or with human patients. The term "Cardiac Stimulation
Device" includes, without limitation: cardiac pacemakers, antitachycardia
pacemakers, cardioverters and defibrillators, including combinations thereof
("such devices"), pulse generators and other waveform generators for such
devices; electronic and mechanical components, including without limitation
batteries and capacitors to the extent these components are used for or with
such devices; mechanisms for coupling such devices in a stimulating, shocking or
sensing relationship to the heart including without limitation leads,
electrodes, and sensors; and data dispensing, processing and gathering systems
for such devices, including without limitation programmers, pacing system
analyzers, defibrillation system analyzers, testers, encoders, decoders,
transmitters, receivers, and computer software- controlled systems, including
all related software; and internal, but not external, holter monitors used for
recording heart rhythms (even though such internal holter monitors do not
electrically stimulate the heart). The term "Cardiac Stimulation Device"
excludes, by way of example and not limitation, muscle stimulators, nerve
stimulators, bone growth stimulators, cardiomyoplasty stimulators and associated
devices, arrhythmia mapping devices, imaging technology, angioplasty devices,
catheter ablation systems, and temporary external pacemakers and defibrillators
and EKG monitors (other than pacing programmers) which are stand-alone,
non-ambulatory and not intended for transtelephonic monitoring.
1.9. "Confidential Information" shall mean technical and
business information relating to a Party's or its Affiliates' Intellectual
Property Rights, trade secret processes or
<PAGE>
devices, techniques, data, formula, inventions (whether or not patentable) or
products, research and development (including research subjects, methods and
results), production, manufacturing and engineering processes, computer
software, costs, profit or margin information, pricing policies, confidential
market information, finances, customers, distribution, sales, marketing, and
production and future business plans and any other information of a
"confidential" nature, specifically including, without limitation, any
information that is identified orally or in writing by the disclosing party to
be confidential, or that the receiving party should reasonably understand under
the circumstances to be a trade secret of the disclosing party or information of
a similar nature that is not generally known to the public.
1.10. "Demand for Arbitration" shall have the meaning set
forth in Section 12.2(b).
1.11. "ELA" shall mean ELA Medical, Inc., a Delaware
corporation.
1.12. "ELA Supply Agreement" shall mean that certain Cardiac
Stimulation Device Product Manufacturing and Supply Agreement between Purchaser
and ELA dated the date hereof.
1.13. "Existing Distributors" shall mean those third parties
having an existing distribution, sales representative or agency arrangement with
Manufacturer in the Territory, the list of which third parties is set forth in
Schedule 1.13.
1.14. "Expense Reimbursement Basis" shall mean a reimbursement
for all reasonable out-of-pocket costs and expenses plus an agreed upon hourly
or per diem amount for personnel and agreed upon amounts for reasonable overhead
allocation.
1.15. "FDA" shall mean the United States Food and Drug
Administration or any successor United States governmental agency performing
similar functions with respect to medical devices.
1.16. "FDA Tracking Information" shall mean the information
relating to the Products that must be maintained pursuant to 21 U.S. Code of
Federal Regulations Part 821 and any amendments or additions thereto.
1.17. "Firm Period" shall mean any three months (or six
months, as applicable) of a Forecast which are considered "firm" pursuant to
Section 7.4.
1.18. "Force Majeure" shall mean, in relation to either Party,
any circumstances beyond the reasonable control of that Party, including,
without limitation, any fire, storm, flood, earthquake, explosion, accident,
acts of the public enemy, war, rebellion, insurrection, sabotage, epidemic,
quarantine restrictions, acts of God or acts of any Governmental Authority,
labor disputes that result in work stoppages, transportation embargoes or
failure or delays of transportation, or inability to secure raw materials or
machinery for the manufacture of devices
<PAGE>
as a result of any of the foregoing. No acts of a Governmental Authority
resulting from any acts or omissions of Purchaser or Manufacturer that are in
breach of this Agreement shall constitute an event of Force Majeure for the
breaching Party.
1.19. "Forecast" shall have the meaning set forth in Section
7.4.
1.20. "Government Approval" shall mean governmental marketing,
and other governmental authorization required from any Governmental Authority
before the Products may be commercially marketed in the Territory, including any
requirements for reimbursement and pricing approval.
1.21. "Governmental Authority" shall mean any nation or
government, any state, province or other political subdivision thereof or any
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, including the FDA.
1.22. "ICD" shall have the meaning set forth in the recitals
hereto.
1.23. "Infringement Claims" shall have the meaning set forth
in Section 9.4.
1.24. "Initiating Person" shall have the meaning set forth in
Section 12.2(b).
1.25. "Intellectual Property Rights" shall mean any patent,
copyright, registered design, trademark or other industrial or intellectual
property right owned or otherwise enforceable pursuant to license or otherwise
by any Person, and applications for any of the foregoing.
1.26. "Inventory" shall mean the Purchaser's inventory of
Products.
1.27. "IDE" shall mean an investigational device exemption
from the FDA for sale of Products in the United States prior to obtaining FDA
approval for commercial sale.
1.28. "Labels and Markings" shall mean labeling materials,
packaging, trade dress, logos, tradenames, trademarks and related materials used
for exterior packaging and exterior labeling of Products to be sold by Purchaser
(or any distributor or subdistributor thereof) under this Agreement, but shall
not include Promotional Materials or Technical Materials.
1.29. "LLC Agreement" shall mean the limited liability company
operating agreement between Manufacturer and ELA relating to the operations and
governance of Purchaser dated the date hereof.
1.30. "Material Adverse Effect" means any material adverse
effect on the assets, results of operations, properties, business or financial
condition of the Manufacturer or
<PAGE>
Purchaser, as applicable, and its subsidiaries taken as a whole.
1.31. "Order" shall mean a firm purchase order for the
Products made by Purchaser.
1.32. "Other Cardiac-Related Devices" shall mean any
cardiac-related devices other than Cardiac Stimulation Devices.
1.33. "Party" shall mean each of Manufacturer and Purchaser
and "Parties" shall mean both of Manufacturer and Purchaser, in each case
together with each of their successors and permitted assigns.
1.34. "Person" shall mean any individual, general partnership,
limited partnership, limited liability company corporation, joint venture,
trust, business trust, cooperative or association, or any foreign trust or
foreign business organization or any Governmental Authority.
1.35. "Price Period" shall mean a six-month period beginning
on January 1 and July 1 of each year until December 31, 1999 and a one-year
period from January 1 to December 31 of each year of the term of this Agreement
thereafter; provided, that the first Price Period under this Agreement shall be
from the date of this Agreement through June 30, 1998.
1.36. "Product" and "Products" shall mean the entire current
and future ICD product line, including, without limitation, mechanisms for
coupling such devices in a stimulating, shocking or sensing relationship to the
heart including, without limitation, leads, electrodes and sensors; and data
dispensing, processing and gathering systems for such devices including, without
limitation, programmers, defibrillation system analyzers, testers, encoders,
decoders, transmitters, receivers and computer software-controlled systems,
including all related software, that are developed or acquired, directly or
indirectly (including by Manufacturer being acquired by or becoming an Affiliate
of a party not previously an Affiliate) by Manufacturer and its Affiliates, and
all subsequent modifications, components and improvements used therein during
the term of this Agreement; provided, however, that any Products acquired by
Manufacturer, directly or indirectly, that are subject to agreements or
restrictions that prevent Manufacturer from complying with the terms hereof
shall be excluded from this Agreement only to the extent of such pre-existing
agreements and only for the remainder of the then existing term thereof.
1.37. "Promotional Materials" shall mean all promotional and
marketing materials used by Purchaser in connection with the marketing and
commercialization of the Products in the Territory, including but not limited to
sales aids, catalogues, sales brochures, sales manuals, advertisements (in
printed or electronic form), convention exhibits, protocols for clinical studies
after FDA approval of a Product and publications from such studies.
1.38. "Purchaser's Marks" shall mean the trademarks and logos
owned or
<PAGE>
licensed by Purchaser or its Affiliates (including ELA and its Affiliates)
(whether registered or not) as Purchaser may from time to time designate to be
used in marketing and selling the Products in the Territory during the term of
this Agreement.
1.39. "Quarter" shall mean each calendar quarter ending March
31, June 30, September 30, or December 31 of each year during the term of this
Agreement.
1.40. "Recalls" shall mean any withdrawals of the Product from
the market in the Territory declared by Manufacturer or Purchaser, whether
voluntary or involuntary.
1.41. "Regulatory Data" shall mean the medical, clinical and
other scientific data necessary to, required for, or included in any regulatory
filing to obtain or maintain any Government Approval to market the Products
including pre-approval and post-approval reports, filings and submissions, other
than reports of Adverse Device Events and related summaries.
1.42. "Related Agreements" shall mean the agreements listed on
Schedule 1.42.
1.43. "Respondent" shall have the meaning set forth in Section
12.2(b).
1.44. "Technical Information" shall mean know-how, trade
secrets, inventions, data, technology, processes and information, including
improvements and modifications to any thereof, relating to the Products,
disclosed by Manufacturer to Purchaser under this Agreement that are either
Confidential Information of Manufacturer or its Affiliates or are protected by
Intellectual Property Rights of Manufacturer or its Affiliates, including
without limitation, processes and analytical methodology used in development,
testing, analysis and manufacture and medical, clinical and other scientific
data other than those which (i) are already known to Purchaser at the time of
disclosure or are received from a third party with a right to convey it, or (ii)
were independently developed by Purchaser prior to the time of disclosure;
provided, that Purchaser shall bear the burden of proving either of the
exceptions in (i) or (ii) hereto.
1.45. "Technical Materials" shall mean all manuals,
programming guides, user guides and training manuals of an educational or
instructional nature which are distributed in conjunction with each Product,
including any information made available by Manufacturer to Purchaser to be used
as part of the content of the Promotional Materials.
1.46. "Territory" shall mean the United States of America and
any additional countries which may be added to the Territory by written
amendment of this Agreement executed by both Parties.
1.47. "Third Party Claims" shall have the meaning set forth in
Section 9.3(b).
1.48. "Unit" shall mean a specific model of Product that is
packaged, invoiced and sold as a unit by Manufacturer, such as an ICD Unit, a
lead Unit, a programming Unit and an accessory Unit.
<PAGE>
1.49. "Unit Transfer Price" shall mean the transfer prices set
in accordance with Section 6.1.
Any reference in this Agreement to "writing" or cognate expressions
includes a reference to electronic or facsimile transmission or comparable means
of communications.
Any reference in this Agreement to any Applicable Law shall be
construed as a reference to the relevant Applicable Law (including any successor
provisions) as amended, re-enacted or extended at the time in question.
2. MANUFACTURE AND PURCHASE.
2.1. AGREEMENT TO MANUFACTURE.
(a) Subject to the terms and conditions of this
Agreement, Manufacturer shall manufacture and supply Products to be labeled
under Purchaser's Marks to Purchaser for sale in the Territory on an exclusive
basis as specified in Section 2.2 and Purchaser shall purchase Products to be
labeled under Purchaser's Marks from Manufacturer for sale in the Territory.
(b) During the term of this Agreement, Purchaser
shall not have any rights to obtain the Products of Manufacturer from any Person
other than Manufacturer or its Affiliates.
(c) Purchaser shall not sell, or cause to sell, (i)
Products to any Person located outside the Territory or (ii) Products to any
Person located in the Territory, if, to the knowledge of Purchaser, such Party
inside the Territory intends to resell the Products in any country outside the
Territory; provided, however, that subject to subclause (ii) above, Purchaser
will not be liable for any third party acts resulting in Products being sold
outside the Territory. Nothing herein shall be deemed to obligate Purchaser to
impose any restrictions upon the use or resale of any Product by a purchaser
thereof in the Territory to the extent that such a restriction would be in
violation of Applicable Law. Purchaser shall not be in breach of this Agreement
as a result of any use or resale of a Product outside the Territory by a
purchaser that is not bound by restrictions on such use or resale by virtue of
the provisions of the preceding sentence. To the maximum extent permissible
under Applicable Law, Purchaser shall cease all sales of Products to Persons it
has reason to believe are reselling Products outside the Territory whether or
not such resales are permissible under Applicable Law.
(d) Except as provided in Section 3.7, nothing herein
shall be construed to: (i) effect any sale or transfer of any Technical
Information or Intellectual Property Rights of Manufacturer to Purchaser; (ii)
grant any license to Purchaser to design, develop or manufacture the Products;
or (iii) grant to Purchaser any rights to the Intellectual Property Rights of
Manufacturer or its Affiliates.
<PAGE>
(e) Subject to the terms of this subsection,
Manufacturer shall determine its offering of Products from time to time in its
sole discretion, including setting its development schedule for any new Product
or the improvement or modification of a Product. Notwithstanding the foregoing
and subject to Section 9.4, Manufacturer shall (i) give Purchaser written notice
at least one (1) year in advance of any discontinuance of the sale of an ICD
Product in the Territory, or (ii) offer for sale to Purchaser an improved
Product for the same uses or indications unless otherwise agreed in writing by
the Parties. Manufacturer's discontinuance of the sale of a Product to Purchaser
hereunder shall not thereafter give Manufacturer the right to sell such
discontinued Product in the Territory, whether directly or through third
parties.
2.2. EXCLUSIVITY.
(a) Subject to the provisions of Sections 2.1(e) and
2.2(f) for the term of this Agreement, Manufacturer shall sell, or cause to be
sold, Products exclusively to Purchaser for marketing and sale in the Territory.
In furtherance hereof and subject to the terms of this Agreement, Purchaser
shall have the exclusive right to import, have imported, advertise, have
advertised, market, have marketed, promote, have promoted, sell, have sold and
have distributed the Products in the Territory.
(b) Manufacturer agrees not to take, or permit to be
taken, any action which is inconsistent with the exclusive rights granted to
Purchaser under Section 2.2(a). Without limiting the foregoing, but subject to
Section 2.2(f), Manufacturer shall not, directly or indirectly, (i) sell,
deliver or supply, or cause to be sold, delivered or supplied, Products to any
Person in the Territory, under any label or trademark, (ii) make, manufacture or
supply, or cause to be made, manufactured or supplied, Products for the account
of any Person in the Territory, under any label or trademark, (iii) grant any
manufacturing or marketing rights with respect to the Products in the Territory,
under any labels or trademarks, or (iv) sell, deliver or supply, or cause to be
sold, delivered or supplied, Products to any Person outside the Territory, if,
to the knowledge of Manufacturer, such Person intends to resell the Products in
the Territory, provided however, that subject to the foregoing, Manufacturer
will not be liable for any third party acts resulting in Products being sold in
the Territory other than by Purchaser and its Purchaser Distributors. Nothing
herein shall be deemed to obligate Manufacturer to impose any restrictions upon
the use or resale of any Product by a purchaser thereof outside the Territory
(other than a distributor of Manufacturer) to the extent that such a restriction
would be in violation of Applicable Law. Manufacturer shall not be in breach of
this Agreement as a result of any use or resale of a Product in the Territory by
a purchaser that is not bound by restrictions on such use or resale by virtue of
the provisions of the preceding sentence. To the maximum extent permissible
under Applicable Law, Manufacturer shall cease all sales of Products to Persons
it has reason to believe are reselling Products in the Territory, whether or not
such resales are permissible under Applicable Law.
(c) If either Manufacturer or Purchaser learns of any
sales of Products
<PAGE>
in the Territory other than by Purchaser and its distributors, such Party will
provide written notice thereof to the other Party. The Parties shall consult
with each other in good faith concerning appropriate actions (consistent with
Applicable Laws) to stop and thereafter prevent such sales of the Products in
the Territory. If the Parties are unable to agree upon a joint course of action,
each Party shall be free to take such actions as it sees fit in its discretion,
subject to compliance with Applicable Law, provided that neither Party shall be
under any obligation to take any such action.
(d) Purchaser acknowledges that, subject to the
restrictions set forth herein, Manufacturer may sell Products, or otherwise
enter into agreements with third parties with respect to the manufacture, sale
and distribution of Products in countries outside the Territory.
(e) Manufacturer acknowledges that Purchaser has
entered into the ELA Supply Agreement pursuant to which it may purchase and sell
Cardiac Stimulation Devices which may be now or in the future competitive with
the Products.
(f) Purchaser acknowledges and agrees that
Manufacturer may import, have imported, distribute, have distributed, sell and
have sold Products within the Territory for the limited purpose of obtaining any
Government Approval in accordance with the terms hereof. Purchaser further
acknowledges and agrees that Manufacturer may export and have exported Products
manufactured in the Territory for distribution or sale outside the Territory.
2.3. EXISTING DISTRIBUTORS OF MANUFACTURER.
Manufacturer has no Existing Distributors of the Products in the
Territory as of the date hereof except as set forth on Schedule 1.13.
2.4. OTHER CARDIAC-RELATED DEVICES.
Prior to entering into any contract with any third party with regard to
the purchase, sale or distribution in the Territory of Other Cardiac-Related
Devices other than for research or clinical testing of such Other
Cardiac-Related Devices, each Party agrees to discuss in good faith with the
other the inclusion of Other Cardiac-Related Devices under this Agreement,
subject to mutually agreeable terms. Nothing in this Section 2.4 shall create an
obligation between the Parties to agree to include Other Cardiac-Related Devices
and any obligation to include Other Cardiac-Related Devices will arise only as
and to the extent that an agreement is reached between the Parties in writing.
<PAGE>
3. INTELLECTUAL PROPERTY MATTERS
3.1. USE OF PURCHASER'S TRADEMARKS ON PRODUCTS.
Unless otherwise agreed by the Parties in writing, the Products
manufactured and supplied to Purchaser for sale in the Territory hereunder shall
bear only Purchaser's Marks in such manner as Purchaser may direct, consistent
with Applicable Laws and Government Approvals.
3.2. USE OF MANUFACTURER'S NAME ON PRODUCTS.
Solely if and to the extent necessary to obtain or comply with a
Government Approval, or to comply with Applicable Law or where the Parties
otherwise mutually agree, including in response to advice or guidance from a
Governmental Authority, the Products, Promotional Materials, Labels and Markings
and Technical Materials covered by this Agreement shall bear the name and, if
also required, the address of Manufacturer solely as a designation of the
identity of the manufacturer of such Product, and Manufacturer hereby grants to
Purchaser the right to use Manufacturer's name solely for such purposes subject
to such reasonable procedures to protect the name and any related Intellectual
Property Rights of Manufacturer as the Parties may agree.
3.3. NO USE OF MANUFACTURER'S TRADEMARKS.
Subject to the provisions of Section 3.2, nothing in this Agreement
shall give Purchaser any right to use any trademarks or tradenames of
Manufacturer or its Affiliates in connection with the Products being
manufactured for Purchaser hereunder.
3.4. COPYRIGHTS.
With respect to all copyrights related to any tangible materials
produced for Purchaser by or under the direction of Manufacturer, including
Technical Materials, software and translated materials and Labels and Markings,
but excluding Promotional Materials, title in and to any copyrights for such
materials shall remain with the Manufacturer, and Purchaser shall have no right
to copy, reproduce or make derivative works thereof, unless otherwise
specifically agreed between the Parties in writing. All title in and to any
copyrights in the Promotional Materials shall rest with Purchaser, except that
nothing herein shall affect any right, title or interest of Manufacturer in the
Technical Materials (even if the Promotional Materials are derivative works
thereof) and subject to Section 11.5 of the LLC Agreement.
3.5. TECHNICAL INFORMATION.
As between Manufacturer and its Affiliates, on the one hand, Purchaser,
and its Affiliates (including with respect to Purchaser, ELA), on the other
hand, all Technical Information and
<PAGE>
Regulatory Data, if any, generated by Purchaser and its Affiliates pursuant to
clinical studies or regulatory approvals in the Territory shall be the property
of Manufacturer. Purchaser, its Affiliates and Purchaser Distributors shall have
the right to use such Technical Information and Regulatory Data solely in
furtherance of the performance of Purchaser's obligations under this Agreement.
As the owner of the Technical Information, Manufacturer shall have the right to
use, disclose and license to any Person all or any portion of such Technical
Information.
3.6. INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS OF
MANUFACTURER.
In the event that Purchaser becomes aware of the possibility of an
infringement of the Intellectual Property Rights of Manufacturer by a third
party in the Territory, Purchaser shall promptly notify Manufacturer of the
circumstances surrounding such infringement. Manufacturer may, in its sole
discretion and at its own expense and retaining all proceeds therefrom, take
such actions as Manufacturer deems appropriate with respect to any infringement
identified by Purchaser, or with respect to any other infringement of
Intellectual Property Rights of Manufacturer or its Affiliates in the Territory,
as may be permitted by Applicable Law.
3.7. LICENSE OF TECHNICAL INFORMATION.
Subject to the confidentiality provisions of this Agreement,
Manufacturer hereby grants a non-transferable, non-exclusive, royalty free
license to Purchaser of Technical Information for the sole purpose of allowing
Purchaser's personnel to provide technical support to customers and to develop
the Promotional Materials.
4. COMMERCIALIZATION.
4.1. DILIGENCE.
(a) As soon as practicable after receipt of
Government Approval to market any Product in the Territory, Purchaser shall
thereafter use its Best Efforts to market, promote and commercialize such
Product in the Territory during the term of the Agreement.
(b) Purchaser shall promptly notify Manufacturer of
any inquiry (other than an order or potential order from a customer within the
Territory) from any Governmental Authority concerning the Products or
Manufacturer.
(c) Purchaser shall notify Manufacturer promptly upon
Purchaser's receipt of any actual notice that the FDA intends to visit or
inspect Purchaser's facilities in the Territory for a purpose relevant to the
development or marketing of the Products and provide Manufacturer with copies of
all correspondence relating thereto and an opportunity to participate in any
inspection or regulatory comments or correspondence prepared by Purchaser in
response to such comments.
(d) Purchaser and Manufacturer shall promptly notify
each other of
<PAGE>
any and all Adverse Device Events, or any events that could reasonably be
expected to become an Adverse Device Event, of which it becomes aware and will
forward promptly to the other all written reports relating to such actual or
potential Adverse Device Event. Purchaser shall also forward to Manufacturer any
explanted Products, if available. Subject to Section 9.2, Manufacturer shall be
responsible, and bear the cost of, all other requirements, regulatory filings or
measures resulting from such Adverse Device Event.
(e) Purchaser shall not knowingly sell, lease, give
or otherwise dispose of any Product to any person or entity other than a duly
qualified medical practitioner or hospital and not knowingly sell, lease, give
or otherwise dispose of any Product for any use or application other than one
particularly authorized by Manufacturer in writing or in literature and labeling
accompanying the Product.
(f) Purchaser shall provide customer support services
in the Territory at levels consistent with Purchaser's Best Efforts obligation
to develop the market for the Products within the Territory, subject to industry
standards for customary levels of support services for similar products.
4.2. REPORTS AND SALES RECORDS
(a) At least once per year, Manufacturer and
Purchaser shall consult with each other for the purpose of assessing the state
of the market in the Territory.
(b) Purchaser shall provide to Manufacturer copies of
its up-to-date price lists each time such lists are revised.
(c) Purchaser will provide Manufacturer monthly, or
such other interval as may be agreed, with a report (format to be agreed upon)
on sales, marketing activities, market and competitive developments, human
resources and Inventory of Products. Purchaser shall also supply an annual
statement within forty-five (45) days after the end of each calendar year
detailing annual sales figures (stated both in Units and local currency) and a
semi-annual statement of aging Inventory and the amount of Inventory on hand at
June 30 and December 31 of each year within forty-five (45) days after each such
date.
(d) Purchaser and Manufacturer shall meet at regular
intervals throughout the year to exchange information concerning marketing
projects and clinical studies in the Territory.
4.3. PROMOTIONAL AND PRODUCT LITERATURE.
(a) Manufacturer will prepare and supply Purchaser
with reasonable quantities of all Technical Materials, including any revisions
or updates thereof, for each Product in English, at Manufacturer's sole cost and
expense. Manufacturer shall indemnify and hold Purchaser harmless from any and
all claims, expenses, damages and liabilities arising out of the
<PAGE>
Technical Materials.
(b) Purchaser will prepare and supply all Promotional
Materials for use in connection with sale of the Products in the Territory;
provided, however, (i) all Promotional Materials shall require the prior
approval of Manufacturer, which approval shall not be unreasonably withheld and
shall be communicated within a reasonable period of time, and Purchaser shall
make all changes therein as Manufacturer may, in a timely manner, reasonably
request; (ii) Purchaser shall not include any warranties in such materials that
exceed the warranties provided to Purchaser by Manufacturer in Section
9.1(a)(iii) and (iv) or on warranty cards provided by Manufacturer ; and (iii)
subject to Section 9.3, Purchaser shall indemnify and hold Manufacturer harmless
from any and all claims, expenses, damages and liabilities arising out of the
Promotional Materials. If Purchaser desires to design its own protocols for
clinical studies after FDA approval of Products, Purchaser shall submit such
protocols for the prior approval of Manufacturer. All publications resulting
from such studies must also be submitted to Manufacturer for approval prior to
publication.
(c) Unless otherwise agreed by the Parties in
writing, all Technical Materials, Promotional Materials and Labels and Markings
shall bear only Purchaser's Marks, except to the extent that Manufacturer's name
is required to be included in accordance with Section 3.2.
(d) Manufacturer shall supply to Purchaser a copy of
all sales, promotional or marketing literature that Manufacturer has developed
or used for sale of the Products for Purchaser's information and, if agreed by
the Parties in writing, Purchaser may use such sales, promotional or marketing
literature in developing the Promotional Materials.
(e) Manufacturer and Purchaser shall use their Best
Efforts to work together to coordinate the generation and review of the
Promotional Materials.
4.4. TECHNICAL ASSISTANCE.
Manufacturer shall provide at no charge to Purchaser the services of
one qualified technician on a full-time basis during normal working hours for up
to four weeks each year during the term of this Agreement to provide training
and support at Manufacturer's Minnesota facility upon reasonable prior notice.
At Purchaser's option, Manufacturer shall provide such services at another
location, inside or outside the Territory; provided that Purchaser will
reimburse Manufacturer for its reasonable out-of-pocket expenses incurred in
connection with providing such services at another location (including airfare
and hotel). If Purchaser wishes to obtain additional technical support services
beyond those set forth above, Manufacturer shall provide such additional
services as Purchaser may reasonably request upon reasonable prior notice.
Purchaser shall compensate Manufacturer for any such additional services on an
Expense Reimbursement Basis.
<PAGE>
4.5. LABELS AND MARKINGS.
Manufacturer shall prepare all Labels and Markings for the Products
manufactured for Purchaser hereunder, which Labels and Markings will include
Manufacturer's model numbers and Purchaser's Marks. Purchaser may submit the
format of such Labels and Markings to Manufacturer. Manufacturer shall submit
all Labels and Markings to Purchaser for its review and comment and shall make
such changes thereto as Purchaser may, in a timely manner, reasonably request,
subject only to any requirements under Applicable Law. Failure of Purchaser to
object or request changes to any Labels and Markings within 10 working days (in
France) of Purchaser's receipt of such materials shall be deemed approval at
such Labels and Markings. Purchaser shall supply electronic or camera-ready art
to Manufacturer for Purchaser's Marks to be used on the Labels and Markings and
Manufacturer shall be responsible for affixing such Labels and Markings to the
Product. No Labels and Markings may be altered without the prior written consent
of Purchaser except as required by Applicable Law or by order of a Governmental
Authority. Purchaser shall indemnify and hold Manufacturer harmless from and
against any and all claims, expenses, damages and liabilities arising out of the
use of Purchaser's Marks on any such Labels and Markings.
4.6. MARKETING ALLOWANCE AND ROYALTIES.
From time to time, Manufacturer may (but shall have no obligation to)
pay to Purchaser a marketing allowance or charge a royalty for use of the
Intellectual Property Rights in any Products, each as if and to the extent
agreed by Manufacturer and Purchaser in writing. For 1998, Manufacturer shall
pay the Marketing Allowance set forth in Schedule 4.6.
5. REGULATORY AND GOVERNMENTAL APPROVALS.
5.1. CLINICAL STUDIES.
(a) Manufacturer shall use its Best Efforts to
initiate and complete clinical trials or studies in the Territory for the
purpose of obtaining all required Government Approvals, including without
limitation, from the FDA, for each Product after obtaining an IDE from the FDA
for such Product at its sole cost and expense. All such clinical trials shall be
conducted in accordance with Applicable Laws.
(b) Each of Manufacturer and Purchaser shall disclose
to the other all Regulatory Data in its possession or which it is responsible
for obtaining under this Agreement generated for the Products in the Territory
(or required by any Applicable Law to be made available in connection with the
sale of the Products in the Territory) and shall have the right to use, directly
or indirectly, all such information, including the right to cross-reference any
and all regulatory filings with respect to the Products, in connection with the
development and commercialization of the Products in accordance with this
Agreement. Each Party shall be solely responsible for its use of such Regulatory
Data. To assist in connection with commercialization
<PAGE>
of the Products in the Territory pursuant to this Agreement, Manufacturer shall
use its Best Efforts, consistent with any legal or contractual limitations, to
make available other regulatory filings, clinical data and information regarding
either the Products or Manufacturer, including updating such information from
time to time and upon effecting any change by Manufacturer, for use by Purchaser
solely for the purpose of obtaining Government Approvals required to be obtained
by Purchaser under Applicable Law and commercializing the Products in the
Territory.
5.2. GOVERNMENT APPROVALS.
(a) Manufacturer shall use its Best Efforts to obtain
an IDE, if required, and all other required or desirable Government Approvals,
including without limitation those required to be obtained from the FDA for the
clinical trials or studies and sale of each Product in the Territory at its sole
cost and expense after Manufacturer has completed the validation of such Product
required for human implant.
(b) Manufacturer will be responsible for all
requirements of Applicable Law in the Territory concerning the sale of the
Products in the Territory, including all Product labeling (other than trade
marks, tradenames, trade dress, logos, layout design and similar matters) and
local regulatory requirements within the Territory.
(c) Manufacturer will upon submission or receipt (i)
send to Purchaser a copy of any document submitted to or other correspondence
regarding the Product with any Governmental Authority; and (ii) provide
Purchaser with copies of all Government Approvals within fifteen (15) days of
receipt. Manufacturer will keep Purchaser informed, in writing, of the status of
its Government Approvals on a regular basis. Purchaser will assist Manufacturer
in connection with such activities, to the extent reasonably requested by
Manufacturer.
(d) After receipt of necessary Government Approvals
and thereafter throughout the term of this Agreement, Manufacturer will use its
Best Efforts to maintain such Government Approvals in effect at its own expense
to the extent it is commercially and economically viable.
(e) Unless otherwise required by Applicable Laws and
subject to the following sentence, Manufacturer shall be the holder of all
Government Approvals in the Territory. In the event that the Parties determine
that it is desirable, for legal or administrative reasons, for Purchaser or its
designee to hold any Government Approvals, Manufacturer will cooperate to permit
Purchaser to hold such Government Approvals.
(f) Manufacturer shall keep Purchaser advised of any
changes in Applicable Laws in the Territory, including material proposed changes
thereto, of which Manufacturer becomes aware in the course of performing its
duties hereunder that affect the Products.
(g) Purchaser shall permit Manufacturer or its
designated
<PAGE>
representative to perform, upon reasonable prior notice and at Manufacturer's
sole cost and expense, reasonable vendor audits or other audits required by
Applicable Laws on the facilities, procedures and records which are relevant to
such audits of Purchaser and, to the extent obtainable by Purchaser at no cost
to Purchaser, on facilities, procedures and records which are relevant to such
audits of other distributors or any other Persons with responsibility for any
aspect of selling the Products, on reasonable advance notice to Purchaser during
normal business hours.
6. PRICING AND PAYMENTS.
6.1. TRANSFER PRICES.
(a) For each Unit shipped by Manufacturer to
Purchaser, Purchaser shall pay a Unit Transfer Price as fixed and agreed for
each Price Period between Manufacturer and Purchaser prior to commencement of
the relevant Price Period. Unit Transfer Prices for the initial Products for the
initial Price Period are set forth in Schedule 6.1(a) attached hereto. xxxx
xxxxxxxx xxxxxx xxx xxx xxxxxxxx xxxx xx xxxxxxxxxx xx xxxx xxxxx xxx xxxxxx
xxxxxxx xxx xxxxxxx xx x xxxxx xx xxxxx xxxxx. xxxxxxxxx xxxxx xxxxxxxxx xxxxxx
xxxx xxx xxxx xx xxxxxxxx xx xxx xxxxxxxxx.
(b) xxxxxx xxx xxxxxxxxxxx xxxxx xx xxx xxxxx xx
xxxxxxx xx x xxxx xxxxxxxx xxxxxx xxxxxxxxxxx xxxx xxxx xx xxxx xxxxx xxxxxxx
xxx x xxxxx xxxxxx xx xxxxxxx xxxxxxxxxx xxxxxxx xx xxx xxxxx xxxxxxx xx xxx
xxxxxxxxx xxxxxxxx xxxxxxx xxx xxxxxx xxxx xxxxxxxx xxxxx xxxxx xxx xxxx xxxx xx
xxxxxxxxxx xxxx xxxxxxx xxx xx xxx xxx xxxxxxxxx xxx xxxxxx xxxx xxxxxxx xxx
xxxxxxxxx xxxxxxxxx xx xxxxxxx xx xxx xxxxxx xx xxxxxxxxxx xxxx xxxxxxx xx.
(c) Manufacturer and Purchaser shall agree upon the
"Budgeted Sales Price" for each Unit as a reference for determining the Unit
Transfer Prices prior to expiration of the then current Price Period, such
agreement to be reached in accordance with the provisions of this Section 6.1.
(d) With respect to programming Units, Unit Transfer
Prices shall provide Manufacturer with a target price equal to xxxxxxxxxxxxx
xxxxx xxxxxxxx xxxxxxxxxxxxx xxxx xxx xxxx xxxxxxxxxxx xxxx xxxx x xxxxxx xxxxxx
xx xxxxx xxxxxxx x.
(e) If the Parties are not able to reach agreement on
any Unit Transfer Price (including any marketing allowance or royalty under
Section 4.6) for any Price Period, they shall negotiate in good faith to attempt
to resolve their differences. If such negotiations shall fail to result in an
agreement within thirty (30) days, the Parties shall each submit their Unit
Transfer Price proposals to the Chief Executive Officers (or equivalent officer)
of the Parties to attempt to resolve their differences. If such Chief Executive
Officers shall fail to reach agreement within fifteen (15) days, the Parties
shall submit their final proposals to an independent third party decisionmaker
who shall pick whichever of the final proposals more closely adheres to the
principles set forth in this Section 6.1 and Section 10.2 of the LLC
<PAGE>
Agreement and the best available information presented by the Parties as to fair
and competitive prices in the Territory. The third party decisionmaker shall be
selected by joint agreement of the two Parties (or if they are unable to agree
within ten (10) days, then by the American Arbitration Association ("AAA");
provided, however, that the AAA shall not administer the proceedings). The
decision of such third party shall be final and non-appealable. The Person
selected to be the third party decisionmaker shall have experience in the
medical device industry and in distribution and other relevant commercial
matters in such industry. Preference shall be given to the selection of an
individual with experience as an arbitrator, but the individual need not be a
lawyer. The Parties shall each submit their final proposals to the independent
decisionmaker with supporting analyses and other information as they deem
appropriate within fifteen (15) days after selection of the decisionmaker. No
Party shall have EX PARTE communications with the decisionmaker during any time
period immediately relevant to the decisionmaker's actions in connection with
this Agreement. Each Party shall be entitled to rebut the presentation of the
other and to submit a final summary argument after review of the other Party's
rebuttal, in each case within fifteen (15) days after the final proposal
submissions. Each of the submissions of each Party (including their respective
final proposals) will be made concurrently to the independent decisionmaker and
will be opened simultaneously and provided to the other Party upon such opening.
(f) Pending resolution of any dispute regarding
applicable Unit Transfer Prices for any Price Period, the Parties shall continue
to purchase and sell Products based upon the prior Price Period's Unit Transfer
Prices (including any marketing allowance or royalty under Section 4.6).
6.2. PAYMENT TERMS.
Manufacturer shall invoice Purchaser for the applicable Unit Transfer
Price promptly following shipment of Products by Manufacturer. All payments due
hereunder shall be paid in United States Dollars and are due xxxxxxxxxxxxxxxxx
after the invoice date during the first two (2) Price Periods after the
Effective Date, xxxxxxxxxxxxxxxxxx after the invoice date during the next
two (2) Price Periods after the Effective Date, and xxxxxxxxxxxxxxxx after the
invoice date for all Price Periods thereafter. Payment, unless otherwise agreed
in writing, shall be made by wire transfer to such bank as Manufacturer may
designate in writing, without set-off and free and clear of and without any
deduction or withholding for or on account of, any taxes, duties, levies, fees
or charges of any nature whatsoever. Once an Order has been accepted by
Manufacturer, no shipment of Product so ordered may thereafter be delayed at
Purchaser's request.
6.3. FINANCIAL AND RELATED BOOKS AND RECORDS.
Each Party shall maintain accurate and complete books and records with
respect to the performance of such Party's obligations under this Agreement,
such records to be maintained in accordance with generally accepted accounting
principles in the United States. Such records (wherever located) shall be
maintained for at least four years after the date of creation thereof.
<PAGE>
Each Party shall have the right during such four-year period, through its
independent auditors to conduct an audit, during normal business hours and
following reasonable prior notice to the other Party, to examine at the other
Party's location, all records of such other Party for the purpose of verifying
the payments or expenditures or performance of such Party hereunder. Information
provided to, and generated by, such auditors shall be considered Confidential
Information. If any such audit shows any underpayment or overcharge, the
auditing Party shall issue a written statement to the audited Party and a
correcting payment or refund shall be made within thirty (30) days after receipt
of the written statement described above unless the audited Party claims that
the statement is in error. The fees and expenses of the accountants performing
such verification shall be borne by the Party requesting the audit.
Notwithstanding the foregoing, if any such audit results in any underpayment or
overcharge with respect to any twelve-month period of more than $25,000, then
the Party being audited shall bear the reasonable costs of the accountants in
performing such audit. Upon request and in accordance with Applicable Law, each
Party shall provide to the other Party copies of such records reasonably
required by the requesting Party to comply with Applicable Laws at the sole cost
and expense of the requesting Party.
6.4. LATE PAYMENTS.
All payments not made on a timely basis in accordance with this
Agreement shall bear interest at a rate of one percent per month (1%) or, if
lower, the maximum rate permitted by Applicable Law beginning on the date that
payment was due. Such interest is to be determined and compounded on a daily
basis from the date due until the date paid. Payment of such interest charges
will not excuse or cure any breach or default for late payment. If either Party
retains a collection agency, attorney or other Person to collect overdue
payments hereunder, all collection costs, including but not limited to
reasonable attorney's fees, will be payable by the non-paying Party.
7. PURCHASE AND SUPPLY OF PRODUCT.
7.1. ORDERS.
(a) Purchases and sales of Products shall be
initiated by means of an Order on a purchase order form from Purchaser to
Manufacturer. Subject to subsection (b) below, Manufacturer shall accept all
such Orders promptly and in no event later than ten (10) working days from the
date of receipt by Manufacturer; provided that such Orders do not exceed nor
fall short of the Forecast for the relevant Firm Period determined in accordance
with Section 7.4 by more than 20%. All Orders accepted by Manufacturer shall not
thereafter be cancelable or recoverable by Purchaser or Manufacturer. It is
understood that each Party may, for convenience, use its own standard
pre-printed forms of invoice, purchase order, acknowledgement or acceptance in
the performance of its obligations hereunder; provided, however, that any terms,
conditions or provisions in such pre-printed forms which are inconsistent with
or which modify or supplement this Agreement shall be null and void. This
Agreement is not an Order of Purchaser and does not request or authorize
delivery of any
<PAGE>
Products, except pursuant to implementation of the specific provisions of this
Agreement.
(b) In the event of any shortage of the Products,
Manufacturer shall allocate such Products among its customers and accept Orders
so as to give at least equal priority to Purchaser with all other customers
based upon the prior year's purchase volumes of Purchaser and such other
customers.
(c) Upon acceptance of each Order (but subject to
Sections 7.2(a) and 10.3(f)), Manufacturer shall promptly inform Purchaser of
Manufacturer's estimated shipment date for the Order. Manufacturer's obligation
with respect to accepted Orders shall be to use its Best Efforts to meet the
delivery date specified in Purchaser's Order unless Purchaser expressly agrees
to a later date. If Manufacturer anticipates any delays in the scheduled
delivery date for any Order, Manufacturer will provide prompt written notice to
Purchaser and shall cooperate with Purchaser to reschedule delivery at the
earliest possible date so as to minimize the impact on Purchaser. If Purchaser
fails to make any purchases or if Manufacturer fails to use its Best Efforts to
meet the delivery date specified in any accepted Order (or any later date agreed
to by Purchaser as specified above), the defaulting Party shall be responsible
(subject to Section 9.5) for the other Party's reasonable damages resulting
therefrom but the non-defaulting Party shall be obligated to take reasonable
steps to mitigate such damages.
(d) All Products shall be shipped to locations
specified by Purchaser in the relevant Order in shipping packages specified or
supplied by Purchaser and using the Labels and Markings. All shipments shall be
FOB Manufacturer's plant.
7.2. EFFECT OF LATE PAYMENTS.
If the Purchaser fails to pay the full amount due with respect to any
invoice (other than any amounts that are subject to a bona fide dispute) after
the date such invoice becomes due, Manufacturer shall be entitled (without
prejudice to any other right or remedy it may have) to:
(a) cancel or suspend any further deliveries of the
Products to the Purchaser under any Order; and
(b) charge the Purchaser interest on the unpaid
invoice at the rate provided in Section 6.4 from the date the payment became due
until actual payment is made (irrespective of whether the date of payment is
before or after any judgment or award in respect of the same).
7.3. INSPECTION OF SHIPMENTS.
Manufacturer shall send to Purchaser prior to or concurrently with each
shipment a copy of any documentation for the relevant Product that has been
agreed by the Parties. Purchaser shall have the right to inspect the shipment of
the Products which are the subject of each Order for damage, defects, shortages
or other noncomformities within thirty (30) calendar days after receipt thereof
and shall notify Manufacturer as soon as possible of any damage, defects,
<PAGE>
shortages or of any other failure of the Products to conform to this Agreement.
Any Products which are the subject of an Order not rejected by Purchaser by
written notice to Manufacturer within such thirty (30) day period shall be
deemed accepted. Purchaser's sole remedy with respect to any nonconformity after
acceptance of a shipment shall be those provided pursuant to the warranties set
forth in Section 9.1. Upon Manufacturer's request, Purchaser shall provide
Manufacturer with packing slips, inspection reports and other documentation
supporting its rejection of any shipment. If such shortages or nonconformity
existed at the time of delivery of the Order, Manufacturer shall promptly
deliver additional or substitute Products to Purchaser in accordance with the
delivery procedures set forth herein.
7.4. PURCHASE FORECASTS.
At least one calendar month prior to the first requested delivery of
Products hereunder, Purchaser shall notify Manufacturer in writing of the
projected total number of Products, broken down by each Product model or
category, to be purchased by Purchaser during each month of the succeeding
twelve (12) calendar month period ("Forecast"). The projections for the first
six (6) months of such initial Forecast shall be firm and shall be accompanied
by Orders for such first six (6) months with respect to the models covered
thereby. Thereafter, Purchaser shall provide Manufacturer with a similar
Forecast for any new Product models or categories; the first six (6) months of
such Forecast for new Products shall be firm and shall be accompanied by Orders
for such first six (6) months for such new Products. All such Forecasts shall be
updated on a monthly basis by adding a twelfth month to replace the expired
month (but not changing any other month in the Forecast), with updates to be
delivered not less than one (1) calendar month in advance. The first three (3)
months of each such updated Forecast (beginning with the fifth month of the
first Forecast period for each Product) shall be firm and shall be accompanied
by Orders for the Products in the additional month of the Firm Period. The
estimates for the remaining nine (9) months shall be non-binding estimates for
planning purposes only and Purchaser shall have no liability therefor. Purchaser
shall establish reasonable Inventory levels to meet demand for the Products
which shall be a minimum amount equal to one month of anticipated demand for the
Territory as evidenced by the Forecast. To accommodate Manufacturer's production
scheduling, the total Products ordered for any three (3)-month or six (6)-month
Firm Period will be limited to a twenty percent (20%) maximum aggregate increase
or twenty percent (20%) maximum decrease in Units relative to the projection for
such Firm Period contained in the Forecast provided to Manufacturer for such
Firm Period, unless otherwise agreed by the Parties in writing.
7.5. RETURN OF EXPIRED PRODUCTS.
Purchaser shall, at its own expense, return to Manufacturer all
Products held in Inventory which have pased the "use before" date marked on the
sterile pack. Purchaser shall not be reimbursed or credited for any such expired
Inventory.
<PAGE>
8. QUALITY ASSURANCE; TESTING.
8.1. QUALITY CONTROL.
Manufacturer shall produce the Products in accordance with all
Applicable Laws including requirements of the Act and the FDA's Good
Manufacturing Practice regulations in effect at the time of manufacture, and
applicable specifications for all models of the Products, including, without
limitation, those specified from time to time in the Technical Materials.
Manufacturer shall permit, shall cause its Affiliates and use its Best Efforts
to cause third party suppliers to permit, quality assurance representatives of
Purchaser promptly after signature of this Agreement, no more than once a year
thereafter, and prior to placing an initial Order for any new Product, to
inspect Manufacturer's or its Affiliates' manufacturing, testing and storage
facilities, and the manufacturing, testing and storage facilities of any third
parties who manufacture components for Manufacturer or its Affiliates, to
conduct quality assurance audits. Purchaser agrees that all arrangements for
such audits of third-party suppliers shall be made through Manufacturer and that
Manufacturer may, at its option, accompany Purchaser on any such audits. Such
audits shall be limited to inspection of the quality control systems and
procedures of the Person being audited and a review of Product validation files,
clinical documentation, and regulatory status, upon reasonable notice, during
normal business hours and pursuant to confidentiality agreements as described in
Section 11.1. Manufacturer shall permit, and cause its Affiliates and use its
Best Efforts to cause its third party suppliers to permit, any officials of any
Governmental Authority in the Territory to inspect its facilities as necessary
to comply with Applicable Laws. Manufacturer shall notify Purchaser of any FDA
inspection of its production or testing facilities for the Products and shall
provide Purchaser with copies of any reports (including Forms 483) issued as a
result thereof to the extent applicable to the Products.
8.2. TESTING.
In accordance with Applicable Laws, including the requirements of the
Act, Manufacturer shall test or cause to be tested each Unit to be supplied
pursuant to this Agreement before delivery of such Unit to Purchaser.
Manufacturer acknowledges that Purchaser is relying upon testing documentation
or other validation or verification documents showing Manufacturer's compliance
with its standard quality control procedures relating to the Products provided
by Manufacturer with each shipment as to the compliance of such shipment with
all applicable specifications. Purchaser agrees to conduct only such testing or
programming of any Unit prior to delivery to a customer or after explant of any
Unit from a patient as may be agreed by Manufacturer in writing, otherwise
requested by Manufacturer in writing or in accordance with procedures set forth
on Schedule 8.2.
<PAGE>
8.3. RECORDS AND TRACEABILITY.
Manufacturer hereby covenants and agrees that for a minimum period of
fifteen (15) years after the sale and purchase of any Product hereunder, it
shall maintain complete and accurate records of the FDA Tracking Information for
all Products, and all components thereof, that are manufactured and sold under
this Agreement, to the extent necessary to meet or exceed all applicable FDA
requirements and other Applicable Laws. Purchaser hereby covenants and agrees
that for a minimum period of fifteen (15) years after the sale and purchase of
any Product hereunder, it shall maintain the FDA Tracking Information regarding
the sale of all Products manufactured for it by Manufacturer hereunder to the
extent necessary to meet or exceed all applicable FDA requirements and other
Applicable Laws in the Territory and, in the event of a dissolution or
liquidation of Purchaser, Purchaser shall transfer such FDA Tracking Information
to Manufacturer. The Parties agree to provide each other with reasonable access
to and copies of such records and information in the event of any Recall or
other similar event involving the Products described in Section 9.2 or as
necessary for any compliance with Applicable Laws. In furtherance and not in
limitation of the foregoing, upon reasonable prior written notice from
Manufacturer, Purchaser shall provide to Manufacturer the FDA Tracking
Information at the end of each calendar month (or earlier if required by
relevant Applicable Law) if, and for so long as, the provision of such FDA
Tracking Information has become mandatory under Applicable Law.
9. WARRANTIES AND INDEMNIFICATIONS.
9.1. MANUFACTURER PRODUCT WARRANTIES.
(a) Manufacturer represents, warrants and covenants
that:
(i) at the time of shipment of all Products
hereunder, such Products shall be new with xx xxxxx xxx xxxxxxxx xxxx
remaining prior to the expiration of the "use before" date and shall,
unless otherwise agreed in writing by the Parties, meet or exceed all
requirements under all Applicable Laws in the Territory;
(ii) Purchaser shall have good and valid
title in and to such Products, free and clear from any liens, security
interests, charges, claims or other encumbrances;
(iii) for a period of xxxxxxxx xx xxxxxx
from date of implant in a patient, each Product will be free from
defects in design, materials and workmanship (battery depletion within
the limits outlined in the specifications for such Product is not
considered a defect); and
(iv) for a period of xxxxxxxx xx xxxxxx from
date of implant in a patient, each Product will conform to the
specification for such Product established in accordance with this
Agreement.
<PAGE>
The xxxxxxxx xx xxxxx xxxxxxx referred to (iii) and
(iv) above apply only for the purposes of the warranty set forth in this Section
9.1. Notwithstanding any provision of this Agreement, the Parties may agree to
shorten or lengthen the warranty periods set forth in Sections 9.1(a)(iii) or
(iv) from time to time to reflect competitive factors and if and to the extent
required by Applicable Law. Any such change shall be made in compliance with
Applicable Laws.
(b) In the event of any breach of the foregoing
warranties, Manufacturer shall, at its option, reprocess, if feasible, or supply
a replacement of, any Products or any components thereof which fail to meet the
terms of such warranties at no additional charge to Purchaser and Manufacturer
shall be responsible for transportation and insurance costs to ship such
reprocessed or replacement Products to Purchaser. Purchaser shall be responsible
for transportation and insurance costs to ship any claimed defective Product
back to Manufacturer's plant for Manufacturer's review. Manufacturer shall
determine at Manufacturer's cost at its factory whether such Product is in fact
defective. If Purchaser does not agree with Manufacturer's determination that
such Product is not defective, the Parties shall retain an appropriate expert to
be mutually agreed fifteen (15) days of Purchaser's receipt of Manufacturer's
determination to judge ultimately whether such Product is defective. If the
Parties cannot agree on an appropriate expert, each party shall submit two
nominations to the AAA within ten (10) days thereafter for the AAA to appoint an
appropriate expert from such nominees; provided, however, that the AAA will not
administer the proceeding. If either Party does not submit nominations as
described above, the AAA shall appoint an expert from the nominees it has
received. The determination of the expert will be final and binding on the
Parties. The cost for retaining the expert shall be borne by Manufacturer if
such Product is judged defective and by Purchaser if such Product is judged not
to be defective. Any returned Products shall become the property of
Manufacturer. This warranty does not extend to any Products that have been
damaged or rendered defective as a result of: (i) misuse or negligence on the
part of Purchaser or failure of Purchaser or any of its customers to follow
instructions for proper use and care of the Product; (ii) external factors such
as fire and flood; (iii) accidents involving, or modification or alteration of,
the Product other than those caused by Manufacturer after delivery to Purchaser
or (iv) implantation after the "use before" date marked on the Product's sterile
pack.
(c) Purchaser and Manufacturer shall discuss in good
faith the nature and content of written product warranties to be extended by
Purchaser to customers with respect to the Products in the Territory. Without
Manufacturer's prior written consent, and except as may be required to comply
with Applicable Laws, Purchaser shall not extend to customers any warranties
with respect to the Products in the Territory which are inconsistent with those
warranties being extended by Manufacturer from time to time outside the
Territory.
9.2. RECALLS.
Purchaser and Manufacturer each shall notify the other promptly if any
Product is the
<PAGE>
subject of a Recall or other similar event in any jurisdiction, and the Parties
shall reasonably cooperate in the handling and disposition of such Recall or
other similar event; provided, however, in the event of a disagreement as to any
matters related to any proposed Recall or other similar event, other than the
determination of who shall bear the costs as set forth in the immediately
following sentence, each Party shall have the right to cause a Recall or other
similar event to be undertaken. Manufacturer shall bear the reasonable costs
(including without limitation, the cost of locating and contacting by any means
patients and customers, the cost of explanting the recalled Products and
implanting a replacement Product, and the cost of such replacement Product
("Costs")) of all Recalls of the Products except any voluntary Recall effected
solely by Purchaser, for which Purchaser shall initially bear all Costs. If
subsequent to such voluntary Recall by Purchaser, events show that Manufacturer
wrongfully refused to agree to such Recall, then Manufacturer shall reimburse
Purchaser for all Costs incurred by Purchaser in connection therewith.
Notwithstanding the foregoing, Purchaser shall pay the Costs of any Recall or
other similar event if and to the extent caused by (i) any unauthorized change
to the Products by Purchaser which directly results in the Recall, (ii) the
failure of Purchaser to properly store, label or otherwise handle the Products
which directly results in the Recall or (iii) any other breach of this Agreement
by Purchaser which directly results in the Recall.
9.3. INDEMNIFICATION FOR THIRD PARTY CLAIMS.
(a) Notwithstanding any other provision of this
Agreement, Manufacturer shall be responsible for, and shall assume the defense
of and indemnify and hold Purchaser and its Affiliates (including ELA and its
Affiliates) harmless from and against, all Third Party Claims arising out of or
related to any Products or Technical Materials related thereto manufactured or
supplied by Manufacturer hereunder; provided that the indemnification
obligations of Manufacturer under this Section shall not apply to any Third
Party Claim caused by any misuse, willful misconduct or negligent act or
negligent failure to act on the part of Purchaser with respect to the Products
including any modification or alteration of the Product other than caused by
Manufacturer after delivery to Purchaser and any implantation after the "use
before" date marked on the Product's sterile pack.
(b) For purposes of this Agreement, the term "Third
Party Claims" shall mean any and all claims, lawsuits or actions asserted
against Purchaser or its Affiliates (including ELA and its Affiliates) or their
respective directors, officers and agents under any and all Applicable Laws
arising out of or relating to any Product or Technical Materials (including,
without limitation, any data in the Technical Materials that are properly
included in the Promotional Materials with Manufacturer's prior written
approval) related thereto that are manufactured or supplied by Manufacturer or
its Affiliates, including, but not limited to, claims based on strict liability,
tort, negligence or breach of express or implied warranty and claims for
special, incidental, exemplary and consequential damages, in cases in which it
is alleged that personal injury (including, but not limited to, emotional
distress or disturbance), direct financial loss, death or property damage was
caused by a defect in design, material or manufacture of any of the Products or
the Technical Materials (including, without limitation, any data in the
Technical Materials that are properly included in the Promotional Materials with
Manufacturer's
<PAGE>
prior written approval) related thereto that are manufactured or supplied by
Manufacturer or its Affiliates hereunder including any misrepresentation or
failure to warn in the Technical Materials. "Third Party Claims" shall also
include all losses, liabilities, damages, judgments, awards and costs (including
reasonable attorneys' fees) arising out of or relating to the claims described
in the preceding sentence.
9.4. MANUFACTURER INFRINGEMENT INDEMNIFICATION.
Manufacturer shall indemnify and hold Purchaser and its Affiliates
(including ELA and its Affiliates) harmless from and against any and all
liabilities, damages, costs or losses (including, without limitation, reasonable
attorneys' fees) arising out of or related to claims or suits asserted or
brought against Manufacturer or Purchaser under any and all Applicable Laws to
the extent such claim or suit is based on alleged infringement, unauthorized use
or misappropriation of patents, mask work rights, copyrights or other
Intellectual Property Rights of a third party in connection with the sale or use
of Products in the Territory (the "Infringement Claims"). In any event,
Manufacturer has the right at any time and in its sole discretion to modify the
design of any Product so that it becomes non-infringing, to obtain a license for
such Products or to cease to provide such Product to Purchaser, provided that
all damages, losses, costs, and expenses incurred by Purchaser that are directly
related to such modification shall be treated as indemnifiable expenses of
Purchaser and its Affiliates (including ELA and its Affiliates) for purposes of
this Section 9.4 and shall be borne by Manufacturer. Purchaser shall use its
Best Efforts to assist and cooperate with Manufacturer in the defense of any
Infringement Claims to the extent Purchaser is the beneficiary of any rights
against the maker of such Infringement Claim pursuant to any agreement the
benefit of which may also inure to the benefit of Manufacturer; provided that
such cooperation shall be at the sole expense of Manufacturer and Purchaser
shall not be required to initiate or join in any litigation in connection
therewith.
9.5. LIMITATION ON DAMAGES.
Except as expressly provided in this Agreement, neither Purchaser nor
Manufacturer shall be liable to the other, for any special, incidental,
exemplary or consequential loss or damage (whether for loss of profit or
otherwise and whether occasioned by the negligence of a Party or its employees
or agents or otherwise) arising out of or in connection with any act or failure
to act of Manufacturer or Purchaser relating to the manufacture or supply of the
Products or, their sale by the Purchaser or arising out of the performance or
non-performance of this Agreement.
MANUFACTURER'S WARRANTIES SET FORTH IN THIS SECTION 9 ARE ITS EXCLUSIVE
WARRANTIES TO PURCHASER WITH RESPECT TO THE PRODUCTS, AND ARE GIVEN AND ACCEPTED
IN LIEU OF ANY AND ALL OTHER WARRANTIES, GUARANTEES, CONDITIONS AND
REPRESENTATIONS, EXPRESS OR IMPLIED, CONCERNING THE PRODUCTS, WHETHER ARISING
UNDER ANY APPLICABLE LAW OR OTHERWISE INCLUDING, WITHOUT LIMITATION, ANY IMPLIED
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
<PAGE>
9.6. CERTAIN COVENANTS.
Purchaser represents, warrants and covenants that:
(a) Purchaser will not furnish purchasers of the
Products with any warranties, whether written or oral, beyond those given by
Manufacturer to Purchaser under Section 9.1(a)(iii) and (iv) or stated in any
warranty card or similar material provided by Manufacturer or included with the
Product;
(b) Purchaser shall comply with all Applicable Laws
concerning the use, handling, sale and disposition of the Products in the
Territory.
9.7. REPRESENTATIONS AND WARRANTIES OF THE PARTIES.
Each of Manufacturer and Purchaser hereby represents and warrants to
the other that as of the date hereof:
(a) Manufacturer is a corporation and Purchaser is a limited
liability company duly organized and existing in good standing under the laws of
the jurisdiction in which it is incorporated, and has the requisite corporate
power to own its properties and to carry on its business as now being conducted.
Each is duly qualified as a foreign corporation to do business and is in good
standing in every jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary and where the failure to
qualify would have a Material Adverse Effect with respect to such Party.
(b) Each has the requisite corporate power and authority to
enter into and perform this Agreement and to perform in accordance with the
terms hereof. The execution and delivery of the Agreement and the consummation
of the transactions contemplated hereby have been duly authorized by its board
of directors and no further consent or authorization of its board of directors
or stockholders is required. The Agreement has been duly executed and delivered
by it. The Agreement constitutes a valid and binding obligation enforceable
against it in accordance with its terms, except as such enforceability may be
limited by applicable insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally the enforcement of, creditors'
rights and remedies or by equitable principles of general application.
(c) Except as set forth on Schedule 9.7, the execution,
delivery and performance of the Agreement and the consummation of the
transactions contemplated hereby do not (i) result in a violation of its
Articles of Incorporation, or By-laws, or (ii) conflict with, or constitute a
default (or an event which with material notice or lapse of time or both would
become a default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any material agreement, material indenture or
material instrument to which it is a party, or result in a violation of any law,
rule, regulation, order, judgment or decree applicable to it or by which any
property or asset of such Party is bound or affected (except in the case of
<PAGE>
subclause (ii) above, for such conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations as would not, individually or in the
aggregate, have a Material Adverse Effect). No action, suit, dispute or
proceeding is pending or, to the best knowledge of such Party, threatened
against such Party which, if adversely determined, would prevent such Party from
carrying out its obligations under this Agreement. Each Party's business is not
being conducted in violation of any law, ordinance or regulation of any
Governmental Authority, except for possible violations which either singly or in
the aggregate do not and will not have a Material Adverse Effect. Except as
contemplated by this Agreement, it is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
Governmental Authority in order for it to execute, deliver or perform any of its
obligations under the Agreement.
(d) Neither Party shall be deemed to have made any
representation or warranty to the other Party except as expressly made in
Sections 2.3, 9.1 and this Section 9.7. Without limiting the generality of the
foregoing, and without prejudice to any express representations and warranties
made to either Party in this Section 9.7, neither Party makes any representation
or warranty to the other with regard to any issues related to Intellectual
Property Rights, projections, estimates or budgets or other matters previously
delivered to or made available to the other with respect to future revenues,
expenses, expenditures or future results of operations. Nothing in this Section
9.7(d) shall limit any remedy that may be available to a Party pursuant to
Applicable Law.
9.8. MITIGATION.
In the event of any occurrence which may result in either Party
becoming liable for breach of this Agreement, each Party shall use its
reasonable efforts to take such actions as may be reasonably necessary to
mitigate the damages payable by the breaching Party.
9.9. INDEMNIFICATION PROCEDURE FOR THIRD PARTY CLAIMS AND
INFRINGEMENT CLAIMS.
If a Party seeks indemnification hereunder for a matter that involves a
claim by a third party including without limitation, Third Party Claims and
Infringement Claims, the Party seeking indemnification (an "Indemnitee") shall
promptly notify the indemnifying Party (the "Indemnitor") of and shall provide
reasonable information and details concerning the nature of such claim.
Indemnitor shall, to the extent applicable, have the right to assume the defense
at its expense of all third party claims and shall pay all costs and damages
finally awarded against the Indemnitor and the Indemnitee in conjunction with
such third party claims, provided that (i) the Indemnitee provides prompt
written notice to the Indemnitor of its receipt of service of any such claim;
(ii) the Indemnitor controls the defense of the third party claim on behalf of
all Parties; (iii) the Indemnitee consents to representation in such claims by
counsel selected by and representing the Indemnitor; provided, however, that if
outside counsel to the Indemnitee reasonably advises the Indemnitee and the
Indemnitor in a written opinion that such joint representation raises a
potential conflict of interest as between the Indemnitee and the Indemnitor
<PAGE>
(other than a conflict concerning the right to indemnification under this
Agreement), then the Indemnitee shall have the right to retain separate counsel
to represent its interests in such third party claim and the reasonable costs,
fees and expenses thereof shall be borne equally by the Indemnitee and the
Indemnitor; and (iv) upon request of the Indemnitor, the Indemnitee uses its
Best Efforts to cooperate with the Indemnitor in defending such third party
claim by providing the Indemnitor with all necessary business information and
relevant documents under its control related to the third party claim and
cooperating with such other reasonable requests of the Indemnitor at the
Indemnitor's expense in accordance with Applicable Law. The Parties' indemnity
obligations under this Article 9 shall not apply to amounts paid in settlement
of any loss, claim, liability or action if such settlement is effected without
the consent of the Indemnitor, which consent shall not be unreasonably withheld.
The Indemnitee's failure to deliver notice to the Indemnitor within a reasonable
time after the commencement of any such action, if materially prejudicial to the
Indemnitor's ability to defend such action, shall relieve the Indemnitor of any
liability to the Indemnitee under this Article 9, but not any liability that it
may have to the Indemnitee otherwise than under this Article 9.
10. TERM AND TERMINATION.
10.1. TERM.
The term of this Agreement shall commence on the date hereof and
terminate on the expiration or termination of the LLC Agreement and shall
terminate upon the commencement of any dissolution or liquidation proceedings
with respect to the Purchaser; provided that, notwithstanding any expiration or
termination of the LLC Agreement or liquidation or dissolution of the Purchaser,
this Agreement shall continue in full force and effect with respect to
Manufacturer's then-current Products for the benefit of Purchaser, or ELA, as
applicable, in accordance with Section 14.2(b)(ii) of the LLC Agreement.
10.2. EVENTS OF EARLY TERMINATION.
(a) This Agreement may be immediately terminated as
to the entire Territory by either Party, upon giving written notice to the other
Party, in the event that the other Party shall become insolvent or be declared
insolvent or bankrupt by a court of competent jurisdiction or shall be the
subject of any reorganization (other than a corporate reorganization effected in
the ordinary course of business and not arising out of any insolvency) or
winding up, receivership or dissolution, bankruptcy or liquidation proceeding,
or any proceeding or action similar to one or more of the above, in which case
termination shall be effective upon such written notice. The failure of either
Party to give notice of termination upon obtaining knowledge of any such event
shall not be interpreted as a waiver of such Party's rights under this Section
10.2, and such Party reserves the right to exercise any such rights at any time
after the occurrence of any such event.
(b) Subject to the further provisions of this Section
10.2(b), upon any material breach or default of this Agreement by either Party,
the non-breaching Party shall have
<PAGE>
the right to serve notice upon the breaching Party of its intention to terminate
this Agreement in its entirety upon the expiration of ninety (90) days after the
date such notice is given, unless the breaching Party shall cure any such breach
or default within said ninety (90) day period. Upon the expiration of the
applicable cure period, if the breaching Party shall not have cured the alleged
breach to the reasonable satisfaction of the non-breaching Party, and if the
non- breaching Party gives a notice of final termination, final termination of
this Agreement shall be effective on the date such notice is given. In the event
of any dispute as to the existence of a default or the adequacy of any cure
thereof, the Party charged with such alleged breach or failure to cure may
require that the right to terminate be determined by the dispute resolution
mechanism pursuant to Article 12.
10.3. RIGHTS AND OBLIGATIONS ON EXPIRATION OR TERMINATION.
Upon termination or expiration of this Agreement for any reason
whatsoever the following provisions shall apply:
(a) After the date which is three (3) months from the
date of termination or expiration, Purchaser shall cease to promote, market or
advertise the Products. Purchaser and Manufacturer shall each cooperate with the
other in an orderly winding up of their respective dealings.
(b) Except in the event of termination of this
Agreement by Purchaser in accordance with Section 10.2 or as a result of the
termination of the LLC Agreement pursuant to Section 14.1(b) thereof where
Manufacturer is deemed the Withdrawing Member (as defined therein), Purchaser
shall within thirty (30) days of expiration or receipt of notice of termination
by Manufacturer certify to Manufacturer the destruction at its own expense of
all Promotional Materials relating to the Products then in the possession of the
Purchaser and shall, if requested by Manufacturer, return, at its own expense,
all samples of Products if such samples have been provided free of charge to
Purchaser.
(c) In the event of termination of this Agreement by
Manufacturer in accordance with Section 10.2 or as a result of the termination
of the LLC Agreement pursuant to Section 14.1(b) thereof where Purchaser is
deemed the Withdrawing Member (as defined therein), at Manufacturer's option,
outstanding unpaid invoices rendered by Manufacturer in respect of the Products
shall become immediately due and payable by Purchaser and invoices with respect
to Products ordered prior to termination but for which an invoice has not been
submitted shall be payable immediately upon submission of the invoice. In any
event, Purchaser shall continue to pay all amounts due hereunder prior to the
effective date of termination and all amounts due thereafter including amounts
in respect of the Product ordered by Purchaser prior to the date of termination
and delivered by Manufacturer.
(d) To the extent applicable, Purchaser shall provide
the FDA Tracking Information in the form and within the time limits specified in
this Agreement.
<PAGE>
(e) Purchaser shall provide Manufacturer with such
information regarding patients in whom the Products have been implanted and at
such times as reasonably necessary to allow Manufacturer to service such
Products and comply with all Applicable Laws. Purchaser understands that
Manufacturer or its designee may be obligated to continue to contact Purchaser's
customers after expiration or termination of this Agreement to allow
Manufacturer to comply with United States law and regulatory requirements to
collect and update periodically the FDA Tracking Information throughout the time
the Products are implanted in patients.
(f) In the event of termination of this Agreement in
accordance with Section 10.2, or as a result of the termination of the LLC
Agreement pursuant to Section 14.1(b) thereof, the terminating Party may at its
sole discretion cancel by prompt written notice any Orders for the Products
which are unshipped at the date of such termination.
(g) Subject to Section 3.4, upon termination or
expiration of this Agreement, each Party shall promptly return to the other
Party all documents, letters, records, notebooks, papers, writings, designs,
drawings, models, blueprints and all other materials and all copies thereof
embodying or showing any of the Technical Information provided by Manufacturer
or any Confidential Information disclosed by either Party, in each case which is
then in the Party's possession or under its control, by whomever prepared, and
all other property owned by one Party but in the possession of the other Party
shall be returned.
(h) Unless otherwise expressly provided in this
Agreement, upon the termination or expiration of this Agreement, neither Party
shall have any further duties or obligations to the other under this Agreement;
provided, however, that no such termination or expiration shall relieve either
Party from any liability for which it is otherwise responsible under this
Agreement (including liabilities under Article 9 of this Agreement) with respect
to any event, occurrence, transaction, act or omission which occurred prior to
the date of such termination or expiration or with respect to any losses,
liabilities or claims arising out of any breach or default under this Agreement.
11. CONFIDENTIALITY; PUBLICITY; NON-SOLICITATION.
11.1. CONFIDENTIAL INFORMATION.
(a) Each Party shall (and shall cause its Affiliates,
agents and representatives to), for the term of this Agreement and for six (6)
years after the expiration or termination of this Agreement for any reason, (i)
keep confidential, (ii) not disclose to others, (iii) use only for the purposes
provided for or permitted under this Agreement or the Related Agreements, and
(iv) use Best Efforts, and at least the same degree of care (but no less than a
reasonable degree of care) as it uses to protect its own Confidential
Information of like importance, to prevent unauthorized use, dissemination and
disclosure of, all of the other Party's and its Affiliates' Confidential
Information, except as expressly provided for or permitted by this Agreement.
All Confidential Information shall, as between the Parties and their Affiliates
remain the sole property of the disclosing party or the relevant Affiliate. The
receiving party and its
<PAGE>
Affiliates, agents and representatives shall have no rights to the Confidential
Information of the disclosing party and its Affiliates, except as provided in
this Agreement. Nothing in this Section 11.1 shall prevent disclosure or use of
information which is or becomes public knowledge without the fault of the
receiving party and its Affiliates, agents and representatives or information
already known to, or proven by written evidence to have been independently
derived by, the receiving party or its Affiliates or received from a third party
having the right to convey it. Notwithstanding the foregoing, such Confidential
Information may be (i) disclosed to a Governmental Authority and to others to
the extent such disclosure may be required to be included in regulatory filings
permitted under the terms of this Agreement or required under Applicable Law;
(ii) published by the receiving party or its Affiliates, if and to the extent
such publication has been approved in writing by the disclosing party; or (iii)
disclosed to the extent required by Applicable Law or as ordered by a court or
other regulatory body having competent jurisdiction. In each of the foregoing
cases, the receiving party will use its Best Efforts to limit the disclosure and
maintain confidentiality of such Confidential Information to the maximum extent
practicable and prior to making any such disclosure it shall use Best Efforts to
consult with the disclosing party regarding the scope of any protective order or
other confidentiality protections that may be available to limit the extent of
disclosure. Any disclosure of Confidential Information to any Affiliates, agents
or representatives of the receiving party shall be limited to a "need to know"
basis for purposes related to this Agreement; provided that (i) the receiving
party shall be responsible and liable to disclosing party for any breach of the
terms of this Section 11.1 by any Affiliate, agent or representative, and (ii)
disclosure by the receiving party to any agent or representative shall be made
pursuant to appropriate confidentiality agreements.
(b) The provisions of this Section 11.1 shall survive
and shall remain in full force and effect for six (6) years after the expiration
or termination or termination of this Agreement for any reason. For purposes of
this Section 11.1 and 11.2, ELA and its Affiliates shall be deemed Affiliates of
Purchaser.
11.2. PUBLICITY.
Each Party agrees, and shall cause its Affiliates to, not to issue any
press release disclosing the terms of, or relating to, this Agreement, without
the prior written consent of the other Party; provided; however, that neither
Party or its Affiliates shall be prevented from complying with any duty of
disclosure it may have pursuant to Applicable Law. Such disclosing party shall
use its Best Efforts to consult with the other Party regarding the issuance of
any such press release, or with regard to any public statement disclosing the
terms of this Agreement and shall use its Best Efforts to obtain confidential
treatment for any Confidential Information where such press release or other
public statement is required to be made by Applicable Law.
11.3. NON-SOLICITATION.
Except as otherwise agreed in writing, during the term of this
Agreement and for one (1) year after termination or expiration hereof, each
Party shall refrain from soliciting the personnel of the other Party or its
Affiliates (including, with respect to Purchaser, ELA and its Affiliates),
<PAGE>
including without limitation, research and development personnel.
12. DISPUTE RESOLUTION PROVISIONS.
12.1. GENERAL DISPUTE PRINCIPLES.
(a) All disputes between or among the Parties and/or
any of their Affiliates (including the Joint Venture) under this Agreement and
the Related Agreements shall be settled, if possible, through good faith
negotiations between the relevant parties.
(b) Disputes as to the specific matters referred to
in Section 6.1(e) and 9.1(b) shall be resolved as provided in such Sections. All
other disputes under this Agreement and the Related Agreements shall be resolved
as provided in Article 12.
(c) Prior to resolving any dispute by means of
arbitration or by means of any suit, action or legal proceeding permitted under
Section 12.2, the relevant parties involved in such dispute shall refer such
dispute to their respective Chief Executive Officers or equivalent, who shall
meet in person to negotiate in good faith the possible resolution thereof on at
least two occasions within 30 days before any such party commences arbitration
or other litigation permitted under this Agreement (provided that if any such
party fails or refuses to have a representative attend such meetings within such
thirty (30) day period, the procedures of Section 12.2 shall be applicable after
the conclusion of such thirty (30) day period); and further provided, that (i)
any legal proceedings seeking interim equitable relief (including a temporary
restraining order or preliminary injunction) until such time as such interim
equitable relief can be addressed through arbitration; (ii) proceedings for
provisional relief contemplated by Section 12.2(i) below; and (iii) third party
legal proceedings under Section 12.1(d) below may be commenced immediately.
(d) If a Party or any of its Affiliates (including in
the case of Purchaser ELA and its Affiliates) is subject to a claim, demand,
action or proceeding by a third party and is permitted by law or arbitral rules
to join another party to such proceeding, this Article 12 shall not prevent such
joinder. This Article 12 shall also not prevent either Party or any such
Affiliate from pursuing any legal action against a third party.
12.2. ARBITRATION OF OTHER DISPUTES.
(a) In the event such good faith negotiations are
unsuccessful, either Party may, after 30 days written notice to the other,
submit any controversy or claim arising out of, relating to or in connection
with this Agreement, or the breach thereof, to arbitration administered by the
American Arbitration Association ("AAA") in accordance with its then existing
International Arbitration rules except that Sections 29 and 31 of the Commercial
Arbitration Rules in effect on the date hereof (a copy of which is attached
hereto as Schedule 12.2) shall govern in the event of any conflict therewith
(collectively, "AAA Rules") and judgment upon the award rendered by the
arbitrator may be entered in any court having
<PAGE>
jurisdiction thereof.
(b) To the extent this Section is deemed a separate
agreement, independent from this Agreement, Article 13 shall be incorporated
herein by reference. Either Party (the "Initiating Party") may commence an
arbitration by submitting a demand for arbitration ("Demand for Arbitration")
under the AAA Rules and by notice to the other Party (the "Respondent") in
accordance with Section 13.4. Such notice shall set forth in reasonable detail
the basic operative facts upon which the Initiating Party seeks relief and
specific reference to the clauses of this Agreement, the amount claimed, if any,
and any nonmonetary relief sought against the Respondent. After the Demand for
Arbitration, response and counterclaim, if any, and reply to counterclaim, if
any, have been submitted, either Party may propose additional issues for
resolution in the pending proceedings only if expressly so ordered by the
arbitrators.
(c) The place of arbitration shall be New York, New
York, and the award shall be deemed a U.S. award for purposes of the Convention
on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (the "New
York Convention").
(d) The Parties shall attempt, by agreement, to
nominate a sole arbitrator for confirmation by the AAA. If the Parties fail so
to nominate a sole arbitrator within 30 days from the date when the Initiating
Party's Demand for Arbitration has been communicated to the Respondent, a board
of three arbitrators shall be appointed by the Parties jointly or, if the
Parties cannot agree as to three arbitrators within 30 days after the
commencement of the arbitration proceeding, then one arbitrator shall be
appointed by each of the Initiating Party and the Respondent within 60 days
after the commencement of the arbitration proceeding and the third arbitrator
shall be appointed by mutual agreement of such two arbitrators. If such two
arbitrators shall fail to agree within 75 days after commencement of the
arbitration proceeding upon the appointment of the third arbitrator, the third
arbitrator shall be appointed by the AAA in accordance with the AAA Rules.
Notwithstanding the foregoing, if any Party shall fail to appoint an arbitrator
within the specified time period, such arbitrator and the third arbitrator shall
be appointed by the AAA in accordance with its then existing rules. For purposes
of this Section, the "commencement of the arbitration proceeding" shall be
deemed to be the date upon which the Demand for Arbitration has been delivered
to the Parties in accordance with Section 13.4. Any award shall be rendered by a
majority of the arbitrators. A hearing on the matter in dispute shall commence
within 90 days following selection of the arbitrators, and the decision of the
arbitrators shall be rendered no later than 90 days after commencement of such
hearing.
(e) An award rendered in connection with an
arbitration pursuant to this Section shall be final and binding upon the
Parties, and the Parties agree and consent that the arbitral award shall be
conclusive proof of the validity of the determinations of the arbitrators set
forth in the award and any judgment upon such an award may be entered and
enforced in any court of competent jurisdiction.
(f) The Parties agree that the award of the arbitral
tribunal will be the
<PAGE>
sole and exclusive remedy between them regarding any and all claims and
counterclaims between them with respect to the subject matter of the arbitrated
dispute. The Parties hereby waive all IN PERSONAM jurisdictional defenses in
connection with any arbitration hereunder or the enforcement of an order or
award rendered pursuant thereto (assuming that the terms and conditions of this
arbitration clause have been complied with).
(g) The Parties hereby agree that for purposes of the
New York Convention, the relationship between the Parties is commercial in
nature, and that any disputes between the Parties related to this Agreement
shall be deemed commercial.
(h) The arbitrators shall issue a written explanation
of the reasons for the award and a full statement of the facts as found and the
rules of law applied in reaching their decision to both Parties. The arbitrators
shall apportion to each Party all costs (including attorneys' and witness fees,
if any) incurred in conducting the arbitration in accordance with what the
arbitrators deem just and equitable under the circumstances. Any provisional
remedy which would be available to a court of law shall be available from the
arbitrators pending arbitration of the dispute. Either Party may make an
application to the arbitrators seeking injunctive or other interim relief, and
the arbitrators may take whatever interim measures they deem necessary in
respect of the subject matter of the dispute, including measures to maintain the
status quo until such time as the arbitration award is rendered or the
controversy is otherwise resolved. The arbitrator shall have the authority to
award any remedy or relief (except as ex parte relief) that a court of the State
of New York could order or grant, including, without limitation, specific
performance of any obligation created under this Agreement, the issuance of an
injunction, or the imposition of sanctions for abuse or frustration of the
arbitration process, but specifically excluding punitive damages.
(i) The Parties may file an application in any proper
court for a provisional remedy in connection with an arbitrable controversy, but
only upon the ground that the award to which the application may be entitled may
be rendered ineffectual without provisional relief. The Parties may also
commence legal action in lieu of any arbitration under this Section 12.2 in
connection with any third party litigation proceedings or for any matter
involving disputes related to Intellectual Property Rights.
(j) After the appointment of the arbitrators, the
parties to the arbitration shall have the right to take depositions, ask
interrogatories, obtain documentation and to obtain other discovery regarding
the subject matter of the arbitration, and, to that end to use and exercise all
the same rights, remedies, and procedures, and be subject to all of the same
duties, liabilities, and obligations in the arbitration with respect to the
subject matter thereof, as if the subject matter of the arbitration were pending
in a civil action before a United States District Court for the Southern
District of New York and such persons, documents or other requested material
were located in the State of New York. The parties shall reach agreement with
the arbitrator on a streamlined and expedited discovery program in order to save
costs and avoid unnecessary delay in completing any arbitration and may present
to the arbitrator for a ruling any reasons for limiting such discovery in order
to save costs and avoid delay.
<PAGE>
(k) For purposes of any suit, action, or legal
proceeding permitted under this Article 12, each party to this Agreement (a)
hereby irrevocably submits itself to and consents to the non-exclusive
jurisdiction of the United States District Court for the Southern District of
New York for the purposes of any suit, action or legal proceeding in connection
with this Agreement including to enforce an arbitral resolution, settlement,
order or award made pursuant to this Agreement (including pursuant to New York
Convention, the U.S. Arbitration Act, or otherwise), and (b) to the extent
permitted by Applicable Law, hereby waives, and agrees not to assert, by way of
motion, as a defense, or otherwise, in any such suit, action or legal proceeding
pending in such event, any claim that it is not personally subject to the
jurisdiction of such court, that the suit, action or legal proceeding is brought
in an inconvenient forum or that the venue of the suit, action or legal
proceeding is improper. Each party to this Agreement hereby agrees to the entry
of an order to enforce any resolution, settlement, order or award made pursuant
to this Section by the United States District Court for the Southern District of
New York and in connection therewith hereby waives, and agrees not to assert by
way of motion, as a defense, or otherwise, any claim that such resolution,
settlement, order or award is inconsistent with or violative of the laws or
public policy of the laws of the State of New York or any other jurisdiction.
(l) All claims arising under this Agreement and all
Related Agreements brought by the Parties and/or their Affiliates (including in
the case of Purchaser ELA and its Affiliates) at substantially the same time
shall be referred to a single arbitration to the extent arbitrable under this
Article 12.
13. MISCELLANEOUS.
13.1. FEES AND EXPENSES.
Except as expressly set forth herein, each Party shall be solely
responsible for the payment of the fees and expenses of its advisers, counsel,
accountants and other experts, if any, and all other expenses incurred by such
Party incident to the negotiation, preparation, execution, delivery and
performance of this Agreement.
13.2. SEVERABILITY.
If any provision of this Agreement is held by a court of competent
jurisdiction or panel of arbitrators (including pursuant to enforcement of an
arbitration award under this Agreement) to be invalid, unlawful or
unenforceable, it shall be modified, if possible, to the minimum extent
necessary to make it valid, lawful, and enforceable or, if such modification is
not possible, it shall be stricken from this Agreement, and the remaining
provisions of this Agreement shall continue in full force and effect; provided,
however, that if a provision is so stricken and is of a nature so as to
fundamentally alter the economic arrangements of this Agreement, the Party
adversely affected may terminate this Agreement by giving to the other Person
sixty (60) days written notice of termination.
<PAGE>
13.3. ENTIRE AGREEMENT; AMENDMENTS.
This Agreement and the Schedules hereto, contain the entire
understanding of the Parties with respect to the matters referred to hereby and,
except as specifically set forth herein, neither the Purchaser nor the
Manufacturer makes any representation, warranty, covenant or undertaking with
respect to such matters. No provision of this Agreement may be amended or
supplemented other than by a written instrument signed by the Party against whom
enforcement of any such amendment or supplement is sought.
13.4. NOTICES.
Any notice or other communication required or permitted to be given
herein shall be in writing and shall be effective (a) upon hand delivery or
delivery by telecopy or facsimile at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the third business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be:
If to the Manufacturer: With a copy to:
Angeion Corporation Morrison & Foerster, LLP
3650 Annapolis Lane, Suite 170 425 Market Street
Plymouth, MN 55447-5434 San Francisco, CA 94105
Telephone: (612) 550-9388 Telephone: (415) 268-7000
Telecopier: (612) 509-9521 Telecopier: (415) 268-7522
Attention: Chief Executive Officer Attention: Gavin B. Grover, Esq.
If to the Purchaser: With copies to:
Angellan Medical Systems, LLC ELA Medical, Inc.
2950 Xenium Lane 2950 Xenium Lane
Plymouth, MN 55441 Plymouth, MN 55441
Telephone: (612) 519-9400 Telephone: (612) 519-9400
Telecopier: (612) 519-9440 Telecopier: (612) 519-9440
Attention: Chief Executive Officer Attention: Chief Executive Officer
ELA Medical
Centre d'Affaires la Boursidiere
92357 Le Plessis Robinson
France
Telephone: (33)(1)46.01.33.01
Telecopier: (33)(1)46.01.33.15
<PAGE>
Attention: President
Synthelabo
22 Avenue Galilee
92350 Le Plessis Robinson
France
Telephone: (33)(1)45.37.56.67
Telecopier: (33)(1)45.37.58.04
Attention: General Counsel
and
Coudert Brothers
1114 Avenue of the Americas
New York, NY 10036-7703
Telephone: (212) 626-4400
Telecopier: (212-626-4120
Attention: James C. Colihan, Esq.
Any Party hereto may from time to time change its address for notices
under this Section 13.4 by giving at least ten (10) days' written notice of such
changed address to the other Party hereto.
13.5. NO WAIVER.
No waiver by either Party of any default with respect to any provision,
condition or requirement of this Agreement shall be deemed to be a continuing
waiver in the future of this Agreement; or a waiver of any other provision,
condition or request of this Agreement; nor shall any delay or omission of
either Party to exercise any right hereunder in any manner impair the exercise
of any such right accruing to it thereafter.
13.6. HEADINGS.
The headings herein are for convenience only, do not constitute a part
of this Agreement and shall not be deemed to limit or affect any of the
provisions of this Agreement.
13.7. SURVIVAL OF PROVISIONS.
The provisions of Sections 5.2(g), 6.3, 8.1, 8.3, 9.1, 9.2, 9.3, 9.4,
9.5, 9.9, 10.3, 11.1, 11.3, 12.1, 12.2 and Article 13 shall survive the
expiration or termination for any reason of this Agreement.
<PAGE>
13.8. SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and inure to the benefit of the
Parties and their successors and assigns. Neither this Agreement nor any
interest hereunder shall be assigned or transferred, whether directly or
indirectly, including by operation of law ("Assign" or "Assignment"), by any
Party without the prior express written consent of the other Party (which
consent may be withheld for any reason in the sole discretion of the Party from
whom consent is sought), and any such attempt at Assignment shall be null and
void. The assignment by a Party of this Agreement or any rights hereunder shall
not affect the obligations of such Party under this Agreement.
Notwithstanding the foregoing, either Party may Assign this Agreement
to an Affiliate (including in the case of Purchaser ELA and its Affiliates) of
such Party so long as any assignment by Manufacturer is made to an Affiliate
that is directly or indirectly 100% owned by, or under 100% common control with,
Manufacturer.
Any permitted Assignment made pursuant to this Section shall be valid
only if (i) the assigning Party remains liable under this Agreement, and (ii)
the relevant Affiliate or other entity assumes in writing all of the assigning
Party's obligations under this Agreement.
13.9. NO THIRD PARTY BENEFICIARIES.
This Agreement is intended for the benefit of the Parties hereto and
their respective permitted successors and assigns and is not for the benefit of,
nor may any provision thereof be enforced by, any other Person.
13.10. GOVERNING LAW.
The Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New York.
13.11. INSURANCE.
Each of Purchaser and Manufacturer will maintain liability insurance
for Third Party Claims in amounts to be agreed upon, but subject to availability
on commercially reasonable terms. Schedule 13.11 sets forth the initial agreed
upon minimum amounts for such liability insurance which amounts shall be
effective until a change in such amounts is mutually agreed in writing. Each of
Purchaser and Manufacturer shall provide copies of certificates of insurance
evidencing compliance with this Section on the date of execution hereof and
within thirty (30) days after the expiration of each policy during the term
hereof.
13.12. WAIVERS.
<PAGE>
Each Party hereby waives, to the extent it is able to do so under
Applicable Law, any statutory or other rights it may have or acquire in respect
of the termination of the relationship established hereby pursuant to the terms
of this Agreement, and agrees that the rights available to it hereunder in the
event of such termination are adequate and reflect the agreement of the Parties.
Neither Party shall have any right to claim any indemnity for goodwill or lost
profits or any damages arising from the rightful termination of this Agreement
by the other Party in accordance with the terms of this Agreement.
13.13. ENGLISH LANGUAGE CONTROLS.
The original and controlling version of this Agreement shall be the
version using the English Language. All translations of this Agreement into
other languages shall be for the convenience of the Parties only, and shall not
control the meaning or application of this Agreement. All notices and other
communications required or permitted by this Agreement must be in English, and
the interpretation and application of such notices and other communications
shall be based solely upon the English language version thereof.
13.14. RELATIONSHIP OF THE PARTIES.
For all purposes of this Agreement, Purchaser and Manufacturer shall be
deemed to be independent entities and anything in this Agreement to the contrary
notwithstanding, nothing herein shall be deemed to constitute Purchaser and
Manufacturer as partners, joint venturers, co-owners, an association or any
entity separate and apart from each Party itself, nor shall this Agreement
constitute any Party hereto an employee or agent, legal or otherwise, of the
other Person for any purposes whatsoever. Neither Party hereto is authorized to
make any statements or representations on behalf of the other Party or in any
way obligate the other Party, except as expressly authorized in writing by the
other Party. Anything in this Agreement to the contrary notwithstanding, no
Party hereto shall assume nor shall be liable for any liabilities or obligations
of the other Party, whether past, present or future.
13.15. COUNTERPARTS.
This Agreement may be executed in two or more counterparts, all of
which shall be considered one and the same Agreement and shall become effective
when counterparts have been signed by each Party and delivered to the other
Party, it being understood that both Parties need not sign the same counterpart.
13.16. SOVEREIGN IMMUNITY; EXCLUSIONS.
(a) Each Party hereto agrees that, to the extent that
it or any of its property is or becomes entitled at any time to any immunity on
the grounds of sovereignty or otherwise from any legal action, suit or
proceeding, from set off or counterclaim, from the jurisdiction of any set off
or counterclaim, from the jurisdiction of any competent court, from service of
process, from attachment prior to judgment, from attachment in aid of execution,
from
<PAGE>
execution prior to judgment or from any other legal process in any jurisdiction,
it, for itself and its property, expressly, irrevocably and unconditionally
waives, and agrees not to plead or claim any such immunity with respect to its
obligations, liabilities or any other matter under or arising out of or in
connection with this Agreement or the subject matter of this Agreement
(including without limitation any obligation for the payment of money). Each
Party hereto is not subject to withdrawal in any jurisdiction or under any
statute, including, without limitation, the Foreign Sovereign Immunities Act, 28
U.S.C. ss.ss. 1602 et seq. The foregoing waiver shall constitute a present
waiver of immunity at any time any action is initiated against any Party hereto
with respect to this Agreement.
(b) The Parties hereby agree to exclude application
of the following instruments and documents: United Nations Convention on the
International Sale of Goods, UNCITRAL Arbitration Rules and 1990 International
Chamber of Commerce Incoterms.
13.17. FORCE MAJEURE.
(a) Neither Party shall be responsible or liable to
the other hereunder for the failure or delay in the performance of this
Agreement due to any event of Force Majeure. In the event of the applicability
of this Section 13.17, the Party failing or delaying performance shall use its
Best Efforts to eliminate, cure and overcome any of such causes and resume the
performance of its obligations. If any event of Force Majeure continues for more
than 180 days, either Party shall have a right to eliminate from the Territory,
on a country by country basis, each country affected by such Force Majeure event
(or terminate this Agreement if all countries are affected) upon written notice
to the other Party delivered while such event of Force Majeure is continuing.
For the avoidance of doubt, in the event that any event of Force Majeure has
occurred and so long as it is continuing, excusing performance by one Party of
its obligations hereunder, the other Party shall also be excused from its
obligations hereunder to the extent its performance is dependent upon the
affected Party's performance.
(b) Upon the occurrence of an event of Force Majeure,
the Party failing or delaying performance shall promptly notify the other Party,
in writing, setting forth the nature of the occurrence, its expected duration
and how such Party's performance is affected. The failing or delaying Party
shall resume performance of its obligations hereunder as soon as practicable
after the Force Majeure event ceases.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have cause this Agreement to be
duly executed by their respective authorized officers as of the date of this
Agreement.
ANGEION CORPORATION
By: /s/ W. A. McFarlin
--------------------------------------
Name: W. A. McFarlin
Title: Chairman/CEO
ANGELLAN MEDICAL SYSTEMS, LLC
by its Members
ANGEION CORPORATION
By: /s/ W. A. McFarlin
--------------------------------
Name: W. A. McFarlin
Title: Chairman/CEO
ELA MEDICAL, INC.
By: /s/ Philippe Baetz
--------------------------------
Name: Philippe Baetz
Title: President
<PAGE>
SCHEDULE 1.13 - EXISTING DISTRIBUTORS
None.
<PAGE>
SCHEDULE 1.42 - RELATED AGREEMENTS
1. The Amended and Restated Investment and Master Strategic Relationship
Agreement between Synthelabo and Angeion dated as of October 9, 1997
(the "Investment Agreement").
2. The Warrants of Angeion issued or to be issued to Synthelabo pursuant
to the Investment Agreement.
3. The Implantable Cardioverter Defibrillator Product Manufacturing and
Supply Agreement between Angeion Corporation and ELA Medical dated as
of December 9, 1997.
4. The Cardiac Stimulation Device Product Manufacturing and Supply
Agreement between Purchaser and ELA Medical, Inc. dated as of December
9, 1997.
5. The Intercompany Services Agreement between Angeion and the Purchaser
dated as of December 9, 1997.
6. The Trademark License Agreement between ELA Medical, Inc. and the
Purchaser dated as of December 9, 1997.
7. The Limited Liability Company Operating Agreement of Angellan Medical
Systems, LLC dated as of December 9, 1997.
8. Any other agreements contemplated by this Agreement.
<PAGE>
SCHEDULE 4.6 - MARKETING ALLOWANCE
xxx xxx xxxxxxxx xxxx xxxx xxxxxxxxxxxx xxxxx xxx xx xxxxxxxxx x
xxxxxxxxx xxxxxxxxx xxxxx xx xx xxxxxxx xxxxxxx xx xxx xxxxxxxxx xxxxxxxx xxxx
xxxxx xxx xxxxxxxxxxxxx xxxxxxxx xxxxxxxx xx xxx xxxxxxxx xxx xxxx xxxxx xxx
xxxxxxx xxxxxxxxxxx xx xx xxxxxxx. xxxx xxxxxxxxx xxxxxxxxx xxxxx xx xxxxxxx xx
xxxxxxxxxxxx xx xxxxxxxxx xx xxxxx x xxxxx xxxxxxxxxxxx xx xxxxxx xxx xxx
xxxxxxx xx xxx xxxx xxx xx xxxx xx xxx xxxxx xxxxxx xxx xxxxx xxxxxxxx xx xxxx.
<PAGE>
SCHEDULE 6.1(a) - UNIT TRANSFER PRICES FOR INITIAL PRODUCTS
xxxxxxxxx
xxxxxxxxx
xxxxxxxxx
xxxxxxxxx
xxxxxxxxx
xxxxxxxxx
xxxxxxxxx
xxxxxxxxx
xxxxxxxxx
<PAGE>
SCHEDULE 8.2 - TESTING PROCEDURES
None.
<PAGE>
SCHEDULE 9.7 - NO CONFLICTS
MANUFACTURER
(i) No exceptions, except as provided in sub-clause (ii) below.
(ii) Manufacturer makes no representation and warranty with respect to
xxxxxxxxxxxx xxxxxxxx xxxxxx or xxx xxxxxxxxxx xxxxxxxx xx xxxxxxxxxxxx
xxxxxxxx xxxxxx.
PURCHASER
(i) No exceptions, except as provided in sub-clause (ii) below.
(ii) Purchaser makes no representation and warranty with respect to
xxxxxxxxxxxx xxxxxxxx xxxxxx or xxx xxxxxxxxxx xxxxxxxx xx xxxxxxxxxxxx
xxxxxxxx xxxxxx.
<PAGE>
SCHEDULE 12.2 - AAA RULES
29. ORDER OF PROCEEDINGS AND COMMUNICATION WITH ARBITRATOR
A hearing shall be opened by the filing of the oath of the arbitrator, where
required; by the recording of the date, time and place of the hearing, and the
presence of the arbitrator, the parties, and their representatives, if any, and
by the receipt by the arbitrator of the statement of the claim and the answering
statement, if any.
The arbitrator may, at the beginning of the hearing, ask for statements
clarifying the issues involved. In some cases, part or all of the above will
have been accomplished at the preliminary hearing conducted by the arbitrator
pursuant to Section 10.
The complaining party shall then present evidence to support its claim. The
defending party shall then present evidence supporting its defense. Witnesses
for each party shall submit to questions or other examination. The arbitrator
has the discretion to vary this procedure but shall afford a full and equal
opportunity to all parties for the presentation of any material and relevant
evidence.
Exhibits, when offered by either party, may be received in evidence by the
arbitrator.
The names and addresses of all witnesses and a description of the exhibits in
the order received shall be made a part of the record.
There shall be no direct communication between the parties and a neutral
arbitrator other than at oral hearing, unless the parties and the arbitrator
agree otherwise. Any other oral or written communication from the parties to the
neutral arbitrator shall be directed to the AAA for transmittal to the
arbitrator.
31. EVIDENCE
The parties may offer such evidence as is relevant and material to the dispute
and shall produce such evidence as the arbitrator may deem necessary to an
understanding and determination of the dispute. An arbitrator or other person
authorized by law to subpoena witnesses or documents may do so upon the request
of any party or independently.
The arbitrator shall be the judge of the relevance and materiality of the
evidence offered, and conformity to legal rules of evidence shall not be
necessary. All evidence shall be taken in the presence of all of the arbitrators
and all of the parties, except where any of the parties is absent in default or
has waived the right to be present.
<PAGE>
SCHEDULE 13.11 - INSURANCE
xxxx xxxxx xxxxx xxxxx xxx xxx xxxxxxx xxxxxxxxx xxxxxxxxx xxxx x
xxxxxxx xxxxxx xx xx xxxxxxx xxx xxxxxxxxxx xx xxxxxxx xx xxx xxxxxxxxx xxxx xx
xxxx xxxx xx xxxxxxxx xxxxxxxxxx. xx xxxxxxxx xxxx xxxxx xxxxx xxxxx xxxxxxxxx
xxx xxxxxxx xxxxxxx xxxx x xxxxxxx xxxxxx xx x xxxxxxx xxx xxxxxxxxxx.
<PAGE>
SCHEDULE 14.11 - INSURANCE
xxxxx xxxxx xxxxx xxxxx xxx xxx xxxxxxx xxxxxxxxx xxxxxxxxx xxxx x
xxxxxxx xxxxxx xx xx xxxxxxx xxx xxxxxxxxxx xx xxxxxxx xx xxx xxxxxxxxx xxxx xx
xxxx xxxx xx xxxxxxxx xxxxxxxxxx. xx xxxxxxxx xxxx xxxxx xxxxx xxxxx xxxxxxxxx
xxx xxxxxxx xxxxxxx xxxx x xxxxxxxx xxxxxx xx x xxxxxxx xxx xxxxxxxxxx.
EXHIBIT 10.5
FIRST AMENDMENT TO RIGHTS AGREEMENT
This FIRST AMENDMENT TO RIGHTS AGREEMENT, dated as of October 9, 1997
(this "Agreement"), by and between ANGEION CORPORATION, a Minnesota corporation
(the "Company"), and NORWEST BANK MINNESOTA, N.A., a national banking
association, as Rights Agent ("Rights Agent").
WHEREAS, on April 8, 1996, the Board of Directors of the Company (the
"Board") authorized the issuance of Rights to purchase, on the terms and subject
to the provisions of that certain Rights Agreement dated April 8, 1996 between
the parties hereto (the "Rights Agreement"; all terms not defined herein shall
have the meanings set forth in the Rights Agreement), one one-thousandth of a
Preferred Share of the Company;
WHEREAS, the Board authorized and declared a dividend distribution of:
(a) one Right for each Common Share of the Company outstanding at the close of
business on the Record Date and (b) one Right for each Common Share into which
Series A Preferred Shares outstanding on the Record Date are convertible;
WHEREAS, the Company has entered into that certain Investment and
Master Strategic Relationship Agreement between the Company and Synthelabo, a
society anonyme, dated as of October 9, 1997, pursuant to which the Company has
agreed to amend certain provisions of the Rights Agreement; and
WHEREAS, pursuant to Section 27 of the Rights Agreement, at least a
majority of the Continuing Directors has approved the amendment of certain
provisions of the Rights Agreement.
NOW, THEREFORE, in consideration of these premises, the mutual
agreements set forth, and other good and valuable consideration, the sufficiency
of which is hereby acknowledged by each party, the Rights Agreement is hereby
amended as follows:
1. Section 1(a) is hereby amended by deleting Section 1(a) in its
entirety and substituting the following therefor:
"(a) "Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 15% or more of the Common Shares then outstanding (the
"Acquiring Person Trigger Amount") (other than as a result of a Permitted Offer
(as hereinafter defined)), but shall not include the Company, any Subsidiary of
the Company, or any employee benefit plan of the Company or of any Subsidiary of
the Company or any Persons organized, appointed or established by the Company
for or pursuant to the terms of any such plan. Notwithstanding the foregoing, no
Person shall become an "Acquiring Person": (i) as the result of an acquisition
of Common Shares by the Company which, by reducing the number of Common Shares
outstanding, increases the proportionate number of Common Shares beneficially
owned by such Person to the Acquiring Person Trigger Amount; provided, however,
that if a Person shall become the Beneficial Owner of the Acquiring Person
Trigger Amount by reason of Common Share purchase by the Company and shall
thereafter become the Beneficial Owner of any additional Common Shares, other
than pursuant
<PAGE>
to the receipt of stock dividends or stock splits on a pro rata basis on Common
Shares already beneficially owned by such Person, then such Person shall be
deemed to be an "Acquiring Person" or (ii) who is a Person who is the Beneficial
Owner of the Acquiring Person Trigger Amount but who acquired Beneficial
Ownership of Common Shares without any plan or intention to seek or affect
control of the Company, if such Person promptly enters into an irrevocable
commitment promptly to divest, and thereafter promptly divests (without
exercising or retaining any power, including voting, with respect to such
shares), sufficient shares of Common Shares (or securities convertible into,
exchangeable into or exercisable for Common Shares) so that such Person ceases
to be the Beneficial Owner of the Acquiring Person Trigger Amount or (iii) who
Beneficially Owns Common Shares consisting solely of one or more of (A) Common
Shares Beneficially Owned pursuant to the grant for exercise of an option
granted to such Person by the Company in connection with an agreement to merge
with, or acquire, the Company entered into prior to Section 11(a)(ii) Trigger
Date, (B) shares of Common Stock (or securities convertible into, exchangeable
into or exercisable for Common Shares), beneficially Owned by such Person or its
Affiliates or Associates at the time of grant of such option or (C) shares of
Common Shares (or securities convertible into, exchangeable into or exercisable
for Common Shares) acquired by Affiliates or Associates of such Person after the
time of such grant which, in the aggregate, amount to less than 1% of the
outstanding shares of Common Stock. For purposes of the definition of "Acquiring
Person," the Acquiring Person Trigger Amount for Synthelabo, a societe anonyme
("Synthelabo"), ELA Medical, Inc., a Delaware corporation ("ELA USA") and ELA
Medical, S.A., a societe anonyme ("ELA France"; Synthelabo, ELA USA and ELA
France, collectively the "Synthelabo Group") shall be 20% or more of the Common
Shares then outstanding (the "Synthelabo Trigger Amount") which shall be
applicable if any member of the Synthelabo Group has, or, together with any
Affiliates and Associates of such member, shall be the Beneficial Owner of, such
Synthelabo Trigger Amount."
2. Section 1(d) is hereby amended by deleting Section 1(d) in its
entirety and substituting the following therefor:
"(d) "Adverse Person" shall mean any Person determined to be
an Adverse Person pursuant to the criteria set forth in Section 11(a)(ii)(B);
provided however, notwithstanding anything to the contrary, no member of the
Synthelabo Group shall be deemed an "Adverse Person" hereunder."
3. Subpart (ii) of the first sentence of Section 3(a) is hereby amended
by deleting such subpart in its entirety and substituting the following
therefor:
"(ii) the close of business on the tenth Business Day (or such
later date as may be determined by the Board, acting by a majority of the
Continuing Directors, prior to such time as any Person has become an Acquiring
Person) after the date that a tender or exchange offer by any Person (other than
the Company, any Subsidiary of the Company, any employee benefit plan of the
Company or of any Subsidiary of the Company, or any Person or entity organized,
appointed or established by the Company for or pursuant to the terms of any such
plan) is first published or sent or given within the meaning of the Rule
14d-2(a) of the General Rules and Regulations under the Exchange Act (or any
comparable or successor rule) (and if such provisions are not applicable, such
offer is published, sent or given in substantially the same manner as if such
provisions were applicable), if upon consummation thereof, such Person would be
the Beneficial Owner of the Acquiring Person Trigger Amount; provided, however,
if such an
<PAGE>
offer is made by a member of the Synthelabo Group (a "Synthelabo Offer"), which,
upon consummation thereof, would result in any member of the Synthelabo Group
having or, together with any Affiliates and Associates of such member, becoming
the Beneficial Owner of, less than the Synthelabo Trigger Amount, then such
Synthelabo Offer shall not be considered to be a Distribution Date (as defined
below), but if the consummation of such Synthelabo Offer would result in any
member of the Synthelabo Group having, or, together with any Affiliates and
associates of such member, becoming the Beneficial Owner of, the Synthelabo
Trigger Amount, then such Synthelabo Offer shall be considered a Distribution
Date, or"
4. Except as expressly amended hereby, the Rights Agreement shall
remain in full force and effect.
5. This Agreement shall be deemed a contract made under the laws of the
State of Minnesota and for all purposes shall be governed by and construed in
accordance with the laws of such state applicable to contracts made and to be
performed entirely within such state.
6. This Agreement may be executed in any number of counterparts and
each of such counterparts shall for all purposes be deemed to be an original,
and all such counterparts shall together constitute but one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to
be duly executed and delivered as of the date first above written.
ANGEION CORPORATION
By: /s/ Whitney A. McFarlin
Name: Whitney A. McFarlin
Its: President/ CEO
NORWEST BANK MINNESOTA, N.A.
By: /s/ Lisa Dornburg
Name: Lisa Dornburg
Its: Norwest Bank MN N.A. Officer
<PAGE>
Angeion Corporation
Officer's Certificate
The undersigned, Whitney A. McFarlin, the Chief Executive Officer of
Angeion Corporation (the "Company") hereby certifies that the attached proposed
First Amendment (the "First Amendment") to the Rights Agreement (the "Rights
Agreement") dated April 8, 1996 between the Company and Norwest Bank Minnesota,
N.A. (the "Rights Agent") complies with the terms of Section 27 of the Rights
Agreement. The Rights Agent is hereby directed to execute and deliver the First
Amendment.
Dated the 9th day of October, 1997.
/s/ Whitney A. McFarlin
Whitney A. McFarlin
EXHIBIT 10.6
SECOND AMENDMENT TO RIGHTS AGREEMENT
This SECOND AMENDMENT TO RIGHTS AGREEMENT, dated as of December 9, 1997
(this "AGREEMENT"), by and between ANGEION CORPORATION, a Minnesota corporation
(the "Company"), and NORWEST BANK MINNESOTA, N.A., a national banking
association, as Rights Agent ("Rights Agent").
WHEREAS, on April 8, 1996, the Board of Directors of the Company (the
"Board") authorized the issuance of Rights to purchase, on the terms and subject
to the provisions of that certain Rights Agreement dated April 8, 1996 between
the parties hereto (the "Rights Agreement"; all terms not defined herein shall
have the meanings set forth in the Rights Agreement), one one-thousandth of a
Preferred Share of the Company;
WHEREAS, the Board authorized and declared a dividend distribution of:
(a) one Right for each Common Share of the Company outstanding at the close of
business on the Record Date and (b) one Right for each Common Share into which
Series A Preferred Shares outstanding on the Record Date are convertible;
WHEREAS, the Company has entered into that certain Investment and
Master Strategic Relationship Agreement between the Company and Synthelabo, a
societe anonyme ("Synthelabo"), dated as of October 9, 1997;
WHEREAS, the Rights Agreement was amended by that certain First
Amendment to Rights Agreement, dated as of October 9, 1997, by and between the
Company and the Rights Agent (the "First Amendment");
WHEREAS, the Company has agreed pursuant to the amendment and
restatement of the Investment and Master Strategic Relationship Agreement
between the Company and Synthelabo (the "Amended and Restated Investment
Agreement") to further amend certain provisions of the Rights Agreement; and
WHEREAS, pursuant to Section 27 of the Rights Agreement, at least a
majority of the Continuing Directors has approved the further amendment of
certain provisions of Rights Agreement.
NOW, THEREFORE, in consideration of these premises, the mutual
agreements set forth, and other good and valuable consideration, the sufficiency
of which is hereby acknowledged by each party, the Rights Agreement is hereby
further amended as follows:
1 . Section 1(a) is hereby amended by deleting Section 1(a) in its
entirety and substituting the following therefor:
"(a) "Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 15% or more of the Common Shares then outstanding (the
"Acquiring Person Trigger Amount") (other than as a result of a Permitted Offer
(as hereinafter defined)), but shall not include the Company, any
<PAGE>
Subsidiary of the Company, or any employee benefit plan of the Company or of any
Subsidiary of the Company or any Person organized, appointed or established by
the Company for or pursuant to the terms of any such plan. Notwithstanding the
foregoing, no Person shall become an "Acquiring Person": (i) as the result of an
acquisition of Common Shares by the Company which, by reducing the number of
Common Shares outstanding, increases the proportionate number of Common Shares
beneficially owned by such Person to the Acquiring Person Trigger Amount;
provided, however, that if a Person shall become the Beneficial Owner of the
Acquiring Person Trigger Amount by reason of Common Share purchases by the
Company and shall thereafter become the Beneficial Owner of any additional
Common Shares, other than pursuant to the receipt of stock dividends or stock
splits on a pro rata basis on Common Shares already beneficially owned by such
Person, then such Person shall be deemed to be an "Acquiring Person" or (ii) who
is a Person who is the Beneficial Owner of the Acquiring Person Trigger Amount
but who acquired Beneficial Ownership of Common Shares without any plan or
intention to seek or affect control of the Company, if such Person promptly
enters into an irrevocable commitment promptly to divest, and thereafter
promptly divests (without exercising or retaining any power, including voting,
with respect to such shares), sufficient shares of Common Shares (or securities
convertible into, exchangeable into or exercisable for Common Shares) so that
such Person ceases to be the Beneficial Owner of the Acquiring Person Trigger
Amount or (iii) who Beneficially Owns Common Shares consisting solely of one or
more of (A) Common Shares Beneficially Owned pursuant to the grant for exercise
of an option granted to such Person by the Company in connection with an
agreement to merge with, or acquire, the Company entered into prior to a Section
11 (a)(ii) Trigger Date, (B) shares of Common Stock (or securities convertible
into, exchangeable into or exercisable for Common Shares), Beneficially Owned by
such Person or its Affiliates or Associates at the time of grant of such option
or (C) shares of Common Shares (or securities convertible into, exchangeable
into or exercisable for Common Shares) acquired by Affiliates or Associates of
such Person after the time of such grant which, in the aggregate, amount to less
than 1% of the outstanding shares of Common Stock. For purposes of the
definition of "Acquiring Person", the Acquiring Person Trigger Amount for
Synthelabo, ELA Medical, Inc., a Delaware corporation ("ELA USA") and ELA
Medical, S.A., a societe anonyme ("ELA France"; Synthelabo, ELA USA and ELA
France, collectively the "Synthelabo Group") shall be 20% or more of the Common
Shares then outstanding (the "Synthelabo Trigger Amount") which shall be
applicable if any member of the Synthelabo Group has, or, together with any
Affiliates and Associates of such member, shall be the Beneficial Owner of, such
Synthelabo Trigger Amount; provided that the Synthelabo Trigger Amount shall be
0.1% above such higher percentage of the Common Shares from time to time
outstanding as may result from any issuance to the Synthelabo Group of
additional Common Shares pursuant to Sections 2.1, 2.2, 2.3, 2.4 or 4.1(d) of
the Amended and Restated
<PAGE>
Investment Agreement (including any Common Shares issued as dividends or as a
result of stock splits and similar reclassifications with respect to any such
Common Shares) and such percentage shall automatically adjust to take into
account the changes specified in this Section 1(a) below, following any Excess
Threshold Event, it being the intention of the parties that the Synthelabo
Trigger Amount shall increase to a level greater than 20% of the Common Shares
from time to time outstanding to the extent necessary in order to permit the
Beneficial Ownership by the Synthelabo Group of Common Shares acquired or to be
acquired pursuant to Sections 2.1, 2.2, 2.3, 2.4 or 4.1(d) of the Amended and
Restated Investment Agreement taking into account Common Shares previously
acquired pursuant to Section 4.2(b)(ii) of the Amended and Restated Investment
Agreement (in each case including any Common Shares issued as dividends or as a
result of stock splits and similar reclassifications with respect to any such
Common Shares) (any such event which results in the Beneficial Ownership by the
Synthelabo Group of more than 20% of the Common Shares from time to time
outstanding being referred to as an "Excess Threshold Event"). From and after
any Excess Threshold Event, the Synthelabo Trigger Amount shall equal 0.1% above
the percentage of Common Stock Beneficially Owned by the Synthelabo Group
immediately after the occurrence of any Excess Threshold Event; provided,
however, that such Synthelabo Trigger Amount shall subsequently be reduced (but
in no event less than 20%) upon the issuance by the Company of additional Common
Shares which has the effect of diluting the Synthelabo Group's Beneficial
Ownership (after giving effect to any participation in such issuance by the
Synthelabo Group pursuant to Section 2.3 or 2.4 of the Amended and Restated
Investment Agreement) such that the Synthelabo Trigger Amount shall thereafter
equal 0.1% above the percentage of Common Shares Beneficially Owned by the
Synthelabo Group immediately after such issuance based upon the total Common
Shares of the Company outstanding at such time."
2. Subpart (ii) of the first sentence of Section 3(a) is hereby amended
by deleting such subpart in its entirety and substituting the following
therefor:
"(ii) the close of business on the tenth Business Day (or such
later date as may be determined by the Board, acting by a majority of the
Continuing Directors, prior to such time as any Person has become an Acquiring
Person) after the date that a tender or exchange offer by any Person (other than
the Company, any Subsidiary of the Company, any employee benefit plan of the
Company or of any Subsidiary of the Company, or any Person or entity organized,
appointed or established by the Company for or pursuant to the terms of any such
plan) is first published or sent or given within the meaning of the Rule
14d-2(a) of the General Rules and Regulations under the Exchange Act (or any
comparable or successor rule) (and if such provisions are not applicable such
offer is published, sent or given in substantially the same manner as if such
provisions were applicable), if upon consummation thereof, such Person would be
the Beneficial Owner of the Acquiring Person Trigger Amount; provided, however,
if such an offer is made by a member of the Synthelabo Group (a "Synthelabo
Offer"), which, upon consummation thereof, would result in any member of the
Synthelabo Group having or, together with any Affiliates and Associates of such
member, becoming the Beneficial Owner of, Common Shares in amount that is less
than the Synthelabo Trigger Amount, then such Synthelabo Offer shall not be
considered to be a Distribution Date (as defined below), but if the consummation
of such Synthelabo Offer would result in any member of the Synthelabo Group
having, or, together with any Affiliates and Associates of such member, becoming
the Beneficial Owner of, Common Shares equal to or in excess of the Synthelabo
Trigger Amount, then such Synthelabo Offer shall be considered a Distribution
Date, or"
3. Except as expressly amended hereby and pursuant to the First
Amendment, the Rights Agreement shall remain in full force and effect.
4. This Agreement shall be deemed a contract made under the laws of the
State of Minnesota and for all purposes shall be governed by and construed in
accordance with the laws of such state applicable to contracts made and to be
performed entirely within such state.
<PAGE>
5. This Agreement may be executed in any number of counterparts and
each of such counterparts shall for all purposes be deemed to be an original,
and all such counterparts shall together constitute but one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the date first above written.
ANGEION CORPORATION
By: /s/ Whitney A. McFarlin
-------------------------------------
Name: Whitney A. McFarlin
-----------------------------------
Its: Chairman/CEO
------------------------------------
NORWEST BANK MINNESOTA, N.A.
By: /s/ Lisa Dornberg
-------------------------------------
Name: Lisa Dornberg
-----------------------------------
Its: Norwest Bank MN N.A. Officer
------------------------------------
<PAGE>
ANGEION CORPORATION
Officer's Certificate
The undersigned, Whitney A. McFarlin, the Chief Executive Officer of
Angeion Corporation (the "Company") hereby certifies that the attached proposed
Second Amendment (the "Second Amendment") to the Rights Agreement, dated April
8, 1996 between the Company and Norwest Bank Minnesota, N.A. (the "Rights
Agent"), as previously amended (the "Rights Agreement") complies with the terms
of Section 27 of the Rights Agreement. The Rights Agent is hereby directed to
execute and delivery the Second Amendment.
Dated the 9th day of December 1997.
/s/ Whitney A. McFarlin
--------------------------------------
Whitney A. McFarlin
EXHIBIT 10.7
THIS SECURITY IS SUBJECT TO THE PROVISIONS OF THE AMENDED AND RESTATED
INVESTMENT AND MASTER STRATEGIC RELATIONSHIP AGREEMENT DATED AS OF OCTOBER 9,
1997 BETWEEN THE ISSUER AND SYNTHELABO AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT
IN ACCORDANCE THEREWITH. A COPY OF SUCH AGREEMENT IS ON FILE AT THE OFFICE OF
THE CORPORATE SECRETARY OF THE ISSUER. THIS SECURITY WAS SOLD IN A PRIVATE
PLACEMENT, WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AND MAY BE
OFFERED OR SOLD ONLY IF REGISTERED UNDER THE SECURITIES ACT OF 1933 OR IF AN
EXEMPTION FROM REGISTRATION IS AVAILABLE.
-------------------------------
ANGEION CORPORATION
COMMON STOCK PURCHASE WARRANT
1,350,845 Shares
Capitalized terms used and not otherwise defined in this Common Stock
Purchase Warrant (this "Warrant") shall have the respective meanings assigned to
them in the Amended and Restated Investment and Master Strategic Relationship
Agreement dated as of the 9th day of October, 1997, between Angeion Corporation,
a Minnesota corporation having its executive offices and principal place of
business at 3650 Annapolis Lane, Minneapolis, Minnesota 55447 (the "Company"),
and Synthelabo, a French societe anonyme (the "Holder"), as the same may be
supplemented, modified, amended, renewed or restated from time to time (the
"Purchase Agreement").
The Company does hereby certify and agree that, for value received, the
Holder, its successors and assigns, hereby is entitled to purchase from the
Company 1,350,845 duly authorized, validly issued, fully paid and non-assessable
shares of Common Stock, par value $0.01 per share ("Common Stock"), of the
Company (the "Exercise Quantity") upon the terms and subject to the provisions
of this Warrant.
Section 1. Price and Exercise of Warrant.
1.1 Term of Warrant. This Warrant shall be exercisable for the period
commencing on the date hereof and ending at 4:30 p.m., New York City time, on
the fourth anniversary of the date hereof (the "Expiration Date").
1.2 Exercise Price. The price per share at which the shares of Common Stock
issuable upon exercise of this Warrant (the "Warrant Shares") shall be $6.6625
per share (the "Warrant Price") and shall be subject to downward adjustment
(which adjustments shall supercede any prior
<PAGE>
lesser adjustments pursuant to paragraphs (c) or (d) of Section 4 below) to a
price equal to one hundred thirty percent (130%) of the First Anniversary Market
Price in the event of the issuance of Supplemental Shares as contemplated by
Section 2.1(e) of the Purchase Agreement.
1.3 Exercise of Warrant. (a) This Warrant may be exercised, in whole or in
part, upon surrender to the Company at its offices at 3650 Annapolis Lane,
Minneapolis, Minnesota of the certificate or certificates evidencing this
Warrant to be exercised, together with the form of election to exercise attached
hereto as Exhibit A duly completed and executed, and upon payment to the Company
of the Warrant Price for the number of Warrant Shares in respect of which this
Warrant is then being exercised. Payment of the aggregate Warrant Price may be
made in cash, by certified or bank check or by wire transfer.
(b) Subject to Section 2 hereof, upon such surrender of this Warrant,
and the duly completed and executed form of election to exercise, and payment of
the Warrant Price as aforesaid, the Company shall cause to be issued and
delivered with all reasonable dispatch (and in any event within five business
days thereafter) to the Holder or such other person as the Holder may designate
in writing a certificate or certificates for the number of full shares of Common
Stock so purchased upon the exercise of this Warrant. Such certificate or
certificates shall be deemed to have been issued and any person so designated to
be named therein shall be deemed to have become a holder of record of such
shares of Common Stock as of the date of the surrender of this Warrant, and the
duly completed and executed form of election to exercise, and payment of the
Warrant Price, as aforesaid; provided, however, that if, at the date of
surrender of this Warrant and payment of the Warrant Price, the transfer books
for the shares of Common Stock purchasable upon the exercise of this Warrant
shall be closed, the certificates for the shares of Common Stock shall be
issuable as of the date on which such books shall next be opened (whether before
or after the Expiration Date), and, until such date, the Company shall be under
no duty to cause to be delivered any certificate for such shares of Common Stock
or for shares of such other class of stock. If this Warrant is exercised in
part, a new Warrant certificate of the same tenor and for the number of Warrant
Shares not exercised shall be executed by the Company.
1.4 Fractional Interests. The Company shall not be required to issue
fractions of shares of Common Stock on the exercise of this Warrant. If any
fraction of a share of Common Stock would be issuable upon the exercise of this
Warrant (or any portion thereof), the Company shall purchase such fraction for
an amount in cash equal to the same fraction of the last reported sale price of
the Common Stock on the NASDAQ National Market System or any other national
securities exchange on which the Common Stock is then listed.
Section 2. Exchange and Transfer of Warrant.
(a) This Warrant may be exchanged for two or more Warrants entitling
the Holder thereof to purchase the same aggregate Exercise Quantity at the
Exercise Price per share and otherwise having the same terms and provisions as
this Warrant. The Holder may request such an exchange by surrender of this
Warrant to the Company, together with a written exchange request specifying the
desired number of Warrants and allocation of the Exercise Quantity
<PAGE>
purchasable under the existing Warrant. Within two business days after the
Company's receipt of this Warrant and such an exchange request, the Company will
issue and deliver such new Warrants to the Holder in the amounts and with the
allocations requested.
(b) Subject to the restrictions set forth in Section 4.2(d) of the
Purchase Agreement, this Warrant from time to time may be transferred, in whole
or in part, by the Holder or any duly authorized representative of the Holder. A
transfer may be registered with the Company by submission to it of this Warrant,
together with the annexed Assignment Form attached hereto as Exhibit B duly
completed and executed. Within two business days after the satisfaction by the
Holder of the conditions to such transfer set forth in such Section 4.2(d) and
the Company's receipt of this Warrant and the Assignment Form so completed and
executed, the Company will issue and deliver to the transferee a new Warrant
representing the portion of the Exercise Quantity transferred at the same
Exercise Price per share and otherwise having the same terms and provisions as
this Warrant, which the Company will register in the new holder's name. In the
event of a partial transfer of this Warrant, the Company shall concurrently
issue and deliver to the transferring holder a new Warrant that entitles the
transferring holder to purchase the balance of the Exercise Quantity not so
transferred and that otherwise is upon the same terms and conditions as this
Warrant. Upon the due delivery of this Warrant for transfer, the transferee
holder shall be deemed for all purposes to have become the holder of the new
Warrant issued respecting the Exercise Quantity transferred, effective
immediately prior to the close of business on the date of such delivery,
irrespective of the date of actual delivery of the new Warrant representing the
Exercise Quantity transferred.
(c) In the event of the loss, theft or destruction of this Warrant,
the Company shall execute and deliver an identical new Warrant to the Holder in
substitution therefor upon the Company's receipt of (i) evidence reasonably
satisfactory to the Company of such event and (ii) if requested by the Company,
an indemnity agreement reasonably satisfactory in form and substance to the
Company. In the event of the mutilation of or other damage to this Warrant, the
Company shall execute and deliver an identical new Warrant to the Holder in
substitution therefor upon the Company's receipt of the mutilated or damaged
Warrant.
(d) The Company shall pay all costs and expenses incurred in
connection with the exercise, exchange, transfer or replacement of this Warrant,
including, without limitation, the costs of preparation, execution and delivery
of a new Warrant and of stock certificates representing all Warrant Shares;
provided, however, that the Holder shall pay all stamp and other transfer taxes
payable in connection with the transfer or replacement of this Warrant.
Section 3. Certain Covenants.
(a) The Company shall at all times reserve for issuance and keep
available out of its authorized and unissued shares of Common Stock, solely for
the purpose of providing for the exercise of this Warrant, such number of shares
of Common Stock as shall from time to time be sufficient therefor.
<PAGE>
(b) The Company will not, by amendment of its articles of
incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of this
Warrant. Without limiting the foregoing, the Company (i) will not increase the
par value of any shares of capital stock receivable upon the exercise of this
Warrant above the amount payable therefor upon such exercise, and (ii) will take
all such action as may be necessary or appropriate in order that the Company may
validly and legally issue fully paid and nonassessable shares of capital stock
upon the exercise of this Warrant.
Section 4. Adjustment of Warrant Price and Number of Warrant Shares.
The Warrant Price in effect at any time and the number and kind of
securities purchasable upon the exercise of this Warrant shall be subject to
adjustment from time to time upon the occurrence of certain events, as
hereinafter provided.
(a) In case the Company shall hereafter (i) pay a dividend or make a
distribution on its Common Stock in shares of its Common Stock, (ii) subdivide
its outstanding Common Stock, (iii) combine its outstanding Common Stock into a
smaller number of shares, or (iv) issue any shares by reclassification of its
Common Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing corporation), the
Warrant Price in effect at the time of the record date for such dividend or
distribution or the effective date of such subdivision, combination or
reclassification shall be proportionately adjusted so that the Holder, upon
exercise of this Warrant after such date, shall be entitled to receive the
aggregate number and kind of shares of Common Stock which, if this Warrant had
been exercised immediately prior to such record date, it would have owned upon
such exercise and been entitled to receive upon such dividend, distribution,
subdivision, combination or reclassification.
(b) In case the Company shall hereafter distribute to all holders of
its Common Stock shares of stock other than Common Stock, evidences of its
indebtedness or assets (excluding cash dividends or distributions out of
retained earnings and dividends or distributions referred to in paragraph (a)
above), or any rights, warrants or options to subscribe for or purchase shares
of Common Stock (or securities convertible into, exercisable for or exchangeable
for shares of Common Stock ) (excluding those referred to in paragraph (c)
below), then in each such case the Warrant Price in effect thereafter shall be
determined by multiplying the Warrant Price in effect immediately prior to the
date of such issuance by a fraction, the numerator of which shall be the total
number of outstanding shares of Common Stock multiplied by the Fair Market Value
Price (as defined below), less the then fair market value (as determined in good
faith by the Company's board of directors) of said shares of stock, assets or
evidences of indebtedness so distributed or of such rights or warrants, and the
denominator of which shall be the total number of outstanding shares of Common
Stock multiplied by the Fair Market Value Price. Such adjustments shall be made
whenever any such distribution is made and shall become effective immediately
after the record date for the determination of shareholders entitled to receive
such distribution.
<PAGE>
(c) In case the Company shall hereafter issue shares of its Common
Stock or securities (including options, warrants or rights) convertible into,
exchangeable for or exercisable for shares of Common Stock, such shares of
Common Stock or securities convertible into, exchangeable for or exercisable for
shares of Common Stock being herein called "Company Securities") at a price per
share that is less than the Initial Reference Price (as defined below) at any
time during the Initial Anti-Dilution Period (as defined below), the Warrant
Price shall be adjusted immediately thereafter so that it shall equal the price
determined by multiplying the Warrant Price in effect immediately prior thereto
by a fraction, (x) the numerator of which shall be the sum of the number of
shares of Common Stock outstanding immediately prior to the issuance of such
additional Company Securities pursuant to such offering plus the number of
shares of Common Stock which the aggregate consideration received for the
issuance of such additional shares would purchase at such Initial Reference
Price, and (y) the denominator of which shall be the number of shares of Common
Stock outstanding immediately after the issuance of such additional shares
pursuant to such offering. Such adjustment shall be made successively whenever
such an issuance is made.
(d) In case the Company shall hereafter issue any Company Securities
(excluding securities issued in transactions described in paragraph (c) above)
at an effective price per share less than the Fair Market Value Price, the
Warrant Price shall be adjusted immediately thereafter so that it shall equal
the price determined by multiplying the Warrant Price in effect immediately
prior thereto by a fraction, (x) the numerator of which shall be the sum of the
number of shares of Common Stock outstanding immediately prior to the issuance
of such additional Company Securities pursuant to such offering plus the number
of shares of Common Stock which the aggregate consideration received for the
issuance of such additional shares would purchase at the Fair Market Value
Price, and (y) the denominator of which shall be the number of shares of Common
Stock outstanding immediately after the issuance of such additional shares
pursuant to such offering. Such adjustment shall be made successively whenever
such an issuance is made.
(e) Whenever the Warrant Price payable upon exercise of this Warrant
is adjusted pursuant to paragraphs (a), (b), (c) and (d) above, the number of
Warrant Shares purchasable upon exercise of this Warrant shall simultaneously be
adjusted by multiplying the number of Warrant Shares initially issuable upon
exercise of this Warrant by the Warrant Price in effect as of the date of this
Warrant and dividing the product so obtained by the Warrant Price, as adjusted.
(f) Anything herein to the contrary notwithstanding:
(i) (A) The Company shall not be required to make any adjustment
contemplated under paragraph (c) in the case of: (A) the issuance of
shares of Common Stock upon the sale, issuance or exercise in whole or
in part of the warrants to purchase shares of Common Stock issued
pursuant to the Purchase Agreement; (B) the issuance of shares of
Common Stock or any other securities which may now or hereafter be
granted or exercised under any of the Company's compensatory benefit
<PAGE>
plans (regardless of whether such shares of Common Stock or other
securities are issued to employees, directors, consultants or others
of the Company or the joint venture established pursuant to the
Limited Liability Company Operating Agreement of Angellan Medical
Systems, LLC (the "U.S. Joint Venture Agreement")) (the "Plans") and
such other employee benefit arrangements, contracts or plans as are
recommended by the management of the Company and approved by its board
of directors (adjusted appropriately for stock splits, stock
combinations or stock dividends); (C) the issuance or sale of shares
of Common Stock or convertible securities upon the exercise of any
rights or warrants to subscribe for or purchase, or any options for
the purchase of, Common Stock or convertible securities outstanding on
the date of the Purchase Agreement, except as set forth in Schedule
2.4(f)(i)(A)(C) of the Purchase Agreement; (D) the issuance or sale of
shares of Common Stock upon conversion or exchange of any convertible
securities or exercise of any options, warrants or other purchase
rights, if a prior antidilution adjustment was made or required to be
made hereunder upon the issuance, sale (or grant with respect to
options) of such convertible securities, options, warrants or other
purchase rights; (E) the issuance of shares of Common Stock in
connection with a bona fide merger, acquisition (including without
limitation, acquisition of a third party's assets, products,
technology or other rights) or other similar transaction involving the
Company or a subsidiary of the Company if the board of directors of
the Company has obtained a fairness opinion with respect to the
issuance of such Common Stock from a nationally or regionally
recognized investment banking firm indicating the financial terms of
such merger, acquisition or other similar transaction are fair to the
Company when taken as a whole; or (F) the issuance of any Company
Securities in any transaction which is part of the formation of a
strategic relationship or joint venture between the Company and a
third party if the board of directors of the Company has obtained a
fairness opinion with respect to the issuance of such Company
Securities from a nationally or regionally recognized investment
banking firm indicating that the financial terms of such strategic
relationship, joint venture or other similar relationship or venture
are fair to the Company when taken as a whole.
(B) The Company shall not be required to make any adjustment
contemplated under paragraph (d) in the case of: (A) the issuance
of shares of Common Stock upon the sale, issuance or exercise in
whole or in part of the warrants to purchase shares of Common
Stock issued pursuant to the Purchase Agreement; (B) the issuance
of shares of Common Stock or any other securities which may now
or hereafter be granted or exercised under any of the Plans and
such other employee benefit arrangements, contracts or plans as
are recommended by the management of the Company and approved by
its board of directors (adjusted appropriately for stock splits,
stock combinations or stock dividends); (C) the issuance or sale
of shares of Common Stock or convertible securities upon the
exercise of any rights or warrants to subscribe for or purchase,
or any options for the purchase of, Common Stock or convertible
securities outstanding on the date of the Purchase Agreement,
except as set forth in Schedule 2.4(f)(i)(A)(C) of the Purchase
Agreement; (D)
<PAGE>
the issuance or sale of shares of Common Stock upon conversion or
exchange of any convertible securities or exercise of any
options, warrants or other purchase rights, if a prior
antidilution adjustment was made or required to be made hereunder
upon the issuance, sale (or grant with respect to options) of
such convertible securities, options, warrants or other purchase
rights; (E) the issuance of shares of Common Stock in connection
with a bona fide merger, acquisition (including without
limitation, acquisition of a third party's assets, products,
technology or other rights) or other similar transaction
involving the Company or a subsidiary of the Company if the board
of directors of the Company has obtained a fairness opinion with
respect to the issuance of such Common Stock from a nationally or
regionally recognized investment banking firm indicating the
financial terms of such merger, acquisition or other similar
transaction are fair to the Company when taken as a whole; (F)
the issuance of any Company Securities in any transaction which
is part of the formation of a strategic relationship or joint
venture between the Company and a third party if the board of
directors of the Company has obtained a fairness opinion with
respect to the issuance of such Company Securities from a
nationally recognized investment banking firm indicating that the
financial terms of such strategic relationship, joint venture or
other similar relationship or venture are fair to the Company
when taken as a whole; or (G) the issuance of shares of Common
Stock in connection with a bona fide private placement
transaction not involving purchasers or placement agents
affiliated with the Company if (1) the discount to market is not
greater than 15% and (2) the Company has obtained a fairness
opinion with respect to the issuance thereof from a nationally or
regionally recognized investment banking firm that the financial
terms of such transaction are fair to the Company when taken as a
whole.
(ii) The Company shall not be required to make any adjustment
contemplated under paragraph (c) or (d) with respect to any Future
Financing (as defined below) if the Investor exercises its right to
increase or maintain its stock ownership with respect to such Future
Financing pursuant to the Purchase Agreement.
(iii) The provisions of paragraphs (c) and (d) above shall terminate
and have no further force and effect upon the Investor's Rights
Termination Date as such term is defined in the U.S. Joint Venture
Agreement.
(g) The number of shares of Common Stock outstanding at any given time
for purposes of the calculations under paragraphs (c) and (d) shall be subject
to the following rules:
(i) In case of (1) the sale by the Company for cash (or as a component
of a unit being sold for cash) of any rights or warrants to subscribe
for or purchase, or any options for the purchase of, Common Stock or
any securities convertible into or exchangeable for Common Stock
without the payment of any further consideration
<PAGE>
other than cash, if any (such securities convertible, exercisable or
exchangeable into Common Stock being herein called "Convertible
Securities"), or (2) the issuance by the Company, without the receipt
by the Company of any consideration therefor, or any rights or
warrants to subscribe for or purchase, or any options for the purchase
of, Common Stock or Convertible Securities, in each case, if (and only
if) the consideration payable to the Company upon the exercise of such
rights, warrants or options shall consist of cash, whether or not such
rights, warrants or options, or the right to convert or exchange such
Convertible Securities, are immediately exercisable, and the price per
share for which Common Stock is issuable upon the exercise of such
rights, warrants or options or upon the conversion or exchange of such
Convertible Securities (determined by dividing (x) the minimum
aggregate consideration payable to the Company upon the exercise of
such rights, warrants or options, plus the consideration, if any,
received by the Company for the issuance or sale of such rights,
warrants or options, plus, in the case of such Convertible Securities,
the minimum aggregate amount of additional consideration, other than
such Convertible Securities, payable upon the conversion or exchange
thereof, by (y) the total maximum number of shares of Common Stock
issuable upon the exercise of such rights, warrants or options or upon
the conversion or exchange of such Convertible Securities issuable
upon the exercise of such rights, warrants or options) is less than
the Initial Reference Price or Fair Market Value Price, as applicable,
on the date of the issuance or sale of such rights, warrants or
options, then the total maximum number of shares of Common Stock
issuable upon the exercise of such rights, warrants or options or upon
the conversion or exchange of such Convertible Securities (as of the
date of the issuance or sale of such rights, warrants or options)
shall be deemed to be outstanding shares of Common Stock and shall be
deemed to have been sold for cash in an amount equal to (1) any cash
paid for such warrants, options or Convertible Securities plus (2) the
price per share payable upon the exercise of such rights, warrants or
options or upon the conversion or exchange of such Convertible
Securities issuable upon the exercise of such rights, warrants or
options.
(ii) In case the Company shall modify the rights of conversion,
exchange or exercise of any of the securities referred to in (i) above
or any other securities of the Company convertible, exchangeable or
exercisable for shares of Common Stock, for any reason other than an
event that would require adjustment to prevent dilution, so that the
consideration per share received by the Company after such
modification is less than the Initial Reference Price or Fair Market
Value Price, as applicable, the number of shares to be issued and
outstanding shall be recalculated according to (i) and the number of
antidilution shares issued pursuant to paragraph (c) or (d), as the
case may be, shall be recalculated and any additional resulting
antidilution shares shall thereupon be issued.
(iii) In the case of the sale for cash of any shares of Common Stock,
any Convertible Securities, any rights or warrants to subscribe for or
purchase, or any options for the purchase of, Common Stock or
Convertible Securities, the
<PAGE>
consideration received by the Company theretofor shall be deemed to be
the gross sales price therefor without deducting therefrom any expense
paid or incurred by the Company or any underwriting discounts or
commissions or concessions paid or allowed by the Company in
connection therewith.
(h) No adjustment in the Warrant Price shall be required unless such
adjustment would require an increase or decrease of at least five cents ($0.05)
in such price; provided, however, that any adjustments not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 4 shall be made to the nearest cent or to
the nearest one-thousandth of a share, as the case may be.
(i) Anything in this Section 4 to the contrary notwithstanding, the
Company shall be entitled, but shall not be required, to make such changes in
the Warrant Price, in addition to those required by this Section 4, as it in its
discretion shall determine to be advisable in order that any dividend or
distribution in shares of Common Stock, subdivision, reclassification or
combination of shares of Common Stock, issuance of rights or warrants to
purchase Common Stock or distribution of shares of stock other than Common
Stock, evidences of indebtedness or assets (other than distributions in cash out
of retained earnings) referred to hereinabove in this Section 4, hereafter made
by the Company to the holders of its Common Stock shall not be taxable to them.
(j) Whenever the Warrant Price is adjusted, as herein provided, the
Company shall promptly cause a notice setting forth the adjusted Warrant Price
and adjusted number of shares issuable upon exercise of this Warrant to be
mailed to the Holder. The certificate setting forth the computation shall be
signed by the Chief Financial Officer of the Company.
(k) In the event that at any time, as a result of any adjustment made
pursuant to paragraph (a) above, the holder of this Warrant thereafter shall
become entitled to receive any shares of the Company, other than Common Stock,
thereafter the number of such other shares so receivable upon exercise of this
Warrant shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Common Stock contained in paragraphs (a) to (h) inclusive, above.
Section 5. Rights and Obligations of the Warrant Holder.
This Warrant shall not entitle the Holder to any rights of a stockholder in
the Company.
Section 6. Restrictive Stock Legend.
This Warrant and the Warrant Shares have not been registered under any
securities laws. Accordingly, until such time as the securities represented
thereby are no longer subject to the restrictions set forth in Section 4.2 of
the Purchase Agreement and there is delivered to the Company an opinion of
counsel reasonably acceptable to the Company to the effect that such legend is
no longer required, any stock certificates issued pursuant to the exercise of
this Warrant shall bear the following legend:
<PAGE>
THIS SECURITY IS SUBJECT TO THE PROVISIONS OF THE AMENDED AND
RESTATED INVESTMENT AND MASTER STRATEGIC RELATIONSHIP AGREEMENT
DATED AS OF OCTOBER 9, 1997 BETWEEN THE ISSUER AND SYNTHELABO AND
MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN ACCORDANCE THEREWITH. A
COPY OF SUCH AGREEMENT IS ON FILE AT THE OFFICE OF THE CORPORATE
SECRETARY OF THE ISSUER. THIS SECURITY WAS SOLD IN A PRIVATE
PLACEMENT, WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933,
AND MAY BE OFFERED OR SOLD ONLY IF REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR IF AN EXEMPTION FROM REGISTRATION IS
AVAILABLE.
Section 7. Notices.
Any notice or other communication required or permitted to be given here
shall be in writing and shall be effective (a) upon hand delivery or delivery by
telex (with correct answerback received), telecopy or facsimile at the address
or number designated below (if delivered on a business day during normal
business hours where such notice is to be received), or the first business day
following such delivery (if delivered other than on a business day during normal
business hours where such notice is to be received) or (b) on the third business
day following the date of mailing by express courier service, fully prepaid,
addressed to such address, or upon actual receipt of such mailing, whichever
shall first occur. The addresses for such communication shall be:
If to the Company:
Angeion Corporation
3650 Annapolis Lane, Suite 170
Plymouth, MN 55447-5434
Telephone: (612) 550-9388
Telecopier: (612) 509-9525
Attention: Chief Financial Officer
With a copy to:
Morrison & Foerster LLP
425 Market Street
San Francisco, CA 94105
Telephone: (415) 268-7000
Telecopier: (415) 268-7522
Attention: Gavin B. Grover, Esq.
If to the Holder:
<PAGE>
Synthelabo
22 Avenue Galilee
92350 Le Plessis Robinson
France
Telephone: (33)(1)45.37.56.67
Telecopier: (33)(1)45.37.58.04
Attention: General Counsel
With copies to:
ELA Medical
Centre d'Affairs la Boursidiere
92357 Le Plessis Robinson
France
Telephone: (33)(1)46.01.33.01
Telecopier: (33)(1)46.01.33.15
Attention: President
and
Coudert Brothers
1114 Avenue of the Americas
New York, NY 10036-7703
Telephone: (212) 626-4400
Telecopier: (212) 626-4120
Attention: James C. Colihan, Esq.
Each party hereto may from time to time change its address for notices under
this Section 7 by giving at least 10 days' notice of such changes address to the
other party hereto.
Section 8. Amendments and Waivers.
This Warrant and any term hereof may be changed, waived, discharged or
terminated only by an instrument in writing signed by the party against which
enforcement of such change, waiver, discharge or termination is sought.
Section 9. Applicable Law.
This Warrant shall be governed by and construed and enforced in accordance
with the laws of the State of New York.
Section 10. Definitions.
As used in this Warrant, the following terms shall be defined as follows:
<PAGE>
"Fair Market Value Price" shall mean the average Quoted Price for the five
business days prior to the closing of the applicable sale.
"Future Financing" shall mean any future offering of any shares of any
class of Company Securities with voting rights generally to elect directors of
the Company.
"Initial Anti-Dilution Period" shall mean the period commencing on October
9, 1997 and terminating on the first anniversary of the date hereof.
"Initial Reference Price" shall mean one hundred and fifteen percent (115%)
of the average Quoted Price for all trading days within the fifteen (15) trading
days ending two days prior to the public announcement by the Company of the
transactions contemplated by the Purchase Agreement.
"Quoted Price" of the Common Stock shall mean: the last sale price regular
way or, in the case no such sale takes place on such day, the average of the
closing bid and asked prices regular way, in wither case on the NASDAQ National
Market System as reported by NASDAQ, or, if the Common Stock is not authorized
for quotation on the NASDAQ National Market System, on the New York Stock
Exchange Composite Tape (the "Composite Tape"), or, if the Common Stock is not
listed or admitted to trading on such exchange, on the national securities
exchange in or nearest the City of New York on which the Common Stock is listed
or admitted to trading, or if the Common Stock is not listed or admitted to
trading on any national securities exchange, the last sale price regular way or,
in case no such sale takes place on such day, the average of the highest
reported bid and lowest reported asked prices as furnished by the National
Association of Securities Dealers Inc. through NASDAQ or a similar organization
if NASDAQ is no longer reporting such information, or if on any such trading day
the Common Stock is not quoted by any such organization, the fair value of a
share of Common Stock on such day, as determined in good faith by the board of
directors of the Company.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed
on the day and year first above written.
ANGEION CORPORATION
By:_________________________
Title:
<PAGE>
Exhibit A
To: ANGEION CORPORATION
ELECTION TO EXERCISE
The undersigned hereby exercises its right to subscribe for and
purchase from ANGEION CORPORATION ______ fully paid, validly issued and
nonassessable shares of Common Stock covered by the within Warrant and tenders
payment herewith in the amount of $__________ in accordance with the terms
thereof, and requests that certificates for such shares be issued in the name
of, and delivered to:
__________________________________
__________________________________
__________________________________
Date:___________________ [Holder]
By _________________________
Name:
Title:
<PAGE>
Exhibit B
ASSIGNMENT FORM
To: ANGEION CORPORATION
The undersigned hereby assigns and transfers this Warrant to
________________________________________________________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and postal code)
and irrevocably appoints
________________________________________________________________________________
to transfer this Warrant on the books of the Company.
Date:___________________ [Holder]
By _________________________
Name:
Title:
(Sign exactly as your name appears on the face of this Warrant)
Signature guarantee:
EXHIBIT 10.8
Exhibit A-5
[Form of Supplemental Warrants]
THIS SECURITY IS SUBJECT TO THE PROVISIONS OF THE AMENDED AND RESTATED
INVESTMENT AND MASTER STRATEGIC RELATIONSHIP AGREEMENT DATED AS OF OCTOBER 9,
1997 BETWEEN THE ISSUER AND SYNTHELABO AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT
IN ACCORDANCE THEREWITH. A COPY OF SUCH AGREEMENT IS ON FILE AT THE OFFICE OF
THE CORPORATE SECRETARY OF THE ISSUER. THIS SECURITY WAS SOLD IN A PRIVATE
PLACEMENT, WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AND MAY BE
OFFERED OR SOLD ONLY IF REGISTERED UNDER THE SECURITIES ACT OF 1933 OR IF AN
EXEMPTION FROM REGISTRATION IS AVAILABLE.
-------------------------------
ANGEION CORPORATION
COMMON STOCK PURCHASE WARRANT
__________ Shares
Capitalized terms used and not otherwise defined in this Common Stock
Purchase Warrant (this "Warrant") shall have the respective meanings assigned to
them in the Amended and Restated Investment and Master Strategic Relationship
Agreement dated as of the 9th day of October, 1997, between Angeion Corporation,
a Minnesota corporation having its executive offices and principal place of
business at 3650 Annapolis Lane, Minneapolis, Minnesota 55447 (the "Company"),
and Synthelabo, a French societe anonyme (the "Holder"), as the same may be
supplemented, modified, amended, renewed or restated from time to time (the
"Purchase Agreement").
The Company does hereby certify and agree that, for value received, the
Holder, its successors and assigns, hereby is entitled to purchase from the
Company __________ duly authorized, validly issued, fully paid and
non-assessable shares of Common Stock, par value $0.01 per share ("Common
Stock"), of the Company (the "Exercise Quantity") upon the terms and subject to
the provisions of this Warrant.
Section 1. Price and Exercise of Warrant.
1.1 Term of Warrant. This Warrant shall be exercisable for the period
<PAGE>
commencing on the date hereof and ending at 4:30 p.m., New York City time, on
the fourth anniversary of the Initial Closing Date (the "Expiration Date").
1.2 Exercise Price. The price per share at which the shares of Common Stock
issuable upon exercise of this Warrant (the "Warrant Shares") shall be one
hundred thirty percent (130%) of the First Anniversary Market Price per share
(the "Warrant Price").
1.3 Exercise of Warrant. (a) This Warrant may be exercised, in whole or in
part, upon surrender to the Company at its offices at 3650 Annapolis Lane,
Minneapolis, Minnesota of the certificate or certificates evidencing this
Warrant to be exercised, together with the form of election to exercise attached
hereto as Exhibit A duly completed and executed, and upon payment to the Company
of the Warrant Price for the number of Warrant Shares in respect of which this
Warrant is then being exercised. Payment of the aggregate Warrant Price may be
made in cash, by certified or bank check or by wire transfer.
(b) Subject to Section 2 hereof, upon such surrender of this Warrant,
and the duly completed and executed form of election to exercise, and payment of
the Warrant Price as aforesaid, the Company shall cause to be issued and
delivered with all reasonable dispatch (and in any event within five business
days thereafter) to the Holder or such other person as the Holder may designate
in writing a certificate or certificates for the number of full shares of Common
Stock so purchased upon the exercise of this Warrant. Such certificate or
certificates shall be deemed to have been issued and any person so designated to
be named therein shall be deemed to have become a holder of record of such
shares of Common Stock as of the date of the surrender of this Warrant, and the
duly completed and executed form of election to exercise, and payment of the
Warrant Price, as aforesaid; provided, however, that if, at the date of
surrender of this Warrant and payment of the Warrant Price, the transfer books
for the shares of Common Stock purchasable upon the exercise of this Warrant
shall be closed, the certificates for the shares of Common Stock shall be
issuable as of the date on which such books shall next be opened (whether before
or after the Expiration Date), and, until such date, the Company shall be under
no duty to cause to be delivered any certificate for such shares of Common Stock
or for shares of such other class of stock. If this Warrant is exercised in
part, a new Warrant certificate of the same tenor and for the number of Warrant
Shares not exercised shall be executed by the Company.
1.4 Fractional Interests. The Company shall not be required to issue
fractions of shares of Common Stock on the exercise of this Warrant. If any
fraction of a share of Common Stock would be issuable upon the exercise of this
Warrant (or any portion thereof), the Company shall purchase such fraction for
an amount in cash equal to the same fraction of the last reported sale price of
the Common Stock on the NASDAQ National Market System or any other national
securities exchange on which the Common Stock is then listed.
Section 2. Exchange and Transfer of Warrant.
(a) This Warrant may be exchanged for two or more Warrants entitling
<PAGE>
the Holder thereof to purchase the same aggregate Exercise Quantity at the
Exercise Price per share and otherwise having the same terms and provisions as
this Warrant. The Holder may request such an exchange by surrender of this
Warrant to the Company, together with a written exchange request specifying the
desired number of Warrants and allocation of the Exercise Quantity purchasable
under the existing Warrant. Within two business days after the Company's receipt
of this Warrant and such an exchange request, the Company will issue and deliver
such new Warrants to the Holder in the amounts and with the allocations
requested.
(b) Subject to the restrictions set forth in Section 4.2(d) of the
Purchase Agreement, this Warrant from time to time may be transferred, in whole
or in part, by the Holder or any duly authorized representative of the Holder. A
transfer may be registered with the Company by submission to it of this Warrant,
together with the annexed Assignment Form attached hereto as Exhibit B duly
completed and executed. Within two business days after the satisfaction by the
Holder of the conditions to such transfer set forth in such Section 4.2(d) and
the Company's receipt of this Warrant and the Assignment Form so completed and
executed, the Company will issue and deliver to the transferee a new Warrant
representing the portion of the Exercise Quantity transferred at the same
Exercise Price per share and otherwise having the same terms and provisions as
this Warrant, which the Company will register in the new holder's name. In the
event of a partial transfer of this Warrant, the Company shall concurrently
issue and deliver to the transferring holder a new Warrant that entitles the
transferring holder to purchase the balance of the Exercise Quantity not so
transferred and that otherwise is upon the same terms and conditions as this
Warrant. Upon the due delivery of this Warrant for transfer, the transferee
holder shall be deemed for all purposes to have become the holder of the new
Warrant issued respecting the Exercise Quantity transferred, effective
immediately prior to the close of business on the date of such delivery,
irrespective of the date of actual delivery of the new Warrant representing the
Exercise Quantity transferred.
(c) In the event of the loss, theft or destruction of this Warrant,
the Company shall execute and deliver an identical new Warrant to the Holder in
substitution therefor upon the Company's receipt of (i) evidence reasonably
satisfactory to the Company of such event and (ii) if requested by the Company,
an indemnity agreement reasonably satisfactory in form and substance to the
Company. In the event of the mutilation of or other damage to this Warrant, the
Company shall execute and deliver an identical new Warrant to the Holder in
substitution therefor upon the Company's receipt of the mutilated or damaged
Warrant.
(d) The Company shall pay all costs and expenses incurred in
connection with the exercise, exchange, transfer or replacement of this Warrant,
including, without limitation, the costs of preparation, execution and delivery
of a new Warrant and of stock certificates representing all Warrant Shares;
provided, however, that the Holder shall pay all stamp and other transfer taxes
payable in connection with the transfer or replacement of this Warrant.
<PAGE>
Section 3. Certain Covenants.
(a) The Company shall at all times reserve for issuance and keep
available out of its authorized and unissued shares of Common Stock, solely for
the purpose of providing for the exercise of this Warrant, such number of shares
of Common Stock as shall from time to time be sufficient therefor.
(b) The Company will not, by amendment of its articles of
incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of this
Warrant. Without limiting the foregoing, the Company (i) will not increase the
par value of any shares of capital stock receivable upon the exercise of this
Warrant above the amount payable therefor upon such exercise, and (ii) will take
all such action as may be necessary or appropriate in order that the Company may
validly and legally issue fully paid and nonassessable shares of capital stock
upon the exercise of this Warrant.
Section 4. Adjustment of Warrant Price and Number of Warrant Shares.
The Warrant Price in effect at any time and the number and kind of
securities purchasable upon the exercise of this Warrant shall be subject to
adjustment from time to time upon the occurrence of certain events, as
hereinafter provided.
(a) In case the Company shall hereafter (i) pay a dividend or make a
distribution on its Common Stock in shares of its Common Stock, (ii) subdivide
its outstanding Common Stock, (iii) combine its outstanding Common Stock into a
smaller number of shares, or (iv) issue any shares by reclassification of its
Common Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing corporation), the
Warrant Price in effect at the time of the record date for such dividend or
distribution or the effective date of such subdivision, combination or
reclassification shall be proportionately adjusted so that the Holder, upon
exercise of this Warrant after such date, shall be entitled to receive the
aggregate number and kind of shares of Common Stock which, if this Warrant had
been exercised immediately prior to such record date, it would have owned upon
such exercise and been entitled to receive upon such dividend, distribution,
subdivision, combination or reclassification.
(b) In case the Company shall hereafter distribute to all holders of
its Common Stock shares of stock other than Common Stock, evidences of its
indebtedness or assets (excluding cash dividends or distributions out of
retained earnings and dividends or distributions referred to in paragraph (a)
above), or any rights, warrants or options to subscribe for or purchase shares
of Common Stock (or securities convertible into, exercisable for or exchangeable
for shares of Common Stock ) (excluding those referred to in paragraph (c)
below), then in each such case the Warrant Price in effect thereafter shall be
determined
<PAGE>
by multiplying the Warrant Price in effect immediately prior to the date of such
issuance by a fraction, the numerator of which shall be the total number of
outstanding shares of Common Stock multiplied by the Fair Market Value Price (as
defined below), less the then fair market value (as determined in good faith by
the Company's board of directors) of said shares of stock, assets or evidences
of indebtedness so distributed or of such rights or warrants, and the
denominator of which shall be the total number of outstanding shares of Common
Stock multiplied by the Fair Market Value Price. Such adjustments shall be made
whenever any such distribution is made and shall become effective immediately
after the record date for the determination of shareholders entitled to receive
such distribution.
(c) In case the Company shall hereafter issue shares of its Common
Stock or securities (including options, warrants or rights) convertible into,
exchangeable for or exercisable for shares of Common Stock, such shares of
Common Stock or securities convertible into, exchangeable for or exercisable for
shares of Common Stock being herein called "Company Securities") at a price per
share that is less than the Initial Reference Price (as defined below) at any
time during the Initial Anti-Dilution Period (as defined below), the Warrant
Price shall be adjusted immediately thereafter so that it shall equal the price
determined by multiplying the Warrant Price in effect immediately prior thereto
by a fraction, (x) the numerator of which shall be the sum of the number of
shares of Common Stock outstanding immediately prior to the issuance of such
additional Company Securities pursuant to such offering plus the number of
shares of Common Stock which the aggregate consideration received for the
issuance of such additional shares would purchase at such Initial Reference
Price, and (y) the denominator of which shall be the number of shares of Common
Stock outstanding immediately after the issuance of such additional shares
pursuant to such offering. Such adjustment shall be made successively whenever
such an issuance is made.
(d) In case the Company shall hereafter issue any Company Securities
(excluding securities issued in transactions described in paragraph (c) above)
at an effective price per share less than the Fair Market Value Price, the
Warrant Price shall be adjusted immediately thereafter so that it shall equal
the price determined by multiplying the Warrant Price in effect immediately
prior thereto by a fraction, (x) the numerator of which shall be the sum of the
number of shares of Common Stock outstanding immediately prior to the issuance
of such additional Company Securities pursuant to such offering plus the number
of shares of Common Stock which the aggregate consideration received for the
issuance of such additional shares would purchase at the Fair Market Value
Price, and (y) the denominator of which shall be the number of shares of Common
Stock outstanding immediately after the issuance of such additional shares
pursuant to such offering. Such adjustment shall be made successively whenever
such an issuance is made.
(e) Whenever the Warrant Price payable upon exercise of this Warrant
is adjusted pursuant to paragraphs (a), (b), (c) and (d) above, the number of
Warrant Shares purchasable upon exercise of this Warrant shall simultaneously be
adjusted by multiplying the number of Warrant Shares initially issuable upon
exercise of this Warrant by the Warrant
<PAGE>
Price in effect as of the date of this Warrant and dividing the product so
obtained by the Warrant Price, as adjusted.
(f) Anything herein to the contrary notwithstanding:
<PAGE>
(i) (A) The Company shall not be required to make any adjustment
contemplated under paragraph (c) in the case of: (A) the issuance of
shares of Common Stock upon the sale, issuance or exercise in whole or
in part of the warrants to purchase shares of Common Stock issued
pursuant to the Purchase Agreement; (B) the issuance of shares of
Common Stock or any other securities which may now or hereafter be
granted or exercised under any of the Company's compensatory benefit
plans (regardless of whether such shares of Common Stock or other
securities are issued to employees, directors, consultants or others
of the Company or the joint venture established pursuant to the
Limited Liability Company Operating Agreement of Angellan Medical
Systems, LLC (the "U.S. Joint Venture Agreement")) (the "Plans") and
such other employee benefit arrangements, contracts or plans as are
recommended by the management of the Company and approved by its board
of directors (adjusted appropriately for stock splits, stock
combinations or stock dividends); (C) the issuance or sale of shares
of Common Stock or convertible securities upon the exercise of any
rights or warrants to subscribe for or purchase, or any options for
the purchase of, Common Stock or convertible securities outstanding on
the date of the Purchase Agreement, except as set forth in Schedule
2.4(f)(i)(A)(C) of the Purchase Agreement; (D) the issuance or sale of
shares of Common Stock upon conversion or exchange of any convertible
securities or exercise of any options, warrants or other purchase
rights, if a prior antidilution adjustment was made or required to be
made hereunder upon the issuance, sale (or grant with respect to
options) of such convertible securities, options, warrants or other
purchase rights; (E) the issuance of shares of Common Stock in
connection with a bona fide merger, acquisition (including without
limitation, acquisition of a third party's assets, products,
technology or other rights) or other similar transaction involving the
Company or a subsidiary of the Company if the board of directors of
the Company has obtained a fairness opinion with respect to the
issuance of such Common Stock from a nationally or regionally
recognized investment banking firm indicating the financial terms of
such merger, acquisition or other similar transaction are fair to the
Company when taken as a whole; or (F) the issuance of any Company
Securities in any transaction which is part of the formation of a
strategic relationship or joint venture between the Company and a
third party if the board of directors of the Company has obtained a
fairness opinion with respect to the issuance of such Company
Securities from a nationally or regionally recognized investment
banking firm indicating that the financial terms of such strategic
relationship, joint venture or other similar relationship or venture
are fair to the Company when taken as a whole.
(B) The Company shall not be required to make any adjustment
<PAGE>
contemplated under paragraph (d) in the case of: (A) the issuance
of shares of Common Stock upon the sale, issuance or exercise in
whole or in part of the warrants to purchase shares of Common
Stock issued pursuant to the Purchase Agreement; (B) the issuance
of shares of Common Stock or any other securities which may now
or hereafter be granted or exercised under any of the Plans and
such other employee benefit arrangements, contracts or plans as
are recommended by the management of the Company and approved by
its board of directors (adjusted appropriately for stock splits,
stock combinations or stock dividends); (C) the issuance or sale
of shares of Common Stock or convertible securities upon the
exercise of any rights or warrants to subscribe for or purchase,
or any options for the purchase of, Common Stock or convertible
securities outstanding on the date of the Purchase Agreement,
except as set forth in Schedule 2.4(f)(i)(A)(C) of the Purchase
Agreement; (D) the issuance or sale of shares of Common Stock
upon conversion or exchange of any convertible securities or
exercise of any options, warrants or other purchase rights, if a
prior antidilution adjustment was made or required to be made
hereunder upon the issuance, sale (or grant with respect to
options) of such convertible securities, options, warrants or
other purchase rights; (E) the issuance of shares of Common Stock
in connection with a bona fide merger, acquisition (including
without limitation, acquisition of a third party's assets,
products, technology or other rights) or other similar
transaction involving the Company or a subsidiary of the Company
if the board of directors of the Company has obtained a fairness
opinion with respect to the issuance of such Common Stock from a
nationally or regionally recognized investment banking firm
indicating the financial terms of such merger, acquisition or
other similar transaction are fair to the Company when taken as a
whole; (F) the issuance of any Company Securities in any
transaction which is part of the formation of a strategic
relationship or joint venture between the Company and a third
party if the board of directors of the Company has obtained a
fairness opinion with respect to the issuance of such Company
Securities from a nationally recognized investment banking firm
indicating that the financial terms of such strategic
relationship, joint venture or other similar relationship or
venture are fair to the Company when taken as a whole; or (G) the
issuance of shares of Common Stock in connection with a bona fide
private placement transaction not involving purchasers or
placement agents affiliated with the Company if (1) the discount
to market is not greater than 15% and (2) the Company has
obtained a fairness opinion with respect to the issuance thereof
from a nationally or regionally recognized investment banking
firm that the financial terms of such transaction are fair to the
Company when taken as a whole.
(ii) The Company shall not be required to make any adjustment
contemplated under paragraph (c) or (d) with respect to any Future
Financing (as defined below) if
<PAGE>
the Investor exercises its right to increase or maintain its stock
ownership with respect to such Future Financing pursuant to the
Purchase Agreement.
(iii) The provisions of paragraphs (c) and (d) above shall terminate
and have no further force and effect upon the Investor's Rights
Termination Date as such term is defined in the U.S. Joint Venture
Agreement.
(g) The number of shares of Common Stock outstanding at any given time
for purposes of the calculations under paragraphs (c) and (d) shall be subject
to the following rules:
(i) In case of (1) the sale by the Company for cash (or as a component
of a unit being sold for cash) of any rights or warrants to subscribe
for or purchase, or any options for the purchase of, Common Stock or
any securities convertible into or exchangeable for Common Stock
without the payment of any further consideration other than cash, if
any (such securities convertible, exercisable or exchangeable into
Common Stock being herein called "Convertible Securities"), or (2) the
issuance by the Company, without the receipt by the Company of any
consideration therefor, or any rights or warrants to subscribe for or
purchase, or any options for the purchase of, Common Stock or
Convertible Securities, in each case, if (and only if) the
consideration payable to the Company upon the exercise of such rights,
warrants or options shall consist of cash, whether or not such rights,
warrants or options, or the right to convert or exchange such
Convertible Securities, are immediately exercisable, and the price per
share for which Common Stock is issuable upon the exercise of such
rights, warrants or options or upon the conversion or exchange of such
Convertible Securities (determined by dividing (x) the minimum
aggregate consideration payable to the Company upon the exercise of
such rights, warrants or options, plus the consideration, if any,
received by the Company for the issuance or sale of such rights,
warrants or options, plus, in the case of such Convertible Securities,
the minimum aggregate amount of additional consideration, other than
such Convertible Securities, payable upon the conversion or exchange
thereof, by (y) the total maximum number of shares of Common Stock
issuable upon the exercise of such rights, warrants or options or upon
the conversion or exchange of such Convertible Securities issuable
upon the exercise of such rights, warrants or options) is less than
the Initial Reference Price or Fair Market Value Price, as applicable,
on the date of the issuance or sale of such rights, warrants or
options, then the total maximum number of shares of Common Stock
issuable upon the exercise of such rights, warrants or options or upon
the conversion or exchange of such Convertible Securities (as of the
date of the issuance or sale of such rights, warrants or options)
shall be deemed to be outstanding shares of Common Stock and shall be
deemed to have been sold for cash in an amount equal to (1) any cash
paid for such warrants, options or Convertible Securities plus (2) the
price per share payable upon the exercise of such rights, warrants or
options or upon the conversion or exchange of such Convertible
Securities issuable upon the exercise of such rights, warrants or
options.
<PAGE>
(ii) In case the Company shall modify the rights of conversion,
exchange or exercise of any of the securities referred to in (i) above
or any other securities of the Company convertible, exchangeable or
exercisable for shares of Common Stock, for any reason other than an
event that would require adjustment to prevent dilution, so that the
consideration per share received by the Company after such
modification is less than the Initial Reference Price or Fair Market
Value Price, as applicable, the number of shares to be issued and
outstanding shall be recalculated according to (i) and the number of
antidilution shares issued pursuant to paragraph (c) or (d), as the
case may be, shall be recalculated and any additional resulting
antidilution shares shall thereupon be issued.
(iii) In the case of the sale for cash of any shares of Common Stock,
any Convertible Securities, any rights or warrants to subscribe for or
purchase, or any options for the purchase of, Common Stock or
Convertible Securities, the consideration received by the Company
theretofor shall be deemed to be the gross sales price therefor
without deducting therefrom any expense paid or incurred by the
Company or any underwriting discounts or commissions or concessions
paid or allowed by the Company in connection therewith.
(h) No adjustment in the Warrant Price shall be required unless such
adjustment would require an increase or decrease of at least five cents ($0.05)
in such price; provided, however, that any adjustments not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 4 shall be made to the nearest cent or to
the nearest one-thousandth of a share, as the case may be.
(i) Anything in this Section 4 to the contrary notwithstanding, the
Company shall be entitled, but shall not be required, to make such changes in
the Warrant Price, in addition to those required by this Section 4, as it in its
discretion shall determine to be advisable in order that any dividend or
distribution in shares of Common Stock, subdivision, reclassification or
combination of shares of Common Stock, issuance of rights or warrants to
purchase Common Stock or distribution of shares of stock other than Common
Stock, evidences of indebtedness or assets (other than distributions in cash out
of retained earnings) referred to hereinabove in this Section 4, hereafter made
by the Company to the holders of its Common Stock shall not be taxable to them.
(j) Whenever the Warrant Price is adjusted, as herein provided, the
Company shall promptly cause a notice setting forth the adjusted Warrant Price
and adjusted number of shares issuable upon exercise of this Warrant to be
mailed to the Holder. The certificate setting forth the computation shall be
signed by the Chief Financial Officer of the Company.
(k) In the event that at any time, as a result of any adjustment made
<PAGE>
pursuant to paragraph (a) above, the holder of this Warrant thereafter shall
become entitled to receive any shares of the Company, other than Common Stock,
thereafter the number of such other shares so receivable upon exercise of this
Warrant shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Common Stock contained in paragraphs (a) to (h) inclusive, above.
Section 5. Rights and Obligations of the Warrant Holder.
This Warrant shall not entitle the Holder to any rights of a stockholder in
the Company.
Section 6. Restrictive Stock Legend.
This Warrant and the Warrant Shares have not been registered under any
securities laws. Accordingly, until such time as the securities represented
thereby are no longer subject to the restrictions set forth in Section 4.2 of
the Purchase Agreement and there is delivered to the Company an opinion of
counsel reasonably acceptable to the Company to the effect that such legend is
no longer required, any stock certificates issued pursuant to the exercise of
this Warrant shall bear the following legend:
THIS SECURITY IS SUBJECT TO THE PROVISIONS OF THE AMENDED AND
RESTATED INVESTMENT AND MASTER STRATEGIC RELATIONSHIP AGREEMENT
DATED AS OF OCTOBER 9, 1997 BETWEEN THE ISSUER AND SYNTHELABO AND
MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN ACCORDANCE THEREWITH. A
COPY OF SUCH AGREEMENT IS ON FILE AT THE OFFICE OF THE CORPORATE
SECRETARY OF THE ISSUER. THIS SECURITY WAS SOLD IN A PRIVATE
PLACEMENT, WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933,
AND MAY BE OFFERED OR SOLD ONLY IF REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR IF AN EXEMPTION FROM REGISTRATION IS
AVAILABLE.
Section 7. Notices.
Any notice or other communication required or permitted to be given here
shall be in writing and shall be effective (a) upon hand delivery or delivery by
telex (with correct answerback received), telecopy or facsimile at the address
or number designated below (if delivered on a business day during normal
business hours where such notice is to be received), or the first business day
following such delivery (if delivered other than on a business day during normal
business hours where such notice is to be received) or (b) on the third business
day following the date of mailing by express courier service, fully prepaid,
addressed to such address, or upon actual receipt of such mailing, whichever
shall first occur. The addresses for such communication shall be:
<PAGE>
If to the Company:
Angeion Corporation
3650 Annapolis Lane, Suite 170
Plymouth, MN 55447-5434
Telephone: (612) 550-9388
Telecopier: (612) 509-9525
Attention: Chief Financial Officer
With a copy to:
Morrison & Foerster LLP
425 Market Street
San Francisco, CA 94105
Telephone: (415) 268-7000
Telecopier: (415) 268-7522
Attention: Gavin B. Grover, Esq.
If to the Holder:
Synthelabo
22 Avenue Galilee
92350 Le Plessis Robinson
France
Telephone: (33)(1)45.37.56.67
Telecopier: (33)(1)45.37.58.04
Attention: General Counsel
With copies to:
ELA Medical
Centre d'Affairs la Boursidiere
92357 Le Plessis Robinson
France
Telephone: (33)(1)46.01.33.01
Telecopier: (33)(1)46.01.33.15
Attention: President
and
Coudert Brothers
1114 Avenue of the Americas
New York, NY 10036-7703
<PAGE>
Telephone: (212) 626-4400
Telecopier: (212) 626-4120
Attention: James C. Colihan, Esq.
Each party hereto may from time to time change its address for notices under
this Section 7 by giving at least 10 days' notice of such changes address to the
other party hereto.
Section 8. Amendments and Waivers.
This Warrant and any term hereof may be changed, waived, discharged or
terminated only by an instrument in writing signed by the party against which
enforcement of such change, waiver, discharge or termination is sought.
Section 9. Applicable Law.
This Warrant shall be governed by and construed and enforced in accordance
with the laws of the State of New York.
Section 10. Definitions.
As used in this Warrant, the following terms shall be defined as follows:
"Fair Market Value Price" shall mean the average Quoted Price for the five
business days prior to the closing of the applicable sale.
"Future Financing" shall mean any future offering of any shares of any
class of Company Securities with voting rights generally to elect directors of
the Company.
"Initial Anti-Dilution Period" shall mean the period commencing on the date
hereof and terminating on the first anniversary of the date hereof.
"Initial Reference Price" shall mean one hundred and fifteen percent (115%)
of the First Anniversary Market Price.
"Quoted Price" of the Common Stock shall mean: the last sale price regular
way or, in the case no such sale takes place on such day, the average of the
closing bid and asked prices regular way, in wither case on the NASDAQ National
Market System as reported by NASDAQ, or, if the Common Stock is not authorized
for quotation on the NASDAQ National Market System, on the New York Stock
Exchange Composite Tape (the "Composite Tape"), or, if the Common Stock is not
listed or admitted to trading on such exchange, on the national securities
exchange in or nearest the City of New York on which the Common Stock is listed
or admitted to trading, or if the Common Stock is not listed or admitted to
trading on any national securities exchange, the last sale price regular way or,
in case no such sale takes place on such day, the average of the highest
reported bid and lowest reported
<PAGE>
asked prices as furnished by the National Association of Securities Dealers Inc.
through NASDAQ or a similar organization if NASDAQ is no longer reporting such
information, or if on any such trading day the Common Stock is not quoted by any
such organization, the fair value of a share of Common Stock on such day, as
determined in good faith by the board of directors of the Company.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed
on the day and year first above written.
ANGEION CORPORATION
By:_________________________
Title:
<PAGE>
Exhibit A
To: ANGEION CORPORATION
ELECTION TO EXERCISE
The undersigned hereby exercises its right to subscribe for and
purchase from ANGEION CORPORATION ______ fully paid, validly issued and
nonassessable shares of Common Stock covered by the within Warrant and tenders
payment herewith in the amount of $__________ in accordance with the terms
thereof, and requests that certificates for such shares be issued in the name
of, and delivered to:
_______________________
_______________________
_______________________
Date: ___________________ [Holder]
By ________________________________
Name:
Title:
<PAGE>
Exhibit B
ASSIGNMENT FORM
To: ANGEION CORPORATION
The undersigned hereby assigns and transfers this Warrant to
_______________________________________________________________________________
(Insert assignee's social security or tax identification number)
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Print or type assignee's name, address and postal code)
and irrevocably appoints _______________________________________________________
to transfer this Warrant on the books of the Company.
Date: ___________________ [Holder]
By ________________________________
Name:
Title:
(Sign exactly as your name appears on the face of this Warrant)
Signature guarantee:
EXHIBIT 10.9
Exhibit A-2
[Form of Second Investment Warrants]
THIS SECURITY IS SUBJECT TO THE PROVISIONS OF THE INVESTMENT AND MASTER
STRATEGIC RELATIONSHIP AGREEMENT DATED AS OF OCTOBER 9, 1997 BETWEEN THE ISSUER
AND SYNTHELABO AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN ACCORDANCE
THEREWITH. A COPY OF SUCH AGREEMENT IS ON FILE AT THE OFFICE OF THE CORPORATE
SECRETARY OF THE ISSUER. THIS SECURITY WAS SOLD IN A PRIVATE PLACEMENT, WITHOUT
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AND MAY BE OFFERED OR SOLD ONLY
IF REGISTERED UNDER THE SECURITIES ACT OF 1933 OR IF AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.
-------------------------------
ANGEION CORPORATION
COMMON STOCK PURCHASE WARRANT
_________________ Shares
Capitalized terms used and not otherwise defined in this Common Stock
Purchase Warrant (this "Warrant") shall have the respective meanings assigned to
them in the Investment and Master Strategic Relationship Agreement dated as of
the 9th day of October, 1997, between Angeion Corporation, a Minnesota
corporation having its executive offices and principal place of business at 3650
Annapolis Lane, Minneapolis, Minnesota 55447 (the "Company"), and Synthelabo, a
French societe anonyme (the "Holder"), as the same may be supplemented,
modified, amended, renewed or restated from time to time (the "Purchase
Agreement").
The Company does hereby certify and agree that, for value received, the
Holder, its successors and assigns, hereby is entitled to purchase from the
Company ______ duly authorized, validly issued, fully paid and non-assessable
shares of Common Stock, par value $0.01 per share ("Common Stock"), of the
Company (the "Exercise Quantity") upon the terms and subject to the provisions
of this Warrant.
Section 1. Price and Exercise of Warrant.
1.1 Term of Warrant. This Warrant shall be exercisable for the period
commencing on the date hereof and ending at 4:30 p.m., New York City time, on
the third anniversary of the date hereof (the "Expiration Date").
1.2 Exercise Price. The price per share at which the shares of Common Stock
issuable upon exercise of this Warrant (the "Warrant Shares") shall be $___ per
share (the
<PAGE>
"Warrant Price").
1.3 Exercise of Warrant. (a) This Warrant may be exercised, in whole or in
part, upon surrender to the Company at its offices at 3650 Annapolis Lane,
Minneapolis, Minnesota of the certificate or certificates evidencing this
Warrant to be exercised, together with the form of election to exercise attached
hereto as Exhibit A duly completed and executed, and upon payment to the Company
of the Warrant Price for the number of Warrant Shares in respect of which this
Warrant is then being exercised. Payment of the aggregate Warrant Price may be
made in cash, by certified or bank check or by wire transfer.
(b) Subject to Section 2 hereof, upon such surrender of this Warrant,
and the duly completed and executed form of election to exercise, and payment of
the Warrant Price as aforesaid, the Company shall cause to be issued and
delivered with all reasonable dispatch (and in any event within five business
days thereafter) to the Holder or such other person as the Holder may designate
in writing a certificate or certificates for the number of full shares of Common
Stock so purchased upon the exercise of this Warrant. Such certificate or
certificates shall be deemed to have been issued and any person so designated to
be named therein shall be deemed to have become a holder of record of such
shares of Common Stock as of the date of the surrender of this Warrant, and the
duly completed and executed form of election to exercise, and payment of the
Warrant Price, as aforesaid; provided, however, that if, at the date of
surrender of this Warrant and payment of the Warrant Price, the transfer books
for the shares of Common Stock purchasable upon the exercise of this Warrant
shall be closed, the certificates for the shares of Common Stock shall be
issuable as of the date on which such books shall next be opened (whether before
or after the Expiration Date), and, until such date, the Company shall be under
no duty to cause to be delivered any certificate for such shares of Common Stock
or for shares of such other class of stock. If this Warrant is exercised in
part, a new Warrant certificate of the same tenor and for the number of Warrant
Shares not exercised shall be executed by the Company.
1.4 Fractional Interests. The Company shall not be required to issue
fractions of shares of Common Stock on the exercise of this Warrant. If any
fraction of a share of Common Stock would be issuable upon the exercise of this
Warrant (or any portion thereof), the Company shall purchase such fraction for
an amount in cash equal to the same fraction of the last reported sale price of
the Common Stock on the NASDAQ National Market System or any other national
securities exchange on which the Common Stock is then listed.
Section 2. Exchange and Transfer of Warrant.
(a) This Warrant may be exchanged for two or more Warrants entitling
the Holder thereof to purchase the same aggregate Exercise Quantity at the
Exercise Price per share and otherwise having the same terms and provisions as
this Warrant. The Holder may request such an exchange by surrender of this
Warrant to the Company, together with a written exchange request specifying the
desired number of Warrants and allocation of the Exercise Quantity purchasable
under the existing Warrant. Within two business days after the Company's receipt
of this Warrant and such an exchange request, the Company will issue and deliver
such new Warrants to the Holder in the amounts and with the allocations
<PAGE>
requested.
(b) Subject to the restrictions set forth in Section 4.2(d) of the
Purchase Agreement, this Warrant from time to time may be transferred, in whole
or in part, by the Holder or any duly authorized representative of the Holder. A
transfer may be registered with the Company by submission to it of this Warrant,
together with the annexed Assignment Form attached hereto as Exhibit B duly
completed and executed. Within two business days after the satisfaction by the
Holder of the conditions to such transfer set forth in such Section 4.2(d) and
the Company's receipt of this Warrant and the Assignment Form so completed and
executed, the Company will issue and deliver to the transferee a new Warrant
representing the portion of the Exercise Quantity transferred at the same
Exercise Price per share and otherwise having the same terms and provisions as
this Warrant, which the Company will register in the new holder's name. In the
event of a partial transfer of this Warrant, the Company shall concurrently
issue and deliver to the transferring holder a new Warrant that entitles the
transferring holder to purchase the balance of the Exercise Quantity not so
transferred and that otherwise is upon the same terms and conditions as this
Warrant. Upon the due delivery of this Warrant for transfer, the transferee
holder shall be deemed for all purposes to have become the holder of the new
Warrant issued respecting the Exercise Quantity transferred, effective
immediately prior to the close of business on the date of such delivery,
irrespective of the date of actual delivery of the new Warrant representing the
Exercise Quantity transferred.
(c) In the event of the loss, theft or destruction of this Warrant, the
Company shall execute and deliver an identical new Warrant to the Holder in
substitution therefor upon the Company's receipt of (i) evidence reasonably
satisfactory to the Company of such event and (ii) if requested by the Company,
an indemnity agreement reasonably satisfactory in form and substance to the
Company. In the event of the mutilation of or other damage to this Warrant, the
Company shall execute and deliver an identical new Warrant to the Holder in
substitution therefor upon the Company's receipt of the mutilated or damaged
Warrant.
(d) The Company shall pay all costs and expenses incurred in connection
with the exercise, exchange, transfer or replacement of this Warrant, including,
without limitation, the costs of preparation, execution and delivery of a new
Warrant and of stock certificates representing all Warrant Shares; provided,
however, that the Holder shall pay all stamp and other transfer taxes payable in
connection with the transfer or replacement of this Warrant.
Section 3. Certain Covenants.
(a) The Company shall at all times reserve for issuance and keep
available out of its authorized and unissued shares of Common Stock, solely for
the purpose of providing for the exercise of this Warrant, such number of shares
of Common Stock as shall from time to time be sufficient therefor.
(b) The Company will not, by amendment of its articles of incorporation
<PAGE>
or through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of this Warrant.
Without limiting the foregoing, the Company (i) will not increase the par value
of any shares of capital stock receivable upon the exercise of this Warrant
above the amount payable therefor upon such exercise, and (ii) will take all
such action as may be necessary or appropriate in order that the Company may
validly and legally issue fully paid and nonassessable shares of capital stock
upon the exercise of this Warrant.
Section 4. Adjustment of Warrant Price and Number of Warrant Shares.
The Warrant Price in effect at any time and the number and kind of
securities purchasable upon the exercise of this Warrant shall be subject to
adjustment from time to time upon the occurrence of certain events, as
hereinafter provided.
(a) In case the Company shall hereafter (i) pay a dividend or make a
distribution on its Common Stock in shares of its Common Stock, (ii) subdivide
its outstanding Common Stock, (iii) combine its outstanding Common Stock into a
smaller number of shares, or (iv) issue any shares by reclassification of its
Common Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing corporation), the
Warrant Price in effect at the time of the record date for such dividend or
distribution or the effective date of such subdivision, combination or
reclassification shall be proportionately adjusted so that the Holder, upon
exercise of this Warrant after such date, shall be entitled to receive the
aggregate number and kind of shares of Common Stock which, if this Warrant had
been exercised immediately prior to such record date, it would have owned upon
such exercise and been entitled to receive upon such dividend, distribution,
subdivision, combination or reclassification.
(b) In case the Company shall hereafter distribute to all holders of
its Common Stock shares of stock other than Common Stock, evidences of its
indebtedness or assets (excluding cash dividends or distributions out of
retained earnings and dividends or distributions referred to in paragraph (a)
above), or any rights, warrants or options to subscribe for or purchase shares
of Common Stock (or securities convertible into, exercisable for or exchangeable
for shares of Common Stock ) (excluding those referred to in paragraph (c)
below), then in each such case the Warrant Price in effect thereafter shall be
determined by multiplying the Warrant Price in effect immediately prior to the
date of such issuance by a fraction, the numerator of which shall be the total
number of outstanding shares of Common Stock multiplied by the Fair Market Value
Price (as defined in below), less the then fair market value (as determined in
good faith by the Company's board of directors) of said shares of stock, assets
or evidences of indebtedness so distributed or of such rights or warrants, and
the denominator of which shall be the total number of outstanding shares of
Common Stock multiplied by the Fair Market Value Price. Such adjustments shall
be made whenever any such distribution is made and shall become effective
immediately after the record date for the determination of shareholders entitled
to receive such distribution.
(c) In case the Company shall hereafter issue shares of its Common
<PAGE>
Stock or securities (including options, warrants or rights) convertible into,
exchangeable for or exercisable for shares of Common Stock, such shares of
Common Stock or securities convertible into, exchangeable for or exercisable for
shares of Common Stock being herein called "Company Securities") at a price per
share that is less than the Second Reference Price (as defined below) at any
time during the Anti-Dilution Period (as defined below), the Warrant Price shall
be adjusted immediately thereafter so that it shall equal the price determined
by multiplying the Warrant Price in effect immediately prior thereto by a
fraction, (x) the numerator of which shall be the sum of the number of shares of
Common Stock outstanding immediately prior to the issuance of such additional
Company Securities pursuant to such offering plus the number of shares of Common
Stock which the aggregate consideration received for the issuance of such
additional shares would purchase at such Second Reference Price, and (y) the
denominator of which shall be the number of shares of Common Stock outstanding
immediately after the issuance of such additional shares pursuant to such
offering. Such adjustment shall be made successively whenever such an issuance
is made.
(d) In case the Company shall hereafter issue any Company Securities
(excluding securities issued in transactions described in paragraph (c) above)
at an effective price per share less than the Fair Market Value Price, the
Warrant Price shall be adjusted immediately thereafter so that it shall equal
the price determined by multiplying the Warrant Price in effect immediately
prior thereto by a fraction, (x) the numerator of which shall be the sum of the
number of shares of Common Stock outstanding immediately prior to the issuance
of such additional Company Securities pursuant to such offering plus the number
of shares of Common Stock which the aggregate consideration received for the
issuance of such additional shares would purchase at the Fair Market Value
Price, and (y) the denominator of which shall be the number of shares of Common
Stock outstanding immediately after the issuance of such additional shares
pursuant to such offering. Such adjustment shall be made successively whenever
such an issuance is made.
(e) Whenever the Warrant Price payable upon exercise of this Warrant is
adjusted pursuant to paragraphs (a), (b), (c) and (d) above, the number of
Warrant Shares purchasable upon exercise of this Warrant shall simultaneously be
adjusted by multiplying the number of Warrant Shares initially issuable upon
exercise of this Warrant by the Warrant Price in effect as of the date of this
Warrant and dividing the product so obtained by the Warrant Price, as adjusted.
(f) Anything herein to the contrary notwithstanding:
(i) (A) The Company shall not be required to make any
adjustment contemplated under paragraph (c) in the case of: (A) the
issuance of shares of Common Stock upon the sale or exercise in whole
or part of the warrants to purchase shares of Common Stock issued
pursuant to the Purchase Agreement; (B) the issuance of shares of
Common Stock or any other securities which may now or hereafter be
granted or exercised under any of the Company's compensatory benefit
plans (regardless of whether such shares of Common Stock or other
securities are issued to employees, directors, consultants or others of
the Company or the joint
<PAGE>
venture established pursuant to the Limited Liability Company Operating
Agreement of _______________ LLC (the "U.S. Joint Venture Agreement"))
(the "Plans") and such other employee benefit arrangements, contracts
or plans as are recommended by the management of the Company and
approved by its board of directors (adjusted appropriately for stock
splits, stock combinations or stock dividends); (C) the issuance or
sale of shares of Common Stock or convertible securities upon the
exercise of any rights or warrants to subscribe for or purchase, or any
options for the purchase of, Common Stock or convertible securities
outstanding on the date of the Purchase Agreement, except as set forth
in Schedule 2.4(f)(i)(A)(C) of the Purchase Agreement; (D) the issuance
or sale of shares of Common Stock upon conversion or exchange of any
convertible securities or exercise of any options, warrants or other
purchase rights, if a prior antidilution adjustment was made or
required to be made hereunder upon the issuance, sale (or grant with
respect to options) of such convertible securities, options, warrants
or other purchase rights; (E) the issuance of shares of Common Stock in
connection with a bona fide merger, acquisition (including without
limitation, acquisition of a third party's assets, products, technology
or other rights) or other similar transaction involving the Company or
a subsidiary of the Company if the board of directors of the Company
has obtained a fairness opinion with respect to the issuance of such
Common Stock from a nationally or regionally recognized investment
banking firm indicating the financial terms of such merger, acquisition
or other similar transaction are fair to the Company when taken as a
whole; or (F) the issuance of any Company Securities in any transaction
which is part of the formation of a strategic relationship or joint
venture between the Company and a third party if the board of directors
of the Company has obtained a fairness opinion with respect to the
issuance of such Company Securities from a nationally or regionally
recognized investment banking firm indicating that the financial terms
of such strategic relationship, joint venture or other similar
relationship or venture are fair to the Company when taken as a whole.
(B) The Company shall not be required to make any
adjustment contemplated under paragraph (d) in the case of:
(A) the issuance of shares of Common Stock upon the sale or
exercise in whole or part of the warrants to purchase shares
of Common Stock issued pursuant to the Purchase Agreement; (B)
the issuance of shares of Common Stock or any other securities
which may now or hereafter be granted or exercised under any
of the Plans and such other employee benefit arrangements,
contracts or plans as are recommended by the management of the
Company and approved by its board of directors (adjusted
appropriately for stock splits, stock combinations or stock
dividends); (C) the issuance or sale of shares of Common Stock
or convertible securities upon the exercise of any rights or
warrants to subscribe for or purchase, or any options for the
purchase of, Common Stock or convertible securities
outstanding on the date of the Purchase Agreement, except as
set forth in Schedule 2.4(f)(i)(A)(C) of the Purchase
Agreement; (D) the issuance or sale of shares of Common Stock
upon conversion or exchange of any convertible securities or
exercise of any
<PAGE>
options, warrants or other purchase rights, if a prior
antidilution adjustment was made or required to be made
hereunder upon the issuance, sale (or grant with respect to
options) of such convertible securities, options, warrants or
other purchase rights; (E) the issuance of shares of Common
Stock in connection with a bona fide merger, acquisition
(including without limitation, acquisition of a third party's
assets, products, technology or other rights) or other similar
transaction involving the Company or a subsidiary of the
Company if the board of directors of the Company has obtained
a fairness opinion with respect to the issuance of such Common
Stock from a nationally or regionally recognized investment
banking firm indicating the financial terms of such merger,
acquisition or other similar transaction are fair to the
Company when taken as a whole; (F) the issuance of any Company
Securities in any transaction which is part of the formation
of a strategic relationship or joint venture between the
Company and a third party if the board of directors of the
Company has obtained a fairness opinion with respect to the
issuance of such Company Securities from a nationally
recognized investment banking firm indicating that the
financial terms of such strategic relationship, joint venture
or other similar relationship or venture are fair to the
Company when taken as a whole; or (G) the issuance of shares
of Common Stock in connection with a bona fide private
placement transaction not involving purchasers or placement
agents affiliated with the Company if (1) the discount to
market is not greater than 15% and (2) the Company has
obtained a fairness opinion with respect to the issuance
thereof from a nationally or regionally recognized investment
banking firm that the financial terms of such transaction are
fair to the Company when taken as a whole.
(ii) The Company shall not be required to make any adjustment
contemplated under paragraph (c) or (d) with respect to any Future
Financing (as defined below) if the Investor exercises its right to
increase or maintain its stock ownership with respect to such Future
Financing pursuant to the Purchase Agreement.
(iii) The provisions of paragraphs (c) and (d) above shall terminate
and have no further force and effect upon the Investor's Rights
Termination Date as such term is defined in the U.S. Joint Venture
Agreement.
(g) The number of shares of Common Stock outstanding at any given time
for purposes of the calculations under paragraphs (c) and (d) shall be subject
to the following rules:
(i) In case of (1) the sale by the Company for cash (or as a component
of a unit being sold for cash) of any rights or warrants to subscribe
for or purchase, or any options for the purchase of, Common Stock or
any securities convertible into or exchangeable for Common Stock
without the payment of any further consideration other than cash, if
any (such securities convertible, exercisable or exchangeable into
Common Stock being herein called "Convertible Securities"), or (2) the
issuance by
<PAGE>
the Company, without the receipt by the Company of any consideration
therefor, or any rights or warrants to subscribe for or purchase, or
any options for the purchase of, Common Stock or Convertible
Securities, in each case, if (and only if) the consideration payable to
the Company upon the exercise of such rights, warrants or options shall
consist of cash, whether or not such rights, warrants or options, or
the right to convert or exchange such Convertible Securities, are
immediately exercisable, and the price per share for which Common Stock
is issuable upon the exercise of such rights, warrants or options or
upon the conversion or exchange of such Convertible Securities
(determined by dividing (x) the minimum aggregate consideration payable
to the Company upon the exercise of such rights, warrants or options,
plus the consideration, if any, received by the Company for the
issuance or sale of such rights, warrants or options, plus, in the case
of such Convertible Securities, the minimum aggregate amount of
additional consideration, other than such Convertible Securities,
payable upon the conversion or exchange thereof, by (y) the total
maximum number of shares of Common Stock issuable upon the exercise of
such rights, warrants or options or upon the conversion or exchange of
such Convertible Securities issuable upon the exercise of such rights,
warrants or options) is less than the Second Reference Price or Fair
Market Value Price, as applicable, on the date of the issuance or sale
of such rights, warrants or options, then the total maximum number of
shares of Common Stock issuable upon the exercise of such rights,
warrants or options or upon the conversion or exchange of such
Convertible Securities (as of the date of the issuance or sale of such
rights, warrants or options) shall be deemed to be outstanding shares
of Common Stock and shall be deemed to have been sold for cash in an
amount equal to (1) any cash paid for such warrants, options or
Convertible Securities plus (2) the price per share payable upon the
exercise of such rights, warrants or options or upon the conversion or
exchange of such Convertible Securities issuable upon the exercise of
such rights, warrants or options.
(ii) In case the Company shall modify the rights of conversion,
exchange or exercise of any of the securities referred to in (i) above
or any other securities of the Company convertible, exchangeable or
exercisable for shares of Common Stock, for any reason other than an
event that would require adjustment to prevent dilution, so that the
consideration per share received by the Company after such modification
is less than the Second Reference Price or Fair Market Value Price, as
applicable, the number of shares to be issued and outstanding shall be
recalculated according to (i) and the number of antidilution shares
issued pursuant to paragraph (c) or (d), as the case may be, shall be
recalculated and any additional resulting antidilution shares shall
thereupon be issued.
(iii) In the case of the sale for cash of any shares of Common Stock,
any Convertible Securities, any rights or warrants to subscribe for or
purchase, or any options for the purchase of, Common Stock or
Convertible Securities, the consideration received by the Company
theretofor shall be deemed to be the gross sales price therefor without
deducting therefrom any expense paid or incurred by the Company or any
underwriting discounts or commissions or concessions paid or allowed by
the Company in connection therewith.
<PAGE>
(h) No adjustment in the Warrant Price shall be required unless such
adjustment would require an increase or decrease of at least five cents ($0.05)
in such price; provided, however, that any adjustments not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 4 shall be made to the nearest cent or to
the nearest one-thousandth of a share, as the case may be.
(i) Anything in this Section 4 to the contrary notwithstanding, the
Company shall be entitled, but shall not be required, to make such changes in
the Warrant Price, in addition to those required by this Section 4, as it in its
discretion shall determine to be advisable in order that any dividend or
distribution in shares of Common Stock, subdivision, reclassification or
combination of shares of Common Stock, issuance of rights or warrants to
purchase Common Stock or distribution of shares of stock other than Common
Stock, evidences of indebtedness or assets (other than distributions in cash out
of retained earnings) referred to hereinabove in this Section 4, hereafter made
by the Company to the holders of its Common Stock shall not be taxable to them.
(j) Whenever the Warrant Price is adjusted, as herein provided, the
Company shall promptly cause a notice setting forth the adjusted Warrant Price
and adjusted number of shares issuable upon exercise of this Warrant to be
mailed to the Holder. The certificate setting forth the computation shall be
signed by the Chief Financial Officer of the Company.
(k) In the event that at any time, as a result of any adjustment made
pursuant to paragraph (a) above, the holder of this Warrant thereafter shall
become entitled to receive any shares of the Company, other than Common Stock,
thereafter the number of such other shares so receivable upon exercise of this
Warrant shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Common Stock contained in paragraphs (a) to (h) inclusive, above.
Section 5. Rights and Obligations of the Warrant Holder.
This Warrant shall not entitle the Holder to any rights of a stockholder in
the Company.
Section 6. Restrictive Stock Legend.
This Warrant and the Warrant Shares have not been registered under any
securities laws. Accordingly, until such time as the securities represented
thereby are no longer subject to the restrictions set forth in Section 4.2 of
the Purchase Agreement and there is delivered to the Company an opinion of
counsel reasonably acceptable to the Company to the effect that such legend is
no longer required, any stock certificates issued pursuant to the exercise of
this Warrant shall bear the following legend:
THIS SECURITY IS SUBJECT TO THE PROVISIONS OF THE
<PAGE>
INVESTMENT AND MASTER STRATEGIC RELATIONSHIP AGREEMENT DATED AS OF
OCTOBER 9, 1997 BETWEEN THE ISSUER AND SYNTHELABO AND MAY NOT BE
SOLD OR TRANSFERRED EXCEPT IN ACCORDANCE THEREWITH. A COPY OF SUCH
AGREEMENT IS ON FILE AT THE OFFICE OF THE CORPORATE SECRETARY OF
THE ISSUER. THIS SECURITY WAS SOLD IN A PRIVATE PLACEMENT, WITHOUT
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AND MAY BE OFFERED
OR SOLD ONLY IF REGISTERED UNDER THE SECURITIES ACT OF 1933 OR IF
AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
Section 7. Notices.
Any notice or other communication required or permitted to be given here
shall be in writing and shall be effective (a) upon hand delivery or delivery by
telex (with correct answerback received), telecopy or facsimile at the address
or number designated below (if delivered on a business day during normal
business hours where such notice is to be received), or the first business day
following such delivery (if delivered other than on a business day during normal
business hours where such notice is to be received) or (b) on the third business
day following the date of mailing by express courier service, fully prepaid,
addressed to such address, or upon actual receipt of such mailing, whichever
shall first occur. The addresses for such communication shall be:
If to the Company:
Angeion Corporation
3650 Annapolis Lane, Suite 170
Plymouth, MN 55447-5434
Telephone: (612) 550-9388
Telecopier: (612) 509-9525
Attention: Chief Financial Officer
With a copy to:
Morrison & Foerster LLP
425 Market Street
San Francisco, CA 94105
Telephone: (415) 268-7000
Telecopier: (415) 268-7522
Attention: Gavin B. Grover, Esq.
If to the Holder:
Synthelabo
22 Avenue Galilee
92350 Le Plessis Robinson
<PAGE>
France
Telephone: (33)(1)45.37.56.67
Telecopier: (33)(1)45.37.58.04
Attention: General Counsel
With copies to:
ELA Medical
Centre d'Affaires la Boursidiere
92357 Le Plessis Robinson
France
Telephone: (33)(1)46.01.33.01
Telecopier: (33)(1)46.01.33.15
Attention: President
and
Coudert Brothers
1114 Avenue of the Americas
New York, NY 10036-7703
Telephone: (212) 626-4400
Telecopier: (212) 626-4120
Attention: James C. Colihan, Esq.
Each party hereto may from time to time change its address for notices under
this Section 7 by giving at least 10 days' notice of such changes address to the
other party hereto.
Section 8. Amendments and Waivers.
This Warrant and any term hereof may be changed, waived, discharged or
terminated only by an instrument in writing signed by the party against which
enforcement of such change, waiver, discharge or termination is sought.
Section 9. Applicable Law.
This Warrant shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York without regard to the principles
of conflict of laws.
Section 10. Definitions.
As used in this Warrant, the following terms shall be defined as follows:
"Anti-Dilution Period" shall mean the period commencing on the date hereof
and terminating on the first anniversary of the Initial Closing Date (as defined
in the Purchase Agreement).
<PAGE>
"Fair Market Value Price" shall mean the average Quoted Price for the five
business days prior to the closing of the applicable sale.
"Future Financing" shall mean any future offering of any shares of any
class of Company Securities with voting rights generally to elect directors of
the Company.
"Quoted Price" of the Common Stock shall mean: the last sale price regular
way or, in the case no such sale takes place on such day, the average of the
closing bid and asked prices regular way, in wither case on the NASDAQ National
Market System as reported by NASDAQ, or, if the Common Stock is not authorized
for quotation on the NASDAQ National Market System, on the New York Stock
Exchange Composite Tape (the "Composite Tape"), or, if the Common Stock is not
listed or admitted to trading on such exchange, on the national securities
exchange in or nearest the City of New York on which the Common Stock is listed
or admitted to trading, or if the Common Stock is not listed or admitted to
trading on any national securities exchange, the last sale price regular way or,
in case no such sale takes place on such day, the average of the highest
reported bid and lowest reported asked prices as furnished by the National
Association of Securities Dealers Inc. through NASDAQ or a similar organization
if NASDAQ is no longer reporting such information, or if on any such trading day
the Common Stock is not quoted by any such organization, the fair value of a
share of Common Stock on such day, as determined in good faith by the board of
directors of the Company.
"Second Reference Price" shall mean one hundred and fifteen percent (115%)
of the average Quoted Price for all trading days within the fifteen (15) trading
days ending two days prior to the earlier of (i) the public announcement by the
Company of the granting of approval by the Federal Food and Drug Administration
(the "FDA") regarding the use of the Company's implantable cardioverter
defibrillator model 2010 or (ii) the actual date of grant by the FDA of such
approval.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed
on the day and year first above written.
ANGEION CORPORATION
By:_________________________________
Title:
<PAGE>
Exhibit A
To: ANGEION CORPORATION
ELECTION TO EXERCISE
The undersigned hereby exercises its right to subscribe for
and purchase from ANGEION CORPORATION ______ fully paid, validly issued and
nonassessable shares of Common Stock covered by the within Warrant and tenders
payment herewith in the amount of $__________ in accordance with the terms
thereof, and requests that certificates for such shares be issued in the name
of, and delivered to:
___________________________
___________________________
___________________________
Date: ___________________ [Holder]
By _________________________________
Name:
Title:
<PAGE>
Exhibit B
ASSIGNMENT FORM
To: ANGEION CORPORATION
The undersigned hereby assigns and transfers this Warrant to
________________________________________________________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and postal code)
and irrevocably appoints _______________________________________________________
to transfer this Warrant on the books of the Company.
Date: ___________________ [Holder]
By _____________________________________
Name:
Title:
(Sign exactly as your name appears on the face of this Warrant)
Signature guarantee:
EXHIBIT 10.10
Exhibit A-3
[Form of Third Investment Warrants]
THIS SECURITY IS SUBJECT TO THE PROVISIONS OF THE INVESTMENT AND MASTER
STRATEGIC RELATIONSHIP AGREEMENT DATED AS OF OCTOBER 9, 1997 BETWEEN THE ISSUER
AND SYNTHELABO AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN ACCORDANCE
THEREWITH. A COPY OF SUCH AGREEMENT IS ON FILE AT THE OFFICE OF THE CORPORATE
SECRETARY OF THE ISSUER. THIS SECURITY WAS SOLD IN A PRIVATE PLACEMENT, WITHOUT
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AND MAY BE OFFERED OR SOLD ONLY
IF REGISTERED UNDER THE SECURITIES ACT OF 1933 OR IF AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.
-------------------------------
ANGEION CORPORATION
COMMON STOCK PURCHASE WARRANT
_________________ Shares
Capitalized terms used and not otherwise defined in this Common Stock
Purchase Warrant (this "Warrant") shall have the respective meanings assigned to
them in the Investment and Master Strategic Relationship Agreement dated as of
the 9th day of October, 1997, between Angeion Corporation, a Minnesota
corporation having its executive offices and principal place of business at 3650
Annapolis Lane, Minneapolis, Minnesota 55447 (the "Company"), and Synthelabo, a
French societe anonyme (the "Holder"), as the same may be supplemented,
modified, amended, renewed or restated from time to time (the "Purchase
Agreement").
The Company does hereby certify and agree that, for value received, the
Holder, its successors and assigns, hereby is entitled to purchase from the
Company ______ duly authorized, validly issued, fully paid and non-assessable
shares of Common Stock, par value $0.01 per share ("Common Stock"), of the
Company (the "Exercise Quantity") upon the terms and subject to the provisions
of this Warrant.
Section 1. Price and Exercise of Warrant.
1.1 Term of Warrant. This Warrant shall be exercisable for the period
commencing on the date hereof and ending at 4:30 p.m., New York City time, on
the third anniversary of the date hereof (the "Expiration Date").
1.2 Exercise Price. The price per share at which the shares of Common Stock
issuable upon exercise of this Warrant (the "Warrant Shares") shall be $___ per
share (the
<PAGE>
"Warrant Price").
1.3 Exercise of Warrant. (a) This Warrant may be exercised, in whole or in
part, upon surrender to the Company at its offices at 3650 Annapolis Lane,
Minneapolis, Minnesota of the certificate or certificates evidencing this
Warrant to be exercised, together with the form of election to exercise attached
hereto as Exhibit A duly completed and executed, and upon payment to the Company
of the Warrant Price for the number of Warrant Shares in respect of which this
Warrant is then being exercised. Payment of the aggregate Warrant Price may be
made in cash, by certified or bank check or by wire transfer.
(b) Subject to Section 2 hereof, upon such surrender of this Warrant,
and the duly completed and executed form of election to exercise, and payment of
the Warrant Price as aforesaid, the Company shall cause to be issued and
delivered with all reasonable dispatch (and in any event within five business
days thereafter) to the Holder or such other person as the Holder may designate
in writing a certificate or certificates for the number of full shares of Common
Stock so purchased upon the exercise of this Warrant. Such certificate or
certificates shall be deemed to have been issued and any person so designated to
be named therein shall be deemed to have become a holder of record of such
shares of Common Stock as of the date of the surrender of this Warrant, and the
duly completed and executed form of election to exercise, and payment of the
Warrant Price, as aforesaid; provided, however, that if, at the date of
surrender of this Warrant and payment of the Warrant Price, the transfer books
for the shares of Common Stock purchasable upon the exercise of this Warrant
shall be closed, the certificates for the shares of Common Stock shall be
issuable as of the date on which such books shall next be opened (whether before
or after the Expiration Date), and, until such date, the Company shall be under
no duty to cause to be delivered any certificate for such shares of Common Stock
or for shares of such other class of stock. If this Warrant is exercised in
part, a new Warrant certificate of the same tenor and for the number of Warrant
Shares not exercised shall be executed by the Company.
1.4 Fractional Interests. The Company shall not be required to issue
fractions of shares of Common Stock on the exercise of this Warrant. If any
fraction of a share of Common Stock would be issuable upon the exercise of this
Warrant (or any portion thereof), the Company shall purchase such fraction for
an amount in cash equal to the same fraction of the last reported sale price of
the Common Stock on the NASDAQ National Market System or any other national
securities exchange on which the Common Stock is then listed.
Section 2. Exchange and Transfer of Warrant.
(a) This Warrant may be exchanged for two or more Warrants entitling
the Holder thereof to purchase the same aggregate Exercise Quantity at the
Exercise Price per share and otherwise having the same terms and provisions as
this Warrant. The Holder may request such an exchange by surrender of this
Warrant to the Company, together with a written exchange request specifying the
desired number of Warrants and allocation of the Exercise Quantity purchasable
under the existing Warrant. Within two business days after the Company's receipt
of this Warrant and such an exchange request, the Company will issue and deliver
such new Warrants to the Holder in the amounts and with the allocations
<PAGE>
requested.
(b) Subject to the restrictions set forth in Section 4.2(d) of the
Purchase Agreement, this Warrant from time to time may be transferred, in whole
or in part, by the Holder or any duly authorized representative of the Holder. A
transfer may be registered with the Company by submission to it of this Warrant,
together with the annexed Assignment Form attached hereto as Exhibit B duly
completed and executed. Within two business days after the satisfaction by the
Holder of the conditions to such transfer set forth in such Section 4.2(d) and
the Company's receipt of this Warrant and the Assignment Form so completed and
executed, the Company will issue and deliver to the transferee a new Warrant
representing the portion of the Exercise Quantity transferred at the same
Exercise Price per share and otherwise having the same terms and provisions as
this Warrant, which the Company will register in the new holder's name. In the
event of a partial transfer of this Warrant, the Company shall concurrently
issue and deliver to the transferring holder a new Warrant that entitles the
transferring holder to purchase the balance of the Exercise Quantity not so
transferred and that otherwise is upon the same terms and conditions as this
Warrant. Upon the due delivery of this Warrant for transfer, the transferee
holder shall be deemed for all purposes to have become the holder of the new
Warrant issued respecting the Exercise Quantity transferred, effective
immediately prior to the close of business on the date of such delivery,
irrespective of the date of actual delivery of the new Warrant representing the
Exercise Quantity transferred.
(c) In the event of the loss, theft or destruction of this Warrant, the
Company shall execute and deliver an identical new Warrant to the Holder in
substitution therefor upon the Company's receipt of (i) evidence reasonably
satisfactory to the Company of such event and (ii) if requested by the Company,
an indemnity agreement reasonably satisfactory in form and substance to the
Company. In the event of the mutilation of or other damage to this Warrant, the
Company shall execute and deliver an identical new Warrant to the Holder in
substitution therefor upon the Company's receipt of the mutilated or damaged
Warrant.
(d) The Company shall pay all costs and expenses incurred in connection
with the exercise, exchange, transfer or replacement of this Warrant, including,
without limitation, the costs of preparation, execution and delivery of a new
Warrant and of stock certificates representing all Warrant Shares; provided,
however, that the Holder shall pay all stamp and other transfer taxes payable in
connection with the transfer or replacement of this Warrant.
Section 3. Certain Covenants.
(a) The Company shall at all times reserve for issuance and keep
available out of its authorized and unissued shares of Common Stock, solely for
the purpose of providing for the exercise of this Warrant, such number of shares
of Common Stock as shall from time to time be sufficient therefor.
(b) The Company will not, by amendment of its articles of incorporation
<PAGE>
or through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of this Warrant.
Without limiting the foregoing, the Company (i) will not increase the par value
of any shares of capital stock receivable upon the exercise of this Warrant
above the amount payable therefor upon such exercise, and (ii) will take all
such action as may be necessary or appropriate in order that the Company may
validly and legally issue fully paid and nonassessable shares of capital stock
upon the exercise of this Warrant.
Section 4. Adjustment of Warrant Price and Number of Warrant Shares.
The Warrant Price in effect at any time and the number and kind of
securities purchasable upon the exercise of this Warrant shall be subject to
adjustment from time to time upon the occurrence of certain events, as
hereinafter provided.
(a) In case the Company shall hereafter (i) pay a dividend or make a
distribution on its Common Stock in shares of its Common Stock, (ii) subdivide
its outstanding Common Stock, (iii) combine its outstanding Common Stock into a
smaller number of shares, or (iv) issue any shares by reclassification of its
Common Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing corporation), the
Warrant Price in effect at the time of the record date for such dividend or
distribution or the effective date of such subdivision, combination or
reclassification shall be proportionately adjusted so that the Holder, upon
exercise of this Warrant after such date, shall be entitled to receive the
aggregate number and kind of shares of Common Stock which, if this Warrant had
been exercised immediately prior to such record date, it would have owned upon
such exercise and been entitled to receive upon such dividend, distribution,
subdivision, combination or reclassification.
(b) In case the Company shall hereafter distribute to all holders of
its Common Stock shares of stock other than Common Stock, evidences of its
indebtedness or assets (excluding cash dividends or distributions out of
retained earnings and dividends or distributions referred to in paragraph (a)
above), or any rights, warrants or options to subscribe for or purchase shares
of Common Stock (or securities convertible into, exercisable for or exchangeable
for shares of Common Stock ) (excluding those referred to in paragraph (c)
below), then in each such case the Warrant Price in effect thereafter shall be
determined by multiplying the Warrant Price in effect immediately prior to the
date of such issuance by a fraction, the numerator of which shall be the total
number of outstanding shares of Common Stock multiplied by the Fair Market Value
Price (as defined in below), less the then fair market value (as determined in
good faith by the Company's board of directors) of said shares of stock, assets
or evidences of indebtedness so distributed or of such rights or warrants, and
the denominator of which shall be the total number of outstanding shares of
Common Stock multiplied by the Fair Market Value Price. Such adjustments shall
be made whenever any such distribution is made and shall become effective
immediately after the record date for the determination of shareholders entitled
to receive such distribution.
(c) In case the Company shall hereafter issue shares of its Common
<PAGE>
Stock or securities (including options, warrants or rights) convertible into,
exchangeable for or exercisable for shares of Common Stock, such shares of
Common Stock or securities convertible into, exchangeable for or exercisable for
shares of Common Stock being herein called "Company Securities") at a price per
share that is less than the Third Reference Price (as defined below) at any time
during the Anti-Dilution Period (as defined below), the Warrant Price shall be
adjusted immediately thereafter so that it shall equal the price determined by
multiplying the Warrant Price in effect immediately prior thereto by a fraction,
(x) the numerator of which shall be the sum of the number of shares of Common
Stock outstanding immediately prior to the issuance of such additional Company
Securities pursuant to such offering plus the number of shares of Common Stock
which the aggregate consideration received for the issuance of such additional
shares would purchase at such Third Reference Price, and (y) the denominator of
which shall be the number of shares of Common Stock outstanding immediately
after the issuance of such additional shares pursuant to such offering. Such
adjustment shall be made successively whenever such an issuance is made.
(d) In case the Company shall hereafter issue any Company Securities
(excluding securities issued in transactions described in paragraph (c) above)
at an effective price per share less than the Fair Market Value Price, the
Warrant Price shall be adjusted immediately thereafter so that it shall equal
the price determined by multiplying the Warrant Price in effect immediately
prior thereto by a fraction, (x) the numerator of which shall be the sum of the
number of shares of Common Stock outstanding immediately prior to the issuance
of such additional Company Securities pursuant to such offering plus the number
of shares of Common Stock which the aggregate consideration received for the
issuance of such additional shares would purchase at the Fair Market Value
Price, and (y) the denominator of which shall be the number of shares of Common
Stock outstanding immediately after the issuance of such additional shares
pursuant to such offering. Such adjustment shall be made successively whenever
such an issuance is made.
(e) Whenever the Warrant Price payable upon exercise of this Warrant is
adjusted pursuant to paragraphs (a), (b), (c) and (d) above, the number of
Warrant Shares purchasable upon exercise of this Warrant shall simultaneously be
adjusted by multiplying the number of Warrant Shares initially issuable upon
exercise of this Warrant by the Warrant Price in effect as of the date of this
Warrant and dividing the product so obtained by the Warrant Price, as adjusted.
(f) Anything herein to the contrary notwithstanding:
(i) (A) The Company shall not be required to make any
adjustment contemplated under paragraph (c) in the case of: (A) the
issuance of shares of Common Stock upon the sale or exercise in whole
or part of the warrants to purchase shares of Common Stock issued
pursuant to the Purchase Agreement; (B) the issuance of shares of
Common Stock or any other securities which may now or hereafter be
granted or exercised under any of the Company's compensatory benefit
plans (regardless of whether such shares of Common Stock or other
securities are issued to employees, directors, consultants or others of
the Company or the joint
<PAGE>
venture established pursuant to the Limited Liability Company Operating
Agreement of _______________ LLC (the "U.S. Joint Venture Agreement"))
(the "Plans") and such other employee benefit arrangements, contracts
or plans as are recommended by the management of the Company and
approved by its board of directors (adjusted appropriately for stock
splits, stock combinations or stock dividends); (C) the issuance or
sale of shares of Common Stock or convertible securities upon the
exercise of any rights or warrants to subscribe for or purchase, or any
options for the purchase of, Common Stock or convertible securities
outstanding on the date of the Purchase Agreement, except as set forth
in Schedule 2.4(f)(i)(A)(C) of the Purchase Agreement; (D) the issuance
or sale of shares of Common Stock upon conversion or exchange of any
convertible securities or exercise of any options, warrants or other
purchase rights, if a prior antidilution adjustment was made or
required to be made hereunder upon the issuance, sale (or grant with
respect to options) of such convertible securities, options, warrants
or other purchase rights; (E) the issuance of shares of Common Stock in
connection with a bona fide merger, acquisition (including without
limitation, acquisition of a third party's assets, products, technology
or other rights) or other similar transaction involving the Company or
a subsidiary of the Company if the board of directors of the Company
has obtained a fairness opinion with respect to the issuance of such
Common Stock from a nationally or regionally recognized investment
banking firm indicating the financial terms of such merger, acquisition
or other similar transaction are fair to the Company when taken as a
whole; or (F) the issuance of any Company Securities in any transaction
which is part of the formation of a strategic relationship or joint
venture between the Company and a third party if the board of directors
of the Company has obtained a fairness opinion with respect to the
issuance of such Company Securities from a nationally or regionally
recognized investment banking firm indicating that the financial terms
of such strategic relationship, joint venture or other similar
relationship or venture are fair to the Company when taken as a whole.
(B) The Company shall not be required to make any
adjustment contemplated under paragraph (d) in the case of:
(A) the issuance of shares of Common Stock upon the sale or
exercise in whole or part of the warrants to purchase shares
of Common Stock issued pursuant to the Purchase Agreement; (B)
the issuance of shares of Common Stock or any other securities
which may now or hereafter be granted or exercised under any
of the Plans and such other employee benefit arrangements,
contracts or plans as are recommended by the management of the
Company and approved by its board of directors (adjusted
appropriately for stock splits, stock combinations or stock
dividends); (C) the issuance or sale of shares of Common Stock
or convertible securities upon the exercise of any rights or
warrants to subscribe for or purchase, or any options for the
purchase of, Common Stock or convertible securities
outstanding on the date of the Purchase Agreement, except as
set forth in Schedule 2.4(f)(i)(A)(C) of the Purchase
Agreement; (D) the issuance or sale of shares of Common Stock
upon conversion or exchange of any convertible securities or
exercise of any
<PAGE>
options, warrants or other purchase rights, if a prior
antidilution adjustment was made or required to be made
hereunder upon the issuance, sale (or grant with respect to
options) of such convertible securities, options, warrants or
other purchase rights; (E) the issuance of shares of Common
Stock in connection with a bona fide merger, acquisition
(including without limitation, acquisition of a third party's
assets, products, technology or other rights) or other similar
transaction involving the Company or a subsidiary of the
Company if the board of directors of the Company has obtained
a fairness opinion with respect to the issuance of such Common
Stock from a nationally or regionally recognized investment
banking firm indicating the financial terms of such merger,
acquisition or other similar transaction are fair to the
Company when taken as a whole; (F) the issuance of any Company
Securities in any transaction which is part of the formation
of a strategic relationship or joint venture between the
Company and a third party if the board of directors of the
Company has obtained a fairness opinion with respect to the
issuance of such Company Securities from a nationally
recognized investment banking firm indicating that the
financial terms of such strategic relationship, joint venture
or other similar relationship or venture are fair to the
Company when taken as a whole; or (G) the issuance of shares
of Common Stock in connection with a bona fide private
placement transaction not involving purchasers or placement
agents affiliated with the Company if (1) the discount to
market is not greater than 15% and (2) the Company has
obtained a fairness opinion with respect to the issuance
thereof from a nationally or regionally recognized investment
banking firm that the financial terms of such transaction are
fair to the Company when taken as a whole.
(ii) The Company shall not be required to make any adjustment
contemplated under paragraph (c) or (d) with respect to any Future
Financing (as defined below) if the Investor exercises its right to
increase or maintain its stock ownership with respect to such Future
Financing pursuant to the Purchase Agreement.
(iii) The provisions of paragraphs (c) and (d) above shall terminate
and have no further force and effect upon the Investor's Rights
Termination Date as such term is defined in the U.S. Joint Venture
Agreement.
(g) The number of shares of Common Stock outstanding at any given time
for purposes of the calculations under paragraphs (c) and (d) shall be subject
to the following rules:
(i) In case of (1) the sale by the Company for cash (or as a component
of a unit being sold for cash) of any rights or warrants to subscribe
for or purchase, or any options for the purchase of, Common Stock or
any securities convertible into or exchangeable for Common Stock
without the payment of any further consideration other than cash, if
any (such securities convertible, exercisable or exchangeable into
Common Stock being herein called "Convertible Securities"), or (2) the
issuance by
<PAGE>
the Company, without the receipt by the Company of any consideration
therefor, or any rights or warrants to subscribe for or purchase, or
any options for the purchase of, Common Stock or Convertible
Securities, in each case, if (and only if) the consideration payable to
the Company upon the exercise of such rights, warrants or options shall
consist of cash, whether or not such rights, warrants or options, or
the right to convert or exchange such Convertible Securities, are
immediately exercisable, and the price per share for which Common Stock
is issuable upon the exercise of such rights, warrants or options or
upon the conversion or exchange of such Convertible Securities
(determined by dividing (x) the minimum aggregate consideration payable
to the Company upon the exercise of such rights, warrants or options,
plus the consideration, if any, received by the Company for the
issuance or sale of such rights, warrants or options, plus, in the case
of such Convertible Securities, the minimum aggregate amount of
additional consideration, other than such Convertible Securities,
payable upon the conversion or exchange thereof, by (y) the total
maximum number of shares of Common Stock issuable upon the exercise of
such rights, warrants or options or upon the conversion or exchange of
such Convertible Securities issuable upon the exercise of such rights,
warrants or options) is less than the Third Reference Price or Fair
Market Value Price, as applicable, on the date of the issuance or sale
of such rights, warrants or options, then the total maximum number of
shares of Common Stock issuable upon the exercise of such rights,
warrants or options or upon the conversion or exchange of such
Convertible Securities (as of the date of the issuance or sale of such
rights, warrants or options) shall be deemed to be outstanding shares
of Common Stock and shall be deemed to have been sold for cash in an
amount equal to (1) any cash paid for such warrants, options or
Convertible Securities plus (2) the price per share payable upon the
exercise of such rights, warrants or options or upon the conversion or
exchange of such Convertible Securities issuable upon the exercise of
such rights, warrants or options.
(ii) In case the Company shall modify the rights of conversion,
exchange or exercise of any of the securities referred to in (i) above
or any other securities of the Company convertible, exchangeable or
exercisable for shares of Common Stock, for any reason other than an
event that would require adjustment to prevent dilution, so that the
consideration per share received by the Company after such modification
is less than the Third Reference Price or Fair Market Value Price, as
applicable, the number of shares to be issued and outstanding shall be
recalculated according to (i) and the number of antidilution shares
issued pursuant to paragraph (c) or (d), as the case may be, shall be
recalculated and any additional resulting antidilution shares shall
thereupon be issued.
(iii) In the case of the sale for cash of any shares of Common Stock,
any Convertible Securities, any rights or warrants to subscribe for or
purchase, or any options for the purchase of, Common Stock or
Convertible Securities, the consideration received by the Company
theretofor shall be deemed to be the gross sales price therefor without
deducting therefrom any expense paid or incurred by the Company or any
underwriting discounts or commissions or concessions paid or allowed by
the Company in connection therewith.
<PAGE>
(h) No adjustment in the Warrant Price shall be required unless such
adjustment would require an increase or decrease of at least five cents ($0.05)
in such price; provided, however, that any adjustments not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 4 shall be made to the nearest cent or to
the nearest one-thousandth of a share, as the case may be.
(i) Anything in this Section 4 to the contrary notwithstanding, the
Company shall be entitled, but shall not be required, to make such changes in
the Warrant Price, in addition to those required by this Section 4, as it in its
discretion shall determine to be advisable in order that any dividend or
distribution in shares of Common Stock, subdivision, reclassification or
combination of shares of Common Stock, issuance of rights or warrants to
purchase Common Stock or distribution of shares of stock other than Common
Stock, evidences of indebtedness or assets (other than distributions in cash out
of retained earnings) referred to hereinabove in this Section 4, hereafter made
by the Company to the holders of its Common Stock shall not be taxable to them.
(j) Whenever the Warrant Price is adjusted, as herein provided, the
Company shall promptly cause a notice setting forth the adjusted Warrant Price
and adjusted number of shares issuable upon exercise of this Warrant to be
mailed to the Holder. The certificate setting forth the computation shall be
signed by the Chief Financial Officer of the Company.
(k) In the event that at any time, as a result of any adjustment made
pursuant to paragraph (a) above, the holder of this Warrant thereafter shall
become entitled to receive any shares of the Company, other than Common Stock,
thereafter the number of such other shares so receivable upon exercise of this
Warrant shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Common Stock contained in paragraphs (a) to (h) inclusive, above.
Section 5. Rights and Obligations of the Warrant Holder.
This Warrant shall not entitle the Holder to any rights of a stockholder in
the Company.
Section 6. Restrictive Stock Legend.
This Warrant and the Warrant Shares have not been registered under any
securities laws. Accordingly, until such time as the securities represented
thereby are no longer subject to the restrictions set forth in Section 4.2 of
the Purchase Agreement and there is delivered to the Company an opinion of
counsel reasonably acceptable to the Company to the effect that such legend is
no longer required, any stock certificates issued pursuant to the exercise of
this Warrant shall bear the following legend:
THIS SECURITY IS SUBJECT TO THE PROVISIONS OF THE
<PAGE>
INVESTMENT AND MASTER STRATEGIC RELATIONSHIP AGREEMENT DATED
AS OF OCTOBER 9, 1997 BETWEEN THE ISSUER AND SYNTHELABO AND
MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN ACCORDANCE THEREWITH.
A COPY OF SUCH AGREEMENT IS ON FILE AT THE OFFICE OF THE
CORPORATE SECRETARY OF THE ISSUER. THIS SECURITY WAS SOLD IN A
PRIVATE PLACEMENT, WITHOUT REGISTRATION UNDER THE SECURITIES
ACT OF 1933, AND MAY BE OFFERED OR SOLD ONLY IF REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR IF AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.
Section 7. Notices.
Any notice or other communication required or permitted to be given here
shall be in writing and shall be effective (a) upon hand delivery or delivery by
telex (with correct answerback received), telecopy or facsimile at the address
or number designated below (if delivered on a business day during normal
business hours where such notice is to be received), or the first business day
following such delivery (if delivered other than on a business day during normal
business hours where such notice is to be received) or (b) on the third business
day following the date of mailing by express courier service, fully prepaid,
addressed to such address, or upon actual receipt of such mailing, whichever
shall first occur. The addresses for such communication shall be:
If to the Company:
Angeion Corporation
3650 Annapolis Lane, Suite 170
Plymouth, MN 55447-5434
Telephone: (612) 550-9388
Telecopier: (612) 509-9525
Attention: Chief Financial Officer
With a copy to:
Morrison & Foerster LLP
425 Market Street
San Francisco, CA 94105
Telephone: (415) 268-7000
Telecopier: (415) 268-7522
Attention: Gavin B. Grover, Esq.
If to the Holder:
Synthelabo
22 Avenue Galilee
92350 Le Plessis Robinson
<PAGE>
France
Telephone: (33)(1)45.37.56.67
Telecopier: (33)(1)45.37.58.04
Attention: General Counsel
With copies to:
ELA Medical
Centre d'Affaires la Boursidiere
92357 Le Plessis Robinson
France
Telephone: (33)(1)46.01.33.01
Telecopier: (33)(1)46.01.33.15
Attention: President
and
Coudert Brothers
1114 Avenue of the Americas
New York, NY 10036-7703
Telephone: (212) 626-4400
Telecopier: (212) 626-4120
Attention: James C. Colihan, Esq.
Each party hereto may from time to time change its address for notices under
this Section 7 by giving at least 10 days' notice of such changes address to the
other party hereto.
Section 8. Amendments and Waivers.
This Warrant and any term hereof may be changed, waived, discharged or
terminated only by an instrument in writing signed by the party against which
enforcement of such change, waiver, discharge or termination is sought.
Section 9. Applicable Law.
This Warrant shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York without regard to the principles
of conflict of laws.
Section 10. Definitions.
As used in this Warrant, the following terms shall be defined as follows:
"Anti-Dilution Period" shall mean the period commencing on the date hereof
and terminating on the first anniversary of the Initial Closing Date (as defined
in the Purchase Agreement).
<PAGE>
"Fair Market Value Price" shall mean the average Quoted Price for the five
business days prior to the closing of the applicable sale.
"Future Financing" shall mean any future offering of any shares of any
class of Company Securities with voting rights generally to elect directors of
the Company.
"Quoted Price" of the Common Stock shall mean: the last sale price regular
way or, in the case no such sale takes place on such day, the average of the
closing bid and asked prices regular way, in wither case on the NASDAQ National
Market System as reported by NASDAQ, or, if the Common Stock is not authorized
for quotation on the NASDAQ National Market System, on the New York Stock
Exchange Composite Tape (the "Composite Tape"), or, if the Common Stock is not
listed or admitted to trading on such exchange, on the national securities
exchange in or nearest the City of New York on which the Common Stock is listed
or admitted to trading, or if the Common Stock is not listed or admitted to
trading on any national securities exchange, the last sale price regular way or,
in case no such sale takes place on such day, the average of the highest
reported bid and lowest reported asked prices as furnished by the National
Association of Securities Dealers Inc. through NASDAQ or a similar organization
if NASDAQ is no longer reporting such information, or if on any such trading day
the Common Stock is not quoted by any such organization, the fair value of a
share of Common Stock on such day, as determined in good faith by the board of
directors of the Company.
"Third Reference Price" shall mean one hundred and fifteen percent (115%)
of the average Quoted Price for all trading days within the fifteen (15) trading
days ending two days prior to the earlier of (i) the public announcement by the
Company of the granting of approval by the Federal Food and Drug Administration
(the "FDA") regarding the use of the Company's implantable cardioverter
defibrillator model 2020 or (ii) the actual date of grant by the FDA of such
approval.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed
on the day and year first above written.
ANGEION CORPORATION
By:________________________________
Title:
<PAGE>
Exhibit A
To: ANGEION CORPORATION
ELECTION TO EXERCISE
The undersigned hereby exercises its right to subscribe for
and purchase from ANGEION CORPORATION ______ fully paid, validly issued and
nonassessable shares of Common Stock covered by the within Warrant and tenders
payment herewith in the amount of $__________ in accordance with the terms
thereof, and requests that certificates for such shares be issued in the name
of, and delivered to:
______________________________________
______________________________________
______________________________________
Date: ___________________ [Holder]
By ________________________________
Name:
Title:
<PAGE>
Exhibit B
ASSIGNMENT FORM
To: ANGEION CORPORATION
The undersigned hereby assigns and transfers this Warrant to
_______________________________________________________________________________
(Insert assignee's social security or tax identification number)
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Print or type assignee's name, address and postal code)
and irrevocably appoints ______________________________________________________
to transfer this Warrant on the books of the Company.
Date: ___________________ [Holder]
By ________________________________
Name:
Title:
(Sign exactly as your name appears on the face of this Warrant)
Signature guarantee:
EXHIBIT 10.11
Exhibit A-4
[Form of Fourth Investment Warrants]
THIS SECURITY IS SUBJECT TO THE PROVISIONS OF THE INVESTMENT AND MASTER
STRATEGIC RELATIONSHIP AGREEMENT DATED AS OF OCTOBER 9, 1997 BETWEEN THE ISSUER
AND SYNTHELABO AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN ACCORDANCE
THEREWITH. A COPY OF SUCH AGREEMENT IS ON FILE AT THE OFFICE OF THE CORPORATE
SECRETARY OF THE ISSUER. THIS SECURITY WAS SOLD IN A PRIVATE PLACEMENT, WITHOUT
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AND MAY BE OFFERED OR SOLD ONLY
IF REGISTERED UNDER THE SECURITIES ACT OF 1933 OR IF AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.
-------------------------------
ANGEION CORPORATION
COMMON STOCK PURCHASE WARRANT
_________________ Shares
Capitalized terms used and not otherwise defined in this Common Stock
Purchase Warrant (this "Warrant") shall have the respective meanings assigned to
them in the Investment and Master Strategic Relationship Agreement dated as of
the 9th day of October, 1997, between Angeion Corporation, a Minnesota
corporation having its executive offices and principal place of business at 3650
Annapolis Lane, Minneapolis, Minnesota 55447 (the "Company"), and Synthelabo, a
French societe anonyme (the "Holder"), as the same may be supplemented,
modified, amended, renewed or restated from time to time (the "Purchase
Agreement").
The Company does hereby certify and agree that, for value received, the
Holder, its successors and assigns, hereby is entitled to purchase from the
Company ______ duly authorized, validly issued, fully paid and non-assessable
shares of Common Stock, par value $0.01 per share ("Common Stock"), of the
Company (the "Exercise Quantity") upon the terms and subject to the provisions
of this Warrant.
Section 1. Price and Exercise of Warrant.
1.1 Term of Warrant. This Warrant shall be exercisable for the period
commencing on the date hereof and ending at 4:30 p.m., New York City time, on
the third anniversary of the date hereof (the "Expiration Date").
1.2 Exercise Price. The price per share at which the shares of Common Stock
issuable upon exercise of this Warrant (the "Warrant Shares") shall be $___ per
share (the
<PAGE>
"Warrant Price").
1.3 Exercise of Warrant. (a) This Warrant may be exercised, in whole or in
part, upon surrender to the Company at its offices at 3650 Annapolis Lane,
Minneapolis, Minnesota of the certificate or certificates evidencing this
Warrant to be exercised, together with the form of election to exercise attached
hereto as Exhibit A duly completed and executed, and upon payment to the Company
of the Warrant Price for the number of Warrant Shares in respect of which this
Warrant is then being exercised. Payment of the aggregate Warrant Price may be
made in cash, by certified or bank check or by wire transfer.
(b) Subject to Section 2 hereof, upon such surrender of this Warrant,
and the duly completed and executed form of election to exercise, and payment of
the Warrant Price as aforesaid, the Company shall cause to be issued and
delivered with all reasonable dispatch (and in any event within five business
days thereafter) to the Holder or such other person as the Holder may designate
in writing a certificate or certificates for the number of full shares of Common
Stock so purchased upon the exercise of this Warrant. Such certificate or
certificates shall be deemed to have been issued and any person so designated to
be named therein shall be deemed to have become a holder of record of such
shares of Common Stock as of the date of the surrender of this Warrant, and the
duly completed and executed form of election to exercise, and payment of the
Warrant Price, as aforesaid; provided, however, that if, at the date of
surrender of this Warrant and payment of the Warrant Price, the transfer books
for the shares of Common Stock purchasable upon the exercise of this Warrant
shall be closed, the certificates for the shares of Common Stock shall be
issuable as of the date on which such books shall next be opened (whether before
or after the Expiration Date), and, until such date, the Company shall be under
no duty to cause to be delivered any certificate for such shares of Common Stock
or for shares of such other class of stock. If this Warrant is exercised in
part, a new Warrant certificate of the same tenor and for the number of Warrant
Shares not exercised shall be executed by the Company.
1.4 Fractional Interests. The Company shall not be required to issue
fractions of shares of Common Stock on the exercise of this Warrant. If any
fraction of a share of Common Stock would be issuable upon the exercise of this
Warrant (or any portion thereof), the Company shall purchase such fraction for
an amount in cash equal to the same fraction of the last reported sale price of
the Common Stock on the NASDAQ National Market System or any other national
securities exchange on which the Common Stock is then listed.
Section 2. Exchange and Transfer of Warrant.
(a) This Warrant may be exchanged for two or more Warrants entitling
the Holder thereof to purchase the same aggregate Exercise Quantity at the
Exercise Price per share and otherwise having the same terms and provisions as
this Warrant. The Holder may request such an exchange by surrender of this
Warrant to the Company, together with a written exchange request specifying the
desired number of Warrants and allocation of the Exercise Quantity purchasable
under the existing Warrant. Within two business days after the Company's receipt
of this Warrant and such an exchange request, the Company will issue and deliver
such new Warrants to the Holder in the amounts and with the allocations
<PAGE>
requested.
(b) Subject to the restrictions set forth in Section 4.2(d) of the
Purchase Agreement, this Warrant from time to time may be transferred, in whole
or in part, by the Holder or any duly authorized representative of the Holder. A
transfer may be registered with the Company by submission to it of this Warrant,
together with the annexed Assignment Form attached hereto as Exhibit B duly
completed and executed. Within two business days after the satisfaction by the
Holder of the conditions to such transfer set forth in such Section 4.2(d) and
the Company's receipt of this Warrant and the Assignment Form so completed and
executed, the Company will issue and deliver to the transferee a new Warrant
representing the portion of the Exercise Quantity transferred at the same
Exercise Price per share and otherwise having the same terms and provisions as
this Warrant, which the Company will register in the new holder's name. In the
event of a partial transfer of this Warrant, the Company shall concurrently
issue and deliver to the transferring holder a new Warrant that entitles the
transferring holder to purchase the balance of the Exercise Quantity not so
transferred and that otherwise is upon the same terms and conditions as this
Warrant. Upon the due delivery of this Warrant for transfer, the transferee
holder shall be deemed for all purposes to have become the holder of the new
Warrant issued respecting the Exercise Quantity transferred, effective
immediately prior to the close of business on the date of such delivery,
irrespective of the date of actual delivery of the new Warrant representing the
Exercise Quantity transferred.
(c) In the event of the loss, theft or destruction of this Warrant, the
Company shall execute and deliver an identical new Warrant to the Holder in
substitution therefor upon the Company's receipt of (i) evidence reasonably
satisfactory to the Company of such event and (ii) if requested by the Company,
an indemnity agreement reasonably satisfactory in form and substance to the
Company. In the event of the mutilation of or other damage to this Warrant, the
Company shall execute and deliver an identical new Warrant to the Holder in
substitution therefor upon the Company's receipt of the mutilated or damaged
Warrant.
(d) The Company shall pay all costs and expenses incurred in connection
with the exercise, exchange, transfer or replacement of this Warrant, including,
without limitation, the costs of preparation, execution and delivery of a new
Warrant and of stock certificates representing all Warrant Shares; provided,
however, that the Holder shall pay all stamp and other transfer taxes payable in
connection with the transfer or replacement of this Warrant.
Section 3. Certain Covenants.
(a) The Company shall at all times reserve for issuance and keep
available out of its authorized and unissued shares of Common Stock, solely for
the purpose of providing for the exercise of this Warrant, such number of shares
of Common Stock as shall from time to time be sufficient therefor.
(b) The Company will not, by amendment of its articles of incorporation
<PAGE>
or through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of this Warrant.
Without limiting the foregoing, the Company (i) will not increase the par
value of any shares of capital stock receivable upon the exercise of this
Warrant above the amount payable therefor upon such exercise, and (ii) will take
all such action as may be necessary or appropriate in order that the Company may
validly and legally issue fully paid and nonassessable shares of capital stock
upon the exercise of this Warrant.
Section 4. Adjustment of Warrant Price and Number of Warrant Shares.
The Warrant Price in effect at any time and the number and kind of
securities purchasable upon the exercise of this Warrant shall be subject to
adjustment from time to time upon the occurrence of certain events, as
hereinafter provided.
(a) In case the Company shall hereafter (i) pay a dividend or make a
distribution on its Common Stock in shares of its Common Stock, (ii) subdivide
its outstanding Common Stock, (iii) combine its outstanding Common Stock into a
smaller number of shares, or (iv) issue any shares by reclassification of its
Common Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing corporation), the
Warrant Price in effect at the time of the record date for such dividend or
distribution or the effective date of such subdivision, combination or
reclassification shall be proportionately adjusted so that the Holder, upon
exercise of this Warrant after such date, shall be entitled to receive the
aggregate number and kind of shares of Common Stock which, if this Warrant had
been exercised immediately prior to such record date, it would have owned upon
such exercise and been entitled to receive upon such dividend, distribution,
subdivision, combination or reclassification.
(b) In case the Company shall hereafter distribute to all holders of
its Common Stock shares of stock other than Common Stock, evidences of its
indebtedness or assets (excluding cash dividends or distributions out of
retained earnings and dividends or distributions referred to in paragraph (a)
above), or any rights, warrants or options to subscribe for or purchase shares
of Common Stock (or securities convertible into, exercisable for or exchangeable
for shares of Common Stock ) (excluding those referred to in paragraph (c)
below), then in each such case the Warrant Price in effect thereafter shall be
determined by multiplying the Warrant Price in effect immediately prior to the
date of such issuance by a fraction, the numerator of which shall be the total
number of outstanding shares of Common Stock multiplied by the Fair Market Value
Price (as defined in below), less the then fair market value (as determined in
good faith by the Company's board of directors) of said shares of stock, assets
or evidences of indebtedness so distributed or of such rights or warrants, and
the denominator of which shall be the total number of outstanding shares of
Common Stock multiplied by the Fair Market Value Price. Such adjustments shall
be made whenever any such distribution is made and shall become effective
immediately after the record date for the determination of shareholders entitled
to receive such distribution.
(c) In case the Company shall hereafter issue shares of its Common
<PAGE>
Stock or securities (including options, warrants or rights) convertible into,
exchangeable for or exercisable for shares of Common Stock, such shares of
Common Stock or securities convertible into, exchangeable for or exercisable for
shares of Common Stock being herein called "Company Securities") at a price per
share that is less than the Fourth Reference Price (as defined below) at any
time during the Anti-Dilution Period (as defined below), the Warrant Price shall
be adjusted immediately thereafter so that it shall equal the price determined
by multiplying the Warrant Price in effect immediately prior thereto by a
fraction, (x) the numerator of which shall be the sum of the number of shares of
Common Stock outstanding immediately prior to the issuance of such additional
Company Securities pursuant to such offering plus the number of shares of Common
Stock which the aggregate consideration received for the issuance of such
additional shares would purchase at such Fourth Reference Price, and (y) the
denominator of which shall be the number of shares of Common Stock outstanding
immediately after the issuance of such additional shares pursuant to such
offering. Such adjustment shall be made successively whenever such an issuance
is made.
(d) In case the Company shall hereafter issue any Company Securities
(excluding securities issued in transactions described in paragraph (c) above)
at an effective price per share less than the Fair Market Value Price, the
Warrant Price shall be adjusted immediately thereafter so that it shall equal
the price determined by multiplying the Warrant Price in effect immediately
prior thereto by a fraction, (x) the numerator of which shall be the sum of the
number of shares of Common Stock outstanding immediately prior to the issuance
of such additional Company Securities pursuant to such offering plus the number
of shares of Common Stock which the aggregate consideration received for the
issuance of such additional shares would purchase at the Fair Market Value
Price, and (y) the denominator of which shall be the number of shares of Common
Stock outstanding immediately after the issuance of such additional shares
pursuant to such offering. Such adjustment shall be made successively whenever
such an issuance is made.
(e) Whenever the Warrant Price payable upon exercise of this Warrant is
adjusted pursuant to paragraphs (a), (b), (c) and (d) above, the number of
Warrant Shares purchasable upon exercise of this Warrant shall simultaneously be
adjusted by multiplying the number of Warrant Shares initially issuable upon
exercise of this Warrant by the Warrant Price in effect as of the date of this
Warrant and dividing the product so obtained by the Warrant Price, as adjusted.
(f) Anything herein to the contrary notwithstanding:
(i) (A) The Company shall not be required to make any
adjustment contemplated under paragraph (c) in the case of: (A) the
issuance of shares of Common Stock upon the sale or exercise in whole
or part of the warrants to purchase shares of Common Stock issued
pursuant to the Purchase Agreement; (B) the issuance of shares of
Common Stock or any other securities which may now or hereafter be
granted or exercised under any of the Company's compensatory benefit
plans (regardless of whether such shares of Common Stock or other
securities are issued to employees, directors, consultants or others of
the Company or the joint
<PAGE>
venture established pursuant to the Limited Liability Company Operating
Agreement of _______________ LLC (the "U.S. Joint Venture Agreement"))
(the "Plans") and such other employee benefit arrangements, contracts
or plans as are recommended by the management of the Company and
approved by its board of directors (adjusted appropriately for stock
splits, stock combinations or stock dividends); (C) the issuance or
sale of shares of Common Stock or convertible securities upon the
exercise of any rights or warrants to subscribe for or purchase, or any
options for the purchase of, Common Stock or convertible securities
outstanding on the date of the Purchase Agreement, except as set forth
in Schedule 2.4(f)(i)(A)(C) of the Purchase Agreement; (D) the issuance
or sale of shares of Common Stock upon conversion or exchange of any
convertible securities or exercise of any options, warrants or other
purchase rights, if a prior antidilution adjustment was made or
required to be made hereunder upon the issuance, sale (or grant with
respect to options) of such convertible securities, options, warrants
or other purchase rights; (E) the issuance of shares of Common Stock in
connection with a bona fide merger, acquisition (including without
limitation, acquisition of a third party's assets, products, technology
or other rights) or other similar transaction involving the Company or
a subsidiary of the Company if the board of directors of the Company
has obtained a fairness opinion with respect to the issuance of such
Common Stock from a nationally or regionally recognized investment
banking firm indicating the financial terms of such merger, acquisition
or other similar transaction are fair to the Company when taken as a
whole; or (F) the issuance of any Company Securities in any transaction
which is part of the formation of a strategic relationship or joint
venture between the Company and a third party if the board of directors
of the Company has obtained a fairness opinion with respect to the
issuance of such Company Securities from a nationally or regionally
recognized investment banking firm indicating that the financial terms
of such strategic relationship, joint venture or other similar
relationship or venture are fair to the Company when taken as a whole.
(B) The Company shall not be required to make any
adjustment contemplated under paragraph (d) in the case of:
(A) the issuance of shares of Common Stock upon the sale or
exercise in whole or part of the warrants to purchase shares
of Common Stock issued pursuant to the Purchase Agreement; (B)
the issuance of shares of Common Stock or any other securities
which may now or hereafter be granted or exercised under any
of the Plans and such other employee benefit arrangements,
contracts or plans as are recommended by the management of the
Company and approved by its board of directors (adjusted
appropriately for stock splits, stock combinations or stock
dividends); (C) the issuance or sale of shares of Common Stock
or convertible securities upon the exercise of any rights or
warrants to subscribe for or purchase, or any options for the
purchase of, Common Stock or convertible securities
outstanding on the date of the Purchase Agreement, except as
set forth in Schedule 2.4(f)(i)(A)(C) of the Purchase
Agreement; (D) the issuance or sale of shares of Common Stock
upon conversion or exchange of any convertible securities or
exercise of any
<PAGE>
options, warrants or other purchase rights, if a prior
antidilution adjustment was made or required to be made
hereunder upon the issuance, sale (or grant with respect to
options) of such convertible securities, options, warrants or
other purchase rights; (E) the issuance of shares of Common
Stock in connection with a bona fide merger, acquisition
(including without limitation, acquisition of a third party's
assets, products, technology or other rights) or other similar
transaction involving the Company or a subsidiary of the
Company if the board of directors of the Company has obtained
a fairness opinion with respect to the issuance of such Common
Stock from a nationally or regionally recognized investment
banking firm indicating the financial terms of such merger,
acquisition or other similar transaction are fair to the
Company when taken as a whole; (F) the issuance of any Company
Securities in any transaction which is part of the formation
of a strategic relationship or joint venture between the
Company and a third party if the board of directors of the
Company has obtained a fairness opinion with respect to the
issuance of such Company Securities from a nationally
recognized investment banking firm indicating that the
financial terms of such strategic relationship, joint venture
or other similar relationship or venture are fair to the
Company when taken as a whole; or (G) the issuance of shares
of Common Stock in connection with a bona fide private
placement transaction not involving purchasers or placement
agents affiliated with the Company if (1) the discount to
market is not greater than 15% and (2) the Company has
obtained a fairness opinion with respect to the issuance
thereof from a nationally or regionally recognized investment
banking firm that the financial terms of such transaction are
fair to the Company when taken as a whole.
(ii) The Company shall not be required to make any adjustment
contemplated under paragraph (c) or (d) with respect to any Future
Financing (as defined below) if the Investor exercises its right to
increase or maintain its stock ownership with respect to such Future
Financing pursuant to the Purchase Agreement.
(iii) The provisions of paragraphs (c) and (d) above shall terminate
and have no further force and effect upon the Investor's Rights
Termination Date as such term is defined in the U.S. Joint Venture
Agreement.
(g) The number of shares of Common Stock outstanding at any given time
for purposes of the calculations under paragraphs (c) and (d) shall be subject
to the following rules:
(i) In case of (1) the sale by the Company for cash (or as a component
of a unit being sold for cash) of any rights or warrants to subscribe
for or purchase, or any options for the purchase of, Common Stock or
any securities convertible into or exchangeable for Common Stock
without the payment of any further consideration other than cash, if
any (such securities convertible, exercisable or exchangeable into
Common Stock being herein called "Convertible Securities"), or (2) the
issuance by
<PAGE>
the Company, without the receipt by the Company of any consideration
therefor, or any rights or warrants to subscribe for or purchase, or
any options for the purchase of, Common Stock or Convertible
Securities, in each case, if (and only if) the consideration payable to
the Company upon the exercise of such rights, warrants or options shall
consist of cash, whether or not such rights, warrants or options, or
the right to convert or exchange such Convertible Securities, are
immediately exercisable, and the price per share for which Common Stock
is issuable upon the exercise of such rights, warrants or options or
upon the conversion or exchange of such Convertible Securities
(determined by dividing (x) the minimum aggregate consideration payable
to the Company upon the exercise of such rights, warrants or options,
plus the consideration, if any, received by the Company for the
issuance or sale of such rights, warrants or options, plus, in the case
of such Convertible Securities, the minimum aggregate amount of
additional consideration, other than such Convertible Securities,
payable upon the conversion or exchange thereof, by (y) the total
maximum number of shares of Common Stock issuable upon the exercise of
such rights, warrants or options or upon the conversion or exchange of
such Convertible Securities issuable upon the exercise of such rights,
warrants or options) is less than the Fourth Reference Price or Fair
Market Value Price, as applicable, on the date of the issuance or sale
of such rights, warrants or options, then the total maximum number of
shares of Common Stock issuable upon the exercise of such rights,
warrants or options or upon the conversion or exchange of such
Convertible Securities (as of the date of the issuance or sale of such
rights, warrants or options) shall be deemed to be outstanding shares
of Common Stock and shall be deemed to have been sold for cash in an
amount equal to (1) any cash paid for such warrants, options or
Convertible Securities plus (2) the price per share payable upon the
exercise of such rights, warrants or options or upon the conversion or
exchange of such Convertible Securities issuable upon the exercise of
such rights, warrants or options.
(ii) In case the Company shall modify the rights of conversion,
exchange or exercise of any of the securities referred to in (i) above
or any other securities of the Company convertible, exchangeable or
exercisable for shares of Common Stock, for any reason other than an
event that would require adjustment to prevent dilution, so that the
consideration per share received by the Company after such modification
is less than the Fourth Reference Price or Fair Market Value Price, as
applicable, the number of shares to be issued and outstanding shall be
recalculated according to (i) and the number of antidilution shares
issued pursuant to paragraph (c) or (d), as the case may be, shall be
recalculated and any additional resulting antidilution shares shall
thereupon be issued.
(iii) In the case of the sale for cash of any shares of Common Stock,
any Convertible Securities, any rights or warrants to subscribe for or
purchase, or any options for the purchase of, Common Stock or
Convertible Securities, the consideration received by the Company
theretofor shall be deemed to be the gross sales price therefor without
deducting therefrom any expense paid or incurred by the Company or any
underwriting discounts or commissions or concessions paid or allowed by
the Company in connection therewith.
<PAGE>
(h) No adjustment in the Warrant Price shall be required unless such
adjustment would require an increase or decrease of at least five cents ($0.05)
in such price; provided, however, that any adjustments not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 4 shall be made to the nearest cent or to
the nearest one-thousandth of a share, as the case may be.
(i) Anything in this Section 4 to the contrary notwithstanding, the
Company shall be entitled, but shall not be required, to make such changes in
the Warrant Price, in addition to those required by this Section 4, as it in its
discretion shall determine to be advisable in order that any dividend or
distribution in shares of Common Stock, subdivision, reclassification or
combination of shares of Common Stock, issuance of rights or warrants to
purchase Common Stock or distribution of shares of stock other than Common
Stock, evidences of indebtedness or assets (other than distributions in cash out
of retained earnings) referred to hereinabove in this Section 4, hereafter made
by the Company to the holders of its Common Stock shall not be taxable to them.
(j) Whenever the Warrant Price is adjusted, as herein provided, the
Company shall promptly cause a notice setting forth the adjusted Warrant Price
and adjusted number of shares issuable upon exercise of this Warrant to be
mailed to the Holder. The certificate setting forth the computation shall be
signed by the Chief Financial Officer of the Company.
(k) In the event that at any time, as a result of any adjustment made
pursuant to paragraph (a) above, the holder of this Warrant thereafter shall
become entitled to receive any shares of the Company, other than Common Stock,
thereafter the number of such other shares so receivable upon exercise of this
Warrant shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Common Stock contained in paragraphs (a) to (h) inclusive, above.
Section 5. Rights and Obligations of the Warrant Holder.
This Warrant shall not entitle the Holder to any rights of a stockholder in
the Company.
Section 6. Restrictive Stock Legend.
This Warrant and the Warrant Shares have not been registered under any
securities laws. Accordingly, until such time as the securities represented
thereby are no longer subject to the restrictions set forth in Section 4.2 of
the Purchase Agreement and there is delivered to the Company an opinion of
counsel reasonably acceptable to the Company to the effect that such legend is
no longer required, any stock certificates issued pursuant to the exercise of
this Warrant shall bear the following legend:
THIS SECURITY IS SUBJECT TO THE PROVISIONS OF THE
<PAGE>
INVESTMENT AND MASTER STRATEGIC RELATIONSHIP AGREEMENT DATED
AS OF OCTOBER 9, 1997 BETWEEN THE ISSUER AND SYNTHELABO AND
MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN ACCORDANCE THEREWITH.
A COPY OF SUCH AGREEMENT IS ON FILE AT THE OFFICE OF THE
CORPORATE SECRETARY OF THE ISSUER. THIS SECURITY WAS SOLD IN A
PRIVATE PLACEMENT, WITHOUT REGISTRATION UNDER THE SECURITIES
ACT OF 1933, AND MAY BE OFFERED OR SOLD ONLY IF REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR IF AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.
Section 7. Notices.
Any notice or other communication required or permitted to be given here
shall be in writing and shall be effective (a) upon hand delivery or delivery by
telex (with correct answerback received), telecopy or facsimile at the address
or number designated below (if delivered on a business day during normal
business hours where such notice is to be received), or the first business day
following such delivery (if delivered other than on a business day during normal
business hours where such notice is to be received) or (b) on the third business
day following the date of mailing by express courier service, fully prepaid,
addressed to such address, or upon actual receipt of such mailing, whichever
shall first occur. The addresses for such communication shall be:
If to the Company:
Angeion Corporation
3650 Annapolis Lane, Suite 170
Plymouth, MN 55447-5434
Telephone: (612) 550-9388
Telecopier: (612) 509-9525
Attention: Chief Financial Officer
With a copy to:
Morrison & Foerster LLP
425 Market Street
San Francisco, CA 94105
Telephone: (415) 268-7000
Telecopier: (415) 268-7522
Attention: Gavin B. Grover, Esq.
If to the Holder:
Synthelabo
22 Avenue Galilee
92350 Le Plessis Robinson
<PAGE>
France
Telephone: (33)(1)45.37.56.67
Telecopier: (33)(1)45.37.58.04
Attention: General Counsel
With copies to:
ELA Medical
Centre d'Affaires la Boursidiere
92357 Le Plessis Robinson
France
Telephone: (33)(1)46.01.33.01
Telecopier: (33)(1)46.01.33.15
Attention: President
and
Coudert Brothers
1114 Avenue of the Americas
New York, NY 10036-7703
Telephone: (212) 626-4400
Telecopier: (212) 626-4120
Attention: James C. Colihan, Esq.
Each party hereto may from time to time change its address for notices under
this Section 7 by giving at least 10 days' notice of such changes address to the
other party hereto.
Section 8. Amendments and Waivers.
This Warrant and any term hereof may be changed, waived, discharged or
terminated only by an instrument in writing signed by the party against which
enforcement of such change, waiver, discharge or termination is sought.
Section 9. Applicable Law.
This Warrant shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York without regard to the principles
of conflict of laws.
Section 10. Definitions.
As used in this Warrant, the following terms shall be defined as follows:
"Anti-Dilution Period" shall mean the period commencing on the date hereof
and terminating on the first anniversary of the Initial Closing Date (as defined
in the Purchase Agreement).
<PAGE>
"Fair Market Value Price" shall mean the average Quoted Price for the five
business days prior to the closing of the applicable sale.
"Fourth Reference Price" shall mean one hundred and fifteen percent (115%)
of the average Quoted Price for all trading days within the fifteen (15) trading
days ending two days prior to the earlier of (i) the public announcement by the
Company of the granting of approval by the Federal Food and Drug Administration
(the "FDA") regarding the use of the Company's catheter lead model 4040 or (ii)
the actual date of grant by the FDA of such approval.
"Future Financing" shall mean any future offering of any shares of any
class of Company Securities with voting rights generally to elect directors of
the Company.
"Quoted Price" of the Common Stock shall mean: the last sale price regular
way or, in the case no such sale takes place on such day, the average of the
closing bid and asked prices regular way, in wither case on the NASDAQ National
Market System as reported by NASDAQ, or, if the Common Stock is not authorized
for quotation on the NASDAQ National Market System, on the New York Stock
Exchange Composite Tape (the "Composite Tape"), or, if the Common Stock is not
listed or admitted to trading on such exchange, on the national securities
exchange in or nearest the City of New York on which the Common Stock is listed
or admitted to trading, or if the Common Stock is not listed or admitted to
trading on any national securities exchange, the last sale price regular way or,
in case no such sale takes place on such day, the average of the highest
reported bid and lowest reported asked prices as furnished by the National
Association of Securities Dealers Inc. through NASDAQ or a similar organization
if NASDAQ is no longer reporting such information, or if on any such trading day
the Common Stock is not quoted by any such organization, the fair value of a
share of Common Stock on such day, as determined in good faith by the board of
directors of the Company.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed
on the day and year first above written.
ANGEION CORPORATION
By:_____________________________________
Title:
<PAGE>
Exhibit A
To: ANGEION CORPORATION
ELECTION TO EXERCISE
The undersigned hereby exercises its right to subscribe for
and purchase from ANGEION CORPORATION ______ fully paid, validly issued and
nonassessable shares of Common Stock covered by the within Warrant and tenders
payment herewith in the amount of $__________ in accordance with the terms
thereof, and requests that certificates for such shares be issued in the name
of, and delivered to:
__________________________________________
__________________________________________
__________________________________________
Date: ___________________ [Holder]
By _____________________________________
Name:
Title:
<PAGE>
Exhibit B
ASSIGNMENT FORM
To: ANGEION CORPORATION
The undersigned hereby assigns and transfers this Warrant to
_______________________________________________________________________________
(Insert assignee's social security or tax identification number)
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Print or type assignee's name, address and postal code)
and irrevocably appoints ______________________________________________________
to transfer this Warrant on the books of the Company.
Date: ___________________ [Holder]
By _____________________________________
Name:
Title:
(Sign exactly as your name appears on the face of this Warrant)
Signature guarantee:
EXHIBIT 10.14
December 9, 1997
Synthelabo
22 Avenue Galilee
92350 Le Plessis Robinson
FRANCE
ATTN: Philippe Goupit
Dear Sirs:
This letter is intended to memorialize our mutual agreement regarding the
release of all claims regarding disputes arising from that certain Amended and
Restated Investment and Master Strategic Relationship Agreement, dated as of
October 9, 1997, by and between Angeion Corporation and Synthelabo (the
"Investment Agreement"). All terms not defined herein shall have the same
meanings as set forth in the Investment Agreement. In consideration of the
covenants and releases contained herein, and for other good and valuable
consideration, receipt of which is hereby acknowledged, the parties agree as
follows:
1. The Investor, for itself and its Affiliates, hereby irrevocably
releases and discharges as of the date hereof the Company and its Affiliates,
and each of them, from any and all disputes, controversies, claims, demands,
actions, suits, obligations, damages, expenses, judgments, orders, causes of
action or liabilities of whatever kind or nature, in law, at equity or
otherwise, arising out of the Investment Agreement or the transactions
contemplated thereby or the breach, if any, thereof, which the Investor and its
Affiliates now own or hold or have at any time owned or held as against the
Company and its Affiliates (i) that are known to Investor or any of its
Affiliates as of the date hereof, or (ii) that are described in Schedule 1 or
subsequently arise from any matters described in Schedule 1.
2. The Company, for itself and its Affiliates, hereby irrevocably releases
and discharges as of the date hereof the Investor and its Affiliates, and each
of them, from any and all disputes, controversies, claims, demands, actions,
suits, obligations, damages, expenses, judgments, orders, causes of action or
liabilities of whatever kind or nature, in law, at equity or otherwise, whether
known or unknown, arising out of the Investment Agreement or the transactions
contemplated thereby or the breach, if any, thereof, which the Company and its
Affiliates now own or hold or have at any time owned or held as against the
Investor and its Affiliates (i) that are
<PAGE>
Synthelabo
December 9, 1997
Page Two
known to the Company or any of its Affiliates, or (ii) that relate directly or
indirectly to the matters identified in Schedule 2.
3. The parties, on their own behalf and on the behalf of their respective
Affiliates, hereby acknowledge that they and their respective Affiliates are
aware that they and their respective Affiliates may become aware of subsequently
arising facts or developments arising from the disputes, controversies, claims,
demands, actions, suits, obligations, damages, expenses, judgments, orders,
causes of action and liabilities disclosed in Schedule 1 and Schedule 2, and
agree the releases granted in paragraphs 1 and 2 hereof with respect to such
matters shall be and remain in effect in all respects as complete and general
releases as to all such matters released herein.
4. Each party, on its own behalf and on the behalf of its respective
Affiliates, agrees not to make, assert or maintain against the other party or
its respective Affiliates any claim, demand, action, suit or proceeding arising
out of or in connection with the matters respectively released herein.
5. Each party, on its own behalf and on the behalf of its respective
Affiliates, represents and warrants that such party and its respective
Affiliates have not heretofore assigned or transferred or purported to assign or
transfer to any person, firm, corporation or other entity any claim, demand,
right, damage, liability, action, cause of action or any other matter herein
released.
6. This letter agreement contains the entire understanding of the parties
with respect to the matters referred to herein. No provision of this letter
agreement may be amended or supplemented other than by a written instrument
signed by the party against whom enforcement of any such amendment or supplement
is sought.
7. The releases granted herein shall apply to all aspects of the
transactions contemplated by the Investment Agreement and the transactions
contemplated thereby except that such releases shall not in any way limit the
liabilities or obligations of the parties hereto or their respective Affiliates
under the Related Agreements including with respect to product warranties or
indemnification rights granted therein.
8. The parties hereto shall not be deemed to have made any admission of
wrongdoing or breach with respect to the transactions contemplated by the
Investment Agreement by virtue of their execution and delivery of this letter
agreement nor shall the existence of this letter agreement be used to interpret
<PAGE>
Synthelabo
December 9, 1997
Page Three
standards of materiality or other such principles of general application under
the Investment Agreement with respect to any claims for breach thereof.
9. This letter agreement shall be governed by and construed and enforced
in accordance with the laws of the State of New York.
Please acknowledge Synthelabo's agreement with the foregoing by executing
this letter on the signature line provided below.
Sincerely yours,
ANGEION CORPORATION
By: /s/ Whitney A. McFarlin
-------------------------------------
Whitney A. McFarlin
President and
Chief Executive Officer
ACKNOWLEDGED AND AGREED TO:
SYNTHELABO
By: /s/ Jean Peirre Charlet
----------------------------------
Name: Jean Peirre Charlet
--------------------------------
Title: Attorney-in-Fact
-------------------------------
By: /s/ Goupit Philippe
----------------------------------
Name: Goupit Philippe
--------------------------------
Title: Attorney-in-Fact
-------------------------------
<PAGE>
Schedule 1
The releases granted in paragraphs 1 and 2 of the letter agreement shall
not limit any remedy that Investor may have under Rule 10b-5 for any material
omission or inaccuracy in the information disclosed by the Company to the
Investor on or prior to December 9, 1997.
Any cost, claim, liability, proceeding or damage to the Company arising
from:
1. Any actual or alleged defects in the Company's Sentinel
2010/2011/2012 ICD products related to cracking or failure of any 10
microfarad ceramic capacitor contained therein and early discharge
of batteries in such products as a result thereof or any actual or
alleged problems related to possible dislodgements of the 4040 lead
in animal studies. Any actual or alleged failure of the Company to
disclose such information to the Investor regarding any such actual
or alleged product problems.
2. Any disclosure by the Company of any details of the Investment
Agreement in any press release or in the investor press conferences
held by the Company on October 13, 1997 and November 13, 1997,
including the specific price per share of the Initial Shares
provided for in the Investment Agreement, or information as to ELA's
European and US sales structures, and any alleged failure to seek
prior consultation or approval of ELA or Synthelabo with respect to
any such public announcements or public statements.
3. Any delay in availability of the 4040 leads or ICD's due to
Angeion's decision to temporarily suspend implants of the
2010/2011/2012 ICD.
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Schedule 2
1. Any delay in the filing of the Hart-Scott-Rodino submission.
2. Any failure to close within 2 (two) business days after receipt of a
notice of early termination of the Hart-Scott-Rodino waiting period.
