Exhibit 10.2

***OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

CONFIDENTIAL TREATMENT REQUESTED

 

ASSET PURCHASE AGREEMENT

 

by and among

STRYKER CORPORATION, STRYKER BIOTECH L.L.C.

and

 

MARIEL THERAPEUTICS, INC.

 

 

 

Dated as of June 30, 2014

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TABLE OF CONTENTS

 

ARTICLE I. DEFINITIONS 2 Section 1.01. Defined Terms 2 Section 1.02.
Interpretation and Rules of Construction 11 ARTICLE II. PURCHASE AND SALE 12
Section 2.01. Purchase and Sale of Assets 12 Section 2.02. Assumption and
Exclusion of Liabilities 14 Section 2.03. Non-Assignable Assets 15 Section 2.04.
Upfront Consideration 16 Section 2.05. Additional Consideration 18 Section 2.06.
Closing 22 Section 2.07. Closing Deliveries by Seller and Stryker 22 Section
2.08. Closing Deliveries by Purchaser 23 ARTICLE III. REPRESENTATIONS AND
WARRANTIES OF SELLER AND STRYKER 23 Section 3.01. Organization; Good Standing
and Qualification; Authority and Binding Effect 23 Section 3.02. No Conflict 24
Section 3.03. Governmental Consents and Approvals 24 Section 3.04. Litigation 25
Section 3.05. Compliance with Laws 25 Section 3.06. Intellectual Property 25
Section 3.07. Title 26 Section 3.08. No Brokers 27 Section 3.09. Environmental
Matters 27 Section 3.10. Contracts 27 Section 3.11. Purchase Entirely for Own
Account 27 Section 3.12. Restricted Securities 27 Section 3.13. No Public Market
28 Section 3.14. Legends 28 Section 3.15. Accredited Investor 28 Section 3.16.
No Other Representations or Warranties 28 ARTICLE IV. REPRESENTATIONS AND
WARRANTIES OF STRYKER 28 Section 4.01. Organization; Good Standing and
Qualification; Authority and Binding Effect 28 Section 4.02. No Conflict 29
Section 4.03. Governmental Consents and Approvals 29 Section 4.04. Compliance
with Laws 30

 

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ARTICLE V. REPRESENTATIONS AND WARRANTIES OF PURCHASER 30 Section 5.01.
Organization and Authority of Purchaser 30 Section 5.02. No Conflict 30 Section
5.03. Governmental Consents and Approvals 31 Section 5.04. Litigation 31 Section
5.05. No Brokers 31 Section 5.06. Capitalization 31 ARTICLE VI. ADDITIONAL
COVENANTS 32 Section 6.01. Confidentiality 32 Section 6.02. Condition of the
Purchased Assets 32 Section 6.03. Bulk Transfer Laws 33 Section 6.04. Further
Action 33 Section 6.05. Allocation of Purchase Price 33 Section 6.06. Transfer
Taxes 34 Section 6.07. Transfer of Books and Records and Know-How 34 Section
6.08. Seller’s and Stryker’s Post-Closing Obligations with respect to
Transferred Intellectual Property 34 Section 6.09. Transition Plan 35 Section
6.10. Patent Maintenance 35 Section 6.11. Purchaser Diligence Obligation 35
Section 6.12. Right of First Negotiation 35 Section 6.13. Continuing Involvement
35 Section 6.14. Stock 36 Section 6.15. Transferred Books and Records 36 Section
6.16. Noncompetition Agreement 37 ARTICLE VII. INDEMNIFICATION 38 Section 7.01.
Survival of Representations and Warranties 38 Section 7.02. Indemnification by
Seller and Stryker 38 Section 7.03. Indemnification by Purchaser 38 Section
7.04. Limits on Indemnification 39 Section 7.05. Consequential Damages 39
Section 7.06. Notice of Loss; Third Party Claims 40 Section 7.07. Tax Treatment
42 Section 7.08. Effect of Investigation 42 Section 7.09. Remedies 42 Section
7.10. Offset Rights 42 ARTICLE VIII. GENERAL PROVISIONS 43 Section 8.01.
Expenses 43 Section 8.02. Notices 43 Section 8.03. Public Announcements 44

 

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Section 8.04. Severability 44 Section 8.05. Entire Agreement 45 Section 8.06.
Assignment 45 Section 8.07. Amendment 45 Section 8.08. Waiver 45 Section 8.09.
Force Majeure 45 Section 8.10. No Third Party Beneficiaries 46 Section 8.11.
Governing Law; Jurisdiction 46 Section 8.12. Waiver of Jury Trial 46 Section
8.13. Counterparts 47 Section 8.14. Construction; Headings 47 Section 8.15.
Specific Performance 47

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EXHIBITS A  Form of Assignment & Assumption Agreement B  Form of Bill of Sale
and Assignment C  Form of Patent Assignment D  Transition Plan E  Form of
Secured Promissory Note

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ASSET PURCHASE AGREEMENT

 

This Asset Purchase Agreement (this “Agreement”) is made and entered into as of
June 30, 2014 (the “Effective Date”), by and among Stryker Corporation, a
Michigan corporation (“Stryker”), Stryker Biotech L.L.C., a Michigan limited
liability company (“Seller”), and Mariel Therapeutics, Inc., a Delaware
corporation (“Purchaser”). Seller, Stryker and Purchaser are herein referred to
individually as a “Party” and collectively as the “Parties.” 

 

W I T N E S S E T H:

 

 

WHEREAS, Seller and Stryker own certain intellectual property and other assets
related to Bone Morphogenic Protein (“BMP”) and have conducted research and
development with respect to Bone Morphogenic Protein 7 (“BMP-7”) and certain
derivatives thereof that are applicable to a number of clinically important
areas, including the treatment of the bone, and have the potential for the
treatment of osteoarthritis, chronic kidney disease and other organ fibrosis
conditions, lupus and obesity, and preliminary research with respect to certain
other diseases and conditions.

 

WHEREAS, Purchaser operates in the field of biotechnology and pharmaceutical
drug development.

 

WHEREAS, pursuant to that certain Asset Purchase Agreement by and among Seller,
Stryker and Olympus Biotech Corporation (“Olympus”), dated December 6, 2010 (the
“Olympus Asset Purchase Agreement”), Stryker and Seller sold and transferred to
Olympus certain tangible and intangible assets related to BMP-7 products used
for the treatment, repair, replacement or generation of bone and tooth and,
pursuant to that certain License Agreement by and among Seller, Stryker and
Olympus, dated February 1, 2011 (the “Olympus License Agreement”), Stryker and
Seller granted to Olympus an exclusive license to use certain of their
Intellectual Property in connection with the Exploitation of such BMP-7 products
for the treatment, repair, replacement or generation of bone and tooth by local
application in an insoluble formulation directly on bone or tooth tissue for
local, as opposed to general or systemic, effect (“Olympus Field”). For purposes
of clarity, the Olympus Field does not include local application of BMP-7
Products for the treatment of osteochondritis dissecans and osteoarthritis.

 

WHEREAS, the Parties desire that, at the Closing, Seller and Stryker shall sell
and transfer to Purchaser, and Purchaser shall purchase from Seller and Stryker
all of Seller’s and Stryker’s remaining assets directly related to BMP,
including BMP-7, upon the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements contained herein, the Parties, intending to
be legally bound, hereby agree as follows:

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ARTICLE I. DEFINITIONS

SECTION 1.01. Defined Terms. As used in this Agreement, the following

terms shall have the meanings set forth or as referenced below:

 

“Action” means any claim, cause of action, suit, arbitration, complaint,
criminal prosecution, demand, summons, citation, notice of violation,
governmental or other proceeding or investigation of any nature, civil,
criminal, administrative, regulatory or otherwise, whether at law or equity, by
or before any Governmental Authority.

 

“Affiliate” means, with respect to any specified Person, any other Person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified Person, provided
that, for the purposes of this definition, “control” (including, with
correlative meanings, the terms “controlled by” and “under common control
with”), as used with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such Person, whether through the ownership of voting securities,
by contract or otherwise.

 

“Agreement” is defined in the Preamble.

 

“Ancillary Agreements” means the Bill of Sale, the Assignment & Assumption
Agreement, the Patent Assignment and the Secured Promissory Note.

 

“Assessment Period” is defined in Section 6.12.

 

“Assignment & Assumption Agreement” means the Assignment & Assumption Agreement
to be executed by Purchaser, Stryker and Seller at the Closing, substantially in
the form of Exhibit A.

 

“Assumed Liabilities” is defined in Section 2.02(a).

 

“Bill of Sale” means the Bill of Sale to be executed by Seller and Stryker at
the Closing, substantially in the form of Exhibit B.

 

“BMP” is defined in the Recitals.

 

“BMP-7” is defined in the Recitals.

 

“BMP-7 Products” means any formulation containing BMP-7 regardless of whether it
includes any type of buffer, excipient or handling agent, developed by or on
behalf of Seller or Stryker prior to the Closing. For the avoidance of doubt,
BMP-7 Products shall not include the products licensed or sold to Olympus
pursuant to the Olympus License Agreement or the Olympus Asset Purchase
Agreement for use in the Olympus Field.

 

“Boyer Agreement” is defined in Section 2.02(b)(vi).

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“Business Day” means any day that is not a Saturday, a Sunday or other day on
which banks are required or authorized by Law to be closed in the City of New
York.

 

“Calendar Quarter” means, with respect to any Calendar Year, each of the three
(3) consecutive calendar month periods ending on March 31, June 30, September 30
and December 31 of such Calendar Year.

 

“Calendar Year” means each period of twelve (12) consecutive calendar months
beginning on January 1 and ending on December 31.

 

“Cap” is defined in Section 7.04.

 

“Cash and Cash Equivalents” shall mean Seller’s and Stryker’s cash, negotiable
instruments, checks, money orders, marketable securities, short-term instruments
and other cash equivalents, funds in time and demand deposits or similar
accounts, and any evidence of indebtedness issued or guaranteed by any
Governmental Authority, calculated in accordance with GAAP.

 

“Closing” is defined in Section 2.06.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Commercial Milestone Event” is defined in Section 2.05(b).

 

“Commercial Milestone Payment” is defined in Section 2.05(b).

 

“Commercialization Agreement” is defined in Section 6.12.

 

“Commercially Reasonable Efforts” means, with respect to the Exploitation of
Covered Products by Purchaser, that level of efforts and resources which would
be used by a similarly situated company for products at a similar stage of
development and with similar market potential and market size and risk, taking
into account efficacy, safety, competitiveness of alternative products in the
marketplace, cost to develop, the anticipated or, if applicable, actual claim
structure and the nature and extent of their market exclusivity (including
patent coverage and regulatory exclusivity), the likelihood of obtaining
Regulatory Approval, profitability (including the amounts of marketing and
promotional expenditures with respect to the program), and all other relevant
factors. Commercially Reasonable Efforts shall be determined on an aggregate
basis with respect to all Covered Products and all markets.

 

“Common Stock” means the common stock, par value $ 0.0001, of Purchaser.

 

“Competitive Activity” is defined in Section 6.16(b).

 

“Confidential Information” is defined in Section 6.01.

 

“Contingent Payment” is defined in Section 2.05(c).

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“Contract” means any written or oral note, bond, mortgage, indenture, guarantee,
agreement, contract, sub-contract, lease, license or purchase order (which, for
the avoidance of doubt, does not include any employee benefit or health or
welfare plan or arrangement), and all amendments, modifications and supplements
thereto.

 

“Convertible Securities” is defined in Section 1.01.

 

“Covered Product” means any biologic, pharmaceutical or medical device product
that contains BMP (including the BMP-7 Products) that is generated or derived
from any of the Purchased Assets.

 

“Default” is defined in Section 2.05(e)(vii).

 

“Development Milestone Payment” is defined in Section 2.05(a).

 

“Direct Claim” is defined in Section 7.06(a).

 

“Disclosure Schedules” is defined in Article III.

 

“Effective Date” is defined in the Preamble.

 

“Encumbrance” means any security interest, pledge, attachment, easement,
restriction, hypothecation, mortgage, lien (statutory or otherwise), option,
conditional sale agreement, right of first refusal or right of first offer
(including any agreement to give any of the foregoing), or encumbrance.

 

“Environmental Law” means all requirements of Laws derived from or relating to
all federal, state and local laws or regulations relating to or addressing the
environment, health or safety.

 

“EU” means all of the European Union member states as of the applicable time.

 

“Excluded Assets” is defined in Section 2.01(b).

 

“Excluded Liabilities” is defined in Section 2.02(b).

 

“Excluded Representations” is defined in Section 7.01.

 

“Excluded Representations Cap” is defined in Section 7.04(c).

 

“Exempt Securities” means Options or shares of restricted Common Stock subject
to repurchase or forfeiture granted after the Closing to directors, officers or
employees of, or consultants or advisors to, Purchaser or any of its
subsidiaries pursuant to one or more plans, arrangements or agreements approved
by the Board of Directors of Purchaser, provided that the number of shares of
Common Stock for which such Options are exercisable plus shares of restricted
Common Stock subject to repurchase or forfeiture do not exceed fifteen percent
(15%) of the outstanding voting securities of Purchaser as of the date of
computation (subject to

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appropriate adjustment in the event of any stock dividend, stock split,
combination or other similar recapitalization affecting such shares).

 

“Exploitation” means, as applicable, activities to research, develop, have
developed, make, have made, register, use, sell, offer for sale, have sold,
promote, have promoted, market, have marketed, distribute, have distributed,
import or otherwise exploit a Covered Product. “Exploit” has a correlative
meaning.

 

“FDA” means the United States Food and Drug Administration, or any successor
agency or authority thereto.

 

“FDCA” means the United States Federal Food, Drug, and Cosmetic Act, as amended.

 

“Financial Records” is defined in Section 2.05(e)(iv).

 

“First Commercial Sale” means, with respect to any Covered Product and any
country in the Territory, the first sale of such Covered Product in such country
by Purchaser or any Purchaser Related Party for monetary value for use or
consumption by the general public pursuant to a Regulatory Approval in such
country.

 

“Force Majeure” is defined in Section 8.09.

 

“Fully-Diluted As-Converted Basis” means incorporating and including (i) all
issued and outstanding shares of Common Stock and (ii) all unissued shares of
Common Stock that are either (x) issuable upon exercise of outstanding rights,
options or warrants to subscribe for or otherwise acquire Common Stock or
Convertible Securities (collectively, “Options”) or

(y)  issuable upon conversion or exchange of outstanding indebtedness, shares or
other securities convertible into or exchangeable for Common Stock, other than
Options and Exempt Securities (collectively, “Convertible Securities”).

 

“GAAP” means United States generally accepted accounting principles applied on a
consistent basis.

 

“GI Cross License” is defined in Section 2.02(b)(vi).

 

“Governmental Authority” means any instrumentality, subdivision, court,
tribunal, administrative agency, commission, official or other authority of any
supranational, country, state, province, prefect, municipality, locality or
other government or political subdivision thereof, or any quasi-governmental or
private body exercising any regulatory, taxing, importing or other governmental
or quasi-governmental authority, or any arbitrator or arbitral body.

 

“Governmental Order” means any order, writ, judgment, injunction, decree,
stipulation, determination or award entered by or with any Governmental
Authority.

 

“Indemnified Party” means a Purchaser Indemnified Party or a Seller Indemnified
Party, as the case may be.

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“Indemnifying Party” means Seller and Stryker pursuant to Section 7.02 and
Purchaser pursuant to Section 7.03, as the case may be.

 

“Indemnity Basket” is defined in Section 7.04.

 

“Intellectual Property” means any or all of the following and all rights
therein, arising therefrom, or associated therewith: (i) all patents and
applications therefor anywhere in the world (whether national, international or
otherwise) and including all reissues, reexaminations, divisions, renewals,
extensions or supplementary protection certificates, provisionals, continuations
and continuations-in-part thereof (only to the extent that such
continuations-in-part claim inventions disclosed as required by 35 U.S.C. § 112,
in the parent application) and the like; (ii) all trade secrets, confidential
and proprietary information, including unpatented inventions, invention
disclosures, moral or economic rights of authors and inventors (however
denominated), technical data, know-how, mask works, specifications, methods
(whether or not patentable), designs, processes, procedures, and technology;
(iii) all copyrights, copyright registrations and applications therefor, and all
other rights corresponding thereto throughout the world; and (iv) all industrial
designs and any registrations and applications therefor throughout the world.

 

“Inventory” is defined in Section 2.01(a)(iii).

 

“Law” means any federal, national, supranational, state, provincial, local or
similar statute, law, ordinance, regulation, rule, code, Governmental Order,
requirement or rule of law (including common law), including the U.S. Foreign
Corrupt Practices Act of 1977, the Public Health Service Act and the FDCA.

 

“Liabilities” means any and all damages, debts, liabilities and obligations,
Losses, claims, Taxes, interest obligations, deficiencies, judgments,
assessments, fines, fees, penalties, and expenses, including those arising under
any Law, Action or Governmental Order and those arising under any contract,
agreement, arrangement, commitment or undertaking.

 

“Loss” or “Losses” means any claims, actions, causes of action, judgments,
awards, suits, fines, Liabilities, losses, costs (including the costs of defense
and enforcement of this Agreement and the Ancillary Agreements and the cost of
enforcing any right to indemnification hereunder), damages, expenses or amounts
paid in settlement (in each case, including reasonable attorneys’ and experts’
fees and expenses).

 

“Material Adverse Effect” means any event, occurrence, fact, condition or change
that would reasonably be expected to be materially adverse to or have a material
adverse effect on (i) the ability of Seller or Stryker to carry out its
obligations under, and to consummate the transactions contemplated by, this
Agreement or any of the Ancillary Agreements or (ii) the Assumed Liabilities or
the Purchased Assets.

 

“NDA” means an application for Regulatory Approval of a Covered Product.

 

“Negotiation Period” is defined in Section 6.12.

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“Net Sales” means, with respect to any Covered Product, the gross amounts
received by Purchaser or any Purchaser Related Party, for sales in the
applicable Royalty Territory of such Covered Product by Purchaser or any
Purchaser Related Party for monetary value for use or consumption by the general
public, less the following deductions, to the extent reasonable and customary
and actually allowed and taken with respect to such sales:

 

(i)                 reasonable cash, trade or quantity discounts, charge-back
payments, and rebates actually granted to trade customers, managed health care
organizations, pharmaceutical benefit managers, group purchasing organizations
and national, state, or local government;

 

(ii)               credits, rebates or allowances actually allowed upon prompt
payment or on account of claims, damaged goods, rejections or returns of such
Covered Product, or other similar payments to wholesalers or distributors,
including in connection with recalls, and the actual amount of any write-offs
for bad debt (provided that an amount subsequently recovered will be treated as
Net Sales);

 

(iii)             packaging, freight, postage, shipping, transportation,
warehousing, handling and insurance charges, in each case actually allowed or
paid for delivery of such Covered Product and calculated in accordance with the
standard practices of Purchaser or Purchaser Related Party, as applicable,
consistently applied across its and their respective products;

 

(iv)             taxes (other than income taxes), duties, tariffs or other
governmental charges levied on the sale of such Covered Product, including
non-recoverable VAT, excise taxes and sales taxes, in each case calculated in
accordance with the standard practices of Purchaser or Purchaser Related Party,
as applicable, consistently applied across its and their respective products;
and

 

(v)               the portion of any annual fees due under Section 9008 of the
United States Patient Protection and Affordable Care Act of 2010 (Pub. L. No.
111-48) and other comparable laws that is reasonably allocable to the sale of
such Covered Product in accordance with the standard practices of Purchaser or
Purchaser Related Party, as applicable, consistently applied across its and
their products.

 

Notwithstanding the foregoing, amounts received by Purchaser or any Purchaser
Related Party for the sale of such Covered Product among Purchaser or any
Purchaser Related Parties for resale shall not be included in the computation of
Net Sales hereunder. Net Sales shall be accounted for in accordance with
standard accounting practices, as practiced by Purchaser or Purchaser Related
Party, as applicable, in the relevant country in the Territory, but in any event
in accordance with GAAP, as consistently applied in such country in the
Territory. For clarity, a particular deduction may only be accounted for once in
the calculation of Net Sales. In computing Net Sales, transfers of any samples
of Covered Product at no cost for promotional or educational purposes shall be
disregarded.

 

“Net Sales Report” is defined in Section 2.05(c).

 

“Nonassigned Asset” is defined in Section 2.03(a).

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“Nontransferred Obligations” is defined in Section 2.01(a)(v).

 

“Notice” is defined in Section 6.12.

 

“Notified Party” is defined in Section 2.05(e)(viii).

 

“Notifying Party” is defined in Section 2.05(e)(viii).

 

“Olympus” is defined in the Recitals.

 

“Olympus Asset Purchase Agreement” is defined in the Recitals.

 

“Olympus Field” is defined in the Recitals.

 

“Options” is defined in Section 1.01.

 

“Party” or “Parties” are defined in the Preamble.

 

“Patent Assignment” means the Patent Assignment to be executed by Seller and
Stryker at the Closing, substantially in the form of Exhibit C.

 

“Permitted Encumbrances” means (i) mechanics’, carriers’, workers’, repairers’
and other similar liens arising or incurred in the ordinary course of business
relating to obligations as to which there is no default on the part of Seller or
Stryker or the validity or amount of which is being contested in good faith by
appropriate proceedings, or pledges, deposits or other liens securing the
performance of bids, trade contracts, leases or statutory obligations (including
workers’ compensation, unemployment insurance or other social security
legislation); (ii) those Contracts listed in Schedule 1.01(a); (iii) all
statutory liens for Taxes not yet due; and (iv) all other Encumbrances that
would not have a Material Adverse Effect.

 

“Person” means any individual, corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any limited
liability company or joint stock company), firm or other enterprise,
association, organization, entity or Governmental Authority.

 

“Prime Rate” means the prime rate as published by Citibank, N.A., New York, New
York, from time to time.

 

“Purchased Assets” is defined in Section 2.01(a).

 

“Purchaser” is defined in the Preamble.

 

“Purchaser Indemnified Party” is defined in Section 7.02.

 

“Purchaser Related Party” means (i) any Affiliate of Purchaser or (ii) any Third
Party that acquires rights to any of the Purchased Assets or any Covered Product
from Purchaser or any of its Affiliates or any other Purchaser Related Party.

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“Regulatory Approval” means all approvals and authorizations of any Regulatory
Authority in a particular country or regulatory jurisdiction in the Territory
that are necessary for the commercial sale of a Covered Product in such
jurisdiction in accordance with applicable Laws, but excluding any pricing or
reimbursement approvals.

 

“Regulatory Authority” means any Governmental Authority involved in the granting
of Regulatory Approval in any country or regulatory jurisdiction in the
Territory, including the FDA.

 

“Retained Books and Records” is defined in Section 6.15(c).

 

“Right of First Negotiation” is defined in Section 6.12.

 

“Royalty Term” means, with respect to any Covered Product, on a country-by-
country basis, the period of time commencing on the date of First Commercial
Sale of such Covered Product in such country and ending on the later of (i) the
expiration or abandonment of the last Valid Claim that covers the Use of such
Covered Product in such country and

(ii) twelve (12) years from the date of First Commercial Sale of such Covered
Product in such country.

 

“Royalty Territory” means, with respect to any Covered Product, each country
within the Territory with respect to which the applicable Royalty Term has not
expired, collectively.

 

“Secured Promissory Note” means the secured promissory note to be executed by
Purchaser and to be delivered to Seller at the Closing in payment of the first
$500,000 of the Upfront Purchase Price, substantially in the form of Exhibit E.

 

“Securities Act” means the Securities Act of 1933, as amended, and, as
applicable, the rules and regulations promulgated thereunder.

 

“Seller” is defined in the Preamble.

 

“Seller Indemnified Party” is defined in Section 7.03.

 

“Seller’s Knowledge”, “Knowledge of Seller” or similar terms used in this
Agreement mean the actual knowledge, after due inquiry, of Jamie Kemler, Chief
Executive Officer of Seller and Vice President, Intellectual Property Business
Strategy of Stryker, as of the Effective Date (or, with respect to a certificate
delivered pursuant to this Agreement, as of the date of delivery of such
certificate).

 

“Serum Free Assets” is defined in Section 2.04(a).

 

“Shares” means all shares of Common Stock to be acquired by Stryker hereunder.

 

“Successful Financing” means the receipt by Purchaser of gross proceeds in the
aggregate amount of $10,000,000 or more through the issuance and sale by
Purchaser of any equity securities of Purchaser in one or a series of closings.

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“Tax” or “Taxes” means any and all taxes of any kind together with charges,
fees, levies or other assessments, including any income tax or franchise taxes,
any alternative or add- on minimum taxes, any gross income, gross receipts,
premium, sales, use, ad valorem, value- added, transfer, profits, license,
payroll (e.g., social security, Medicare, unemployment, disability), employment,
withholding (on amounts paid or received), excise (including the medical device
excise tax), severance, stamp, occupation, property, environmental or windfall
profit tax, custom duty or other tax, together with any interest, penalty,
addition to tax or additional amount imposed by any Governmental Authority
responsible for the imposition of any such tax.

 

“Tax Returns” means any and all returns, reports, forms and statements
(including, elections, declarations, amendments, schedules, information returns
or attachments thereto) required to be filed with a Governmental Authority with
respect to Taxes.

 

“Technology Transfer Completion Date” means the earlier of (i) the date on which
all of the activities set forth in the Transition Plan are completed and (ii)
nine (9) months after the Effective Date.

 

“Territory” means every country, territory, possession or other political
subdivision of the world.

 

“Third Party” means any Person other than Purchaser, Seller, Stryker or any of
their respective Affiliates.

 

“Third Party Claim” is defined in Section 7.06(b).

 

“Threshold Level” means five percent (5%) of: (i) Purchaser’s outstanding shares
of capital stock on a Fully-Diluted As-Converted Basis and (ii) the total number
of votes entitled to be cast at any meeting of the stockholders of Purchaser,
excluding votes entitled to be cast by the holders of any Exempt Securities
outstanding as of the applicable computation date.

 

“Transfer Tax” means all federal, state, local or foreign sales, use, transfer,
real property transfer, mortgage recording, stamp duty, value added or similar
Taxes that may be imposed in connection with the transfer of the Purchased
Assets.

 

“Transferred Books and Records” is defined in Section 2.01(a)(vi).

 

“Transferred Contracts” is defined in Section 2.01(a)(v).

 

“Transferred Intellectual Property” means, collectively, the Transferred Patents
and Transferred Know-How.

 

“Transferred Know-How” is defined in Section 2.01(a)(ii).

 

“Transferred Patents” is defined in Section 2.01(a)(i).

 

“Transition Plan” means the Transition Plan attached hereto as Exhibit D.

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“Upfront Purchase Price” is defined in Section 2.04(a).

 

“Use” means making, using, selling, offering to sell or importing.

 

“Valid Claim” means any claim of (a) any issued and unexpired Transferred Patent
that has not been (i) revoked or held unenforceable, unpatentable or invalid by
a Governmental Authority of competent jurisdiction in a decision that is not
appealable or that has not been appealed within the time allowed for appeal or
(ii) abandoned, disclaimed, denied or admitted to be invalid or unenforceable
through reissue, re-examination or disclaimer or otherwise; or (b) any patent
application included in the Transferred Patents that has not been

(i)   cancelled, withdrawn or abandoned without being refiled in another
application in the applicable jurisdiction or (ii) finally rejected by an
administrative agency or Governmental Authority of competent jurisdiction in a
decision that is not appealable or that has not been appealed within the time
allowed for appeal.

 

SECTION 1.02. Interpretation and Rules of Construction. In this Agreement,
except to the extent otherwise provided or that the context otherwise requires:

 

(a)                when a reference is made in this Agreement to an Article,
Section, Exhibit or Schedule, such reference is to an Article or Section of, or
an Exhibit or Schedule to, this Agreement unless otherwise indicated;

 

(b)               the table of contents and headings for this Agreement are for
reference purposes only and do not affect in any way the meaning or
interpretation of this Agreement;

 

(c)                whenever the words “include,” “includes” or “including” are
used in this Agreement, they are deemed to be followed by the words “without
limitation;”

 

(d)               the words “hereof,” “herein” and “hereunder” and words of
similar import, when used in this Agreement, refer to this Agreement as a whole
and not to any particular provision of this Agreement;

 

(e)                all terms defined in this Agreement have the respective
meanings defined herein when used in any certificate or other document made or
delivered pursuant hereto, unless otherwise defined therein;

 

(f)                the definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms;

 

(g)         references to a Person are also to its successors and permitted
assigns; and

(h)         the use of “or” is not intended to be exclusive unless expressly
indicated otherwise.

 16 

   

ARTICLE II. PURCHASE AND SALE

SECTION 2.01. Purchase and Sale of Assets.

 

(a)                Upon the terms and subject to the conditions of this
Agreement, at the Closing, Seller and Stryker shall sell, assign, transfer and
convey to Purchaser, and Purchaser shall purchase from Seller and Stryker, on an
“as is, where is” basis, free and clear of all Encumbrances other than Permitted
Encumbrances, all of Seller’s and Stryker’s right, title and interest in and to
all of the assets relating directly to BMP and the BMP-7 Products, including the
following assets, rights and properties of every nature, kind and description,
tangible and intangible, wherever located, whether or not carried on the books
of Seller or Stryker (other than the Excluded Assets) (collectively, the
“Purchased Assets”), as the same may exist as of the Closing:

 

(i)                 all U.S. and foreign patents and patent applications listed
on Schedule 2.01(a)(i) and any patents and patent applications related by a
claim of priority to any of the patents and applications listed on Schedule
2.01(a)(i), including all reissues, reexaminations, divisions, renewals,
extensions or supplementary protection certificates, provisionals, continuations
and continuations-in-part thereof (only to the extent that such
continuations-in-part claim inventions disclosed as required by 35 U.S.C. § 112,
in the parent application thereof) and the like (the “Transferred Patents”);

 

(ii)               all trade secrets, confidential and proprietary information
owned by Seller or Stryker that is directly related to the BMP-7 Products,
including unpatented inventions, invention disclosures, moral or economic rights
of authors and inventors (however denominated), technical data, design and
engineering data, preclinical and clinical data, know-how, specifications,
methods (whether or not patentable), designs, processes, procedures, and
technology directly related to the BMP-7 Products (the “Transferred Know-How”);

 

(iii)             all inventory of the BMP-7 Products and their components,
wherever located, held by Seller or Stryker, including raw materials, work in
process, samples, packaging, supplies, carriers, matrices, cell lines, vectors,
clones, services parts, purchased parts and goods, damaged and fragmented or
expired inventory, as listed on Schedule 2.01(a)(iii) (the “Inventory”);

 

(iv)             the tangible personal property directly related to the BMP-7
Products as listed on Schedule 2.01(a)(iv);

 

(v)               all rights and obligations of Seller or Stryker under all
Contracts listed on Schedule 2.01(a)(v) (the “Transferred Contracts), other than
any Nontransferred Obligations;

 

(vi)             all books, files, papers, correspondence, documents, databases,
software, reports, laboratory notebooks, plans and records in the possession of
Seller or Stryker that

 17 

   

are directly related to the BMP-7 Products, Purchased Assets and Assumed
Liabilities, except for all Tax Returns, Tax records, Tax workpapers, financial
accounting records and any other similar Tax or financial accounting documents
of Seller or Stryker (the “Transferred Books and Records”);

 

(vii)           all claims, causes of action, defenses and rights of offset or
counterclaim (at any time or in any manner arising or existing, whether choate
or inchoate, known or unknown, contingent or noncontingent) relating solely and
exclusively to any of the Purchased Assets, except for such causes of action,
defenses and rights of offset or counterclaim attributable to any Excluded
Liabilities;

 

(viii)         all rights of Seller or Stryker under warranties, indemnities and
all similar rights against Third Parties to the extent directly related to any
Purchased Assets; and

 

(ix)the goodwill of Seller or Stryker relating to the Purchased Assets.

 

(b)               Notwithstanding anything in Section 2.01(a) to the contrary,
and to the extent that the last sentence of Section 3.06(a) is not applicable,
neither Seller nor Stryker shall sell, convey, assign or transfer, nor cause to
be sold, conveyed, assigned or transferred, to Purchaser, and Purchaser shall
not purchase, and the Purchased Assets shall not include, Seller’s or Stryker’s
right, title and interest in and to any assets of Seller or Stryker not
expressly included in the Purchased Assets (the “Excluded Assets”), including
without limitation:

 

(i)                 all Cash and Cash Equivalents;

 

(ii)all trademarks, trade names and logos;

 

(iii)             all rights of Seller and Stryker under this Agreement and the
Ancillary Agreements;

 

(iv)             all tangible and intangible assets transferred or required to
be transferred to Olympus pursuant to the Olympus Asset Purchase Agreement;

 

(v)               all current and prior insurance policies of Seller and Stryker
and all rights of any nature with respect thereto, including all insurance
recoveries thereunder and rights to assert claims with respect to any such
insurance recoveries;

 

(vi)             any refunds (or rights thereto) or other Tax attributes or
benefits relating to Taxes attributable to the Purchased Assets for periods
ending on or prior to the Closing and all Tax Returns, Tax records, Tax
workpapers, financial accounting records and any other similar Tax or financial
accounting documents of Seller or Stryker;

 

(vii)all accounts and notes receivable; and

 

(viii)         all claims, causes of action, defenses and rights of offset or
counterclaim (at any time or in any manner arising or existing, whether choate
or inchoate, known or unknown, contingent or noncontingent) not included in the
Purchased Assets.

 

 18 

   

SECTION 2.02. Assumption and Exclusion of Liabilities.

 

(a)                Upon the terms and subject to the conditions set forth in
this Agreement, Purchaser shall assume, and agree to pay, perform and discharge
as and when due and owing, only the following Liabilities (the “Assumed
Liabilities”):

 

(i)                 any and all Liabilities arising from Purchaser’s ownership,
use or operation of the Purchased Assets or the Exploitation of the BMP-7
Products after the Closing, other than any Excluded Liabilities; and

 

(ii)               any and all Liabilities of the Seller and Stryker arising
from the Transferred Contracts to the extent relating to performance thereunder
following the Closing; provided, however, that Purchaser is not assuming any
Excluded Liabilities or any Liabilities of Seller or Stryker in respect of a
breach or a default under, or any non- compliance with respect to, any
Transferred Contracts that occurred on or before the Closing.

 

(b)               Seller and Stryker shall retain, and shall be responsible for
paying, performing and discharging as and when due and owing, and Purchaser
shall not assume or have any responsibility for, the Excluded Liabilities.
“Excluded Liabilities” means all Liabilities of the Seller and Stryker, other
than Assumed Liabilities, including the following:

 

(i)                 all Liabilities relating to or arising out of the Excluded
Assets, including all Liabilities incurred by Seller or Stryker in connection
with shutting down, uninstalling and removing equipment not purchased by
Purchaser and all Liabilities associated with any Contract that is not a
Transferred Contract;

 

(ii)               any and all Liabilities arising on or prior to the Closing
from (A) Seller’s or Stryker’s ownership, use or operation of the Purchased
Assets or (B) the Exploitation of the BMP-7 Products on or before the Closing;

 

(iii)             all accounts payable, Taxes and other accrued expenses of
Seller, Stryker or any other Person (whether direct or as a result of successor
liability, transferee liability, joint and several liability or contractual
liability), except as expressly provided in this Agreement and each of the
Ancillary Agreements;

 

(iv)             all Liabilities associated with debt, loans or credit
facilities of Seller, Stryker or their Affiliates owing to financial
institutions;

 

(v)               Seller’s and Stryker’s obligations under this Agreement and
each of the Ancillary Agreements;

 

(vi)             royalty obligations of Stryker under Section 3.1(e) of that
certain Cross- License Agreement among Stryker, Genetics Institute, Inc. and
Creative BioMolecules dated July 15, 1996 (“GI Cross License”) that relate to
that certain Stanford/Cohen and Boyer License Agreement, dated December 2, 1980
(“Boyer Agreement”), including any

 19 

   

royalty obligations that may arise from Purchaser’s Exploitation of the BMP-7
Products after the Closing;

 

(vii)           Liabilities or obligations of Stryker, as successor-in-interest
to Creative BioMolecules, under Section 3.4(a) of the GI Cross License that
relate to the Boyer Agreement (together with subsection (vi) above, the
“Nontransferred Obligations”); and

 

(viii)         any Liabilities of Seller, Stryker or their Affiliates arising or
incurred in connection with the negotiation, preparation, investigation and
performance of this Agreement, each of the Ancillary Agreements and the
transactions contemplated hereby and thereby, including, without limitation,
fees and expenses of counsel, accountants, consultants, advisors and others.

 

SECTION 2.03. Non-Assignable Assets.

 

(a)                Notwithstanding anything in this Agreement to the contrary,
this Agreement shall not constitute an agreement to assign or transfer any
Purchased Asset that is not assignable or transferable without the consent of
any Person, other than Seller, Stryker, Purchaser or any of their respective
Affiliates, to the extent that such consent shall not have been given prior to
the Closing (each, a “Nonassigned Asset”); provided, however, that Seller and
Stryker shall use, both prior to and for twelve (12) months after the Closing,
commercially reasonable efforts to obtain, and Purchaser shall use its
commercially reasonable efforts to assist and cooperate with Seller and Stryker
in connection therewith, all necessary consents to the assignment and transfer
of each Nonassigned Asset, and shall keep Purchaser reasonably informed as to
the status of such efforts; provided, further, that none of Seller, Stryker,
Purchaser or any of their respective Affiliates shall be required to pay money
to any Third Party, commence any litigation or offer or grant any accommodation
(financial or otherwise) to any Third Party in connection with such efforts.
With respect to any Nonassigned Asset, for a period beginning on the Closing and
ending on the earlier of (i) the time such requisite consent is obtained and
such Nonassigned Asset is transferred and assigned to Purchaser or (ii) the date
that is twelve (12) months after the Closing, Seller and Stryker shall use
commercially reasonable efforts to provide to Purchaser substantially comparable
benefits thereof and shall enforce, at the request of and for the benefit of
Purchaser, any rights of Seller or Stryker arising thereunder against any
Person, including the right to seek any available remedies or to elect to
terminate in accordance with the terms thereof upon the advice of Purchaser. To
the extent that Seller or Stryker provides Purchaser with benefits of any
Nonassigned Asset, Purchaser shall perform, as reasonably directed by Seller,
the related obligations of Seller and Stryker thereunder.

 

(b)               Seller and Stryker provides no assurances to Purchaser that
any consent, authorization, approval or waiver of a Third Party contemplated by
this Section 2.03 will be granted. Subject to compliance by Seller and Stryker
with the provisions of this Section 2.03, the Parties acknowledge and agree that
neither Seller, Stryker nor any of their Affiliates shall be obligated to obtain
any such authorization, approval, consent or waiver hereunder and neither
(i) the failure to so actually obtain any such authorization, approval, consent
or waiver in connection with the consummation of the transactions contemplated
by this Agreement in and of itself nor (ii) any default or termination or any
lawsuit, action, claim, proceeding or investigation commenced or threatened by
or on behalf of any Person to the extent arising out of any such

 20 

   

failure to so actually obtain any such authorization, approval, consent or
waiver in connection with the consummation of the transactions contemplated by
this Agreement in and of itself shall be deemed (x) a breach of any
representation, warranty or covenant of Seller or Stryker contained in this
Agreement or (y) to cause any condition to Purchaser’s obligations to close the
transactions contemplated by this Agreement to be deemed not satisfied.

 

SECTION 2.04. Upfront Consideration.

 

(a)                Upfront Purchase Price. The upfront purchase price for the
Purchased Assets shall be $1,500,000 (the “Upfront Purchase Price”), (i)
$500,000 of which shall be paid by Purchaser to Seller at the Closing by the
Secured Promissory Note, (ii) $500,000 of which shall be held back by Purchaser
and shall be released and paid to Seller within thirty (30) days after the
Technology Transfer Completion Date provided that Seller has delivered to
Purchaser the thirteen (13) one-liter bottles containing the 2010 lot of
serum-free BMP-7 protein (the “Serum Free Assets”); and (iii) $500,000 of which
shall be held back by Purchaser and shall be released and paid to Seller on the
earlier of (x) December 31, 2014 and (y) the completion of an initial public
offering of Purchaser’s securities. For the avoidance of doubt, no payment shall
be due to Seller pursuant to Section 2.04(a)(ii), unless Seller has delivered
the Serum Free Assets to Purchaser. The Upfront Purchase Price shall be
non-refundable and non-creditable, except as set forth in Section 7.

 

(b)Equity Participation.

 

(i)                 Initial Stock Issuance. At the Closing, Purchaser shall
issue to Stryker 263,158 shares of Common Stock, which shares shall be duly
authorized and validly issued and considered fully paid and non-assessable.

 

(ii)               Anti-Dilutive Issuances. After the Closing, Purchaser shall
immediately issue to Stryker, for no additional consideration, any additional
shares of Common Stock necessary to ensure that the total number of shares of
capital stock of Purchaser issued to Stryker (whether or not subsequently sold
or transferred) does not at any time prior to, or upon the occurrence of, a
Successful Financing represent less than the Threshold Level. Such additional
shares of Common Stock shall be issued to Stryker concurrently with the issuance
by Purchaser of any shares of Common Stock, Options or Convertible Securities
other than Exempt Securities and Purchaser shall promptly deliver the stock
certificate or certificates representing such additional shares of Common Stock
to Stryker upon such issuance. Any such additional shares of Common Stock, when
issued in accordance with this Section 2.04(b)(ii), shall be duly authorized and
validly issued and considered fully paid and nonassessable, free and clear of
all Encumbrances, created, imposed or suffered to be imposed by Purchaser.
Purchaser’s obligation to make additional issuances of Common Stock to Stryker
pursuant to this Section 2.04(b)(ii) shall continue until (x) all of the shares
of capital stock to be issued in connection with a Successful Financing have
been issued and (y) Stryker has been issued all of the shares required to be
issued pursuant to this Section 2.04(b)(ii) to ensure that its interests are not
diluted as a result of the Successful Financing. Notwithstanding anything in
this Section 2.04(b)(ii) to the contrary, in no event shall Stryker be entitled
to receive, pursuant to this Section 2.04(b)(ii), a number of shares
representing more than the Threshold Level at and as

 21 

   

of the occurrence of a Successful Financing, even if a Successful Financing
occurs during the course of a transaction or series of transactions and, after
the Successful Financing, Purchaser issues additional shares of capital stock in
connection with such transaction or transactions, as the case may be. For the
avoidance of doubt, Stryker’s rights to receive additional shares of Common
Stock under this Agreement in connection with any issuance by Purchaser of any
shares of Common Stock, Options or Convertible Securities shall cease and no
longer apply with respect to and to the extent that Purchaser receives gross
proceeds in excess of $10,000,000 through a Successful Financing. For so long as
Purchaser is obligated to make additional issuances of Common Stock to Stryker
pursuant to this Section 2.04(b)(ii), Purchaser shall deliver to Stryker within
sixty (60) days after the end of each Calendar Quarter a statement setting
forth: (A) the number of shares of each class and series of capital stock of
Purchaser and the number of securities convertible into or exercisable for such
shares of capital stock, outstanding at the end of such Calendar Quarter; (B)
the number of shares of Common Stock issuable upon conversion or exercise of any
outstanding Options, warrants or other securities that are convertible or
exercisable for Common Stock, and the exchange ratio or exercise price
applicable thereto; and (C) the total number of shares of capital stock of
Purchaser in the employee stock option pool, in each case ((A) through (C)) in
sufficient detail to permit Stryker to calculate its percentage equity ownership
of Purchaser and certified as being true, complete and correct by the chief
financial officer or chief executive officer of Purchaser in his or her official
capacity.

 

(iii)             Lock-Up. Stryker hereby agrees that it will not, without the
prior written consent of the managing underwriter, during the period commencing
on the date of the final prospectus relating to any public offering of
Purchaser’s securities and ending on the date specified by Purchaser and the
managing underwriter (such period not to exceed one hundred eighty (180) days,
or such other period as may be requested by Purchaser or an underwriter to
accommodate regulatory restrictions on (x) the publication or other distribution
of research reports and (y) analyst recommendations and opinions, including, but
not limited to, the restrictions contained in FINRA Rule 2711(f)(4) or NYSE Rule
472(f)(4), or any successor provisions or amendments thereto), (A) lend, offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock held immediately prior to the effectiveness of the
registration statement for the offering or (B) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of the economic
consequences of ownership of any shares of Common Stock, whether any such
transaction described in clause (A) or clause (B) above is to be settled by
delivery of shares of Common Stock, in cash or otherwise. The foregoing
provisions of this Section 2.04(b)(iii) shall not apply to the sale of any
shares of Common Stock to an underwriter pursuant to an underwriting agreement
and shall only be applicable to Stryker if all officers, directors, holders of
more than one percent (1%) of the outstanding shares of Common Stock (after
giving effect to the conversion of all Convertible Securities) and Purchaser
enter into, and remain bound by, similar agreements. The underwriters in
connection with the offering are intended third party beneficiaries of this
Section 2.04(b)(iii) and shall have the right, power and authority to enforce
the provisions hereof

 22 

   

as though they were a party hereto. Stryker further agrees to execute such
agreements as may be reasonably requested by Purchaser or any underwriter that
are consistent with this Section 2.04(b)(iii) or that are necessary to give
further effect hereto. In order to enforce the covenants set forth in this
Section 2.04(b)(iii), Purchaser may impose stop-transfer instructions with
respect to the shares of Common Stock held by Stryker until the end of such
restricted period.

 

SECTION 2.05. Additional Consideration.

 

(a)                Development Milestone Payments. Upon the terms and subject to
the conditions of this Agreement, Purchaser shall make (or cause to be made)
each of the one-time, non-refundable, non-creditable payments set forth below
(each, a “Development Milestone Payment”) to Seller no later than thirty (30)
days following the first occurrence of the corresponding milestone event set
forth below (each a “Development Milestone Event”). For the sake of clarity, (i)
each Development Milestone Payment shall become due and payable upon the first
occurrence of the corresponding Development Milestone Event, regardless of
whether such Development Milestone Event is achieved by Purchaser or by a
Purchaser Related Party, and (ii) the aggregate amount of the Development
Milestone Payments payable pursuant to this Section 2.05(a) shall not exceed
[***].

 

Development Milestone Event Development Milestone Payment Acceptance of an NDA
for a Covered Product by the FDA [***] First Commercial Sale of a Covered
Product in the United States [***] First Commercial Sale of a Covered Product in
the EU [***]

  

(b)               Commercial Milestone Payments. Upon the terms and subject to
the conditions of this Agreement, Purchaser shall make (or cause to be made)
each of the one-time, non-refundable, non-creditable payments set forth below
(each, a “Commercial Milestone Payment”) to Seller no later than thirty (30)
days following the first occurrence of the corresponding milestone event set
forth below (each a “Commercial Milestone Event”). For the sake of clarity, (i)
each Commercial Milestone Payment shall become due and payable upon the first
occurrence of the corresponding Commercial Milestone Event, regardless of
whether such Commercial Milestone Event is achieved by Purchaser or by a
Purchaser Related Party, and (ii) the aggregate amount of the Commercial
Milestone Payments payable pursuant to this Section 2.05(b) shall not exceed
[***].

 

Commercial Milestone Event Commercial Milestone Payment First Calendar Year in
which aggregate annual Net Sales of all Covered Products in the Territory are at
least [***] [***]

 23 

   

 

First Calendar Year in which aggregate annual Net Sales of all Covered Products
in the Territory are at least [***] [***] First Calendar Year in which aggregate
annual Net Sales of all Covered Products in the Territory are at least [***]
[***]

 

(c)                Contingent Payments. Upon the terms and subject to the
conditions of this Agreement, on a Covered Product-by-Covered Product basis,
Purchaser shall pay (or cause to be paid) to Seller with respect to Net Sales of
each Covered Product, an amount equal to (the “Contingent Payments”):

 

(i)               [***] percent ([***]%) of Net Sales in a Calendar Year (or
portion thereof) for the portion of annual aggregate Net Sales of such Covered
Product less than or equal to [***]; plus

 

(ii)              [***] percent ([***]%) of Net Sales in a Calendar Year (or
portion thereof) for the portion of annual aggregate Net Sales of such Covered
Product greater than [***] and less than or equal to [***]; plus

 

(iii)             [***] percent ([***]%) of Net Sales in a Calendar Year (or
portion thereof) for the portion of annual aggregate Net Sales of such Covered
Product greater than [***].

 

By way of example only, if, during a Calendar Year, the Net Sales of a Covered
Product were [***], the amount owed to Seller pursuant to this Section 2.05(c)
would be [***].

 

Purchaser shall pay (or cause to be paid) the Contingent Payments to Seller with
respect to each Calendar Quarter within ninety (90) days after the end of such
Calendar Quarter, and each such Contingent Payment shall be accompanied by a
report that sets forth the Net Sales of each Covered Product in the Territory
during such Calendar Quarter and the amount payable to Seller (each such report,
a “Net Sales Report”).

 

(d)               Agreements with Purchaser Related Parties. Any agreement
between Purchaser and any Purchaser Related Party under which such Purchaser
Related Party acquires any rights to the Purchased Assets or any Covered Product
shall (i) be consistent with the terms and conditions of this Agreement; (ii)
not in any way diminish, reduce or eliminate any obligations under this
Agreement of Purchaser; (iii) require such Purchaser Related Party to provide
Purchaser with all information required to prepare the Net Sales Reports; (iv)
require such Purchaser Related Party to comply with all applicable terms of this
Agreement, including the obligation to maintain books and records consistent
with the terms of Section 2.05(e)(iv) and to permit audits of Financial Records
pursuant to Section 2.05(e)(v). Subject to Section 8.06, such agreement may
include the assignment of certain rights under this Agreement, and

 24 

   

delegation of certain obligations under this Agreement, of Purchaser to such
Purchaser Related Party, provided that Purchaser shall remain liable for the
performance of such obligations by such Purchaser Related Party. Purchaser shall
provide Seller with a copy of any such agreement within thirty (30) days after
the execution thereof.

 

(e)Payment Terms.

 

(i)                 Method of Payment. Each payment under this Agreement shall
be made by electronic transfer in immediately available funds via either a bank
wire transfer, an automated clearing house (ACH) mechanism, or any other means
of electronic funds transfer, at Purchaser’s election, to such bank account as
Seller shall designate in a notice at least five (5) Business Days before the
payment is due.

 

(ii)               Currency. All payments due under this Agreement shall be made
in United States dollars. Whenever, for the purposes of calculating Contingent
Payments, conversion from any foreign currency will be required, all amounts
will first be calculated in the currency of sale and then converted into United
States dollars by applying Seller’s customary and usual currency conversion
procedures, consistently applied.

 

(iii)             Blocked Payments. If, at any time, legal restrictions prevent
the prompt remittance of part or all Contingent Payments with respect to any
country in the Territory where any Covered Product is sold, Contingent Payments
shall continue to be accrued in such country and Net Sales in such country shall
continue to be reported, but such Contingent Payments will not be paid until
they may be removed from the country or, at Seller’s request, shall be paid in
the local currency into a local bank designated by Seller for the account of
Seller. If such Contingent Payments are accrued, then at such time as Purchaser
or Purchaser Related Party, as applicable, is able to remove currency from such
country it shall also remove and pay such Contingent Payments accrued on
Seller’s behalf.

 

(iv)             Record Keeping. Purchaser shall keep, and shall cause Purchaser
Related Parties to keep, books and accounts of record in connection with the
sale of Covered Products in the Territory, including records of Net Sales,
exchange rates and royalty payments (collectively, the “Financial Records”), in
accordance with GAAP and in sufficient detail to permit accurate determination
of all figures necessary for verification of Commercial Milestone Payments and
Contingent Payments to be made to Seller hereunder. Purchaser shall maintain,
and shall cause Purchaser Related Parties to maintain, such Financial Records
for a period of at least three (3) years after the end of the Calendar Quarter
in which they are generated.

 

(v)               Audits. Upon thirty (30) days prior written notice from
Seller, Purchaser shall permit an independent certified public accounting firm
of nationally recognized standing selected by Seller and reasonably acceptable
to Purchaser, to examine, at Seller’s sole expense, the relevant Financial
Records of Purchaser and the Purchaser Related Parties for the purpose of
verifying the Net Sales Reports and the Commercial Milestone Payments and
Contingent Payments made to Seller hereunder. Seller shall be

 25 

   

entitled to conduct an audit in accordance with this Section 2.05(e)(v) not more
than once in any Calendar Year and such audit shall be limited to the pertinent
Financial Records from any Calendar Year ending not more than three (3) years
prior to the date of the request. The accounting firm shall be provided access
to such Financial Records at the facility(ies) of Purchaser and the Purchaser
Related Parties where such Financial Records are normally kept and such audit
shall be conducted during the normal business hours of Purchaser or the
Purchaser Related Party, as applicable. The accounting firm shall enter into a
confidentiality agreement with Purchaser on terms substantially similar to those
set forth in Section 6.01 prior to being provided access to any Financial
Records. Upon completion of the audit, the accounting firm shall provide Seller
and Purchaser with a written report disclosing any discrepancies in the Net
Sales Reports, Commercial Milestone Payments or Contingent Payments, if any, and
in each case, the specific details concerning any discrepancies. Any information
provided by Purchaser or the Purchaser Related Parties to the accounting firm
and the written report provided by the accounting firm shall be deemed to be
Confidential Information for purposes of this Agreement.

 

(vi)             Underpayments/Overpayments. If a report of an independent
certified public accounting firm submitted to Seller and Purchaser in accordance
with Section 2.05(e)(v) shows any underpayment of Commercial Milestone Payments
or Contingent Payments, Purchaser shall remit (or cause to be remitted) to
Seller within thirty (30) days after receipt of such report by Purchaser, (x)
the amount of such underpayment and (y) if such underpayment exceeds five
percent (5%) of the total amount owed to Seller for the Calendar Year then being
audited, the reasonable fees and expenses of such accounting firm performing the
audit, subject to reasonable substantiation thereof. If such accounting firm’s
written report shows any overpayment of Commercial Milestone Payments or
Contingent Payments, Purchaser shall receive a credit equal to such overpayment
against the Commercial Milestone Payments or Contingent Payments otherwise
payable to Seller or a refund in immediately available cash, as specified by
Purchaser, which credit or refund shall be reduced by the reasonable fees and
expenses of such accounting firm performing the audit, subject to reasonable
substantiation thereof.

 

(vii)           Interest. Except for any payment due pursuant to the Secured
Promissory Note, any payment of any sums due and payable to Seller hereunder,
that is more than forty-five (45) days past due (a “Default”) shall be subject
to interest at an annual percentage rate equal to the greater of (A) [***] and
(B) [***] if such payment is not made within forty-five (45) days of Purchaser’s
receipt of notice that such amount is past due. Likewise, any overpayment that
is not refunded within forty-five (45) days after the date upon which Purchaser
requested the refund of such overpayment pursuant to Section 2.05(e)(vi) shall
thereafter be subject to interest at an annual percentage rate equal to the
greater of (A) [***] and (B) [***]. Notwithstanding the preceding sentence, if a
Party contests any amounts due hereunder in good faith and promptly notifies the
other Party of such dispute, interest shall not accrue as to amounts being so
contested until forty-five (45) days following the presentation of such notice
to the other Party.

 26 

   

(viii)         Late Payment Collection. Except for any payment due pursuant to
the Secured Promissory Note, if a Party (for purposes of this Section
2.05(e)(viii), the “Notifying Party”) determines in good faith that another
Party failed to pay any sum (in immediately available funds) when due and owing
(for purposes of this Section 2.05(e)(viii), the “Notified Party”), then, the
Notifying Party shall promptly send written notice of such determination to the
Notified Party. If the Notified Party either (i)   acknowledges that such
amounts are due and owing but fails to make such payment within five (5)
Business Days of receiving such notice or (ii) denies that such amounts are due,
the Notified Party shall reimburse the Notifying Party for all costs incurred in
collecting any payments conclusively determined to have been overdue and related
interest, including, without limitation, reasonable attorneys’ fees, legal
costs, court costs and collection agency fees; provided, however, that if a
court or neutral arbiter determines that no amounts had been due or owing at the
time the Notifying Party delivered its notice to the Notified Party, the
Notifying Party will reimburse the Notified Party for all costs incurred in
defending itself, including, without limitation, reasonable attorneys’ fees,
legal costs, court costs and collection agency fees. For the avoidance of doubt,
any amounts paid pursuant this Section 2.05(e)(viii) will not also be deemed
Losses for the purposes of indemnification under ARTICLE VII.

 

(ix) Taxes. All payments under this Agreement shall be made without any
deduction or withholding for or on account of any Tax. The net amount of any
payment by Purchaser or Purchaser Related Party to Seller under this Agreement
shall be in the amount specified under this Agreement, after deduction or
withholding for or on account of any Tax paid by Purchaser or any Purchaser
Related Party, which shall not reduce the amount of the required payment.

 

SECTION 2.06. Closing. Subject to the terms and conditions of this Agreement,
the sale and purchase of the Purchased Assets and the assumption of the Assumed
Liabilities contemplated by this Agreement (the “Closing”) shall take place at
Ropes & Gray LLP, Prudential Tower, 800 Boylston Street, Boston, MA 02199 on the
Effective Date at 10:00AM Eastern Time or on such other date or location as the
Parties may mutually agree upon.

 

SECTION 2.07. Closing Deliveries by Seller and Stryker. At the Closing, Seller
and Stryker shall deliver or cause to be delivered to Purchaser:

 

(a)the Bill of Sale and such other instruments, in form and substance reasonably
satisfactory to Purchaser, as may be reasonably requested by Purchaser to effect
the transfer of the Purchased Assets to Purchaser, in each case duly executed by
Seller and Stryker (as applicable);

 

(b)the duly executed Patent Assignment by Stryker;

 

(c)subject to Section 2.03 and Section 6.07, the tangible Purchased Assets;

 

(d)executed counterparts of the Assignment & Assumption Agreement;

 

(e)executed counterpart of the Secured Promissory Note by Seller;

 27 

   

(f) such other specific instruments of sale, transfer, conveyance and
assignments as Purchaser may reasonably request;

 

(g)originals, if available, of all Transferred Contracts;

 

(h)subject to Section 6.07, the Transferred Books and Records;

 

(i) a limited liability company action of the members/managers of the Seller
approving this Agreement and the transactions contemplated hereby, in each case,
certified by an appropriate party;

(j)a certificate from the Secretary of State of the State of Michigan as to the
good standing of Seller and Stryker.

 

SECTION 2.08. Closing Deliveries by Purchaser. At the Closing, Purchaser shall
deliver to Seller or Stryker, as applicable:

 

(a)executed Secured Promissory Note;

 

(b)executed counterpart of the Bill of Sale;

 

(c)executed counterpart of the Assignment & Assumption Agreement;

 

(d)executed counterpart of the Patent Assignment;

 

(e) resolutions of the directors of Purchaser approving this Agreement and the
transactions contemplated hereby, in each case, certified by an officer of
Purchaser;

 

(f)a certificate from the Secretary of State of the State of Delaware as to
Purchaser’s good standing; and

 

(g)a stock certificate representing 263,158 shares of Common Stock, with
appropriate legends.

 

ARTICLE III.

 

REPRESENTATIONS AND WARRANTIES OF SELLER AND STRYKER

 

Seller and Stryker hereby jointly and severally represent and warrant to
Purchaser as of the Closing, except as disclosed in the corresponding numbered
section of the disclosure schedule (the “Disclosure Schedules”), which is
segregated into sections and subsections corresponding with the sections and
subsections of this ARTICLE III, as follows. Any information set forth in one
section of the Disclosure Schedules will be deemed to apply to each other
section or subsection of the Disclosure Schedules and this ARTICLE III to which
its relevance is reasonably apparent on its face.

 

SECTION 3.01. Organization; Good Standing and Qualification; Authority and
Binding Effect.

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(a)                Seller is a limited liability company duly formed, validly
existing and in good standing under the laws of the State of Michigan and has
all necessary power and authority (i)   to own, lease, and operate its
properties, (ii) to carry on its business as it is now conducted, and (iii) to
enter into this Agreement and each Ancillary Agreement to which it is a party
and to carry out its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. Seller is duly licensed or
qualified to do business in all jurisdictions in which such license or
qualification is required, except for those jurisdictions in which failure to do
so would not have a Material Adverse Effect.

 

(b)               The execution and delivery of this Agreement and the Ancillary
Agreements by Seller, the performance by Seller of its obligations hereunder and
thereunder and the consummation by Seller of the transactions contemplated
hereby and thereby have been, or will have been at the Closing, duly authorized
by all requisite limited liability company action on the part of Seller.

 

(c)                This Agreement has been, and upon their execution the
Ancillary Agreements to which Seller is a party shall have been, duly executed
and delivered by Seller, and (assuming due authorization, execution and delivery
by Purchaser and Stryker) this Agreement constitutes, and upon their execution
the Ancillary Agreements shall constitute, legal, valid and binding obligations
of Seller, enforceable against Seller in accordance with their respective terms,
except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or similar Laws affecting
creditors’ rights generally or by general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law).

 

SECTION 3.02. No Conflict. Except as may result from any facts or circumstances
relating solely to Purchaser, the execution, delivery and performance of this
Agreement and the Ancillary Agreements by Seller do not and will not (a)
violate, conflict with or result in a breach of the certificate of formation or
the governing documents of Seller, (b) conflict with or violate any Law or
Governmental Order applicable to Seller or the Purchased Assets or (c) conflict
with, result in any breach of, constitute a default (or event which with the
giving of notice or lapse of time, or both, would become a default) under,
require any consent under, result in the creation or imposition of any
Encumbrance other than Permitted Encumbrances on the Purchased Assets, or give
to others any rights of termination, acceleration or cancellation of, any note,
bond, mortgage or indenture, contract, agreement, lease, sublease, license,
permit, franchise or other instrument or arrangement to which Seller is a party
or to which the Purchased Assets are subject, except, in the case of clauses (b)
and (c), as would not have a Material Adverse Effect. For the purposes of
clarity, the representations and warranties made under this Section 3.02 shall
not apply to the Nontransferred Obligations.

 

SECTION 3.03. Governmental Consents and Approvals. Except for any premerger
notifications required under the Hart-Scott-Rodino Act, the execution, delivery
and performance of this Agreement and each Ancillary Agreement by Seller do not
and will not require any consent, approval, authorization or other order of,
action by, filing with or notification to, any Governmental Authority, except
(a) where failure to obtain such consent, approval, authorization or action, or
to make such filing or notification, would not (i) prevent or materially delay
the consummation by Seller of the transactions contemplated by this Agreement

 29 

   

and the Ancillary Agreements or (ii) have a Material Adverse Effect, or (b) as
may be necessary as a result of any facts or circumstances relating solely to
Purchaser or any of its Affiliates.

 

SECTION 3.04. Litigation. There is no Action pending, by or against Seller,
Stryker or their Affiliates, or to the Knowledge of Seller, threatened, before
any Governmental Authority, (a) relating to the Purchased Assets or the BMP-7
Products or

(b)  which could affect the legality, validity or enforceability of this
Agreement, any Ancillary Agreement or the consummation of the transactions
contemplated hereby, and Seller is not aware that there is any basis for the
foregoing.

 

SECTION 3.05. Compliance with Laws.

 

(a)                Seller is in compliance in all respects with all Laws
applicable to the ownership or operation of the Purchased Assets owned by it,
except where failure to be in compliance would not have a Material Adverse
Effect;

 

(b)               Seller is in compliance with the Transferred Contracts to
which it is a party, except where failure to be in compliance would not have a
Material Adverse Effect;

 

(c)                Seller is not in violation of any term of its certificate of
formation or its governing documents; and

 

(d)               There are no Actions pending or, to Seller’s Knowledge,
threatened which question the legality or propriety of the transactions
contemplated by this Agreement or which materially impairs the ability of Seller
or Stryker to perform its obligations hereunder, and Seller is not aware that
there is any basis for the foregoing.

 

SECTION 3.06. Intellectual Property.

 

(a)                Except for the Excluded Assets, (i) the Transferred
Intellectual Property constitutes all Intellectual Property that is owned by
Seller or Stryker that is necessary or useful to Exploit the BMP-7 Products and
(ii) to Seller’s Knowledge, the license agreements included in the Transferred
Contracts constitute all agreements to which Seller or Stryker is a party with
regard to licensed Intellectual Property that directly relates to BMP-7
Products. Seller or Stryker owns all right, title, and interest in and to all of
the Transferred Intellectual Property, free and clear of all Encumbrances, other
than Permitted Encumbrances. All Transferred Patents are owned by Stryker. None
of the Transferred Patents have been abandoned or passed into the public domain.
Seller or Stryker has taken reasonable measures to maintain in confidence all
trade secrets and confidential information comprising a part of the Transferred
Intellectual Property. To the extent Schedule 2.01(a)(i) omits any patents or
patent applications directly relating to the BMP-7 Products that are owned by
Seller or Stryker, Seller and Stryker agree that all such omitted patents and
patent applications shall be Transferred Patents under this Agreement.

 

(b)               Stryker has the sole and exclusive right to file, prosecute
and maintain all patents, applications and registrations with respect to the
Transferred Patents.

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(c)                To Seller’s Knowledge, (i) no infringement, misappropriation,
violation or dilution of any Intellectual Property, or any rights of publicity
or privacy relating to the use of names, likenesses, voices, signatures or
biographical information, of any other Person has occurred or results in any way
from Seller’s or Stryker’s Exploitation of the BMP-7 Products; (ii)  no claim of
any infringement, misappropriation, violation or dilution of any Intellectual
Property or any such rights of any other Person has been made or asserted in
respect of Seller’s or Stryker’s Exploitation of the BMP-7 Products; (iii) no
claim of invalidity of any Transferred Intellectual Property has been made by
any other Person; (iv) no Action is pending or threatened that challenges the
validity, enforceability, ownership or use of any Transferred Intellectual
Property; and (v) Seller and Stryker have not had notice of any basis for a
claim that the Exploitation of the BMP-7 Products infringes, misappropriates,
violates or dilutes any Intellectual Property of any other Person.

 

(d)               Each of Seller and Stryker has a policy that requires each
Person employed or retained by it as a consultant or independent contractor who
contributed to the creation or development of any of the Transferred
Intellectual Property to enter into an agreement covering confidentiality and
assignment of inventions to Seller or Stryker.

 

(e)                All registration, maintenance and renewal fees currently due
in connection with Transferred Patents have been paid and all documents,
recordations and certificates in connection with all Transferred Patents
currently required to be filed have been filed with the relevant patent office
or other authorities in the United States or foreign jurisdictions, as the case
may be, for the purposes of prosecuting, maintaining and perfecting all
Transferred Patents and, if applicable, recording Stryker’s ownership interests
therein.

 

(f)                Neither Seller nor Stryker has brought at any time within two
(2) years prior to the Effective Date nor has been a party to, any claims,
suits, arbitrations or other adversarial proceedings with respect to the
Transferred Intellectual Property against any Third Party, nor has Seller or
Stryker threatened any such action against any Third Party.

 

(g)               To Seller’s Knowledge, except as set forth on Schedule
3.06(g), no Person is violating, infringing or misappropriating any Transferred
Intellectual Property.

 

(h)               All employees, agents, consultants or independent contractors
who have contributed to or participated in the creation or development of any
Transferred Intellectual Property on behalf of Seller or Stryker either: (i)
created such materials in the scope of his or her employment or (ii) is a party
to a “work-for-hire” agreement or similar agreement under which Seller or
Stryker is deemed to be the original owner/author of all rights, title and
interest therein; and in either case has executed an assignment or an agreement
to assign in favor of Seller or Stryker (or such predecessor in interest, as
applicable) of all right, title and interest in such material. To the Knowledge
of Seller, no current or former employee, consultant or independent contractor
of Seller or Stryker has any right, title, claim or interest in, to or under any
Transferred Intellectual Property that has not been exclusively assigned and
transferred to Seller or Stryker.

 

SECTION 3.07. Title. Seller or Stryker has good and marketable title to all of
the Purchased Assets, free and clear of all Encumbrances, other than Permitted
Encumbrances. Except for the Excluded Assets, the Purchased Assets include all
of the tangible personal

 31 

   

properties, Intellectual Property and other assets owned by Seller or Stryker
that are solely and exclusively related to the BMP-7 Products. This Section 3.07
does not relate to Intellectual Property, which is the subject of Section 3.06.

 

SECTION 3.08. No Brokers. No broker, finder or investment banker is entitled to
any brokerage, finder’s or other fee or commission in connection with the
transactions contemplated by this Agreement or the Ancillary Agreements based
upon arrangements made by or on behalf of Seller or Stryker or any of their
Affiliates.

 

SECTION 3.09. Environmental Matters. The operations of Seller with respect to
the Purchased Assets are in compliance in all material respects with all
applicable Environmental Laws.

 

SECTION 3.10. Contracts.

 

(a) Each of the Transferred Contracts constitutes a valid and binding obligation
of the parties thereto and is, unless terminated in accordance with the terms
and conditions provided in the applicable Transferred Contract as footnoted on
Schedule 2.01(a)(v) and not as a result of a breach or default by Seller or
Stryker thereunder, in full force and effect, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors’ rights generally and by the
effect of general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law). Neither Seller nor Stryker nor,
to Seller’s Knowledge, any other party to any Transferred Contract, is in
material breach or violation of, or default under, or has repudiated any
provision of, any Transferred Contract, except where such breach would not have
a Material Adverse Effect.

 

SECTION 3.11. Purchase Entirely for Own Account. The Shares will be acquired for
investment for Stryker’s own account, not as a nominee or agent, and not with a
view to the resale or distribution of any part thereof, and Stryker has no
present intention of selling, granting any participation in, or otherwise
distributing the same. By executing this Agreement, Stryker further represents
that Stryker does not presently have any contract, undertaking, agreement or
arrangement with any Person to sell, transfer or grant participations to such
Person or to any Third Party, with respect to any of the Shares. Stryker has not
been formed for the specific purpose of acquiring the Shares. Stryker
acknowledges that this Agreement is made with Stryker in reliance upon the
foregoing representations, which by Stryker’s execution of this Agreement,
Stryker hereby confirms. Stryker has had an opportunity to discuss Purchaser’s
prospective business, management and financial affairs of Purchaser and the
prospective terms and conditions of the offering of the Shares with Purchaser’s
management.

 

SECTION 3.12. Restricted Securities. Stryker understands that the Shares have
not been, and will not be, registered under the Securities Act, by reason of a
specific exemption from the registration provisions of the Securities Act which
depends upon, among other things, the bona fide nature of the investment intent
and the accuracy of Stryker’s representations as expressed herein. Stryker
understands that the Shares are “restricted securities” under applicable U.S.
federal and state securities laws and that, pursuant to these laws, Stryker must
hold the Shares indefinitely unless they are registered with the Securities and

 32 

   

Exchange Commission and qualified by state authorities, or an exemption from
such registration and qualification requirements is available. Stryker
acknowledges that Purchaser has no obligation to register or qualify the Shares
for resale. Stryker further acknowledges that if an exemption from registration
or qualification is available, it may be conditioned on various requirements
including, but not limited to, the time and manner of sale, the holding period
for the Shares, and on requirements relating to Purchaser which are outside of
Stryker’s control, and which Purchaser is under no obligation and may not be
able to satisfy.

 

SECTION 3.13. No Public Market. Stryker understands that no public market now
exists for the Shares, and that Purchaser has made no assurances that a public
market will ever exist for the Shares.

 

SECTION 3.14. Legends. Stryker acknowledges that the Shares shall bear legends
reflecting appropriate restrictions on transfer as described herein.

 

SECTION 3.15. Accredited Investor. Stryker is an accredited investor as defined
in Rule 501(a) of Regulation D promulgated under the Securities Act.

 

SECTION 3.16. No Other Representations or Warranties. EXCEPT FOR THE
REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN THIS ARTICLE III, NEITHER
SELLER, STRYKER NOR ANY OTHER PERSON MAKES ANY OTHER EXPRESS OR IMPLIED
REPRESENTATION OR WARRANTY ON BEHALF OF SELLER OR STRYKER. SUBJECT TO THE
REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN THIS ARTICLE III,
PURCHASER HEREBY ACKNOWLEDGES AND AGREES THAT PURCHASER IS PURCHASING THE
PURCHASED ASSETS IN AN “AS IS” AND “WHERE IS” BASIS AND IN RELIANCE ON ONLY
THOSE REPRESENTATIONS AND WARRANTIES OF SELLER AND STRYKER EXPRESSLY SET FORTH
IN THIS ARTICLE III.

 

ARTICLE IV.

 

REPRESENTATIONS AND WARRANTIES OF STRYKER

 

Stryker hereby represents and warrants to Purchaser as of the Closing, except as
disclosed in the corresponding numbered section of the Disclosure Schedule,
which is segregated into sections and subsections corresponding with the
sections and subsections of this ARTICLE IV, as follows. Any information set
forth in one section of the Disclosure Schedules will be deemed to apply to each
other section or subsection of the Disclosure Schedules and this ARTICLE IV to
which its relevance is reasonably apparent on its face.

 

SECTION 4.01. Organization; Good Standing and Qualification; Authority and
Binding Effect.

 

(a)                Stryker is a corporation duly formed, validly existing and in
good standing under the laws of the State of Michigan and has all necessary
power and authority (i) to own, lease, and operate its properties, (ii) to carry
on its business as it is now conducted, and (iii) to enter into this Agreement
and each Ancillary Agreement to which it is a party and to carry out its

 33 

   

obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. Stryker is duly licensed or qualified to do
business in all jurisdictions in which such license or qualification is
required, except for those jurisdictions in which failure to do so would not
have a Material Adverse Effect.

 

(b)               The execution and delivery by Stryker of this Agreement and
the Ancillary Agreements to which it is a party, the performance by Stryker of
its obligations hereunder and thereunder and the consummation by Stryker of the
transactions contemplated hereby and thereby have been, or will have been at the
Closing, duly authorized by all requisite corporate action on the part of
Stryker.

 

(c)                This Agreement has been, and upon their execution the
Ancillary Agreements to which Stryker is a party shall have been, duly executed
and delivered by Stryker, and (assuming due authorization, execution and
delivery by Purchaser and Seller) this Agreement constitutes, and upon their
execution the Ancillary Agreements shall constitute, legal, valid and binding
obligations of Stryker, enforceable against Stryker in accordance with their
respective terms, except as such enforcement may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or similar Laws
affecting creditors’ rights generally or by general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity or at
law).

 

SECTION 4.02. No Conflict. Except as may result from any facts or circumstances
relating solely to Purchaser, the execution, delivery and performance of this
Agreement by Stryker do not and will not (a) violate, conflict with or result in
a breach of the certificate of incorporation or the governing documents of
Stryker, (b) conflict with or violate any Law or Governmental Order applicable
to Stryker or the Purchased Assets or (c) conflict with, result in any breach
of, constitute a default (or event which with the giving of notice or lapse of
time, or both, would become a default) under, require any consent under, result
in the creation or imposition of any Encumbrance other than Permitted
Encumbrances on the Purchased Assets, or give to others any rights of
termination, acceleration or cancellation of, any note, bond, mortgage or
indenture, contract, agreement, lease, sublease, license, permit, franchise or
other instrument or arrangement to which Stryker is a party or to which the
Purchased Assets are subject, except, in the case of clauses (b) and (c), as
would not materially and adversely affect the ability of Stryker to carry out
its obligations under, and to consummate the transactions contemplated by, this
Agreement and the Ancillary Agreements.

 

SECTION 4.03. Governmental Consents and Approvals. Except for any premerger
notifications required under the Hart-Scott-Rodino Act, the execution, delivery
and performance of this Agreement by Stryker and each Ancillary Agreement to
which Stryker is a party do not and will not require any consent, approval,
authorization or other order of, action by, filing with or notification to, any
Governmental Authority, except (a) where failure to obtain such consent,
approval, authorization or action, or to make such filing or notification, would
not (i)   prevent or materially delay the consummation by Stryker of the
transactions contemplated by this Agreement and the Ancillary Agreements or (ii)
have a Material Adverse Effect, or (b) as may be necessary as a result of any
facts or circumstances relating solely to Purchaser or any of its Affiliates.

 

 34 

   

SECTION 4.04. Compliance with Laws.

 

(a)                Stryker is in compliance in all respects with all Laws
applicable to the ownership or operation of the Purchased Assets owned by it,
except where failure to be in compliance would not have a Material Adverse
Effect; and

 

(b)               Stryker is in compliance with the Transferred Contracts to
which it is a party, except where failure to be in compliance would not have a
Material Adverse Effect.

 

ARTICLE V.

 

REPRESENTATIONS AND WARRANTIES OF PURCHASER

 

Purchaser hereby represents and warrants to Seller and Stryker as of the Closing
as follows:

 

SECTION 5.01. Organization and Authority of Purchaser.

 

(a)                Purchaser is a corporation duly formed, validly existing and
in good standing under the laws of Delaware and has all necessary power and
authority (i) to own, lease, and operate its properties, (ii) to carry on its
business as it is now conducted, and (iii) to enter into this Agreement and each
Ancillary Agreement to which it is a party, to carry out its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. Purchaser is duly licensed or qualified to do business in all
jurisdictions in which such license or qualification is required, except for
those jurisdictions in which failure to do so would not have a material adverse
effect on Purchaser.

 

(b)               The execution and delivery of this Agreement and the Ancillary
Agreements by Purchaser, the performance by Purchaser of its obligations
hereunder and thereunder and the consummation by Purchaser of the transactions
contemplated hereby and thereby have been, or will have been at the Closing,
duly authorized by all requisite corporate action on the part of Purchaser.

 

(c)                This Agreement has been, and upon their execution the
Ancillary Agreements to which it is a party shall have been, duly executed and
delivered by Purchaser, and (assuming due authorization, execution and delivery
by Seller and Stryker) this Agreement constitutes, and upon their execution the
Ancillary Agreements shall constitute, legal, valid and binding obligations of
Purchaser, enforceable against Purchaser in accordance with their respective
terms, except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or similar Laws affecting
creditors’ rights generally or by general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law).

 

SECTION 5.02. No Conflict. Except as may result from any facts or circumstances
relating solely to Seller or Stryker, the execution, delivery and performance by
Purchaser of this Agreement and the Ancillary Agreements do not and will not (a)
violate,

 35 

   

conflict with or result in the breach of the certificate of incorporation of
Purchaser, (b) conflict with or violate any Law or Governmental Order applicable
to Purchaser or (c) conflict with, result in any breach of, constitute a default
(or event which with the giving of notice or lapse of time, or both, would
become a default) under, require any consent under, or give to others any rights
of termination, acceleration or cancellation of, any note, bond, mortgage or
indenture, contract, agreement, lease, sublease, license, permit, franchise or
other instrument or arrangement to which Purchaser is a party, except, in the
case of clauses (b) and (c), as would not materially and adversely affect the
ability of Purchaser to carry out its obligations under, and to consummate the
transactions contemplated by, this Agreement and the Ancillary Agreements.

 

SECTION 5.03. Governmental Consents and Approvals. Except for any premerger
notifications required under the Hart-Scott-Rodino Act, the execution, delivery
and performance of this Agreement by Purchaser and each Ancillary Agreement to
which Purchaser is a party do not and will not require any consent, approval,
authorization or other order of, action by, filing with or notification to, any
Governmental Authority, except (a) where failure to obtain such consent,
approval, authorization or action, or to make such filing or notification, would
not (i) prevent or materially delay the consummation by Purchaser of the
transactions contemplated by this Agreement and the Ancillary Agreements or (ii)
have a material adverse effect on Purchaser, or (b) as may be necessary as a
result of any facts or circumstances relating solely to Seller, Stryker or any
of their Affiliates.

 

SECTION 5.04. Litigation. There is no Action, by or against Purchaser or any of
its Affiliates, or to the knowledge of Purchaser, threatened in writing, before
any Governmental Authority, which could affect the legality, validity or
enforceability of this Agreement, any Ancillary Agreement or the consummation of
the transactions contemplated hereby.

 

SECTION 5.05. No Brokers. No broker, finder or investment banker is entitled to
any brokerage, finder’s or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Purchaser or any of its Affiliates.

 

SECTION 5.06. Capitalization.

 

(a)                Schedule 5.06(a) sets forth, with respect to Purchaser, (i)
the number of authorized shares of each class of its capital stock, (ii) the
number of issued and outstanding shares of each class of its capital stock and
(iii) the number of shares of each class of its capital stock which are held in
treasury.

 

(b)               All of the issued and outstanding shares of capital stock of
Purchaser, including the shares of Common Stock issued to Stryker at the
Closing, (i) have been duly authorized and validly issued and are fully paid and
non-assessable, (ii) were issued in compliance with all applicable state and
federal securities Laws and (iii) were not issued in violation of any preemptive
rights or rights of first refusal.

 

(c)                Except as set forth on Schedule 5.06(c), (i) no preemptive
rights, right of first refusal or similar rights exist with respect to the
shares of capital stock of Purchaser, and no

 36 

   

such rights arise or become exercisable by virtue of or in connection with the
transactions contemplated by this Agreement; (ii) there are no outstanding or
authorized rights, options, warrants, convertible securities, subscription
rights, conversion rights, exchange rights or other agreements or commitments of
any kind that could require Purchaser to issue or sell any shares of its capital
stock (or securities convertible into or exchangeable for shares of its capital
stock); (iii)     there are no outstanding stock appreciation, phantom stock,
profit participation or other similar rights with respect to Purchaser; and (iv)
there are no proxies, voting rights or other agreements or understandings with
respect to the voting or transfer of the capital stock of Purchaser.

 

ARTICLE VI.

ADDITIONAL COVENANTS

SECTION 6.01. Confidentiality. From and after the Closing, Seller and Stryker
will treat and hold as confidential, and not use or disclose any of the
Confidential Information to any Person, except to pursue its rights under this
Agreement or the Ancillary Agreements. In the event that Seller or Stryker is
requested or required (by oral question or request for information or documents
in any legal proceeding, interrogatory, subpoena, civil investigative demand or
similar process or as otherwise required by Law) to disclose any Confidential
Information, Seller or Stryker will notify Purchaser promptly of the request or
requirement, as far in advance of such disclosure as practicable, so that
Purchaser may seek an appropriate protective order or waive compliance with the
provisions of this Section 6.01. If, in the absence of a protective order or the
receipt of a waiver hereunder, Seller or Stryker is compelled to disclose any
Confidential Information to any Governmental Authority or else stand liable for
contempt, Seller or Stryker may disclose such Confidential Information to the
Governmental Authority; provided, however, that Seller or Stryker shall use
commercially reasonable efforts to obtain an order or other assurance that
confidential treatment will be accorded to such portion of the Confidential
Information required to be disclosed. For the purposes of this Agreement,
“Confidential Information” shall mean any nonpublic or confidential information
relating to the Purchased Assets, except to the extent that such information
shall have become available to the public other than through improper disclosure
by Seller or Stryker or anyone acting by, through or under Seller or Stryker.

 

SECTION 6.02. Condition of the Purchased Assets.

 

(a)                Purchaser has made all inspections and investigations of the
Purchased Assets deemed necessary or desirable by Purchaser. Purchaser
acknowledges and agrees that (a)  it is purchasing the Purchased Assets based on
the results of such inspections and investigations and not on any
representations and warranties of Stryker, Seller or any of their Affiliates not
set forth in this Agreement or the certificates and other documents delivered
pursuant hereto, including the Ancillary Agreements, (b) the Purchased Assets
are sold “as is, where is” and Purchaser accepts the Purchased Assets in the
condition they are in and at the place where they are located as of the Closing
and (c) the drug substances included in the Inventory are only bulk drug
substance and do not include any finished products. In light of such inspections
and investigations, and the representations and warranties expressly made to
Purchaser by Seller and Stryker in this Agreement, the Ancillary Agreements and
the certificates

 37 

   

and other documents delivered pursuant hereto, PURCHASER ACKNOWLEDGES THAT THE
REPRESENTATIONS AND WARRANTIES GIVEN HEREIN BY SELLER AND STRYKER ARE IN LIEU
OF, AND PURCHASER HEREBY EXPRESSLY WAIVES ALL RIGHTS TO, ANY IMPLIED WARRANTIES
THAT MAY OTHERWISE BE APPLICABLE BECAUSE OF THE PROVISIONS OF THE UNIFORM
COMMERCIAL CODE OR ANY OTHER LAWS, INCLUDING THE WARRANTIES OF MERCHANTABILITY
AND FITNESS FOR A PARTICULAR PURPOSE.

 

(b)               Any claims that Purchaser may have for breach of
representations and warranties shall be based solely on the representations and
warranties set forth in this Agreement and the certificates and other documents
delivered pursuant hereto.

 

(c)                Purchaser further acknowledges that neither Stryker nor
Seller, nor any of their Affiliates, nor any other Person, has made any
representation or warranty, express or implied, as to the accuracy or
completeness of any information regarding Seller, Stryker, the Purchased Assets
or the Assumed Liabilities not expressly set forth in this Agreement or the
certificates or other documents delivered pursuant hereto.

 

SECTION 6.03. Bulk Transfer Laws. Purchaser hereby waives compliance by Seller
or Stryker with any applicable bulk sale or bulk transfer Laws of any
jurisdiction in connection with the sale of the Purchased Assets to Purchaser.

 

SECTION 6.04. Further Action. The Parties shall use all reasonable efforts to
take, or cause to be taken, all appropriate action, to do or cause to be done
all things necessary, proper or advisable under applicable Law, and to execute
and deliver such documents, as may be required to carry out the provisions of
this Agreement and consummate and make effective the transactions contemplated
by this Agreement.

 

SECTION 6.05. Allocation of Purchase Price. The Parties recognize their mutual
obligations to comply with Section 1060 of the Code and to comply with any
similar provision of foreign, state or local law. Purchaser shall prepare an
allocation of the purchase price (which shall include all consideration payable
hereunder, including any payment payable to Seller under ARTICLE II) as
determined for U.S. federal income tax purposes, among the purchased assets in
accordance with the allocation principles set forth on Schedule 6.05 and Section
1060 of the Code and the Treasury regulations thereunder (and any similar
applicable provision of state, local or foreign law, as appropriate) which
allocation and any adjustments thereto shall be binding among the Parties,
including for purposes of filing Form 8594 with each of their respective federal
income tax returns. Purchaser shall deliver such allocation statement to Seller
within sixty (60) days after the Closing. The allocation statement, as
determined by Purchaser, shall be binding unless within thirty (30) Business
Days after delivery of the allocation statement, Seller notifies Purchaser in
writing that Seller objects to the allocation set forth in the allocation
statement setting forth in reasonable detail its objections and the basis
therefore. If such notice is given, Purchaser and Seller shall promptly work in
good faith to reach agreement to any adjustments required to the allocation. The
Parties agree to update the allocation statement in good faith in the case that
any additional payments or adjustments to the purchase price are made herein.
Notwithstanding the foregoing, in the event the Parties cannot come to an
agreement on the content of the allocation statement, then each Party shall be
free to

 38 

   

take its own respective position in respect of such allocation (including on
Form 8594). Seller and Purchaser shall each timely and properly prepare,
execute, file and deliver all such documents, forms and other information as the
other Party may reasonably request to prepare the allocation and any adjustments
thereto.

 

SECTION 6.06. Transfer Taxes. Seller and Purchaser shall each be responsible for
and shall pay fifty percent (50%) of all applicable Transfer Taxes with respect
to or arising of the transaction contemplated by this Agreement and the
Ancillary Agreements. Except as otherwise required by applicable legal
requirements, Seller and Purchaser, as applicable, will file all necessary Tax
Returns and other documentation with respect to all such Transfer Taxes as such
obligations arise primarily on either Purchaser or Seller. If required by
applicable law, Purchaser or Seller, as applicable, will join in the execution
of any such Tax Returns and other documentation.

 

SECTION 6.07. Transfer of Books and Records and Know-How. Seller and Stryker
shall use commercially reasonable efforts to transfer to Purchaser as of the
Closing the Transferred Books and Records and tangible embodiments of the
Transferred Know-How that are (a) located at Seller’s or Stryker’s facilities,
(b) reasonably identifiable and reasonably separable from other books and
records of Seller and Stryker and (c) in a format that is compatible with
Purchaser’s systems. To the extent that Seller or Stryker is unable to transfer
any such Transferred Books and Records or Transferred Know-How as of the
Closing, Seller and Stryker shall use commercially reasonable efforts to deliver
such Transferred Books and Records or Transferred Know-How to Purchaser as soon
as reasonably practicable after the Closing; provided, however, that Seller’s
and Stryker’s obligations under this Section 6.07 shall expire on

the first (1st) anniversary of the Closing. Seller and Stryker shall, when
reasonably available, transfer originals of the Transferred Books and Records
and Transferred Know-How, and otherwise may transfer copies of the Transferred
Books and Records and Transferred Know- How.

 

SECTION 6.08. Seller’s and Stryker’s Post-Closing Obligations with respect to
Transferred Intellectual Property. After the Closing, Seller and Stryker agree
as follows:

 

(a)                Seller and Stryker shall, without further consideration or
compensation, communicate to Purchaser any facts of which Seller or Stryker has
knowledge with respect to the Transferred Intellectual Property, testify in any
legal proceeding, sign all documents, make all rightful oaths and declarations,
to the extent necessary to aid Purchaser in obtaining and enforcing the
Transferred Intellectual Property. Purchaser agrees to reimburse Seller’s and
Stryker’s reasonable out-of-pocket expenses in carrying out its obligations
under this section. If Seller or Stryker cannot be located or is unable or
unwilling to sign documents as required hereunder, Seller and Stryker agree to
and do hereby appoint Purchaser as Seller’s and Stryker’s attorney-in-fact for
the limited purpose of executing all documents and performing all other acts
necessary to give effect and legality to the assignment of the Transferred
Intellectual Property to Purchaser hereunder. Seller and Stryker acknowledge
that this appointment is coupled with an interest and is irrevocable.

 39 

   

(b)               Seller and Stryker agree not to take any action challenging or
opposing, on any grounds whatsoever, Purchaser’s rights in the Transferred
Intellectual Property, or the validity thereof.

 

SECTION 6.09. Transition Plan. In order to facilitate the transfer of the
Purchased Assets to Purchaser, the Parties shall comply with the provisions of
the Transition Plan.

 

SECTION 6.10. Patent Maintenance. From the Closing, as between and among the
Parties, Purchaser will assume sole responsibility and expense for all further
prosecution and maintenance of all pending patent applications and all issued
patents included in the Transferred Patents.

 

SECTION 6.11. Purchaser Diligence Obligation. Purchaser shall, and shall cause
Purchaser Related Parties, to use Commercially Reasonable Efforts to obtain
Regulatory Approval for, and to commercialize, at least one (1) Covered Product
in the United States.

 

SECTION 6.12. Right of First Negotiation. In the event Purchaser or any of its
Affiliates develops a Covered Product in the field of osteoarthritis and seeks
to enter into a commercialization partnership with a Third Party with respect to
such Covered Product, then, prior to entering into any negotiations with respect
to such partnership with a Third Party, Purchaser shall give written notice to
Seller of its desire to enter into a commercialization partnership relationship
(the “Notice”) and offer to Seller the right of first negotiation with respect
to the commercialization rights for such Covered Product (the “Right of First
Negotiation”). In the event that Seller elects to exercise its Right of First
Negotiation, Seller shall have thirty (30) days (the “Assessment Period”) after
receipt of the Notice to so notify Purchaser in writing. Upon receipt of
Seller’s notification, Seller and Purchaser will negotiate in good faith and may
enter into an agreement with respect to the commercialization rights for such
Covered Product (the “Commercialization Agreement”) if the Parties reach
agreement on the terms of such Commercialization Agreement within sixty (60)
days of the Notice (the “Negotiation Period”). In the event that Seller
exercises its Right of First Negotiation, but Seller and Purchaser do not enter
into a definitive Commercialization Agreement within the Negotiation Period, or
Seller does not exercise its Right of First Negotiation during the Assessment
Period, Purchaser shall be free to enter into any commercialization agreement
with any Third Party with respect to the applicable Covered Product at any time
thereafter with no obligation or other liability to Seller with respect to the
Right of First Negotiation for this Agreement; provided, however, that the
material financial terms of any such commercialization agreement with such Third
Party may not be substantially less favorable in the aggregate than the terms
offered to Purchaser by Seller, if any. For the purposes of this Section 6.12,
Seller shall mean Seller and its Affiliates, including Stryker. For the
avoidance of doubt, Seller shall not be prohibited from continuing to pursue a
Commercialization Agreement with Purchaser even if Seller initially does not
exercise its Right of First Negotiation or fails to enter into a definitive
Commercialization Agreement with Purchaser during the Negotiation Period.

 

SECTION 6.13. Continuing Involvement. To facilitate the transfer of the
Purchased Assets from Seller and Stryker to Purchaser under this Agreement,
Seller shall use reasonable efforts to retain the services of Dr. Dean Falb
until the Technology Transfer

 40 

   

Completion Date. Seller shall use reasonable efforts to make Dr. Falb available
to Purchaser, upon Purchaser’s request, to assist Purchaser with the transfer of
the Purchased Assets and Seller shall pay Dr. Falb’s consulting fees for the
time spent providing such assistance to Purchaser. For the avoidance of doubt,
Seller shall not be responsible for any expenses incurred as a result of Dr.
Falb’s provision of business advice to Purchaser. Notwithstanding any of the
foregoing, Purchaser shall be free to, at Purchaser’s own cost and expense,
retain Dr. Falb as an employee or independent contractor at any time.

 

SECTION 6.14. Stock. Purchaser will authorize and reserve for issuance such
number of shares of Common Stock as reasonably necessary to effectuate the
anti-dilution provisions under Section 2.04(b)(ii) (from time to time as such
number becomes determinable).

 

SECTION 6.15. Transferred Books and Records.

 

(a)                Purchaser acknowledges and agrees that Seller and Stryker may
retain copies of the Transferred Books and Records (A) in connection with the
performance of Seller’s or Stryker’s obligations under any agreement effective
prior to the Closing to which Seller or Stryker is a party, (B) as required to
satisfy its ongoing obligations with relevant Government Authorities, (C) to
make any required filings or (D) to respond to any potential inquiry or audit
with any Government Authority.

 

(b)               For a period of five (5) years after the Closing, and except
as prohibited by any applicable Law, upon the reasonable request of Seller or
Stryker and at Seller’s or Stryker’s sole expense, Purchaser shall provide
Seller, Stryker, and their representatives with reasonable access to and the
right to make copies of the Transferred Books and Records, to the extent the
possession of which is retained by Purchaser, as may be necessary or useful in
connection with any Third Party litigation, the preparation of financial
statements, the conduct of any audit or investigation by a Governmental
Authority, or any similar or related matter. If during such period, Purchaser
elects to dispose of such records and documents (other than in connection with a
sale of all or substantially all of Purchaser’s business or assets or other
assignment of Purchaser’s rights hereunder pursuant to Section 8.06), Purchaser
shall give Seller and Stryker sixty (60) days’ prior written notice, during
which period Seller and Stryker shall have the right to take such records and
documents without further consideration, except as prohibited by any applicable
Law. In the event of a sale of all or substantially all of Purchaser’s business
or assets or other assignment of Purchaser’s rights hereunder pursuant to
Section 8.06 within five (5) years after the Closing, the acquirer of
Purchaser’s business or assets or assignee of Purchaser’s rights shall agree to
be bound by this Section 6.15(b) for the remainder of such five (5) year period.

 

(c)                For a period of five (5) years after the Closing, and except
as prohibited by any applicable Law, upon the reasonable request of Purchaser
and at Purchaser’s sole expense, Seller and Stryker shall provide Purchaser and
its representatives with reasonable access to make copies of (i) any books,
files (including financial accounting information), papers, correspondence,
documents, databases, software, reports, laboratory notebooks, plans and records
that remain in Seller’s or Stryker’s possession at the time of such request that
are related to the BMP-7 Products, Purchased Assets and Assumed Liabilities that
are not transferred to Purchaser pursuant to Section 6.07 and (ii) any tangible
and intangible embodiments of the

 41 

   

Transferred Know-How that are not transferred to Purchaser pursuant to Section
6.06 that remain in Seller’s or Stryker’s possession at the time of such request
(the records described in clause (i) and clause (ii), collectively, the
“Retained Books and Records”), as may be necessary or useful in connection with
any Third Party litigation, the conduct of any audit or investigation by a
Governmental Authority, or any similar or related matter. Nothing in this
Section 6.15(c) shall be construed to impose any duty or obligation on Seller or
Stryker to retain, store or preserve any Retained Books and Records after the
Closing.

 

(d)               Notwithstanding anything in this Agreement to the contrary,
Purchaser shall have no right to receive, copy or otherwise obtain or review any
Tax Returns, Tax records, Tax workpapers, financial accounting records and any
other similar Tax or financial accounting documents of Seller or Stryker except
the limited right to review financial accounting information provided in Section
6.15(c)(i).

 

SECTION 6.16. Noncompetition Agreement.

 

(a)                For and in consideration of the transactions contemplated
herein, and so long as any payments due and payable by Purchaser to Seller under
Section 2.04 are not in Default, during the period commencing with the Closing
and ending on the second anniversary of the Closing, Seller and Stryker shall
not engage in any Competitive Activity in the Territory.

 

(b)               “Competitive Activity” means directly or indirectly engaging
in the Exploitation of BMP-7 Products. Notwithstanding the foregoing, if Seller
or Stryker acquires (1) a Third Party (including by a merger or consolidation)
so that such Third Party becomes an Affiliate of Stryker or (2) all or
substantially all of the assets of a Third Party, and such business or assets so
acquired by the acquisition include the rights to BMP-7 Products that represent
less than twenty percent (20%) of such Third Party’s total assets or gross
sales, then such acquisition or the Exploitation of such BMP-7 Products shall
not be deemed to constitute a Competitive Activity.

 

(c)                Notwithstanding the foregoing, the provisions of this Section
6.16 shall not prevent Seller or Stryker from beneficially owning up to five
percent (5%), on a fully-diluted basis, of the total shares of all classes of
stock outstanding of any corporation having securities listed on the NYSE, the
American Stock Exchange or traded on NASDAQ.

 

(d)               It is the understanding of the Parties that the scope of the
covenants contained in this Section 6.16, both as to time and area covered, are
necessary to protect the rights of Purchaser and the goodwill that is a part of
the business of Seller and Stryker to be acquired by Purchaser. It is the
Parties’ intention that these covenants be enforced to the greatest extent (but
to no greater extent) in time, area and degree of participation as is permitted
by the law of that jurisdiction whose law is found to be applicable to any acts
in breach of these covenants. It being the purpose of this Agreement to govern
competition by Seller and Stryker in the Territory, these covenants shall be
governed by and construed according to that law (from among those jurisdictions
arguably applicable to this Agreement and those in which a breach of this
Agreement is alleged to have occurred or to be threatened) which best gives them
effect. The prohibitions in subsection (a) of this Section 6.16 shall be deemed,
and shall be construed, as separate and independent agreements between Purchaser
on the one hand, and Seller and Stryker,

 42 

   

respectively, on the other. If such agreement or any part of such agreement is
held invalid, void or unenforceable by any court of competent jurisdiction, such
invalidity, voidness or unenforceability shall in no way render invalid, void or
unenforceable any other part of them or any separate agreement not declared
invalid, void or unenforceable; and this Agreement shall in such case be
construed as if the invalid, void or unenforceable provisions were omitted.

 

(e)                The Parties agree that the covenants of Seller and Stryker
not to compete contained in this Section 6.16 may be assigned by Purchaser to
any Person to whom this Agreement may be assigned by Purchaser pursuant to
Section 8.06. It is the Parties’ intention that these covenants of Seller and
Stryker shall inure to the benefit of any Person that may succeed to the
Purchased Assets and the business of Seller and Stryker to be acquired by
Purchaser under this Agreement in accordance with the provisions of Section 8.06
with the same force and effect as if these covenants were made directly with
such successor.

 

ARTICLE VII.

INDEMNIFICATION

SECTION 7.01. Survival of Representations and Warranties. The representations
and warranties of the Parties contained in this Agreement and the Ancillary
Agreements shall survive the Closing until the date which is eighteen (18)
months after the Closing; provided, however, that the representations and
warranties set forth in Section 3.01 (Organization; Good Standing and
Qualification; Authority and Binding Effect), Section 3.02 (No Conflict),
Section 3.03 (Governmental Consents and Approvals), Section 3.05(c) and Section
3.05(d) (Compliance with Laws) and the first sentence of Section 3.07 (Title)
shall survive the Closing indefinitely (collectively, the “Excluded
Representations”). Each Indemnified Party must give written notice to the
respective Indemnifying Party of any claim for indemnification under this
Article VII in accordance with Section 7.05. Any claim for indemnification made
in writing by the Indemnified Party on or prior to the expiration of the
applicable survival period shall survive, and may continue to be asserted and
indemnified against, until such claim is finally and fully resolved. All of the
covenants and other agreements of the Parties contained in this Agreement or any
Ancillary Agreement shall survive until fully performed or fulfilled.

 

SECTION 7.02. Indemnification by Seller and Stryker. Purchaser and its
Affiliates, officers, directors, employees, agents, stockholders, attorneys,
representatives, successors and assigns (each, a “Purchaser Indemnified Party”)
shall be indemnified, defended and held harmless by Seller and Stryker, jointly
and severally, from and against any and all Losses arising out of or resulting
from: (a) the breach or violation of or inaccuracy in any representation or
warranty made by Seller or Stryker contained in this Agreement or any Ancillary
Agreement; (b) the breach or violation of any covenant or agreement of Seller or
Stryker contained in this Agreement or any Ancillary Agreement; and (c) the
Excluded Assets or Excluded Liabilities.

 

SECTION 7.03. Indemnification by Purchaser. Seller and Stryker, and each of
their Affiliates, officers, directors, employees, agents, stockholders,
attorneys, representatives, successors and assigns (each, a “Seller Indemnified
Party”) shall be indemnified, defended and

 43 

   

held harmless by Purchaser from and against any and all Losses arising out of or
resulting from: (a)  the breach or violation of or inaccuracy in any
representation or warranty made by Purchaser contained in this Agreement or any
Ancillary Agreement; (b) the breach or violation of any covenant or agreement of
Purchaser contained in this Agreement or any Ancillary Agreement; and (c) the
Assumed Liabilities.

 

SECTION 7.04. Limits on Indemnification.

 

(a)                An Indemnifying Party shall not be liable for any Losses for
indemnification pursuant to Section 7.02(a) or Section 7.03(a) unless such
Losses exceeds $25,000 (the “Indemnity Basket”). If the aggregate amount of all
such Losses exceed the Indemnity Basket, the Indemnified Party shall be
indemnified, subject to the provisions of ARTICLE VII, for the amount of such
Losses that are in excess of the Indemnity Basket. The maximum amount of Losses
which may be recovered from an Indemnifying Party pursuant to Section 7.02(a) or
Section 7.03(a) shall be capped at an amount equal to the total of (i) the
amount paid and the amount due and payable, but not in Default, by Purchaser to
Seller under Section 2.04 and (ii) twenty percent (20%) of the amount paid, if
any, and the amount due and payable, but not in Default, by Purchaser to Seller
under Section 2.05 hereof (together, the “Cap”). Notwithstanding the foregoing,
the limitations set forth in this Section 7.04(a) shall not apply to Losses
based upon, arising out of, with respect to or by reason of any inaccuracy in or
breach of any Excluded Representation.

 

(b)               The maximum amount of Losses which may be recovered from an
Indemnifying Party based upon, arising out of, with respect to or by reason of
any inaccuracy in or breach of any Excluded Representation shall be capped at an
amount equal to the total of (i) the amount paid and the amount due and payable,
but not in Default, by Purchaser to Seller under Section 2.04 and (ii) one
hundred percent (100%) of the amount paid, if any, and the amount due and
payable, but not in Default, by Purchaser to Seller under Section 2.05 hereof
(together, the “Excluded Representation Cap”).

 

(c)                The amount of any Losses for which indemnification is
provided under this ARTICLE VII shall be net of any amounts actually recovered
by the Indemnified Party under insurance policies with respect to such Losses
(net of the present value of any increase in premiums actually imposed by the
applicable insurance carrier as a result of the occurrence of the Loss and all
costs and expenses incurred in recovering such insurance proceeds with respect
to such Loss).

 

(d)               For purposes of this ARTICLE VII, any inaccuracy in or breach
of any representation or warranty shall be determined without regard to any
materiality, “material adverse effect” or other similar qualification contained
in or otherwise applicable to such representation or warranty.

 

SECTION 7.05. Consequential Damages. NO PARTY TO THIS AGREEMENT SHALL BE LIABLE
TO OR OTHERWISE BE RESPONSIBLE TO ANY OTHER PARTY HERETO FOR ANY INCIDENTAL,
INDIRECT, CONSEQUENTIAL, SPECIAL, EXEMPLARY OR PUNITIVE DAMAGES THAT ARISE OUT
OF OR RELATE TO THIS AGREEMENT OR ANY OF THE ANCILLARY AGREEMENTS OR THE
PERFORMANCE OR BREACH HEREOF OR THEREOF, WHETHER IN CONTRACT, TORT, STRICT
LIABILITY OR OTHERWISE.

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SECTION 7.06. Notice of Loss; Third Party Claims.

 

(a)                A claim for indemnification for any matter not involving a
Third Party Claim may be asserted by written notice to the Party from whom
indemnification is sought. Any Action by an Indemnified Party on account of a
Loss which does not result from a Third Party Claim (a “Direct Claim”) shall be
asserted by the Indemnified Party giving the Indemnifying Party reasonably
prompt written notice thereof, but in any event not later than thirty (30) days
after the Indemnified Party becomes aware of such Direct Claim. The failure to
give such prompt written notice shall not, however, relieve the Indemnifying
Party of its indemnification obligations, except and only to the extent that the
Indemnifying Party forfeits rights or defenses by reason of such failure. Such
notice by the Indemnified Party shall describe the Direct Claim in reasonable
detail, shall include copies of all material written evidence thereof and shall
indicate the estimated amount, if reasonably practicable, of the Loss that has
been or may be sustained by the Indemnified Party. The Indemnifying Party shall
have thirty (30) days after its receipt of such notice to respond in writing to
such Direct Claim. The Indemnified Party shall allow the Indemnifying Party and
its professional advisors to investigate the matter or circumstance alleged to
give rise to the Direct Claim, and whether and to what extent any amount is
payable in respect of the Direct Claim and the Indemnified Party shall assist
the Indemnifying Party’s investigation by giving such information and assistance
(including access to the Indemnified Party’s premises and personnel and the
right to examine and copy any accounts, documents or records) as the
Indemnifying Party or any of its professional advisors may reasonably request.
If the Indemnifying Party does not so respond within such thirty (30) day
period, the Indemnifying Party shall be deemed to have rejected such claim, in
which case the Indemnified Party shall be free to pursue such remedies as may be
available to the Indemnified Party upon the terms and subject to the conditions
of this Agreement.

 

(b)               In the event that any Action shall be instituted or that any
claim or demand shall be asserted by any Third Party in respect of which payment
may be sought under Section 7.02 or Section 7.03 hereof (regardless of the
limitations set forth in Section 7.04) (each, a “Third Party Claim”), the
Indemnified Party shall cause written notice of the assertion of any Third Party
Claim of which it has knowledge which is covered by this indemnity to be
forwarded to the Indemnifying Party no later than ten (10) days after the
Indemnified Party has knowledge of the Third Party Claim. The failure of the
Indemnified Party to give notice in compliance with this Section 7.06(b) of any
Third Party Claim shall not release, waive or otherwise affect the Indemnifying
Party’s obligations with respect thereto except to the extent that the
Indemnifying Party is actually prejudiced as a result of such failure. The
Indemnifying Party shall have the right, at its sole option and expense, to be
represented by counsel reasonably acceptable to the Indemnified Party and to
defend against, negotiate, settle or otherwise deal with any Third Party Claim
which relates to any Losses indemnified by it hereunder; provided, however, that
the Indemnifying Party may not assume control of defense to a Third Party Claim
(i) involving criminal liability or in which equitable relief other than
monetary damages is sought, (ii) involving a purported class action, (iii) if
the Indemnifying Party has not notified the Indemnified Party in writing that it
will be liable to indemnify the Indemnified Party with respect

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to all Losses relating to such Third Party Claim subject to the limitations of
Section 7.04 or (iv) if the Third Party Claim relates to the Transferred
Intellectual Property. If the Indemnifying Party elects to defend against,
negotiate, settle or otherwise deal with any Third Party Claim which relates to
any Losses indemnified by it hereunder, it shall within thirty (30) days (or
sooner, if the nature of the Third Party Claim so requires) notify the
Indemnified Party of its intent to do so. If the Indemnifying Party elects not
to defend against, negotiate, settle or otherwise deal with any Third Party
Claim which relates to any Losses indemnified against hereunder, or is not
permitted to assume the defense of a Third Party Claim pursuant to the proviso
to the third sentence of this Section 7.06(b), the Indemnified Party may defend
against, negotiate, settle or otherwise deal with such Third Party Claim,
subject to the provisions below. If the Indemnifying Party shall assume the
defense of any Third Party Claim pursuant to the terms of this Agreement, the
Indemnified Party may participate, at his or its own expense, in the defense of
such Third Party Claim; provided, however, that such Indemnified Party shall be
entitled to participate in any such defense with separate counsel at the expense
of the Indemnifying Party if (i) so requested by the Indemnifying Party to
participate or (ii) in the reasonable opinion of outside counsel to the
Indemnified Party a conflict or potential conflict exists between the
Indemnified Party and the Indemnifying Party that would make such separate
representation advisable; and provided, further, that the Indemnifying Party
shall not be required to pay for more than one such counsel for all Indemnified
Parties in connection with any Third Party Claim. The Parties hereto agree to
reasonably cooperate with each other in connection with the defense, negotiation
or settlement of any such Third Party Claim. Notwithstanding anything in this
Section 7.06 to the contrary, neither the Indemnifying Party nor the Indemnified
Party shall, without the written consent of the other Party, settle or
compromise any Third Party Claim or permit a default or consent to entry of any
judgment unless (i) the claimant provides to such other Party an unqualified
release of the Indemnified and Indemnifying Parties from all liability in
respect of such Third Party Claim, (ii) such settlement does not involve any
injunctive relief binding upon the Indemnified Party or any of its Affiliates,
(iii) such settlement does not encumber any of the material assets of any
Indemnified Party or impose any restriction or condition that would apply to or
materially affect any Indemnified Party or the conduct of any Indemnified
Party’s business and (iv) such settlement does not involve any admission of
liability or wrongdoing by any Indemnified Party or any of its Affiliates.
Notwithstanding the foregoing, if a settlement offer solely for money damages is
made by the applicable Third Party claimant, and the Indemnifying Party notifies
the Indemnified Party in writing of the Indemnifying Party’s willingness to
accept the settlement offer and, subject to the applicable limitations of
Section 7.04, pay the amount called for by such offer, and the Indemnified Party
declines to accept such offer, the Indemnified Party may continue to contest
such Third Party Claim, free of any participation by the Indemnifying Party, and
the amount of any ultimate liability with respect to such Third Party Claim that
the Indemnifying Party has an obligation to pay hereunder shall be limited to
the lesser of (x) the amount of the settlement offer that the Indemnified Party
declined to accept or (y) the aggregate Losses of the Indemnified Party with
respect to such Third Party Claim.

 

(c)                In the event that the Indemnified Party conducts the defense
of the Third Party Claim pursuant to this Section 7.06, the Indemnifying Party
will (i) advance the Indemnified Party promptly and periodically for the
reasonable costs of defending against the Third Party Claim (including
reasonable attorneys’ fees and expenses) and (ii) remain

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responsible for any and all other Losses that the Indemnified Party may incur or
suffer resulting from, arising out of, relating to, in the nature of or caused
by the Third Party Claim to the fullest extent provided in this Article VII.

 

SECTION 7.07. Tax Treatment. To the extent permitted by Law, the Parties agree
to treat all payments made under ARTICLE II, this ARTICLE VII, under any other
indemnity provision contained in this Agreement, and for any misrepresentations
or breach of warranties or covenants, as adjustments to the purchase price for
all Tax purposes. Unless otherwise required by applicable Law, no Party will
take any inconsistent position on any Tax Return.

 

SECTION 7.08. Effect of Investigation. The representations, warranties and
covenants of the Indemnifying Party, and the Indemnified Party’s right to
indemnification with respect thereto, shall not be affected or deemed waived by
reason of any investigation made by or on behalf of the Indemnified Party
(including by any of its representatives) or by reason of the fact that the
Indemnified Party or any of its representatives knew or should have known that
any such representation or warranty is, was or might be inaccurate.

 

SECTION 7.09. Remedies. From and after the Closing, except as specifically
provided herein, the sole and exclusive remedy of any Indemnified Party for any
breach or failure to be true and correct, or alleged breach or failure to be
true and correct, of any representation, warranty covenant, agreement or
obligation in this Agreement or the Ancillary Agreements, shall be
indemnification in accordance with this Article VII. In furtherance of the
foregoing, each of the Parties hereby waives, to the fullest extent permitted by
applicable Law, any and all other rights, claims and causes of action (including
rights of contributions, if any) known or unknown, foreseen or unforeseen, which
exist or may arise in the future, that it may have against any Indemnifying
Party with respect to this Agreement, the Ancillary Agreements or the
transactions contemplated hereby or thereby, arising under or based upon any
federal, state or local Law. Notwithstanding the foregoing, this Section 7.09
shall not operate to limit the rights of the Parties to seek equitable remedies
(including specific performance or injunctive relief) or any remedies available
to it under applicable Law with respect to a Party’s failure to comply with its
indemnification obligations hereunder.

 

SECTION 7.10. Offset Rights. Purchaser shall have the right to set off any
amounts owed by Seller or Stryker to Purchaser under this ARTICLE VII against
any amounts owed by Purchaser to Seller or Stryker pursuant to Section 2.04 and
against twenty percent (20%) of the amounts owed by Purchaser to Seller pursuant
to Section 2.05, as contemplated by Section 7.04(a), and against one hundred
percent (100%) of the amounts owed by Purchaser to Seller pursuant to Section
2.05, as contemplated by Section 7.04(b). For the avoidance of doubt, any Losses
incurred by Purchaser in excess of the Cap or the Excluded Representation Cap in
effect at the time that such Losses were claimed may be set off against later
payments made to Seller by Purchaser pursuant to Section 2.04 or Section 2.05,
subject to the Cap or Excluded Representation Cap in effect at the time each
such later payment is made. If Purchaser intends to exercise such right, it
shall provide written notice to Seller, and if Seller disputes Purchaser’s
notice, the amount claimed to be subject to set-off shall thereafter be paid by
Purchaser into escrow until the claim is resolved by (a) written agreement of
Purchaser and Seller, or (b) a final, non-appealable judgment or decree of any
Governmental Authority. If such resolution upholds

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the set-off in whole or in part, the funds paid into escrow shall be released
first to Purchaser in an amount equal to the amount of such determination, and
the remaining escrow funds, if any, shall then promptly be released to Seller.
If such resolution denies the set-off, the funds paid into escrow shall promptly
be released to Seller. Notwithstanding the foregoing, all funds paid into escrow
shall promptly be released to Seller if: (i) the dispute has not been resolved
within 180 days after delivery by Purchaser of the applicable set-off notice to
Seller and (ii) prior to the conclusion of such period (or such longer period as
Purchaser and Seller may agree) neither Purchaser nor Seller has commenced an
Action with respect to the claimed set-off.

 

ARTICLE VIII.

GENERAL PROVISIONS

SECTION 8.01. Expenses. Except as otherwise specified in this Agreement, all
costs and expenses, including fees and disbursements of counsel, financial
advisors and accountants, incurred in connection with this Agreement and the
transactions contemplated by this Agreement shall be paid by the Party incurring
such costs and expenses, whether or not the Closing shall have occurred.

 

SECTION 8.02. Notices. All notices and other communications hereunder shall be
in writing and shall be deemed duly delivered (i) four (4) Business Days after
being sent by registered or certified mail, return receipt requested, postage
prepaid, (ii) one (1) Business Day after being sent for next Business Day
delivery, fees prepaid, via a reputable nationwide overnight courier service or
(iii) on the date of confirmation of receipt (or, the first (1st) Business Day
following such receipt if the date of such receipt is not a Business Day) of
transmission by facsimile or email, in each case to the intended recipient as
set forth below:

 

(a)if to Seller or Stryker:

  

Stryker Corporation 2825 Airview Blvd.

Kalamazoo, MI 49002

Attn: General Counsel

Facsimile: (269)385-2066

E-mail: michael.hutchinson@stryker.com

 

And

 

Stryker Biotech L.L.C.

One Broadway, 14th Floor

Cambridge, MA 02142

Attn: James Kemler, CEO

E-mail: jamie.kemler@stryker.com with a copy to:

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Ropes & Gray LLP Prudential Tower 800 Boylston Street

Boston, MA 02199-3600

Facsimile: (617) 235-0223 Email:

Telephone: (617) 951-7319 Attention: Steven A. Wilcox

 

(b)if to Purchaser:

 

Mariel Therapeutics, Inc. 135 E. 57th St.

24th Floor

New York, NY 10022

Email: jhernandez@marieltherapeutics.com Telephone: 646-829-1281

Attention: Joseph Hernandez, Executive Chairman

 

with a copy to: Thompson Hine LLP

335 Madison Avenue, 12th Floor Facsimile: (212) 344-6101

Email: Faith.Charles@ThompsonHine.com Telephone: (212) 908-3905

Attention: Faith L. Charles

 

Any Party to this Agreement may change the address to which notices and other
communications hereunder are to be delivered by giving the other Party notice in
the manner herein set forth.

 

SECTION 8.03. Public Announcements. From and after the Effective Date, no public
release or announcement concerning the transactions contemplated hereby shall be
issued by any Party without the prior written consent of all the Parties (which
consent shall not be unreasonably withheld or delayed), except as such release
or announcement may be required by law or the rules or regulations of any United
States or foreign securities exchange, in which case the party required to make
the release or announcement shall allow the other party reasonable time to
comment on such release or announcement in advance of such issuance.

 

SECTION 8.04. Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any Law or public policy, all
other terms and provisions of this Agreement shall nevertheless remain in full
force and effect for so long as the economic or legal substance of the
transactions contemplated by this Agreement is not affected in any manner
materially adverse to any Party. Upon such

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determination that any term or other provision is invalid, illegal or incapable
of being enforced, the Parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the Parties as closely as
possible in an acceptable manner in order that the transactions contemplated by
this Agreement are consummated as originally contemplated to the greatest extent
possible.

 

SECTION 8.05. Entire Agreement. This Agreement and the Ancillary Agreements
constitute the entire agreement of the Parties with respect to the subject
matter hereof and thereof and supersede all prior agreements and undertakings,
both written and oral, among the Parties with respect to the subject matter
hereof and thereof.

 

SECTION 8.06. Assignment. This Agreement may not be assigned by any Party by
operation of law or otherwise without the express written consent of the other
Parties, save that (a) any Party may assign, in whole or in part, any of its
rights or obligations under this Agreement to any of its Affiliates without the
express written consent of the other Party, (b) any Party may assign all of its
rights and obligations under this Agreement to a successor of all or
substantially all of its business or assets (whether by merger, acquisition,
sale of stock, sale of assets or otherwise) without the express written consent
of the other Parties, (c) Purchaser may assign to a successor of any line of
business of Purchaser (whether by sale of assets or otherwise) its rights and
obligations under this Agreement, to the extent applicable to such line of
business, with the express written consent of Seller and Stryker, which consent
shall not be unreasonably withheld; provided that such consent may be withheld
by Seller and Stryker if, in their collective reasonable opinion, Purchaser’s
successor does not have the financial wherewithal to assume and perform
Purchaser’s obligations under this Agreement, the Ancillary Agreements and the
Transferred Contracts and (d) without limiting the generality of the foregoing,
Purchaser may direct Seller or Stryker to transfer any of the Purchased Assets
(or any part thereof) to an Affiliate of Purchaser rather than to Purchaser
itself.

 

SECTION 8.07. Amendment. This Agreement may not be amended or modified except
(a) by an instrument in writing signed by, or on behalf of, the Parties hereto
or (b) by a waiver in accordance with Section 8.08.

 

SECTION 8.08. Waiver. Any Party may (a) extend the time for the performance of
any of the obligations or other acts of the other Party, (b) waive any
inaccuracies in the representations and warranties of the other Party contained
herein or in any document delivered by the other Party pursuant hereto or (c)
waive compliance with any of the agreements of the other Party or conditions to
such Party’s obligations contained herein. Any such extension or waiver shall be
valid only if set forth in an instrument in writing signed by the Party to be
bound thereby. Any waiver of any term or condition shall not be construed as a
waiver of any subsequent breach or a subsequent waiver of the same term or
condition, or a waiver of any other term or condition of this Agreement. The
failure of any Party to assert any of its rights hereunder shall not constitute
a waiver of any of such rights.

 

SECTION 8.09. Force Majeure. In no event shall any Party be liable for
non-performance or any delay in performance or any interruption of this
Agreement caused by circumstances beyond the reasonable control of such Party
(each an event of “Force Majeure”), including but not limited to (a) acts of
God, the elements, epidemics, explosions, accidents,

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landslides, lightning, earthquakes, fires, storms (including but not limited to
tornadoes and hurricanes), sinkholes, floods, or washouts; (b) labor shortage or
trouble including strikes or injunctions (whether or not within the reasonable
control of such party); (c) inability to obtain material, equipment or
transportation; (d) national defense requirements, war, acts of terrorism,
blockades, insurrections, sabotage, riots, arrests and restraints of the
government, either federal or state, civil or military (including any
governmental taking by eminent domain or otherwise); or (e) any applicable Law
or the enforcement thereof by any Governmental Authority having jurisdiction,
that limits or prevents a Party from performing its obligations hereunder or any
notice from any such Governmental Authority of its intention to fine or penalize
such Party or otherwise impede or limit such Party’s ability to perform its
obligations hereunder.

 

SECTION 8.10. No Third Party Beneficiaries. This Agreement shall be binding upon
and inure solely to the benefit of the Parties and their respective successors
and permitted assigns and nothing herein, express or implied, is intended to or
shall confer upon any other Person any legal or equitable right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement.

 

SECTION 8.11. Governing Law; Jurisdiction. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of New York. All Actions
arising out of or relating to this Agreement shall be heard and determined
exclusively in the United States District Court for the District of New York;
provided, however, that if such federal court does not have jurisdiction over
such Action, such Action shall be heard and determined exclusively in any New
York state court. Consistent with the preceding sentence, the Parties hereby (a)
submit to the exclusive jurisdiction of any federal or state court sitting in
New York for the purpose of any Action arising out of or relating to this
Agreement brought by any Party hereto and (b) irrevocably waive, and agree not
to assert by way of motion, defense, or otherwise, in any such Action, any claim
that it is not subject personally to the jurisdiction of the above-named courts,
that its property is exempt or immune from attachment or execution, that the
Action is brought in an inconvenient forum, that the venue of the Action is
improper, or that this Agreement or the transactions contemplated by this
Agreement may not be enforced in or by any of the above-named courts.

 

SECTION 8.12. Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY WAIVES TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT. EACH OF THE PARTIES HERETO HEREBY (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO
ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT,
AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 8.12.

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SECTION 8.13. Counterparts. This Agreement may be executed and delivered in one
or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original, but
all of which taken together shall constitute one and the same agreement. This
Agreement may be executed and delivered by facsimile or .pdf transmission.

 

SECTION 8.14. Construction; Headings. The Parties have participated jointly in
the negotiation and drafting of this Agreement and each of the Ancillary
Agreements. In the event any ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by each of the
Parties and no presumption or burden of proof shall arise favoring or
disfavoring any Party by virtue of the authorship of any provision of this
Agreement. The headings contained in this Agreement are for convenience purposes
only and will not in any way affect the meaning or interpretation hereof.

 

SECTION 8.15. Specific Performance. Each Party acknowledges and agrees that the
other Parties may be damaged irreparably in the event any of the provisions of
this Agreement and any of the Ancillary Agreements are not performed in
accordance with their specific terms or otherwise are breached or violated.
Accordingly, each of the Parties agrees that, without posting bond or other
undertaking, the other Parties will be entitled to seek an injunction or
injunctions to prevent breaches or violations of the provisions of this
Agreement and to enforce specifically this Agreement and the terms and
provisions hereof in any Action instituted in any court of the United States or
any state thereof having jurisdiction over the Parties and the matter in
addition to any other remedy to which it may be entitled, at law or in equity. 

 

[Remainder of Page Intentionally Left Blank; Signature Page Follows]

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of
the date first written above by their respective officers thereunto duly
authorized. 

 

STRYKER BIOTECH L.L.C.

 

By: /s/James Kemler

Name: James Kemler

 

MARIEL THERAPEUTICS, INC.

 

By: /s/ Joseph Hernandez

Name: Joseph Hernandez

Title: Executive Chaiman

 

STRYKER CORPORATION

 

By: /s/ Scott Bruder

Name: Scott Bruder, MD, PhD

Title: Chief Medical and Scientific Officer

 

Signature Page to Asset Purchase Agreement

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