Exhibit 10.01

 

EXECUTION COPY

 

ASSET PURCHASE AGREEMENT

 

by and between

 

OSIRIS THERAPEUTICS, INC.

 

and

 

NUVASIVE, INC.

 

Dated as of May 8, 2008

 

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TABLE OF CONTENTS

 

 

 

Page

 

 

 

ARTICLE I. PURCHASE AND SALE OF ASSETS

1

Section 1.1

Transferred Assets; Excluded Assets; Time of Transfer

1

Section 1.2

Assumed Liabilities; Retained Liabilities

3

Section 1.3

Technology Closing; Manufacturing Closing

4

Section 1.4

Initial Purchase Price

5

Section 1.5

Additional Purchase Price

5

Section 1.6

Withholding

8

Section 1.7

Allocation of Purchase Price

8

 

 

 

ARTICLE II. REPRESENTATIONS AND WARRANTIES OF SELLER

9

Section 2.1

Organization, Good Standing and Authority

9

Section 2.2

Organizational and Governing Documents; Approval

9

Section 2.3

Due Execution and Delivery

9

Section 2.4

Title and Sufficiency of Transferred Assets

10

Section 2.5

Consents; No Conflict

10

Section 2.6

Taxes

10

Section 2.7

Financial Information

11

Section 2.8

[Intentionally omitted.]

11

Section 2.9

Contracts

11

Section 2.10

Litigation and Claims

12

Section 2.11

Compliance With Laws

12

Section 2.12

Employees and Independent Contractors

12

Section 2.13

Employee Benefits

14

Section 2.14

Labor Matters

15

Section 2.15

Intellectual Property

15

Section 2.16

Insurance

17

Section 2.17

Fair Consideration; No Fraudulent Conveyance

18

Section 2.18

Authorizations; Regulatory Compliance

18

Section 2.19

Products; Product Liability

20

Section 2.20

Environmental

20

Section 2.21

Real Property; Leases

21

Section 2.22

Brokers

21

Section 2.23

Capital Expenditures

21

Section 2.24

No Changes

21

Section 2.25

Obsolete Items

23

Section 2.26

Customers and Suppliers

23

Section 2.27

Disclosure

23

 

 

 

ARTICLE III. REPRESENTATIONS AND WARRANTIES OF PURCHASER

23

Section 3.1

Organization and Authority

23

Section 3.2

Organizational and Governing Documents; Approval

24

 

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Section 3.3

Due Execution and Delivery

24

Section 3.4

Consents; No Conflicts

24

Section 3.5

Brokers

24

 

 

 

ARTICLE IV. CERTAIN COVENANTS AND AGREEMENTS

24

Section 4.1

Further Assurances

24

Section 4.2

Conduct of Activities Associated with the Transferred Assets

25

Section 4.3

Financial Statements

26

Section 4.4

Post-Technology Closing Receipts

27

Section 4.5

Confidentiality

27

Section 4.6

No Other Bids

28

Section 4.7

Post-Technology Closing Cooperation Relating to Transferred Assets

29

Section 4.8

No Post-Technology Closing Retention of Copies

30

Section 4.9

Noncompetition and Nonsolicitation

30

Section 4.10

Notice of Breaches

31

Section 4.11

Certain Employee Matters

32

Section 4.12

Right of First Negotiation; Purchase Option

32

Section 4.13

Brand and Trademarks

33

Section 4.14

Consents

33

Section 4.15

Hart-Scott-Rodino Notification

34

Section 4.16

Public Announcement

34

Section 4.17

Bulk Sales Laws

35

Section 4.18

Transfer Taxes

35

Section 4.19

Termination of Certain Contracts

35

Section 4.20

Preparation of Proxy Statement; Stockholder Meeting

35

 

 

 

ARTICLE V. CONDITIONS TO CLOSING

36

Section 5.1

Conditions to Obligations of Each Party

36

Section 5.2

Conditions to the Obligations of the Purchaser

36

Section 5.3

Conditions to the Obligations of Seller

38

 

 

 

ARTICLE VI. CONDITIONS TO THIRD MILESTONE PAYMENT

39

Section 6.1

Conditions to Third Milestone Payment

39

 

 

 

ARTICLE VII. TERMINATION

40

Section 7.1

Termination of Agreement

40

Section 7.2

Procedures and Effect of Termination

41

Section 7.3

Reimbursement of Expenses

41

 

 

 

ARTICLE VIII. INDEMNIFICATION

42

Section 8.1

Indemnification by Seller

42

Section 8.2

Indemnification by Purchaser

42

Section 8.3

Survival

43

Section 8.4

Limitations

43

Section 8.5

Resolution of Notice of Claim

44

 

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Section 8.6

Third Party Actions

45

Section 8.7

Exclusive Remedy

46

Section 8.8

Reliance

46

Section 8.9

Tax Treatment of Indemnity Payments

46

 

 

 

ARTICLE IX. MISCELLANEOUS

46

Section 9.1

Disputes

46

Section 9.2

Merger Clause

47

Section 9.3

Amendments

47

Section 9.4

Notices

47

Section 9.5

Captions

48

Section 9.6

Governing Law

48

Section 9.7

Schedules and Exhibits

48

Section 9.8

Severability

48

Section 9.9

Counterparts

49

Section 9.10

Fees and Expenses

49

Section 9.11

Benefits and Binding Effect

49

Section 9.12

No Third Party Beneficiary

49

Section 9.13

Definitions; Interpretation

49

 

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ASSET PURCHASE AGREEMENT

 

This ASSET PURCHASE AGREEMENT (this “Agreement”) dated as of the 8th day of May,
2008, is by and between OSIRIS THERAPEUTICS, INC., a Delaware corporation
(“Seller”), and NUVASIVE, INC., a Delaware corporation (“Purchaser”).

 

RECITALS:

 

A.            Seller is engaged in the business of processing, manufacturing,
marketing and selling an osteobiologic allograft material containing cancellous
bone (which contains intrinsic viable mesenchymal stem cells) used in spinal
fusion and other surgical procedures and commonly known as Osteocel® and
Osteocel® XO including current formulation and all development projects related
to Osteocel® and Osteocel® XO  (collectively, the “Product”) (the development,
manufacturing, marketing and sale of the Product shall be referred to herein as
the “Business”).

 

B.            Pursuant to this Agreement, Seller and Purchaser intend that
(i) Seller sell and transfer to Purchaser all of Seller’s right, title and
interest in and to all of Seller’s property and assets set forth in
Section 1.1(a) hereof, and (ii) Purchaser assume certain specified obligations
of Seller, contractual and otherwise, set forth in Section 1.2(a), all on the
terms and conditions contained in, and as more fully set forth in, this
Agreement.

 

C.            Simultaneously with the execution and delivery of this Agreement
and as a condition and material inducement to the willingness of Purchaser to
enter into this Agreement, Purchaser and certain stockholders of Seller are
entering into voting agreements pursuant to which, among other things, such
stockholders have agreed to vote in favor of approval of the transactions
contemplated by this Agreement and the other Transaction Documents and to take
certain other actions in furtherance of the transactions contemplated hereby, in
each case upon the terms and subject to the conditions set forth herein.

 

Accordingly, in consideration of the premises and the mutual covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:

 

ARTICLE I.

PURCHASE AND SALE OF ASSETS

 

Section 1.1            Transferred Assets; Excluded Assets; Time of Transfer.

 

(A)           TRANSFERRED ASSETS. ON THE TERMS AND SUBJECT TO THE CONDITIONS SET
FORTH IN THIS AGREEMENT AND IN RELIANCE UPON THE REPRESENTATIONS AND WARRANTIES
CONTAINED HEREIN, AT THE TIMES SET FORTH IN SECTION 1.1(C) BELOW, SELLER SHALL
SELL, TRANSFER, ASSIGN, SET OVER, CONVEY AND DELIVER TO PURCHASER, AND PURCHASER
SHALL PURCHASE, ACQUIRE, ACCEPT, ASSUME AND RECEIVE FROM SELLER, FREE AND CLEAR
OF ANY LIENS (OTHER THAN PERMITTED LIENS), ALL RIGHT, TITLE AND INTEREST OF
SELLER IN, TO AND UNDER THE FOLLOWING ASSETS AND PROPERTY, REAL, PERSONAL OR
MIXED, TANGIBLE OR INTANGIBLE, OF SELLER WITH RESPECT TO THE BUSINESS (OTHER
THAN THE EXCLUDED ASSETS) (THE “TRANSFERRED ASSETS”):

 

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(I)            ALL PATENT RIGHTS, TRADEMARK RIGHTS AND COPYRIGHT RIGHTS SET
FORTH ON SCHEDULE 1.1(A)(I) HERETO (THE “TRANSFERRED TECHNOLOGY”);

 

(II)           ALL INVENTORY (OTHER THAN FINISHED INVENTORY) AND WORK IN PROCESS
EXISTING AS OF THE MANUFACTURING CLOSING DATE, WHICH INCLUDES ANY AND ALL GOODS,
RAW MATERIALS AND WORK IN PROCESS USED OR CONSUMED IN THE BUSINESS, TOGETHER
WITH ALL RIGHTS OF SELLER RELATING TO SUCH INVENTORY AGAINST SUPPLIERS THEREOF
(THE “WORK IN PROCESS”);

 

(III)          [INTENTIONALLY OMITTED.];

 

(IV)          THE RIGHTS OF SELLER RELATED TO THE DEVELOPMENT OF THE PRODUCT,
INCLUDING ALL CLINICAL TRIALS, AND RELATED CLINICAL TRIAL DATA, WHICH RIGHTS ARE
IDENTIFIED ON SCHEDULE 1.1(A)(IV) (THE “PRODUCT DEVELOPMENT”);

 

(V)           ALL DATA AND RECORDS RELATED TO THE OPERATION OF THE BUSINESS,
WHICH DATA AND RECORDS INCLUDE (WITHOUT LIMITATION) CLIENT AND CUSTOMER LISTS,
RESEARCH AND DEVELOPMENT REPORTS, FINANCIAL AND BILLING RECORDS (INCLUDING
ROUTING AND BILLING INFORMATION), CREATIVE MATERIALS, ADVERTISING MATERIALS,
MARKETING MATERIALS, PROMOTIONAL MATERIALS, STUDIES, REPORTS, CORRESPONDENCE AND
OTHER SIMILAR DOCUMENTS (THE “RECORDS”), WHICH RECORDS ARE IDENTIFIED ON
SCHEDULE 1.1(A)(V); PROVIDED THAT ALL SUCH DATA AND RECORDS PROVIDED PURSUANT TO
THIS SECTION 1.1(A)(V) MAY IN SELLER’S SOLE DISCRETION, HAVE REDACTED THEREFROM
ALL DATA UNRELATED TO THE BUSINESS;

 

(VI)          THE TANGIBLE PERSONAL PROPERTY OF SELLER USED IN OR NECESSARY FOR
THE OPERATION OF THE BUSINESS IDENTIFIED ON SCHEDULE 1.1(A)(VI);

 

(VII)         THE PERMITS, LICENSES, FRANCHISES, CONSENTS, AUTHORIZATIONS,
REGISTRATIONS AND OTHER APPROVALS AND OPERATING RIGHTS RELATING TO THE BUSINESS
THAT ARE IDENTIFIED ON SCHEDULE 1.1(A)(VII);

 

(VIII)        ALL CLAIMS OF SELLER AGAINST THIRD PARTIES RELATING TO THE
TECHNOLOGY ASSETS AS OF THE TECHNOLOGY CLOSING DATE AND THE MANUFACTURING ASSETS
AS OF THE MANUFACTURING CLOSING DATE, IN EACH CASE WHETHER CHOATE OR INCHOATE,
KNOWN OR UNKNOWN, CONTINGENT OR NONCONTINGENT;

 

(IX)           ALL RIGHTS OF SELLER RELATING TO DEPOSITS AND PREPAID EXPENSES,
CLAIMS FOR REFUNDS AND RIGHTS TO OFFSET IN RESPECT THEREOF RELATING TO THE
BUSINESS AND/OR THE TRANSFERRED ASSETS;

 

(X)            ALL RIGHTS IN AND TO THE CONTRACTS USED IN, RELATED TO OR
NECESSARY FOR THE OPERATION OF THE BUSINESS AS PRESENTLY CONDUCTED OR AS
CONTEMPLATED TO BE CONDUCTED, THAT ARE IDENTIFIED ON SCHEDULE 1.1(A)(X) (THE
“ASSUMED CONTRACTS”);

 

(XI)           ALL OF SELLER’S GOODWILL RELATING TO THE FOREGOING ASSETS; AND

 

(XII)          ALL BUSINESS INTELLECTUAL PROPERTY NOT OTHERWISE SET FORTH ON
SCHEDULES 1.1(A)(I), 1.1(A)(IV), 1.1(A)(V) AND 1.1(A)(VI).

 

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Schedule 1.1 — Manufacturing Assets identifies all of the Transferred Assets
that are being transferred to Purchaser at the Manufacturing Closing (the
“Manufacturing Assets”).

 

(B)           EXCLUDED ASSETS.  EXCEPT FOR THE TRANSFERRED ASSETS, PURCHASER
SHALL NOT ACQUIRE BY VIRTUE OF THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT,
OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, AND SHALL HAVE NO RIGHT,
TITLE OR INTEREST IN ANY OF THE ASSETS OF SELLER WITH RESPECT TO THE BUSINESS OR
OTHERWISE, AND SUCH ASSETS SHALL REMAIN THE PROPERTY OF THE SELLER
(COLLECTIVELY, THE “EXCLUDED ASSETS”).

 

(C)           TIME FOR TRANSFER OF THE TRANSFERRED ASSETS.  THE CONSUMMATION OF
THE TRANSACTIONS CONTEMPLATED BY THIS SECTION 1.1 SHALL TAKE PLACE (I) WITH
RESPECT TO THE TECHNOLOGY ASSETS, ON THE TECHNOLOGY CLOSING DATE (THE
“TECHNOLOGY ASSET TRANSFER”) AND (II) WITH RESPECT TO THE MANUFACTURING ASSETS,
ON THE MANUFACTURING CLOSING DATE (THE “MANUFACTURING ASSET TRANSFER”).

 

Section 1.2            Assumed Liabilities; Retained Liabilities.

 

(A)           ON THE TERMS OF AND SUBJECT TO THE CONDITIONS OF THIS AGREEMENT
AND IN RELIANCE UPON THE REPRESENTATIONS AND WARRANTIES CONTAINED HEREIN, IN
ADDITION TO PURCHASING AND ACQUIRING THE TRANSFERRED ASSETS, PURCHASER SHALL
ASSUME AND AGREES, FROM AND AFTER THE DATE OF SUCH ASSUMPTION, TO PAY, PERFORM
AND DISCHARGE WHEN DUE, AND TO INDEMNIFY SELLER AGAINST AND HOLD IT HARMLESS
FROM ONLY THE FOLLOWING LIABILITIES AND OBLIGATIONS OF SELLER (BUT EXCLUDING THE
RETAINED LIABILITIES) IN RESPECT OF THE BUSINESS (THE “ASSUMED LIABILITIES”):

 

(I)            (A) THE OBLIGATIONS TO PERFORM ARISING IN THE ORDINARY COURSE OF
THE BUSINESS AFTER THE TECHNOLOGY CLOSING DATE UNDER THE ASSUMED CONTRACTS WHICH
CONSTITUTE A PORTION OF THE TECHNOLOGY ASSETS AND (B) THE OBLIGATIONS TO PERFORM
ARISING IN THE ORDINARY COURSE OF THE BUSINESS AFTER THE MANUFACTURING CLOSING
DATE UNDER THE ASSUMED CONTRACTS WHICH CONSTITUTE A PORTION OF THE MANUFACTURING
ASSETS;

 

(II)           THE EXPENSES AND LIABILITIES RELATING TO THE BUSINESS WHICH ARE
INCURRED OR ACCRUED IN THE ORDINARY COURSE OF THE BUSINESS CONSISTENT WITH PAST
PRACTICE AFTER THE TECHNOLOGY CLOSING DATE.

 

(B)           OTHER THAN THE ASSUMED LIABILITIES, PURCHASER SHALL NOT ASSUME BY
VIRTUE OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, AND SHALL HAVE
NO LIABILITY FOR, ANY OTHER LIABILITY OF SELLER.  ALL LIABILITIES OTHER THAN
ASSUMED LIABILITIES ARE REFERRED TO HEREIN AS “RETAINED LIABILITIES.”  THE
RETAINED LIABILITIES WILL INCLUDE, WITHOUT LIMITATION, THE FOLLOWING:

 

(I)            ALL TRADE ACCOUNTS PAYABLE OF THE BUSINESS;

 

(II)           ANY LIABILITIES OR OBLIGATIONS OF SELLER IN RESPECT OF
INDEBTEDNESS (WHETHER ABSOLUTE, ACCRUED, CONTINGENT, FIXED OR OTHERWISE, WHETHER
DUE OR TO BECOME DUE) OF SELLER, OF ANY KIND, CHARACTER OR DESCRIPTION
WHATSOEVER, INCLUDING, BUT NOT LIMITED TO, INDEBTEDNESS OWED BY SELLER TO ANY OF
ITS STOCKHOLDERS;

 

(III)          ANY LIABILITIES OR OBLIGATIONS OF SELLER RELATED TO THE
EMPLOYMENT, TERMINATION OR COMPENSATION OF ANY EMPLOYEE, CONSULTANT OR SERVICE
PROVIDER OF THE

 

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SELLER, INCLUDING BUT NOT LIMITED TO COMPENSATION CLAIMS, TAXES OR EMPLOYER
WITHHOLDINGS, WORKERS’ COMPENSATION OR BENEFITS (HOWEVER DESCRIBED) OWING TO ANY
SUCH PERSON ARISING OUT OF THE OPERATION OF THE BUSINESS BY SELLER INCLUDING,
FOR AVOIDANCE OF DOUBT, ANY AND ALL LIABILITIES OR OBLIGATIONS TO TRANSFERRED
EMPLOYEES INCURRED PRIOR TO THE TIME THAT ANY SUCH TRANSFERRED EMPLOYEE BECOMES
AN EMPLOYEE OF PURCHASER;

 

(IV)          ANY LIABILITIES OR OBLIGATIONS OF SELLER WHICH ARISE FROM OR OUT
OF OR IN CONNECTION WITH ANY PRODUCT WARRANTY OR PRODUCT LIABILITY CLAIMS OWING,
ACCRUED OR THE UNDERLYING FACTS WITH RESPECT TO WHICH ARISING OUT OF THE
OPERATION OF THE BUSINESS BY SELLER (INCLUDING, FOR AVOIDANCE OF DOUBT, THE
OPERATION OF THE BUSINESS BY SELLER THROUGH AND INCLUDING THE MANUFACTURING
CLOSING DATE BUT EXCLUDING LIABILITIES OR OBLIGATIONS RESULTING FROM EITHER
MODIFICATIONS TO THE PRODUCT MADE BY PURCHASER OR ADDITIONAL WARRANTIES EXTENDED
BY PURCHASER FOLLOWING THE TECHNOLOGY CLOSING DATE);

 

(V)           ANY LIABILITIES OR OBLIGATIONS (WHETHER ASSESSED OR UNASSESSED) OF
SELLER FOR ANY TAXES, ANY TRANSFER TAXES IMPOSED ON SELLER, ANY TAXES OF THE
BUSINESS FOR ANY PERIOD (OR PORTION THEREOF) ENDING ON OR PRIOR TO THE
TECHNOLOGY CLOSING DATE AND ANY TAXES OF THE BUSINESS RELATED TO THE
MANUFACTURING ASSETS FOR ANY PERIOD (OR PORTION THEREOF) ENDING ON OR PRIOR TO
THE MANUFACTURING CLOSING DATE;

 

(VI)          ANY LIABILITIES OR OBLIGATIONS RELATING TO OR ARISING OUT OF A
BREACH OR FAILURE OF SELLER TO PERFORM UNDER AN ASSUMED CONTRACT PRIOR TO THE
DATE ON WHICH ANY SUCH ASSUMED CONTRACT IS TRANSFERRED BY SELLER TO PURCHASER IN
ACCORDANCE WITH THE TERMS OF THIS AGREEMENT;

 

(VII)         ANY LIABILITIES OR OBLIGATIONS RELATING TO OR ARISING UNDER ANY
ENVIRONMENTAL LAW OR REGULATION TO THE EXTENT ARISING OUT OF THE OPERATION OF
THE BUSINESS PRIOR TO THE TECHNOLOGY CLOSING DATE WITH RESPECT TO THE TECHNOLOGY
ASSET AND THE MANUFACTURING CLOSING DATE WITH RESPECT TO THE MANUFACTURING
ASSETS; AND

 

(VIII)        ANY LIABILITIES OR OBLIGATIONS OF SELLER INCURRED, ARISING FROM OR
OUT OF OR IN CONNECTION WITH THIS AGREEMENT, THE MANUFACTURING AGREEMENT, THE
LICENSE AGREEMENT, THE BILL OF SALE — TECHNOLOGY ASSETS, THE BILL OF SALE —
MANUFACTURING ASSETS, THE IP ASSIGNMENT AGREEMENT — PATENTS AND THE IP
ASSIGNMENT AGREEMENT — TRADEMARKS (TOGETHER, THE “TRANSACTION DOCUMENTS”) OR THE
EVENTS OR NEGOTIATIONS LEADING UP TO THE EXECUTION AND CONSUMMATION OF THE
TRANSACTIONS CONTEMPLATED BY THE TRANSACTION DOCUMENTS.

 

Section 1.3            Technology Closing; Manufacturing Closing.  The
consummation of the Technology Asset Transfer (the “Technology Closing”) shall
be held as soon as reasonably practicable upon satisfaction of the conditions
set forth in Article V of this Agreement or such other date and time as
Purchaser and Seller shall agree (the “Technology Closing Date”).  The
consummation of the Manufacturing Asset Transfer (the “Manufacturing Closing”)
shall be held as soon as reasonably practicable following the earlier to occur
of (i) the termination of the Manufacturing Agreement by Purchaser pursuant to
Section 7.1 of the Manufacturing Agreement and (ii) the expiration of the “Term”
(as that term is defined in the Manufacturing Agreement) of the Manufacturing
Agreement (the “Manufacturing Closing Date”).  The Technology Closing

 

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and the Manufacturing Closing shall be held at the offices of DLA Piper US LLP,
4365 Executive Drive, San Diego, California (or via exchange of documents via
PDF and overnight mail courier).

 

Section 1.4            Initial Purchase Price.  At the Technology Closing,
Purchaser shall (i) assume the Assumed Liabilities related to the Technology
Assets, and (ii) pay to Seller an aggregate of Thirty Five Million
Dollars ($35,000,000) (the “Initial Purchase Price”).  Purchaser shall pay the
Initial Purchase Price to Seller by bank or cashiers check or, provided that
Seller has delivered wire transfer instructions to Purchaser not less than two
(2) business days prior to the Technology Closing Date, by wire transfer in
United States dollars of immediately available funds to an account designated in
writing by Seller.

 

Section 1.5            Additional Purchase Price.

 

(A)           MILESTONES; MILESTONE PAYMENTS.  FROM AND AFTER THE TECHNOLOGY
CLOSING DATE, IN ADDITION TO THE CONSIDERATION SET FORTH IN SECTION 1.4 ABOVE,
PURCHASER SHALL, SUBJECT TO, AND CONTINGENT UPON ACHIEVEMENT OF THE
POST-TECHNOLOGY CLOSING PERFORMANCE MILESTONES OF THE BUSINESS SET FORTH BELOW
(EACH, A “MILESTONE”) NOT LATER THAN THE APPLICABLE DATE FOR SATISFACTION OF
EACH MILESTONE SET FORTH BELOW (EACH A “MILESTONE EXPIRATION DATE”), PAY TO
SELLER AN AMOUNT OF CASH (IN UNITED STATES DOLLARS OF IMMEDIATELY AVAILABLE
FUNDS) OR COMMON STOCK, PAR VALUE $0.001 PER SHARE, OF PURCHASER (“PURCHASER
COMMON STOCK”) (THE FORM OF PAYMENT OF WHICH IS TO BE DETERMINED IN THE SOLE
DISCRETION OF PURCHASER), EQUAL TO THE FIRST MILESTONE PAYMENT, SECOND MILESTONE
PAYMENT, THIRD MILESTONE PAYMENT, FOURTH MILESTONE PAYMENT, FIFTH MILESTONE
PAYMENT AND/OR SIXTH MILESTONE PAYMENT, AS APPLICABLE (THE “APPLICABLE MILESTONE
PAYMENT”) AND EACH MILESTONE SHALL BE INDEPENDENT OF EACH OTHER MILESTONE AND
MAY BE SATISFIED AND PAYMENT BECOME DUE THEREFORE REGARDLESS OF NON-SATISFACTION
OF ANY OTHER MILESTONE; PROVIDED, HOWEVER, THAT (I) PURCHASER SHALL NOT ISSUE
SHARES OF PURCHASER COMMON STOCK IN RESPECT OF ANY APPLICABLE MILESTONE PAYMENT
UNLESS SUCH SHARES OF PURCHASER COMMON STOCK MAY BE RE-SOLD BY SELLER PURSUANT
TO RULE 144 OF THE RULES AND REGULATIONS PROMULGATED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”) ON THE DATE OF SUCH ISSUANCE, (II) IF
PURCHASER ELECTS TO ISSUE SHARES OF PURCHASER COMMON STOCK IN RESPECT OF ANY
APPLICABLE MILESTONE PAYMENT, THEN PRIOR TO SUCH ISSUANCE AND UPON REQUEST BY
THE PURCHASER, SELLER SHALL DELIVER TO PURCHASER SUCH REPRESENTATIONS AND
WARRANTIES AS PURCHASER SHALL REASONABLY REQUEST FOR PURPOSES OF EXEMPTING THE
ISSUANCE OF SUCH SHARES FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND (III) IF PURCHASER ELECTS TO ISSUE SHARES OF PURCHASER COMMON STOCK IN
RESPECT OF ANY APPLICABLE MILESTONE PAYMENT, THE NUMBER OF SHARES OF PURCHASER
COMMON STOCK TO BE ISSUED SHALL BE EQUAL TO THE APPLICABLE MILESTONE PAYMENT
DIVIDED BY THE PURCHASER COMMON STOCK VALUE.  THE OBLIGATIONS OF PURCHASER UNDER
THIS SECTION 1.5(A) ARE SUBJECT TO THE PROVISIONS OF SECTION 1.5(C) BELOW
(REGARDING PURCHASER’S RIGHTS OF SET-OFF).  FOR AVOIDANCE OF DOUBT, IN NO EVENT
SHALL THE SUM OF ALL APPLICABLE MILESTONE PAYMENTS MADE BY PURCHASER TO SELLER
UNDER THIS SECTION 1.5 EXCEED FIFTY MILLION DOLLARS ($50,000,000) PLUS OR MINUS
THE WIP VALUE (THE “MAXIMUM MILESTONE AMOUNT”).

 

(I)            IF AT ANY TIME FOLLOWING THE TECHNOLOGY CLOSING DATE BUT AT OR
PRIOR TO APRIL 15, 2009, SELLER SHALL HAVE DELIVERED TO PURCHASER AN AGGREGATE
OF 125,000 CUBIC CENTIMETERS OF PRODUCT (THE “FIRST DELIVERY THRESHOLD”) IN
ACCORDANCE WITH THE TERMS AND PROVISIONS OF, AND SUBJECT TO THE SPECIFICATIONS
SET FORTH IN, THE MANUFACTURING AGREEMENT,

 

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PURCHASER SHALL PAY TO SELLER FIVE MILLION DOLLARS ($5,000,000) (THE “FIRST
MILESTONE PAYMENT”).

 

(II)           IF AT ANY TIME FOLLOWING THE TECHNOLOGY CLOSING DATE BUT PRIOR TO
THE MANUFACTURING CLOSING, SELLER SHALL HAVE DELIVERED TO PURCHASER AN AGGREGATE
OF 250,000 CUBIC CENTIMETERS OF PRODUCT (INCLUDING, FOR AVOIDANCE OF DOUBT, ANY
PRODUCT DELIVERED IN SATISFACTION OF THE FIRST DELIVERY THRESHOLD) (THE “SECOND
DELIVERY THRESHOLD”) IN ACCORDANCE WITH THE TERMS AND PROVISIONS OF, AND SUBJECT
TO THE SPECIFICATIONS SET FORTH IN, THE MANUFACTURING AGREEMENT, PURCHASER SHALL
PAY TO SELLER FIVE MILLION DOLLARS ($5,000,000) (THE “SECOND MILESTONE
PAYMENT”).

 

(III)          SUBJECT TO THE PRIOR SATISFACTION OF THE CONDITIONS SET FORTH IN
ARTICLE VI OF THIS AGREEMENT, AT THE MANUFACTURING CLOSING, PURCHASER SHALL PAY
TO SELLER THE SUM OF (I) TWELVE MILLION, FIVE HUNDRED THOUSAND DOLLARS
($12,500,000) PLUS OR MINUS (II) THE WIP VALUE (THE “THIRD MILESTONE PAYMENT”).

 

(IV)          IF PRIOR TO THE MANUFACTURING CLOSING, SELLER SHALL HAVE DELIVERED
TO PURCHASER AN AGGREGATE OF 275,000 CUBIC CENTIMETERS OF PRODUCT (INCLUDING,
FOR AVOIDANCE OF DOUBT, THE PRODUCT DELIVERED PURSUANT TO THE SECOND DELIVERY
THRESHOLD) IN ACCORDANCE WITH THE TERMS AND PROVISIONS OF, AND SUBJECT TO THE
SPECIFICATIONS SET FORTH IN, THE MANUFACTURING AGREEMENT, AT THE MANUFACTURING
CLOSING, PURCHASER SHALL PAY TO SELLER FIVE MILLION DOLLARS ($5,000,000) (THE
“FOURTH MILESTONE PAYMENT”).

 

(V)           AT THE MANUFACTURING CLOSING, PURCHASER SHALL PAY TO SELLER THE
ADDITIONAL PRODUCT DELIVERY PAYMENT, IF ANY (THE “FIFTH MILESTONE PAYMENT”).

 

(VI)          IF AT ANY TIME FOLLOWING THE TECHNOLOGY CLOSING DATE THE BUSINESS
SHALL GENERATE THIRTY-FIVE MILLION DOLLARS ($35,000,000) IN CUMULATIVE NET SALES
(THE “NET SALES THRESHOLD”), PURCHASER SHALL PAY TO SELLER FIFTEEN MILLION
DOLLARS ($15,000,000) (THE “SIXTH MILESTONE PAYMENT”).

 

If any payment under this Section 1.5(a) is made in the form of Purchaser Common
Stock, then on the date of such payment Purchaser shall provide to Seller (I) a
certificate from a duly authorized officer of Purchaser certifying that as of
the date of such issuance (x) the Purchaser Common Stock so issued has been duly
authorized and is validly issued, fully-paid and non-assessable and, (y) the
provisions of Rule 144(c) of the Securities Act, are satisfied and (II) a legal
opinion from Purchaser’s legal counsel that such Purchaser Common Stock has been
duly authorized and validly issued, is fully paid and non-assessable and that
the holding period set forth in Rule 144(b) of the Securities Act has been
satisfied.  If Purchaser is unable to satisfy the requirement set forth in the
immediately preceding sentence, Seller shall be under no obligation to accept
Purchaser Common Stock as payment for the Applicable Milestone Payment and
Purchaser shall make such Applicable Milestone Payment in the form of cash, in
United States dollars of immediately available funds.

 

(B)           TIME FOR DETERMINATION; DISPUTE MECHANISM.

 

(I)            AS SOON AS REASONABLY PRACTICABLE FOLLOWING EACH DATE ON WHICH A
MILESTONE IS ACHIEVED AND IN ANY EVENT WITHIN FIVE (5) BUSINESS DAYS OF THE
ACHIEVEMENT

 

6

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OF ANY SUCH MILESTONE, PURCHASER SHALL PAY TO SELLER THE APPLICABLE MILESTONE
PAYMENT FOR SUCH MILESTONE; PROVIDED, HOWEVER, THAT IN NO EVENT SHALL PURCHASER
BE LIABLE FOR THE PAYMENT OF, AND SELLER SHALL NOT BE ENTITLED TO, ANY
APPLICABLE MILESTONE PAYMENT FOR ANY MILESTONE THAT IS NOT ACHIEVED ON OR BEFORE
THE APPLICABLE MILESTONE EXPIRATION DATE.  AT ALL TIMES FOLLOWING THE
MANUFACTURING CLOSING DATE AND PRIOR TO PAYMENT BY PURCHASER TO SELLER OF THE
SIXTH MILESTONE PAYMENT PURSUANT TO SECTION 1.5(A)(VI) HEREOF, PURCHASER SHALL,
AS SOON AS REASONABLY PRACTICABLE FOLLOWING EACH DECEMBER 31 DURING SUCH PERIOD,
DELIVER TO SELLER PURCHASER’S CALCULATION OF THE CUMULATIVE NET SALES FOR THE
PERIOD COMMENCING ON THE DAY IMMEDIATELY FOLLOWING THE MANUFACTURING CLOSING
DATE AND UP TO AND INCLUDING EACH SUCH DECEMBER 31.

 

(II)           IF SELLER BELIEVES THAT IT IS ENTITLED TO PAYMENT OF ALL OR ANY
PORTION OF AN APPLICABLE MILESTONE PAYMENT HEREUNDER WHICH SELLER HAS NOT
RECEIVED WITHIN FIVE (5) BUSINESS DAYS FOLLOWING THE ACHIEVEMENT OF THE
MILESTONE FOR WHICH PAYMENT IS DUE, SELLER MAY, NOT LATER THAN TWELVE (12)
MONTHS FOLLOWING THE ACHIEVEMENT OF SUCH MILESTONE, DELIVER TO PURCHASER A
NOTICE SETTING FORTH SELLER’S DETERMINATION THAT ALL OR A PORTION OF SUCH
APPLICABLE MILESTONE PAYMENT IS DUE UNDER THIS AGREEMENT (THE “MILESTONE
ASSESSMENT NOTICE”).  IF SELLER DOES NOT DELIVER TO PURCHASER A MILESTONE
ASSESSMENT NOTICE WITHIN SUCH TWELVE (12) MONTH PERIOD, THEN SELLER SHALL HAVE
BEEN DEEMED TO AGREE THAT THE MILESTONE HAS NOT BEEN MET AND NO PAYMENT WITH
RESPECT TO SUCH MILESTONE IS DUE TO SELLER HEREUNDER AND SELLER SHALL HAVE NO
FURTHER RIGHTS TO SUCH APPLICABLE MILESTONE PAYMENT OR ANY PORTION THEREOF;
PROVIDED, HOWEVER, THAT SELLER’S FAILURE TO DELIVER A MILESTONE ASSESSMENT
NOTICE WITHIN SUCH TWELVE (12) MONTH PERIOD WITH RESPECT TO THE SIXTH MILESTONE
PAYMENT SHALL NOT RELIEVE PURCHASER OF ITS OBLIGATIONS TO PAY THE SIXTH
MILESTONE PAYMENT (IF AND WHEN EARNED) UNLESS PURCHASER IS MATERIALLY PREJUDICED
BY SUCH DELAY.

 

(III)          IF PURCHASER SHALL OBJECT TO SELLER’S DETERMINATION THAT A
MILESTONE HAS BEEN ACHIEVED AS SET FORTH IN THE MILESTONE ASSESSMENT NOTICE,
THEN PURCHASER SHALL DELIVER A DISPUTE NOTICE (A “MILESTONE DISPUTE NOTICE”) TO
SELLER WITHIN FIVE (5) BUSINESS DAYS FOLLOWING SELLER’S DELIVERY OF THE
MILESTONE ASSESSMENT NOTICE.  IF PURCHASER DELIVERS A MILESTONE DISPUTE NOTICE
TO SELLER IN CONNECTION WITH THE SIXTH MILESTONE PAYMENT UNDER
SECTION 1.5(A)(VI), UPON SELLER’S REASONABLE REQUEST, PURCHASER SHALL PROVIDE
SELLER WITH SUCH BOOKS OF ACCOUNT AND RECORDS AND WRITTEN EVIDENCE AS SELLER
SHALL REASONABLY REQUEST SHOWING PURCHASER’S CALCULATION OF THE NET SALES OF THE
BUSINESS AND, UPON SELLER’S REASONABLE REQUEST AND UPON TWO (2) BUSINESS DAYS
PRIOR WRITTEN NOTICE TO PURCHASER, SELLER OR ITS REPRESENTATIVE MAY INSPECT THE
GROSS RECEIPTS, CREDITS, SALES TAX, TAX REPORTS, COSTS AND ANY OTHER REPORTS,
RECORDS OR DOCUMENTS REASONABLY REQUESTED BY SELLER AND ASSOCIATED WITH THE
BUSINESS OR THE PRODUCT FOR THE SOLE PURPOSE OF REVIEWING, AND ONLY TO THE
EXTENT NECESSARY TO REVIEW, PURCHASER’S CALCULATION OF NET SALES.  A
REPRESENTATIVE OF PURCHASER, ON THE ONE HAND, AND A REPRESENTATIVE OF SELLER, ON
THE OTHER, SHALL ATTEMPT IN GOOD FAITH TO RESOLVE ANY SUCH OBJECTIONS WITHIN TEN
(10) BUSINESS DAYS OF THE RECEIPT BY SELLER OF THE MILESTONE DISPUTE NOTICE.

 

(IV)          IF PURCHASER AND SELLER SHALL BE UNABLE TO RESOLVE ANY SUCH
DISPUTE WITHIN THE TEN (10) BUSINESS DAY PERIOD, EITHER PURCHASER OR SELLER BY
WRITTEN NOTICE TO THE OTHER MAY DEMAND ARBITRATION IN ACCORDANCE WITH THE
PROCEDURES SET FORTH IN SECTION 9.1 HEREOF.

 

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(V)           IF NO MILESTONE DISPUTE NOTICE IS DELIVERED WITHIN THE TIMEFRAME
SET FORTH ABOVE, THEN SELLER’S DETERMINATION THAT THE MILESTONE HAS BEEN
ACHIEVED, AND THAT SOME OR ALL OF THE APPLICABLE MILESTONE PAYMENT IS DUE
HEREUNDER, SHALL BE DEEMED TO BE ACCEPTED AND PURCHASER SHALL PAY TO SELLER
THOSE AMOUNTS SET FORTH IN THE MILESTONE ASSESSMENT NOTICE.

 

(C)           RIGHTS OF SET-OFF.  PURCHASER SHALL HAVE THE RIGHT TO WITHHOLD AND
SET-OFF AGAINST ANY AMOUNT OTHERWISE DUE TO BE PAID (BUT NOT YET PAID) PURSUANT
TO THIS SECTION 1.5 THE AMOUNT OF ANY LOSSES TO WHICH ANY PURCHASER INDEMNIFIED
PARTY MAY BE ENTITLED UNDER ARTICLE VIII HEREOF OR ANY OTHER AGREEMENT ENTERED
INTO PURSUANT TO THIS AGREEMENT (THE “RIGHTS OF SET-OFF”); PROVIDED, HOWEVER,
THAT THE FOREGOING SHALL NOT APPLY (I) TO THE SAME LOSS MORE THAN ONCE OR
(II) TO THE EXTENT ANY SUCH LOSS IS ADJUSTED AS PROVIDED FOR IN
SECTION 8.4(B) HEREOF.

 

(D)           ACKNOWLEDGEMENT OF SELLER AND PURCHASER.  SELLER AND PURCHASER
ACKNOWLEDGE  THAT (I) (A) UPON THE TECHNOLOGY CLOSING AND SUBJECT TO PURCHASER’S
EXPRESS OBLIGATIONS UNDER THE MANUFACTURING AGREEMENT, PURCHASER HAS THE RIGHT
TO OPERATE THE BUSINESS AND PURCHASER’S OTHER BUSINESSES IN ANY WAY THAT
PURCHASER DEEMS APPROPRIATE IN PURCHASER’S SOLE DISCRETION, AND (B) SUBJECT TO
PURCHASER’S EXPRESS OBLIGATIONS UNDER THE MANUFACTURING AGREEMENT, PURCHASER HAS
NO OBLIGATION TO OPERATE THE BUSINESS IN ORDER TO ACHIEVE ANY MILESTONE OR TO
ACHIEVE OR MAXIMIZE ANY APPLICABLE MILESTONE PAYMENT, (II) THERE IS NO ASSURANCE
THAT THE SELLER WILL ACHIEVE ALL OR ANY MILESTONES OR THAT PURCHASER WILL
ACHIEVE THE NET SALES THRESHOLD, (III) THE PARTIES SOLELY INTEND THE EXPRESS
PROVISIONS OF THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS TO GOVERN THEIR
CONTRACTUAL RELATIONSHIP, (IV) THE RIGHT OF THE SELLER TO PAYMENT OF ANY
APPLICABLE MILESTONE PAYMENT, IF ANY, SHALL NOT BEAR ANY INTEREST UNLESS NOT
TIMELY PAID, AND (V) THE RIGHT OF THE SELLER TO A PORTION OF ANY APPLICABLE
MILESTONE PAYMENT, IF ANY, SHALL NOT BE REPRESENTED BY A CERTIFICATE OR OTHER
INSTRUMENT, SHALL NOT REPRESENT AN OWNERSHIP INTEREST OF SELLER IN PURCHASER OR
THE BUSINESS AND SHALL NOT ENTITLE SELLER TO ANY RIGHTS COMMON TO ANY HOLDER OF
ANY DEBT OR EQUITY SECURITY OF PURCHASER.  THE SELLER HEREBY WAIVES, ON ITS
BEHALF AND ON BEHALF OF ANY OF ITS SUCCESSORS AND ASSIGNS, ANY FIDUCIARY DUTY
(BUT, FOR AVOIDANCE OF DOUBT, NOT ANY IMPLIED COVENANT OF GOOD FAITH AND FAIR
DEALING) OF PURCHASER TO SELLER, WITH RESPECT TO THE MATTERS CONTEMPLATED BY
THIS SECTION 1.5.

 

Section 1.6            Withholding.  Purchaser shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this Agreement to
Seller  such amounts as Purchaser is required to deduct and withhold under the
Code, or any provisions of state or local Tax law, with respect to the making of
such payment.  Purchaser shall notify Seller of the basis for such withholding
no less than 10 business days prior to the proposed withholding and shall
consider in good faith any views of Seller that such withholding is not required
under the Code, or any provisions of state or local Tax law, with respect to the
making of such payment.

 

Section 1.7            Allocation of Purchase Price.  The Initial Purchase Price
shall be allocated for Tax purposes among the Transferred Assets in accordance
with Section 1060 of the Code.  Purchaser shall prepare and deliver to Seller
for Seller’s approval, a proposed allocation of the Initial Purchase Price
prepared in accordance with the foregoing within 45 days of the Technology
Closing; provided, that if Seller withholds its approval to such allocation,
Purchaser and Seller shall negotiate in good faith to agree upon the allocation
of the Purchase Price within 30 days of Seller’s receipt of Purchaser’s proposed
allocation.  Each of Purchaser and Seller shall

 

8

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file IRS Form 8594 with its Federal income Tax Return consistent with such
allocation as determined in accordance with the immediately preceding sentence
for the Tax year in which this Agreement is consummated.  Seller and Purchaser
shall report all Tax consequences of the transactions contemplated by this
Agreement in a manner consistent with such allocation, and not take any position
inconsistent therewith upon examination of any Tax Return, in any refund claim,
in any litigation or investigation or otherwise.

 

ARTICLE II.

REPRESENTATIONS AND WARRANTIES OF SELLER

 

Seller represents and warrants to Purchaser as of the date hereof as follows:

 

Section 2.1            Organization, Good Standing and Authority.  Seller is
duly formed, validly existing and in good standing under the laws of the State
of Delaware, and is duly qualified as a foreign corporation to transact business
and is in good standing in each jurisdiction in which such qualification is
required, except where failure to be qualified or to be in good standing would
not materially and adversely affect the Business.  Seller has full corporate
power and authority to own the assets owned by it, to lease the properties and
assets held by it under lease, to own and carry on the operation of the Business
as it is now being conducted by it, and to operate the Business as heretofore
operated by it.

 

Section 2.2            Organizational and Governing Documents; Approval.

 

(A)           PRIOR TO THE DATE HEREOF, SELLER HAS FURNISHED TO PURCHASER
COMPLETE AND CORRECT COPIES OF THE CERTIFICATE OF INCORPORATION AND BYLAWS OF
SELLER (THE “SELLER ORGANIZATIONAL DOCUMENTS”).  THE SELLER ORGANIZATIONAL
DOCUMENTS ARE IN FULL FORCE AND EFFECT AND SELLER IS NOT IN VIOLATION OF ANY
PROVISION OF THE SELLER ORGANIZATIONAL DOCUMENTS.

 

(B)           THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS TO WHICH IT IS
A PARTY HAVE BEEN APPROVED BY ALL NECESSARY CORPORATE ACTION OF SELLER AND NO
OTHER CORPORATE PROCEEDINGS ON THE PART OF SELLER AND, EXCEPT FOR THE
STOCKHOLDER APPROVAL, NO CORPORATE PROCEEDINGS ON THE PART OF SELLER’S
STOCKHOLDERS ARE NECESSARY TO AUTHORIZE THE EXECUTION AND DELIVERY OF THIS
AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT, OR THE CONSUMMATION OF THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, UNDER THE DELAWARE GENERAL
CORPORATION LAW, THE SELLER ORGANIZATIONAL DOCUMENTS OR OTHERWISE.

 

Section 2.3            Due Execution and Delivery.  Seller has all necessary
power and authority to execute and deliver this Agreement and the other
Transaction Documents to which it is a party and each instrument required hereby
and thereby to be executed and delivered by it, and, prior to the Technology
Closing, will have all necessary power and authority to carry out its
obligations hereunder and thereunder.  Seller has duly executed and delivered
this Agreement and assuming the due authorization, execution and deliver of this
Agreement by Purchaser, this Agreement constitutes (and, when executed and
delivered, the Transaction Documents to which it is a party will constitute) the
legal, valid and binding obligations of Seller enforceable against it in
accordance with its terms, except that such enforcement (a) may be limited by
bankruptcy, insolvency, moratorium or similar laws affecting creditors’ rights
generally, and (b) is subject to

 

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the availability of equitable remedies, as determined in the discretion of the
court before which such a proceeding may be brought.

 

Section 2.4            Title and Sufficiency of Transferred Assets.  Seller is
the sole owner and has good and marketable title (or leasehold title, as the
case may be) to the Transferred Assets free and clear of all liens, claims,
charges, security interests, leases, covenants, options, pledges, rights of
others, easements, rights of refusal, reservations, restrictions, encumbrances
and other defects in title (collectively, “Liens”) except for (i) Liens incurred
in the ordinary course of the Business, consistent with past practice, of the
type identified on Schedule 2.4(i), (ii) Liens for Taxes not yet due and payable
and (iii) Liens created by the express provisions of the Assumed Contracts
(together, the “Permitted Liens”) whether imposed by agreement, understanding,
law, equity, or otherwise.  The Manufacturing Assets are all assets of Seller
used in or related to the processing and manufacturing of the Products.  The
Transferred Assets are suitable for the uses to which they are being put or have
been put in the ordinary course of the Business and are in good working order. 
The Transferred Assets and the Business Intellectual Property of Seller licensed
to Purchaser under the License Agreement constitute all of the assets, property,
real personal or mixed, tangible or intangible, of Seller used in, held for use
in, or necessary for the operation of the Business as presently conducted.

 

Section 2.5            Consents; No Conflict.  Except as set forth on Schedule
2.5, no consent, authorization, permit, waiver or approval of or from, or notice
to, any person or any governmental authority is required as a condition to the
execution and delivery of this Agreement or the other Transaction Documents by
Seller or the consummation of the transactions contemplated by this Agreement
and the Transaction Documents by Seller.  Except as set forth on Schedule 2.5,
the execution and delivery of this Agreement and the Transaction Documents and
each instrument required hereby to be executed and delivered by Seller and the
consummation of the transactions contemplated hereby and thereby by Seller will
not give rise to a right of termination of, contravene or constitute a default
under, or be an event which with the giving of notice or passage of time or both
will become a default under, or give to others any rights of termination or
cancellation of, or give rise to a right of acceleration of the performance
required by or maturity of, or result in the creation of any Lien, claim, cost,
Tax, losses or loss of any rights with respect to the Business or the
Transferred Assets pursuant to any of the terms, conditions or provisions of or
under any applicable law, the Seller Organizational Documents or under any
Assumed Contract.

 

Section 2.6            Taxes.

 

(A)           ALL TAX RETURNS REQUIRED TO BE FILED (AFTER GIVING EFFECT TO
APPLICABLE EXTENSIONS) BY SELLER BY ANY LAW, RULE OR REGULATION HAVE BEEN FILED
WITH THE APPROPRIATE GOVERNMENTAL AUTHORITY AND ALL TAXES REQUIRED TO BE PAID BY
SELLER PRIOR TO THE TECHNOLOGY CLOSING DATE HAVE BEEN PAID IN FULL.  NO CLAIM
HAS EVER BEEN MADE IN WRITING OR, TO SELLER’S KNOWLEDGE OTHERWISE, BY A TAX
AUTHORITY IN A JURISDICTION WHERE THE SELLER DOES NOT PAY TAX OR FILE TAX
RETURNS THAT IT IS SUBJECT TO TAXATION BY THAT JURISDICTION OR REQUIRED TO FILE
RETURNS IN THAT JURISDICTION.

 

(B)           ALL TAXES OWED BY SELLER OR FOR WHICH SELLER MAY BE HELD LIABLE
(WHETHER OR NOT SHOWN ON ANY TAX RETURN) WHICH WERE OR WILL BE DUE ON OR PRIOR
TO THE TECHNOLOGY CLOSING HAVE BEEN OR WILL BE PAID IN FULL.  THE UNPAID TAXES
OF SELLER FOR PERIODS NOT INCLUDED IN TAX RETURNS

 

10

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FILED OR TO BE FILED PRIOR TO THE TECHNOLOGY CLOSING DOES NOT INCLUDE ANY
MATERIAL LIABILITY FOR TAXES ATTRIBUTABLE TO EVENTS THAT ARE OUTSIDE OF THE
ORDINARY COURSE OF SELLER’S BUSINESS.

 

(C)           THERE ARE NO LIENS FOR TAXES (OTHER THAN FOR CURRENT TAXES NOT YET
DUE AND PAYABLE) ON ANY OF THE TRANSFERRED ASSETS.

 

Section 2.7            Financial Information.  Attached hereto as Schedule 2.7
are (i) the unaudited balance sheet, operating income and free cash flows of the
Business as of the end of and for the fiscal year ended December 31, 2007 and
(ii) the unaudited balance sheet of the Business (the “Balance Sheet”) as of
March 31, 2008 (the “Balance Sheet Date”) and the unaudited operating income and
free cash flows of the Business as of March 31, 2008 (together, the “Financial
Information”).  The Financial Information has been, and if required to be
reported by Purchaser under Item 9.01 of Form 8-K and Regulation S-X of the
federal securities laws for a business acquisition required to be described in
answer to Item 2.01 of Form 8-K the unaudited balance sheet, operating income
and free cash flows of the Business as of the end of and for the fiscal year
ended December 31, 2006 prior to the Technology Closing Date will be, prepared
in accordance with GAAP applied on a consistent basis throughout periods covered
thereby, fairly represent in all material respects the financial condition,
results of operations and cash flows of the Business as of the respective dates
thereof and for the periods referred to therein and are consistent with the
books and records of the Business, subject to the absence of footnotes and
normal, recurring year-end adjustments.  Seller does not have any indebtedness
or other liability or obligation (whether known, unknown, mature, unmatured,
absolute or contingent) of the Business, except for (a) liabilities and
obligations shown on the Balance Sheet and (b) liabilities and obligations which
have arisen since the date of the Balance Sheet in the ordinary course of
business and which are not material to the Business, individually or in the
aggregate.  All reserves that are set forth in or reflected in the Balance Sheet
have been established in accordance with GAAP consistently applied and are
reasonably adequate.

 

Section 2.8            [Intentionally omitted.].

 

Section 2.9            Contracts.

 

(A)           DESCRIPTION OF CONTRACTS.  SCHEDULE 1.1(A)(X) CONTAINS A TRUE AND
COMPLETE LIST OF ALL CONTRACTS TO WHICH THE SELLER IS A PARTY AND WHICH ARE USED
IN OR ARE NECESSARY FOR THE OPERATION OF THE BUSINESS OR BY WHICH ANY
TRANSFERRED ASSETS ARE BOUND, TRUE AND COMPLETE COPIES OF WHICH, TOGETHER WITH
ALL AMENDMENTS, WAIVERS AND SUPPLEMENTS THERETO, HAVE BEEN DELIVERED TO
PURCHASER PRIOR TO THE DATE HEREOF.

 

(B)           STATUS OF CONTRACTS.  EACH ASSUMED CONTRACT IS IN FULL FORCE AND
EFFECT IN ACCORDANCE WITH ITS TERMS AND IS A VALID AND BINDING OBLIGATION OF
SELLER AND, TO SELLER’S KNOWLEDGE, EACH OTHER PARTY THERETO, ENFORCEABLE IN
ACCORDANCE WITH ITS TERMS, EXCEPT THAT SUCH ENFORCEMENT (I) MAY BE LIMITED BY
BANKRUPTCY, INSOLVENCY, MORATORIUM OR SIMILAR LAWS AFFECTING CREDITORS’ RIGHTS
GENERALLY, AND (II) IS SUBJECT TO THE AVAILABILITY OF EQUITABLE REMEDIES, AS
DETERMINED IN THE DISCRETION OF THE COURT BEFORE WHICH SUCH A PROCEEDING MAY BE
BROUGHT.  NEITHER SELLER, NOR TO SELLER’S KNOWLEDGE ANY OTHER PARTY TO ANY OF
THE ASSUMED CONTRACTS, IS IN DEFAULT UNDER ANY ASSUMED CONTRACT AND NO EVENT HAS
OCCURRED WHICH, AFTER NOTICE OR LAPSE OF TIME OR BOTH, WOULD CONSTITUTE A
DEFAULT UNDER ANY SUCH ASSUMED CONTRACT, AND THE

 

11

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CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT AND THE OTHER
TRANSACTION DOCUMENTS WILL NOT GIVE RISE TO ANY SUCH DEFAULT OR BREACH.  EACH
ASSUMED CONTRACT IS IN WRITTEN FORM.

 

(C)           DISPOSITION OF CERTAIN CONTRACTS.  SELLER IS LEGALLY ENTITLED TO
TERMINATE THOSE CONTRACTS IDENTIFIED ON SCHEDULE 2.9(C) IN ACCORDANCE WITH THEIR
TERMS AND WITHOUT PENALTY OR ADDITIONAL PAYMENT, EFFECTIVE NO LATER THAN THE
DATE SET FORTH BESIDE THE NAMES THEREOF ON SCHEDULE 2.9(C).

 

Section 2.10         Litigation and Claims.  There is (a) no Action pending, or
to the Seller’s Knowledge, threatened against or affecting the Business
(including any of the Transferred Assets) or the transactions contemplated
hereby, or (b) to Seller’s Knowledge, no governmental inquiry or investigation
pending or threatened against or affecting the Business (including any of the
Transferred Assets).  The Seller has not received any written legal opinion or
written memorandum or legal advice from legal counsel to the effect that Seller
(with respect to the Business or the Transferred Assets) is exposed, from a
legal standpoint, to any material liability or material disadvantage with
respect to the Business or the prospects, financial condition, operations,
property or affairs of the Business.  The Seller is not in default with respect
to any order, writ, injunction or decree of any governmental entity known to or
served upon the Seller and relating to the Business or the Transferred Assets. 
There is no action or suit by the Seller and relating to the Business or the
Transferred Assets that is pending, threatened or contemplated against any other
person.

 

Section 2.11         Compliance With Laws.   Seller is not in material violation
of or in material default under any law, statute, regulation, rule, ordinance,
administrative order or court order applicable to Seller with respect to the
Business or the Transferred Assets, including, without limitation, the Public
Health Services Act (“PHSA”) and relevant sections of the FDCA, and the United
States National Organ Transplant Act, Title 21 of the Code of Federal
Regulations Part 1271, Human Cells, Tissues, and Cellular and Tissue Based
Products.  To Seller’s Knowledge, the Seller is not under investigation with
respect to, has not been threatened to be charged with, nor has been given
notice of, any violation of or material default under any law, statute,
regulation, rule, ordinance, standard, guideline, administrative order or court
order applicable to Seller with respect to the Business or the Transferred
Assets.  All permits (A) pursuant to which Seller currently operates or holds
any interest in the property of the Business, or (B) which is required for the
operation of the Business as currently conducted or the holding of any such
interest has been issued or granted to Seller and are set forth on Schedule
2.11. All such permits are in full force and effect and constitute all permits
required to permit the Seller to operate or conduct the Business or hold any
interest in the Transferred Assets.

 

Section 2.12         Employees and Independent Contractors.

 

(A)           SCHEDULE 2.12(A)(I) CONTAINS A TRUE AND COMPLETE LIST, AS OF
APRIL 28, 2008, OF ALL EMPLOYEES OF SELLER EMPLOYED IN THE BUSINESS (THE “SELLER
EMPLOYEES”), INCLUDING, TO THE EXTENT APPLICABLE, EACH SELLER EMPLOYEE’S
(I) NAME, (II) TITLE, WAGE, SALARY, TARGET BONUS AND ACCRUED VACATION OR PAID
TIME OFF AS OF APRIL 30, 2008, (III) PRINCIPAL LOCATION OF EMPLOYMENT, AND
(IV) DATE OF HIRE BY SELLER.  SCHEDULE 2.12(A)(II) CONTAINS A LIST OF ALL SELLER
EMPLOYEES WHO TO SELLER’S KNOWLEDGE ARE NOT CITIZENS OF THE UNITED STATES.
SCHEDULE 2.12(A)(III) ALSO CONTAINS A TRUE AND

 

12

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COMPLETE LIST OF ALL SELLER EMPLOYEES WHO ARE AS OF SUCH DATE ON A SHORT- OR
LONG-TERM DISABILITY LEAVE OR OTHER LEAVE OF ABSENCE (BUT NOT INCLUDING
VACATION).  EACH SELLER OPTION PLAN PROVIDES THAT THE VESTING OF ALL OPTIONS TO
PURCHASE SELLER COMMON STOCK, PAR VALUE $0.001 PER SHARE (“SELLER OPTIONS”)
GRANTED THEREUNDER TO ANY SELLER EMPLOYEE MAY BE ACCELERATED, IN WHOLE OR IN
PART, AT THE DISCRETION OF THE BOARD OF DIRECTORS OF SELLER OR THE PLAN
ADMINISTRATOR OF THE SELLER, IN EITHER CASE PURSUANT TO THE OPTION PLAN AND
RELATED DOCUMENTS GOVERNING THE SELLER OPTIONS.

 

(B)           SCHEDULE 2.12(B) CONTAINS A TRUE AND COMPLETE LIST, AS OF THE DATE
HEREOF, OF ALL CONSULTANTS AND OTHER INDEPENDENT CONTRACTORS WHO ARE PROVIDING
MATERIAL SERVICES TO THE BUSINESS (THE “INDEPENDENT CONTRACTORS”), INCLUDING
(I) EACH INDEPENDENT CONTRACTOR’S NAME, (II) THE TYPE OF SERVICES BEING PROVIDED
BY EACH INDEPENDENT CONTRACTOR, (III) THE PRINCIPAL LOCATION WHERE SERVICES ARE
PROVIDED BY EACH INDEPENDENT CONTRACTOR AND (IV) THE DATE WHEN EACH INDEPENDENT
CONTRACTOR WAS RETAINED BY SELLER.  COPIES OF ALL CONTRACTS RELATING TO
INDEPENDENT CONTRACTORS USED IN THE BUSINESS HAVE BEEN FURNISHED TO PURCHASER.

 

(C)           SELLER IS IN COMPLIANCE IN ALL MATERIAL RESPECTS WITH ALL
APPLICABLE LAWS, RULES AND REGULATIONS WITH RESPECT TO EMPLOYMENT, EMPLOYMENT
PRACTICES, AND TERMS, CONDITIONS AND CLASSIFICATION OF EMPLOYMENT (INCLUDING THE
PROPER CLASSIFICATION OF WORKERS AS INDEPENDENT CONTRACTORS AND CONSULTANTS),
WAGE AND HOUR REQUIREMENTS, IMMIGRATION STATUS, DISCRIMINATION IN EMPLOYMENT,
EMPLOYEE HEALTH AND SAFETY, AND THE WORKERS’ ADJUSTMENT AND RETRAINING
NOTIFICATION ACT.  SELLER HAS WITHHELD OR WILL TIMELY WITHHOLD ALL AMOUNTS
REQUIRED BY LAW OR BY AGREEMENT TO BE WITHHELD FROM THE WAGES, SALARIES, AND
OTHER PAYMENTS TO SELLER EMPLOYEES; AND SELLER IS NOT LIABLE FOR ANY ARREARS OF
WAGES, COMPENSATION, TAXES, PENALTIES OR OTHER SUMS FOR FAILURE TO COMPLY WITH
ANY OF THE FOREGOING.  SELLER HAS PAID IN FULL OR WILL TIMELY PAY IN FULL TO ALL
SELLER EMPLOYEES ALL WAGES, SALARIES, COMMISSIONS, BONUSES, BENEFITS AND OTHER
COMPENSATION DUE TO OR ON BEHALF OF SUCH SELLER EMPLOYEES.  THERE ARE NO
CONTROVERSIES PENDING OR, TO SELLER’S KNOWLEDGE, THREATENED, BETWEEN THE SELLER
AND ANY OF ITS SELLER EMPLOYEES, WHICH CONTROVERSIES HAVE OR WOULD REASONABLY BE
EXPECTED TO RESULT IN AN ACTION, SUIT, PROCEEDING, CLAIM, ARBITRATION OR
INVESTIGATION BEFORE ANY GOVERNMENTAL ENTITY.

 

(D)           TO SELLER’S KNOWLEDGE, NO SELLER EMPLOYEE IS IN VIOLATION OF ANY
TERM OF ANY EMPLOYMENT OR SERVICE AGREEMENT, PATENT DISCLOSURE AGREEMENT,
NON-COMPETITION AGREEMENT, OR ANY RESTRICTIVE COVENANT TO A FORMER EMPLOYER
RELATING TO THE RIGHT OF ANY SUCH SELLER EMPLOYEE TO BE EMPLOYED BY THE SELLER
BECAUSE OF THE NATURE OF THE BUSINESS CONDUCTED OR PRESENTLY PROPOSED TO BE
CONDUCTED BY THE SELLER OR TO THE USE OF TRADE SECRETS OR PROPRIETARY
INFORMATION OF OTHERS.  TO SELLER’S KNOWLEDGE, THERE ARE NO MATERIAL
CONTROVERSIES, GRIEVANCES OR CLAIMS PENDING OR THREATENED, BY ANY OF THE SELLER
EMPLOYEES WITH RESPECT TO THEIR EMPLOYMENT. TO SELLER’S KNOWLEDGE, NO SELLER
EMPLOYEE HAS GIVEN NOTICE TO SELLER THAT ANY SUCH SELLER EMPLOYEE INTENDS TO
TERMINATE HIS OR HER EMPLOYMENT WITH THE SELLER (OTHER THAN FOR THE PURPOSES OF
ACCEPTING EMPLOYMENT WITH PURCHASER FOLLOWING THE TECHNOLOGY CLOSING).  THE
EMPLOYMENT OF EACH SELLER EMPLOYEE HAS BEEN AT ALL TIMES IN THE PAST AND IS
“AT-WILL”, AND THE SELLER HAS NOT HAD ANY OBLIGATION TO PROVIDE ANY PARTICULAR
FORM OR PERIOD OF NOTICE PRIOR TO TERMINATING THE EMPLOYMENT OF ANY SELLER
EMPLOYEE.  SELLER HAS NOT (I) ENTERED INTO ANY CONTRACT THAT OBLIGATES OR
PURPORTS TO OBLIGATE PURCHASER TO MAKE AN OFFER OF EMPLOYMENT TO ANY SELLER
EMPLOYEE AND/OR (II) PROMISED OR OTHERWISE PROVIDED ANY ASSURANCES (CONTINGENT
OR OTHERWISE) TO ANY SELLER EMPLOYEE OF ANY TERMS OR CONDITIONS OF EMPLOYMENT
WITH PURCHASER FOLLOWING THE TECHNOLOGY CLOSING.

 

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Section 2.13         Employee Benefits.

 

(A)           SCHEDULE 2.13(A) SETS FORTH A TRUE AND COMPLETE LIST OF EACH
“EMPLOYEE BENEFIT PLAN,” AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), AND EACH AND EVERY WRITTEN,
UNWRITTEN, FORMAL OR INFORMAL PLAN, AGREEMENT, PROGRAM, POLICY OR OTHER
ARRANGEMENT INVOLVING DIRECT OR INDIRECT COMPENSATION (OTHER THAN WORKERS’
COMPENSATION, UNEMPLOYMENT COMPENSATION AND OTHER GOVERNMENT PROGRAMS),
EMPLOYMENT, SEVERANCE, CONSULTING, DISABILITY BENEFITS, SUPPLEMENTAL
UNEMPLOYMENT BENEFITS, VACATION BENEFITS, RETIREMENT BENEFITS, DEFERRED
COMPENSATION, PROFIT-SHARING, BONUSES, STOCK OPTIONS, STOCK APPRECIATION RIGHTS,
OTHER FORMS OF INCENTIVE COMPENSATION, POST-RETIREMENT INSURANCE BENEFITS, OR
OTHER BENEFITS, ENTERED INTO, MAINTAINED OR CONTRIBUTED TO BY SELLER OR ANY OF
ITS SUBSIDIARIES OR WITH RESPECT TO WHICH SELLER OR ANY OF ITS SUBSIDIARIES HAS
OR MAY IN THE FUTURE HAVE ANY LIABILITY (CONTINGENT OR OTHERWISE), AND IN EACH
CASE UNDER WHICH ANY SELLER EMPLOYEE HAS ANY PRESENT OR FUTURE RIGHT TO
BENEFITS.  EACH PLAN, AGREEMENT, PROGRAM, POLICY OR ARRANGEMENT REQUIRED TO BE
SET FORTH ON SUCH SCHEDULE PURSUANT TO THE FOREGOING IS REFERRED TO HEREIN AS A
“SELLER BENEFIT PLAN.”

 

(B)           EACH SELLER BENEFIT PLAN HAS BEEN MAINTAINED AND ADMINISTERED IN
ALL RESPECTS IN COMPLIANCE WITH ITS TERMS AND WITH THE REQUIREMENTS PRESCRIBED
BY ANY AND ALL STATUTES, ORDERS, RULES AND REGULATIONS (FOREIGN AND DOMESTIC),
INCLUDING (WITHOUT LIMITATION) ERISA AND THE CODE, WHICH ARE APPLICABLE TO SUCH
SELLER BENEFIT PLAN.  NO ACTION, SUIT OR CLAIM (EXCLUDING CLAIMS FOR BENEFITS
INCURRED IN THE ORDINARY COURSE) HAS BEEN BROUGHT OR IS PENDING OR, TO SELLER’S
KNOWLEDGE, THREATENED AGAINST OR WITH RESPECT TO ANY SELLER BENEFIT PLAN OR THE
ASSETS OR ANY FIDUCIARY THEREOF (IN THAT PERSON’S CAPACITY AS A FIDUCIARY OF
SUCH SELLER BENEFIT PLAN).  THERE ARE NO AUDITS, INQUIRIES OR PROCEEDINGS
PENDING OR, TO THE KNOWLEDGE OF SELLER, THREATENED BY THE IRS, DOL, OR OTHER
GOVERNMENTAL ENTITY WITH RESPECT TO ANY SELLER BENEFIT PLAN.  NO EVENT HAS
OCCURRED AND, TO SELLER’S KNOWLEDGE, THERE EXISTS NO CONDITION OR SET OF
CONDITIONS IN CONNECTION WITH WHICH PURCHASER OR ANY SELLER EMPLOYEE COULD
REASONABLY BE EXPECTED TO BECOME SUBJECT TO ANY LIABILITY UNDER OR WITH RESPECT
TO ANY SELLER BENEFIT PLAN.

 

(C)           NO SELLER BENEFIT PLAN IS MAINTAINED OUTSIDE THE JURISDICTION OF
THE UNITED STATES, OR COVERS ANY SELLER EMPLOYEE RESIDING OR WORKING OUTSIDE THE
UNITED STATES.

 

(D)           SCHEDULE 2.13(D) DISCLOSES EACH: (I) AGREEMENT WITH ANY SELLER
EMPLOYEE (A) THE BENEFITS OF WHICH ARE CONTINGENT, OR THE TERMS OF WHICH ARE
ALTERED, UPON THE OCCURRENCE OF A TRANSACTION INVOLVING SELLER OF THE NATURE OF
ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, (B) PROVIDING ANY TERM
OF EMPLOYMENT OR COMPENSATION GUARANTEE OR (C) PROVIDING SEVERANCE BENEFITS OR
OTHER BENEFITS AFTER THE TERMINATION OF EMPLOYMENT OF SUCH SELLER EMPLOYEE;
(II) AGREEMENT, PLAN OR ARRANGEMENT UNDER WHICH ANY SELLER EMPLOYEE MAY RECEIVE
PAYMENTS FROM SELLER THAT MAY BE SUBJECT TO THE TAX IMPOSED BY SECTION 4999 OF
THE CODE OR INCLUDED IN THE DETERMINATION OF SUCH SELLER EMPLOYEE’S “PARACHUTE
PAYMENT” UNDER SECTION 280G OF THE CODE; AND (III) AGREEMENT OR PLAN BINDING
SELLER, INCLUDING ANY STOCK OPTION PLAN, STOCK APPRECIATION RIGHT PLAN,
RESTRICTED STOCK PLAN, STOCK PURCHASE PLAN, SEVERANCE BENEFIT PLAN OR SELLER
BENEFIT PLAN, ANY OF THE BENEFITS OF WHICH WILL BE INCREASED, OR THE VESTING OF
THE BENEFITS OF WHICH WILL BE ACCELERATED, BY THE OCCURRENCE OF ANY OF THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR THE VALUE OF ANY OF THE BENEFITS
OF WHICH WILL BE CALCULATED ON THE BASIS OF ANY OF THE TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT.

 

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Section 2.14         Labor Matters.  (i) Seller is not a party to any collective
bargaining agreement or other labor contract applicable to any Seller Employee,
(ii) to Seller’s Knowledge, no union has bargaining rights with respect to any
Seller Employee and there are no threatened or apparent union organizing
activities involving any Seller Employee, (iii) there are no strikes, slowdowns
or work stoppages pending or, to Seller’s Knowledge, threatened between Seller
and an Seller Employee, and (iv) to Seller’s Knowledge, there are no unfair
labor practice complaints involving an Seller Employee pending against Seller.
Seller shall be responsible for providing continuation coverage to the extent
required by Section 4980B of the Code or similar state law (“COBRA”) to Seller
Employees, and other qualified beneficiaries under COBRA with respect to such
employees, who have a COBRA qualifying event (due to termination of employment
with the Seller or otherwise) prior to or in connection with the transactions
contemplated by this Agreement.  Except as required by law, neither Purchaser
nor any of its affiliates shall be responsible for the failure of Seller to
comply with any of the requirements of COBRA, including applicable notice
requirements.

 

Section 2.15         Intellectual Property.

 

(A)           THE TRANSFERRED TECHNOLOGY SET FORTH ON SCHEDULE 1.1(A)(I) AND THE
OTHER BUSINESS INTELLECTUAL PROPERTY SET FORTH ON SCHEDULE 1.1(A)(IV) TOGETHER
SET FORTH A TRUE, COMPLETE AND CORRECT LIST OF ALL BUSINESS INTELLECTUAL
PROPERTY.

 

(B)           THE SELLER IS THE SOLE AND EXCLUSIVE BENEFICIAL AND RECORD OWNER
OF ALL TRANSFERRED TECHNOLOGY.

 

(C)           THE TRANSFERRED TECHNOLOGY AND THE BUSINESS INTELLECTUAL PROPERTY
OF SELLER LICENSED TO PURCHASER UNDER THE LICENSE AGREEMENT (THE “LICENSED
TECHNOLOGY”) IS VALID, EXISTING, IN FULL FORCE AND EFFECT, OR,  WITH RESPECT TO
APPLICATIONS, IS STILL PENDING, AND HAS NOT EXPIRED OR BEEN CANCELLED OR
ABANDONED.  ALL NECESSARY APPLICATION, REGISTRATION, MAINTENANCE, RENEWAL AND
OTHER FEES, AND ALL NECESSARY DOCUMENTS AND CERTIFICATES, IN CONNECTION WITH
SUCH TRANSFERRED TECHNOLOGY AND THE LICENSED TECHNOLOGY HAVE BEEN PAID AND
FILED, RESPECTIVELY, WITH THE RELEVANT PATENT, COPYRIGHT, TRADEMARK OR OTHER
AUTHORITIES IN THE UNITED STATES OR FOREIGN JURISDICTIONS, AS THE CASE MAY BE,
FOR THE PURPOSES OF PERFECTING, PROSECUTING AND MAINTAINING SUCH TRANSFERRED
TECHNOLOGY AND THE LICENSED TECHNOLOGY.

 

(D)           THERE IS NO PENDING OR, TO THE SELLER’S KNOWLEDGE, THREATENED (AND
AT NO TIME WITHIN THE TWO YEARS PRIOR TO THE DATE OF THIS AGREEMENT HAS THERE
BEEN PENDING ANY) ACTION, SUIT, CLAIM OR PROCEEDING BEFORE ANY COURT, GOVERNMENT
AGENCY OR ARBITRAL TRIBUNAL IN ANY JURISDICTION CHALLENGING THE USE, OWNERSHIP,
VALIDITY, ENFORCEABILITY OR REGISTERABILITY OF ANY TRANSFERRED TECHNOLOGY OR THE
LICENSED TECHNOLOGY.  THE SELLER IS NOT A PARTY TO ANY SETTLEMENTS, COVENANTS
NOT TO SUE, CONSENTS, DECREES, STIPULATIONS, JUDGMENTS OR ORDERS RESULTING FROM
ACTION, SUIT, CLAIM OR PROCEEDING WHICH PERMIT THIRD PARTIES TO USE ANY
TRANSFERRED TECHNOLOGY.

 

(E)           SCHEDULE 2.15(E) LISTS ALL LICENSES, SUBLICENSES AND OTHER
AGREEMENT AS TO WHICH SELLER IS A PARTY AND PURSUANT TO WHICH SELLER HAS GRANTED
TO ANY THIRD PARTY ANY RIGHT TO USE ANY OF THE TRANSFERRED TECHNOLOGY, INCLUDING
THE IDENTITY OF ALL PARTIES THERETO, A DESCRIPTION OF THE NATURE AND SUBJECT
MATTER THEREOF AND THE APPLICABLE ROYALTY AND TERM THEREOF.

 

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(F)            SCHEDULE 2.15(F) LISTS ALL LICENSES, SUBLICENSES AND OTHER
AGREEMENTS AS TO WHICH SELLER IS A PARTY AND PURSUANT TO WHICH SELLER IS
AUTHORIZED TO USE ANY INTELLECTUAL PROPERTY BELONGING TO ANY THIRD PARTY IN
CONNECTION WITH THE BUSINESS, INCLUDING THE IDENTITY OF ALL PARTIES THERETO, A
DESCRIPTION OF THE NATURE AND SUBJECT MATTER THEREOF, THE APPLICABLE ROYALTY AND
TERM THEREOF.

 

(G)           THE SELLER OWNS, OR HAS VALID RIGHTS TO USE ALL OF THE TRANSFERRED
TECHNOLOGY.

 

(H)           THE CONDUCT OF THE BUSINESS AND MANUFACTURE, PRACTICE, USE AND
SALE OF THE PRODUCT AS PREVIOUSLY CONDUCTED, MANUFACTURED, PRACTICED, USED AND
SOLD, AND AS CURRENTLY CONDUCTED, MANUFACTURED, USED AND SOLD DID NOT AND DOES
NOT INFRINGE, MISAPPROPRIATE, OR OTHERWISE VIOLATE ANY INTELLECTUAL PROPERTY OR
OTHER PROPRIETARY RIGHT OWNED BY ANY THIRD PARTY, OR CONSTITUTE UNFAIR
COMPETITION OR TRADE PRACTICES UNDER THE LAWS OF ANY JURISDICTION.

 

(I)            THERE IS NO PENDING OR, TO THE KNOWLEDGE OF SELLER, THREATENED
(AND AT NO TIME WITHIN THE TWO YEARS PRIOR TO THE DATE OF THIS AGREEMENT HAS
THERE BEEN PENDING OR, TO THE KNOWLEDGE OF SELLER, THREATENED ANY) ACTION, SUIT,
CLAIM OR PROCEEDING, AND SELLER HAS NOT RECEIVED ANY WRITTEN COMPLAINT, CLAIM,
DEMAND OR NOTICE FROM ANY THIRD PARTY, ALLEGING THAT THE CONDUCT OF THE BUSINESS
INFRINGES, MISAPPROPRIATES, OR OTHERWISE VIOLATES OR CONSTITUTES THE
UNAUTHORIZED USE OF, OR WILL INFRINGE, MISAPPROPRIATE, OR OTHERWISE VIOLATE OR
CONSTITUTE THE UNAUTHORIZED USE OF, THE INTELLECTUAL PROPERTY OR OTHER
PROPRIETARY RIGHT OF ANY THIRD PARTY (NOR DOES THE SELLER HAVE KNOWLEDGE OF ANY
BASIS THEREFOR).  THE SELLER IS NOT A PARTY TO ANY SETTLEMENT, COVENANT NOT TO
SUE, CONSENT, DECREE, STIPULATION, JUDGMENT, OR ORDER RESULTING FROM ANY ACTION
WHICH (I) RESTRICTS THE SELLER’S RIGHTS TO USE ANY TRANSFERRED TECHNOLOGY,
(II) RESTRICTS THE BUSINESS IN ORDER TO ACCOMMODATE A THIRD PARTY’S INTELLECTUAL
PROPERTY OR (III) REQUIRES ANY FUTURE PAYMENT BY THE SELLER.  THE SELLER HAS NOT
RECEIVED ANY WRITTEN OR, TO THE SELLER’S KNOWLEDGE, ORAL COMMUNICATION FROM ANY
THIRD PARTY OFFERING TO LICENSE TO THE SELLER ANY INTELLECTUAL PROPERTY
PURPORTED TO BE USED IN THE BUSINESS OR CLAIMING THAT THE SELLER MUST LICENSE OR
REFRAIN FROM USING ANY INTELLECTUAL PROPERTY OR OTHER PROPRIETARY RIGHTS OF ANY
THIRD PARTY IN ORDER TO CONDUCT THE BUSINESS.

 

(J)            TO THE KNOWLEDGE OF SELLER, NO THIRD PARTY IS INFRINGING,
MISAPPROPRIATING, OR OTHERWISE VIOLATING OR ENGAGED IN THE UNAUTHORIZED USE OF
ANY TRANSFERRED TECHNOLOGY, AND NO ACTIONS, SUITS, CLAIMS OR PROCEEDINGS HAVE
BEEN BROUGHT AGAINST ANY THIRD PARTY BY THE SELLER ALLEGING THAT A THIRD PARTY
IS INFRINGING, MISAPPROPRIATING, OR OTHERWISE VIOLATING OR ENGAGED IN THE
UNAUTHORIZED USE OF ANY TRANSFERRED TECHNOLOGY.

 

(K)           THE SELLER HAS TAKEN COMMERCIALLY REASONABLE STEPS TO OBTAIN,
MAINTAIN AND PROTECT THE TRANSFERRED TECHNOLOGY, INCLUDING REQUIRING EACH
EMPLOYEE, CONSULTANT AND INDEPENDENT CONTRACTOR WHO OR THAT HAS CONTRIBUTED IN
ANY WAY TO THE TRANSFERRED TECHNOLOGY OR HAS MADE ANY CONTRIBUTIONS TO THE
DEVELOPMENT OF ANY PRODUCT TO EXECUTE A WRITTEN AGREEMENT THAT ASSIGNS TO SELLER
ALL RIGHTS, TITLE AND INTEREST IN AND TO THE TRANSFERRED TECHNOLOGY AND ANY
INVENTIONS, IMPROVEMENTS, DISCOVERIES, INFORMATION AND OTHER KNOW-HOW RELATING
TO THE BUSINESS AND THE PRODUCT.  OTHER THAN UNDER AN APPROPRIATE
CONFIDENTIALITY OR NONDISCLOSURE AGREEMENT OR CONTRACTUAL PROVISION RELATING TO
CONFIDENTIALITY AND NONDISCLOSURE, THERE HAS BEEN NO DISCLOSURE TO ANY THIRD
PARTY OF CONFIDENTIAL INFORMATION OR TRADE SECRETS OF THE SELLER RELATED TO ANY
PRODUCT, THE BUSINESS OR THE TRANSFERRED TECHNOLOGY AND THE SELLER HAS TAKEN ALL
REASONABLE PRECAUTIONS TO

 

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PROTECT THE SECRECY, CONFIDENTIALITY AND VALUE OF THE TRANSFERRED TECHNOLOGY
(INCLUDING BY THE ENFORCEMENT OF A POLICY REQUIRING EACH EMPLOYEE, CONSULTANT
AND INDEPENDENT CONTRACTOR TO EXECUTE PROPRIETARY INFORMATION AND
CONFIDENTIALITY AGREEMENTS SUBSTANTIALLY IN THE SELLER’S STANDARD FORM WHICH HAS
BEEN PROVIDED BY SELLER TO PURCHASER).  ASSIGNMENTS TO THE SELLER OF THE PATENT
RIGHTS, COPYRIGHTS AND COPYRIGHT APPLICATIONS LISTED IN SCHEDULE 1.1(A)(I) HAVE
BEEN DULY EXECUTED AND FILED WITH THE UNITED STATES PATENT AND TRADEMARK OFFICE
OR COPYRIGHT OFFICE, AS APPLICABLE.  ASSIGNMENTS OF TRADEMARK REGISTRATIONS AND
PENDING TRADEMARK APPLICATIONS LISTED IN SCHEDULE 1.1(A)(I) AND ACQUIRED FROM
ANY THIRD PARTY HAVE BEEN DULY EXECUTED AND FILED WITH THE UNITED STATES PATENT
AND TRADEMARK OFFICE OR FOREIGN TRADEMARK AUTHORITY, AS APPLICABLE.

 

(L)            NEITHER THE EXECUTION OF THIS AGREEMENT NOR THE CONSUMMATION BY
THE SELLER OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT WILL RESULT IN ANY
VIOLATION, LOSS OR IMPAIRMENT OF, OR PAYMENT OF ANY ADDITIONAL AMOUNTS WITH
RESPECT TO, ANY TRANSFERRED TECHNOLOGY, NOR REQUIRE THE CONSENT OF ANY
GOVERNMENTAL ENTITY OR THIRD PARTY WITH RESPECT TO ANY TRANSFERRED TECHNOLOGY. 
THE SELLER IS NOT A PARTY TO ANY CONTRACT UNDER WHICH A THIRD PARTY WOULD HAVE
OR WOULD BE ENTITLED TO RECEIVE A LICENSE OR ANY OTHER RIGHT TO ANY TRANSFERRED
TECHNOLOGY ANY OTHER PROPERTY OR ASSETS OF PURCHASER OR ANY OF PURCHASER’S
AFFILIATES AS A RESULT OF THE EXECUTION OF THIS AGREEMENT OR THE CONSUMMATION OF
THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, NOR WOULD THE CONSUMMATION OF
SUCH TRANSACTIONS RESULT IN THE AMENDMENT OR ALTERATION OF ANY LICENSE OR OTHER
RIGHT WHICH EXISTS ON THE DATE OF THIS AGREEMENT.

 

(M)          EXCEPT AS SET FORTH ON SCHEDULE 2.15(M), THE SELLER HAS NOT
ASSIGNED OR GRANTED ANY EXCLUSIVE RIGHTS IN ANY TRANSFERRED TECHNOLOGY TO ANY
THIRD PARTY.

 

(N)           NO GOVERNMENT FUNDING, FACILITIES OF A UNIVERSITY, COLLEGE, OTHER
EDUCATIONAL INSTITUTION OR RESEARCH CENTER OR FUNDING FROM THIRD PARTIES WAS
USED IN THE DEVELOPMENT OF ANY TRANSFERRED TECHNOLOGY.  TO THE KNOWLEDGE OF
SELLER, NO CURRENT OR FORMER EMPLOYEE, CONSULTANT OR INDEPENDENT CONTRACTOR OF
THE SELLER, WHO WAS INVOLVED IN, OR WHO CONTRIBUTED TO, THE CREATION OR
DEVELOPMENT OF ANY TRANSFERRED TECHNOLOGY, HAS PERFORMED SERVICES FOR THE
GOVERNMENT, UNIVERSITY, COLLEGE, OR OTHER EDUCATIONAL INSTITUTION OR RESEARCH
CENTER DURING A PERIOD OF TIME DURING WHICH SUCH EMPLOYEE, CONSULTANT OR
INDEPENDENT CONTRACTOR WAS ALSO PERFORMING SERVICES FOR THE SELLER.

 

(O)           SELLER AND PURCHASER ARE PARTIES TO THAT CERTAIN JOINT PRIVILEGE
AGREEMENT DATED AS OF MARCH 5, 2008, PURSUANT TO WHICH SELLER PROVIDED PURCHASER
WITH (I) AN ATTORNEY-CLIENT PRIVILEGED OPINION OF SELLER’S RETAINED COUNSEL,
DATED FEBRUARY 29, 2008, AND (II) AN ATTORNEY-CLIENT PRIVILEGED OPINION OF
SELLER’S RETAINED COUNSEL, DATED MARCH 4, 2008 (COLLECTIVELY, THE “JPA
OPINIONS”).  THE REPRESENTATIONS AND WARRANTIES AS TO CERTAIN FACTUAL MATTERS
MADE BY SELLER TO ITS COUNSEL AS SET FORTH IN THE PRODUCT PACKAGE INSERT
CONTAINED IN THE WRITTEN CERTIFICATE DELIVERED BY SELLER TO SUCH COUNSEL (A COPY
OF WHICH IS ATTACHED AS SCHEDULE 2.15(O) HERETO), IN CONNECTION WITH COUNSEL’S
RENDERING THE JPA OPINIONS WERE TRUE AND CORRECT IN ALL RESPECTS ON THE DATE
MADE.

 

Section 2.16         Insurance.  Schedule 2.16 contains a complete and correct
list as of the date hereof of all insurance policies maintained by or on behalf
of the Seller with respect to the Business and/or the Transferred Assets,
including all legally required workers’ compensation insurance and errors and
omissions, casualty, fire, product liability and general liability

 

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insurance.  True and complete copies of each listed policy have been furnished
to Purchaser.  Such policies are in full force and effect, all premiums due
thereon have been paid and the Seller has complied in all material respects with
the provisions of such policies.  The Seller has not received any notice from
any issuer of such insurance policies canceling or amending any policies listed
on Schedule 2.16.  There is no claim by the Seller pending under any of such
policies as to which coverage has been denied or disputed by the underwriters or
in respect of which the underwriters have reserved their rights.  Neither the
Seller nor any affiliate thereof has ever maintained, established, sponsored,
participated in or contributed to any self-insurance plan with respect to the
Business and/or Transferred Assets.

 

Section 2.17         Fair Consideration; No Fraudulent Conveyance.  Seller is
not now and Seller will not be rendered insolvent by the sale, transfer and
assignment of the Transferred Assets pursuant to the terms of this Agreement or
the transactions contemplated hereby.  Seller has no intention to file for
bankruptcy, and, to Seller’s Knowledge, no insolvency proceedings of any
character including without limitation, bankruptcy, receivership,
reorganization, composition or arrangement with creditors, voluntary or
involuntary, affecting Seller or any of the Transferred Assets or Assumed
Liabilities are pending or threatened.  Seller is not entering into this
Agreement and the transactions contemplated hereby with the intent to defraud,
delay or hinder Seller’s creditors and the consummation of the transactions
contemplated by this Agreement and the transactions contemplated hereby will not
have any such effect.  The transactions contemplated hereby do not constitute a
fraudulent conveyance, or otherwise give rise to any right of any creditor of
Seller whatsoever to any of the Transferred Assets after the Technology Closing.

 

Section 2.18         Authorizations; Regulatory Compliance.

 

Schedule 2.18 sets forth a complete list of all approvals, clearances,
authorizations, licenses or registrations required by any governmental entity
having regulatory authority or jurisdiction over the Business and the Products,
including the United States Food and Drug Administration (“FDA”) and any
regulatory authority in the jurisdiction or country in which the Products are
manufactured, to permit the design, development, pre-clinical and clinical
testing, manufacture, labeling, marketing, promotion, import, export, use and
sale of the Products, whether required of Seller or, to Seller’s Knowledge,
required of any of its suppliers or manufacturers.  Except as set forth on
Schedule 2.18:

 

(A)           THE BUSINESS AND THE PRODUCTS ARE IN COMPLIANCE IN ALL MATERIAL
RESPECTS WITH ALL CURRENT APPLICABLE LAWS, STATUTES, RULES, REGULATIONS,
ORDINANCES, STANDARDS, GUIDELINES OR ORDERS ADMINISTERED, ISSUED OR ENFORCED BY
THE FDA OR ANY OTHER GOVERNMENTAL ENTITY HAVING REGULATORY AUTHORITY OR
JURISDICTION OVER THE BUSINESS AND THE PRODUCTS, INCLUDING, WITHOUT LIMITATION,
THE PHSA AND RELEVANT SECTIONS OF THE FDCA, AND THE UNITED STATES NATIONAL ORGAN
TRANSPLANT ACT, TITLE 21 OF THE CODE OF FEDERAL REGULATIONS PART 1271, HUMAN
CELLS, TISSUES, AND CELLULAR AND TISSUE BASED PRODUCTS..

 

(B)           SELLER AND, TO THE KNOWLEDGE OF SELLER, ITS SUPPLIERS AND
MANUFACTURERS ARE IN COMPLIANCE IN ALL MATERIAL RESPECTS WITH ALL APPLICABLE
LAWS, STATUTES, RULES, REGULATIONS, ORDINANCES, STANDARDS, GUIDELINES OR ORDERS
ADMINISTERED , ISSUED OR ENFORCED BY THE FDA OR ANY OTHER GOVERNMENTAL ENTITY,
INCLUDING THE AMERICAN ASSOCIATION OF TISSUE BANKS, RELATING TO THE

 

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METHODS AND MATERIALS USED IN, AND THE FACILITIES AND CONTROLS USED FOR, THE
DESIGN, MANUFACTURE, PROCESSING, PACKAGING, LABELING, STORAGE AND DISTRIBUTION
OF THE PRODUCTS AND ALL PRODUCTS HAVE BEEN PROCESSED, MANUFACTURED, PACKAGED,
LABELED, STORED, HANDLED AND DISTRIBUTED BY SELLER IN COMPLIANCE WITH THE
QUALITY CONTROL PROCEDURES AND SPECIFICATIONS FURNISHED BY SELLER TO PURCHASER
AND ALL APPLICABLE LAWS, STATUTES, RULES, REGULATIONS, ORDINANCES, STANDARDS,
GUIDELINES OR ORDERS ADMINISTERED, ISSUED OR ENFORCED BY THE FDA OR ANY OTHER
GOVERNMENTAL ENTITY, INCLUDING THE AMERICAN ASSOCIATION OF TISSUE BANKS,
INCLUDING, WITHOUT LIMITATION, CURRENT GOOD TISSUE PRACTICE REGULATIONS
PROMULGATED BY THE FDA AND THE UNITED STATES NATIONAL ORGAN TRANSPLANT ACT,
TITLE 21 OF THE CODE OF FEDERAL REGULATIONS PART 1271, HUMAN CELLS, TISSUES, AND
CELLULAR AND TISSUE BASED PRODUCTS.  FURTHER, NO GOVERNMENTAL ACTION HAS BEEN
TAKEN OR, TO SELLER’S KNOWLEDGE, IS IN THE PROCESS OF BEING TAKEN THAT WILL
SLOW, HALT OR ENJOIN THE MANUFACTURING OF THE PRODUCTS OR THE OPERATION OF THE
BUSINESS OR SUBJECT THE MANUFACTURING OF THE PRODUCTS OR THE BUSINESS TO
REGULATORY ENFORCEMENT ACTION.

 

(C)           SELLER HAS NOT RECEIVED AND, TO SELLER’S KNOWLEDGE, ITS
MANUFACTURERS OR SUPPLIERS HAVE NOT RECEIVED FROM THE FDA OR ANY OTHER
GOVERNMENTAL ENTITY, AND TO SELLER’S KNOWLEDGE, THERE ARE NO FACTS WHICH WOULD
FURNISH ANY REASONABLE BASIS FOR, ANY NOTICE OF ADVERSE FINDINGS, FDA WARNING
LETTERS, REGULATORY LETTERS, NOTICES OF VIOLATIONS, WARNING LETTERS, SECTION 305
CRIMINAL PROCEEDING NOTICES UNDER THE FDCA OR OTHER SIMILAR COMMUNICATION FROM
THE FDA OR OTHER GOVERNMENTAL ENTITY, AND THERE HAVE BEEN NO SEIZURES CONDUCTED
OR, TO SELLER’S KNOWLEDGE, THREATENED BY THE FDA OR OTHER GOVERNMENTAL ENTITY,
AND NO RECALLS, MARKET WITHDRAWALS, FIELD NOTIFICATIONS, NOTIFICATIONS OF
MISBRANDING OR ADULTERATION, OR SAFETY ALERTS CONDUCTED, REQUESTED OR THREATENED
BY THE FDA OR OTHER GOVERNMENTAL ENTITY RELATING TO THE BUSINESS OR TO THE
PRODUCTS.

 

(D)           FOR EACH OF THE PRODUCTS, NO PRE-MARKET NOTIFICATION (“510(K)”)
SUBMISSION IS REQUIRED AND NO 510(K) SUBMISSION HAS BEEN FILED WITH THE FDA OR
ANY OTHER GOVERNMENTAL ENTITY.

 

(E)           TO SELLER’S KNOWLEDGE, THERE ARE NO CURRENTLY EXISTING FACTS WHICH
WILL (I) CAUSE THE WITHDRAWAL OR RECALL, OR REQUIRE SUSPENSION OR ADDITIONAL
APPROVALS OR CLEARANCES, OF ANY PRODUCTS CURRENTLY SOLD BY SELLER, (II) REQUIRE
A CHANGE IN THE MANUFACTURING, MARKETING CLASSIFICATION, LABELING OR INTENDED
USE OF ANY SUCH PRODUCTS, OR (III) REQUIRE THE TERMINATION OR SUSPENSION OF
MARKETING OF ANY SUCH PRODUCTS.

 

(F)            EXCEPT AS SET FORTH ON SCHEDULE 2.18(F), (I) NONE OF THE PRODUCTS
MANUFACTURED, MARKETED OR SOLD BY SELLER HAS BEEN RECALLED OR SUBJECT TO A FIELD
SAFETY NOTIFICATION (WHETHER VOLUNTARILY OR OTHERWISE); (II) TO SELLER’S
KNOWLEDGE NONE OF THE PRODUCTS MANUFACTURED, MARKETED OR SOLD BY SELLER’S
MANUFACTURERS AND SUPPLIERS HAS BEEN RECALLED OR SUBJECT TO A FIELD SAFETY
NOTIFICATION (WHETHER VOLUNTARY OR OTHERWISE); AND (III) SELLER HAS NOT RECEIVED
WRITTEN NOTICE (WHETHER COMPLETED OR PENDING) OF ANY PROCEEDING SEEKING RECALL,
SUSPENSION OR SEIZURE OF ANY PRODUCTS SOLD OR PROPOSED TO BE SOLD BY SELLER.

 

(G)           SELLER HAS SUBMITTED TO THE FDA ALL BIOLOGICAL PRODUCT DEVIATION
REPORTS RELATING TO PERFORMANCE ISSUES THAT COULD LEAD TO SERIOUS INJURY OR
DEATH THAT SELLER HAS BEEN REQUIRED TO SUBMIT UNDER APPLICABLE FEDERAL STATUTES,
RULES, REGULATIONS, STANDARDS, GUIDES OR ORDERS ADMINISTERED OR PROMULGATED BY
THE FDA RELATED TO THE PRODUCTS.  TO SELLER’S KNOWLEDGE, EXCEPT

 

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AS SET FORTH ON SCHEDULE 2.18(G), NO CIRCUMSTANCES HAVE ARISEN THAT WOULD
REQUIRE SELLER TO SUBMIT A BIOLOGICAL PRODUCT DEVIATION REPORT TO THE FDA.

 

Section 2.19         Products; Product Liability.

 

(A)           EACH OF THE PRODUCTS (INCLUDING ALL FINISHED INVENTORY): (I) IS,
AND AT ALL TIMES UP TO AND INCLUDING THE SALE THEREOF HAS BEEN PROCESSED,
MANUFACTURED, PACKAGED, LABELED, STORED, HANDLED, DISTRIBUTED, SHIPPED, MARKETED
AND PROMOTED, AND IN ALL OTHER RESPECTS HAS BEEN, IN COMPLIANCE WITH ALL
APPLICABLE LAWS, STATUTES, RULES, REGULATIONS, ORDINANCES OR ORDERS
ADMINISTERED, ISSUED OR ENFORCED BY THE FDA OR ANY OTHER GOVERNMENTAL ENTITY,
INCLUDING, WITHOUT LIMITATION, CURRENT GOOD TISSUE PRACTICE REGULATIONS
PROMULGATED BY THE FDA, THE PHSA AND RELEVANT SECTIONS OF THE FDCA, AND  THE
UNITED STATES NATIONAL ORGAN TRANSPLANT ACT, TITLE 21 OF THE CODE OF FEDERAL
REGULATIONS PART 1271, HUMAN CELLS, TISSUES, AND CELLULAR AND TISSUE BASED
PRODUCTS AND (B) IS, AND AT ALL RELEVANT TIMES HAS CONFORMED IN ALL MATERIAL
RESPECTS TO ALL SPECIFICATIONS AND ANY PROMISES, WARRANTIES OR AFFIRMATIONS OF
FACT MADE IN ALL REGULATORY FILINGS OR SET FORTH IN ANY REGULATORY APPROVALS,
AUTHORIZATIONS OR CLEARANCES PERTAINING THERETO OR MADE ON THE CONTAINER OR
LABEL FOR SUCH PRODUCT OR IN CONNECTION WITH ITS SALE.  THERE IS NO DESIGN OR
MANUFACTURING DEFECT WITH RESPECT TO THE PRODUCTS.

 

(B)           SCHEDULE 2.19(B) SETS FORTH THE FORMS OF SELLER’S SERVICE OR
PRODUCT WARRANTIES THAT ARE CURRENTLY APPLICABLE TO SERVICES OR MERCHANDISE
RELATED TO THE BUSINESS (INCLUDING, WITHOUT LIMITATION, THE PRODUCTS).  EXCEPT
AS SET FORTH ON SCHEDULE 2.19(B), THERE ARE NO EXISTING OR, TO SELLER’S
KNOWLEDGE, THREATENED, CLAIMS AGAINST SELLER FOR SERVICES OR MERCHANDISE RELATED
TO THE BUSINESS WHICH ARE DEFECTIVE OR FAIL TO MEET ANY SERVICE OR PRODUCT
WARRANTIES OTHER THAN IN THE ORDINARY COURSE OF BUSINESS CONSISTENT WITH PAST
EXPERIENCE.  SELLER HAS NOT INCURRED LIABILITY ARISING OUT OF ANY INJURY TO
INDIVIDUALS AS A RESULT OF THE OWNERSHIP, POSSESSION, OR USE OF ANY PRODUCT AND,
TO SELLER’S KNOWLEDGE, THERE HAS BEEN NO INQUIRY OR INVESTIGATION MADE IN
RESPECT THEREOF BY ANY GOVERNMENTAL ENTITY.

 

Section 2.20         Environmental.

 

(A)           EXCEPT AS WOULD NOT BE REASONABLY LIKELY TO RESULT IN A MATERIAL
LIABILITY OF SELLER WITH RESPECT TO THE BUSINESS, (I) SELLER IS NOW AND ALWAYS
HAS BEEN IN COMPLIANCE WITH APPLICABLE LEGAL REQUIREMENTS WITH RESPECT TO
ENVIRONMENTAL LAWS, RULES, REGULATIONS AND ORDINANCES, AND (II) TO THE SELLER’S
KNOWLEDGE, NO UNDERGROUND STORAGE TANKS AND NO AMOUNT OF ANY SUBSTANCE THAT HAS
BEEN DESIGNATED BY ANY GOVERNMENTAL ENTITY OR BY ANY LEGAL REQUIREMENTS TO BE
RADIOACTIVE, TOXIC, HAZARDOUS OR OTHERWISE A DANGER TO HEALTH OR THE
ENVIRONMENT, INCLUDING PCBS, ASBESTOS, PETROLEUM, TOXIC MOLD, UREA-FORMALDEHYDE
AND ALL SUBSTANCES LISTED AS HAZARDOUS SUBSTANCES PURSUANT TO THE COMPREHENSIVE
ENVIRONMENTAL RESPONSE, COMPENSATION, AND LIABILITY ACT OF 1980, AS AMENDED, OR
DEFINED AS A HAZARDOUS WASTE PURSUANT TO THE UNITED STATES RESOURCE CONSERVATION
AND RECOVERY ACT OF 1976, AS AMENDED, AND THE REGULATIONS PROMULGATED PURSUANT
TO SAID LAWS, BUT EXCLUDING OFFICE AND JANITORIAL SUPPLIES (A “HAZARDOUS
MATERIAL”), ARE PRESENT IN, ON OR UNDER ANY PROPERTY OF SELLER USED IN THE
BUSINESS, INCLUDING THE LAND AND THE IMPROVEMENTS, GROUND WATER AND SURFACE
WATER THEREOF.

 

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(B)           EXCEPT AS WOULD NOT BE REASONABLY LIKELY TO RESULT IN A MATERIAL
LIABILITY TO SELLER WITH RESPECT TO THE BUSINESS, SELLER HAS NOT TRANSPORTED,
STORED, USED, MANUFACTURED, DISPOSED OF, RELEASED, REMOVED OR EXPOSED ITS
EMPLOYEES OR OTHERS TO HAZARDOUS MATERIALS IN VIOLATION OF ANY LEGAL REQUIREMENT
OR MANUFACTURED ANY PRODUCT CONTAINING A HAZARDOUS MATERIAL IN VIOLATION OF ANY
LEGAL REQUIREMENT, NOR HAS SELLER RECEIVED NOTIFICATION FROM ANY PARTY THAT IT
HAS OR IS ALLEGED TO HAVE ANY REMEDIATION OBLIGATION RELATING TO ANY HAZARDOUS
MATERIAL.

 

Section 2.21         Real Property; Leases.  Except as set forth on Schedule
2.21, Seller does not own, lease or sublease any real property used in or
necessary for the operation of the Business.

 

Section 2.22         Brokers.  Except as set forth on Schedule 2.22, no broker
or other representative has acted on behalf of Seller in connection with the
transaction contemplated hereby in such manner as to give rise to any  claim by
any person against Purchaser or Seller for a finder’s fee, brokerage commission
or similar payment.

 

Section 2.23         Capital Expenditures.   Set forth on Schedule 2.23 is a
list of Seller’s approved capital expenditure projects related to the Business
and involving in excess of $25,000 including:  (i) projects which have been
commenced but are not yet completed; (ii) projects which have not been
commenced; and (iii) projects which have been completed in respect of which
payment has been made, within the last twelve (12) months.

 

Section 2.24         No Changes. Except as set forth on Schedule 2.24, since
December 31, 2007 there has not been, occurred or arisen any of the following:

 

(A)           ANY AMENDMENT TO THE SELLER ORGANIZATIONAL DOCUMENTS;

 

(B)           ANY INCURRENCE OR ASSUMPTION BY THE BUSINESS OF ANY INDEBTEDNESS
IN EXCESS OF $5,000 INDIVIDUALLY OR $25,000 IN THE AGGREGATE;

 

(C)           THE IMPOSITION OF ANY LIEN (OTHER THAN PERMITTED LIENS) UPON ANY
OF THE TRANSFERRED ASSETS;

 

(D)           ANY MATERIAL DAMAGE, DESTRUCTION OR LOSS WITH RESPECT TO THE
TRANSFERRED ASSETS OR ANY OTHER REAL OR TANGIBLE PERSONAL PROPERTY USED IN THE
BUSINESS, WHETHER OR NOT COVERED BY INSURANCE;

 

(E)           ANY PAYMENT, LOAN OR ADVANCE OF ANY AMOUNT TO, OR SALE, TRANSFER
OR LEASE OF ANY OF THE TRANSFERRED ASSETS TO, OR ANY AGREEMENT OR ARRANGEMENT
RELATING TO THE BUSINESS OR CONSTITUTING A TRANSFERRED ASSET WITH, ANY MEMBER OR
EQUITY HOLDER OF SELLER OR ANY OF THEIR RESPECTIVE AFFILIATES;

 

(F)            ANY CHANGE IN THE TAX OR ACCOUNTING PRINCIPLES, METHODS,
PRACTICES OR PROCEDURES FOLLOWED BY SELLER OR ANY CHANGE IN THE DEPRECIATION OR
AMORTIZATION POLICIES OR RATES THERETOFORE ADOPTED BY SELLER, EXCEPT AS REQUIRED
BY GAAP OR DISCLOSED TO PURCHASER IN WRITING;

 

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(G)           ANY CHANGE OR REVOCATION BY SELLER OF ANY TAX ELECTION WITH
RESPECT TO THE BUSINESS OR ANY AGREEMENT OR SETTLEMENT WITH ANY GOVERNMENTAL
ENTITY WITH RESPECT TO SUCH TAXES;

 

(H)           ANY ACQUISITION BY SELLER BY MERGING OR CONSOLIDATING WITH, OR BY
PURCHASING A SUBSTANTIAL PORTION OF THE ASSETS OF, OR BY ANY OTHER MANNER, ANY
BUSINESS OR CORPORATION, PARTNERSHIP, ASSOCIATION OR OTHER BUSINESS ORGANIZATION
OR DIVISION THEREOF COMPRISING ALL OR A PORTION OF THE BUSINESS OR THE
TRANSFERRED ASSETS;

 

(I)            ANY SALE, LEASE OR OTHER TRANSFER OR DISPOSITION BY SELLER OF ITS
ASSETS RELATED TO THE BUSINESS, TANGIBLE OR INTANGIBLE, OTHER THAN THE SALE OF
PRODUCT IN THE ORDINARY COURSE OF THE BUSINESS;

 

(J)            ANY CONTRACT (OR SERIES OF RELATED CONTRACTS) RELATED TO THE
BUSINESS AND ENTERED INTO BY SELLER EITHER INVOLVING MORE THAN $25,000
INDIVIDUALLY (OR $50,000 IN THE AGGREGATE) OR OUTSIDE THE ORDINARY COURSE OF
BUSINESS;

 

(K)           ANY ACCELERATION, TERMINATION, MODIFICATION OR CANCELLATION OF ANY
ASSUMED CONTRACT INVOLVING MORE THAN $25,000 INDIVIDUALLY (OR $50,000 IN THE
AGGREGATE);

 

(L)            ANY CAPITAL EXPENDITURE (OR SERIES OF RELATED CAPITAL
EXPENDITURES) RELATED TO THE BUSINESS BY SELLER EITHER INVOLVING MORE THAN
$25,000 INDIVIDUALLY (OR $50,000 IN THE AGGREGATE) OR OUTSIDE THE ORDINARY
COURSE OF BUSINESS;

 

(M)          ANY CAPITAL INVESTMENT IN, ANY LOAN TO OR ANY ACQUISITION OF THE
SECURITIES OR ASSETS OF, ANY OTHER PERSON BY SELLER WITH RESPECT TO OR IN
CONNECTION WITH THE BUSINESS;

 

(N)           ANY DELAY OR POSTPONEMENT OF PAYMENT OF ACCOUNTS PAYABLE OR OTHER
LIABILITIES OF SELLER WITH RESPECT TO OR IN CONNECTION WITH THE BUSINESS OUTSIDE
THE ORDINARY COURSE OF BUSINESS CONSISTENT WITH PAST PRACTICE;

 

(O)           ANY CANCELLATION, COMPROMISE, WAIVER OR RELEASE OF ANY RIGHT OR
CLAIM OF SELLER WITH RESPECT TO OR IN CONNECTION WITH THE BUSINESS OUTSIDE THE
ORDINARY COURSE OF BUSINESS CONSISTENT WITH PAST PRACTICE;

 

(P)           THE COMMENCEMENT OR WRITTEN NOTICE TO SELLER OR, TO SELLER’S
KNOWLEDGE, ORAL NOTICE OR THREAT OF COMMENCEMENT OF ANY LAWSUIT OR PROCEEDING
AGAINST THE TRANSFERRED ASSETS OR AGAINST SELLER WITH RESPECT TO THE TRANSFERRED
ASSETS, THE PRODUCT OR THE BUSINESS;

 

(Q)           ANY LICENSE OR SUBLICENSE OF ANY RIGHTS OF SELLER UNDER OR WITH
RESPECT TO THE TRANSFERRED TECHNOLOGY;

 

(R)            ANY WRITTEN NOTICE OR CLAIM TO SELLER OR, TO SELLER’S KNOWLEDGE,
ORAL NOTICE OR CLAIM OF OWNERSHIP BY ANY PERSON OF BUSINESS INTELLECTUAL
PROPERTY OR OF INFRINGEMENT BY THE BUSINESS OF ANY PERSON’S INTELLECTUAL
PROPERTY RIGHTS;

 

(S)           ANY MATERIAL CHANGE IN PRICING CHARGED BY SELLER FOR PRODUCTS; OR

 

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(T)            ANY NEGOTIATION OR AGREEMENT BY SELLER OR ANY OFFICER OR EMPLOYEE
THEREOF TO DO ANY OF THE THINGS DESCRIBED IN THE PRECEDING CLAUSES (A) THROUGH
(S) (OTHER THAN NEGOTIATIONS WITH PURCHASER AND ITS REPRESENTATIVES REGARDING
THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT).

 

SINCE DECEMBER 31, 2007, NO BUSINESS MATERIAL ADVERSE EFFECT HAS OCCURRED, AND
NO EVENT, CIRCUMSTANCE, CONDITION OR EFFECT HAS OCCURRED THAT COULD REASONABLY
BE EXPECTED TO RESULT IN A BUSINESS MATERIAL ADVERSE EFFECT.

 

Section 2.25         Obsolete Items.  Schedule 2.25 sets forth, as of the date
hereof, a complete and accurate list of any category of products, supplies or
parts used in the Business that has an aggregate inventory value in excess of
$10,000 that has been identified through reasonable business practices to be
obsolete, damaged or defective.

 

Section 2.26         Customers and Suppliers.  Schedule 2.26 identifies the
Business’ ten (10) largest customers and suppliers (measured by dollar volume in
each case) during the calendar year 2007 and during the first three months of
2008, showing with respect to each, the name and address, dollar volume and
nature of the relationship (including the principal categories of Product bought
or sold).  Seller is not required to provide any bonding or other financial
security arrangements in connection with any of the transactions with its
customers or supplies.  Seller has not received any direct communication
(whether written or oral) of any intention of any customer or supplier
identified on Schedule 2.26 to discontinue its relationship as a customer or
supplier of, or materially reduce its purchases from or sales to Seller (or,
post-Technology Closing, from Purchaser).

 

Section 2.27         Disclosure. No statement (including without limitations,
the representations and warranties and covenants contained in this Agreement) by
Seller contained in this Agreement and none of the information contained in the
schedules hereto, in any other Transaction Document and any document, written
statement or certificate furnished to Purchaser and its representatives to
Seller contains or will contain any untrue statement of a material fact or omits
or will omit to state a material fact necessary to make the statements herein or
therein, in light of the circumstances in which they were made, not misleading. 
To the Seller’s Knowledge, there exists no fact that adversely affects the value
of the Transferred Assets or the Business, prospects, financial condition or
operations of the Business which has not been set forth in this Agreement or the
schedules hereto.  Seller has afforded to the officers, employees and authorized
representatives of Purchaser (including, without limitation, independent public
accountants and attorneys) access to all financial and other books and records
(including computer files, retrieval programs and similar documentation) of
Seller with respect to the Business.

 

ARTICLE III.

REPRESENTATIONS AND WARRANTIES OF PURCHASER

 

Purchaser hereby represents and warrants to Seller as of the date hereof as
follows:

 

Section 3.1            Organization and Authority.  Purchaser is duly formed,
validity existing and in good standing under the laws of the State of Delaware
and is duly qualified as a foreign corporation to transact business and is in
good standing in each jurisdiction in which such qualification is required,
except when failure to be so qualified would not materially and

 

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adversely affect Purchaser’s business.  Purchaser has full corporate power and
authority to execute and deliver this Agreement and the Transaction Documents to
which it is party, to perform its obligations hereunder and under the
Transaction Documents, to consummate the transactions contemplated hereby and
thereby and to own and carry on the operation of its business as currently
operated by it.

 

SECTION 3.2            ORGANIZATIONAL AND GOVERNING DOCUMENTS; APPROVAL.

 

                (A)           PRIOR TO THE DATE HEREOF, PURCHASER HAS FURNISHED
TO SELLER COMPLETE AND CORRECT COPIES OF THE CERTIFICATE OF INCORPORATION AND
BYLAWS OF PURCHASER (THE “PURCHASER ORGANIZATIONAL DOCUMENTS”).  THE PURCHASER
ORGANIZATIONAL DOCUMENTS ARE IN FULL FORCE AND EFFECT AND PURCHASER IS NOT IN
VIOLATION OF ANY PROVISION OF THE PURCHASER ORGANIZATIONAL DOCUMENTS.

 

(B)           THIS AGREEMENT AND THE TRANSACTION DOCUMENTS TO WHICH PURCHASER IS
A PARTY HAVE BEEN APPROVED BY ALL NECESSARY CORPORATE ACTION OF PURCHASER.

 

Section 3.3            Due Execution and Delivery.  Purchaser has all necessary
corporate power and authority to execute and deliver this Agreement and the
other Transaction Documents to which it is a party and each instrument required
hereby and thereby to be executed and delivered by it, and to carry out its
obligations hereunder and thereunder.  Purchaser has duly executed and delivered
this Agreement and, assuming the due authorization, execution and deliver of
this Agreement by Seller, this Agreement constitutes (and, when executed and
delivered, the Transaction Documents to which it is a party will constitute) the
legal, valid and binding obligations of Purchaser enforceable against it in
accordance with its terms, except that such enforcement (a) may be limited by
bankruptcy, insolvency, moratorium or similar laws affecting creditors’ rights
generally, and (b) is subject to the availability of equitable remedies, as
determined in the discretion of the court before which such a proceeding may be
brought.

 

Section 3.4            Consents; No Conflicts.  No consent, authorization,
permit, waiver or approval of or from or notice to any person or any
governmental authority is required as a condition to the execution and delivery
of this Agreement by Purchaser or any of the Transaction Documents to which it
is a party and the consummation of the transactions contemplated by this
Agreement and such Transaction Documents by Purchaser.  The execution and
delivery of this Agreement and the other Transaction Documents and each
instrument required hereby to be executed and delivered by Purchaser and the
consummation of the transactions contemplated hereby and thereby by Purchaser
will not contravene any applicable law or the Purchaser Organizational
Documents.

 

Section 3.5            Brokers.  No broker or other representative has acted on
behalf of Purchaser in connection with the transaction contemplated hereby in
such manner as to give rise to any valid claim by any person against Seller for
a finder’s fee, brokerage commission or similar payment.

 

ARTICLE IV.

CERTAIN COVENANTS AND AGREEMENTS

 

Section 4.1            Further Assurances.  Each of Seller and Purchaser
covenants and agrees with the other that at any time and from time to time
hereafter, and without further consideration,

 

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each will promptly execute and deliver to the other such further assurances,
instruments and documents and take such further action as the other may
reasonably request in order to carry out the full intent and purpose of this
Agreement and to consummate the transactions contemplated hereby.  Without
limiting the foregoing, Seller covenants and agrees with Purchaser that at any
time and from time to time following the Technology Closing Date, if Seller
shall be in breach of its representations and warranties set forth in
Section 2.4 (Title and Sufficiency of Transferred Assets), Seller will, without
further consideration, promptly execute and deliver to Purchaser such further
assurances, instruments and documents and take such further action as Purchaser
may reasonably request in order to remedy the breach of such representations and
warranties.

 

Section 4.2            Conduct of Activities Associated with the Transferred
Assets. During the period from the date of this Agreement to (i) the Technology
Closing with respect to the Technology Assets and (ii) the Manufacturing Closing
with respect to the Manufacturing Assets, Seller will conduct its activities
associated with the Transferred Assets in their ordinary and usual course,
consistent with past practice, and will use commercially reasonable efforts to
(i) preserve intact all rights, privileges, franchises and other authority
related to the activities associated with the Transferred Assets and
(ii) maintain in their current or currently planned condition (as such currently
planned condition has been expressly communicated to Purchaser including but not
limited to those matters set forth in the schedules hereto) its current
relationships with licensors, licensees, suppliers, contractors, distributors,
customers, and others having relationships related to the activities associated
with the Business and the Transferred Assets.  Without limiting the generality
of the foregoing, and except as (i) expressly contemplated by this Agreement,
(ii) set forth on Schedule 4.2 or (iii) approved in writing by Purchaser in
advance, prior to the Technology Closing with respect to all Transferred Assets
and the Manufacturing Closing with respect to the Manufacturing Assets, Seller
will not:

 

(A)           CREATE, INCUR OR ASSUME ANY OBLIGATION WHICH WOULD MATERIALLY AND
ADVERSELY AFFECT THE TRANSFERRED ASSETS OR PURCHASER’S ABILITY TO CONDUCT
BUSINESS IN SUBSTANTIALLY THE SAME MANNER AND CONDITION AS CONDUCTED BY SELLER
ON THE DATE OF THIS AGREEMENT;

 

(B)           ENTER INTO ANY CONTRACT THAT, IF ENTERED INTO PRIOR TO THE DATE
HEREOF WOULD BE REQUIRED TO BE SET FORTH ON SCHEDULE 1.1(A)(X) OR VIOLATE,
TERMINATE, AMEND OR OTHERWISE MODIFY OR WAIVE ANY OF THE TERMS OF ANY ASSUMED
CONTRACT;

 

(C)           SELL, LEASE, LICENSE, TRANSFER OR DISPOSE OF ANY OF THE
TRANSFERRED ASSETS (EXCEPT FOR SALES OF PRODUCT IN THE ORDINARY COURSE OF
BUSINESS CONSISTENT WITH ITS PAST PRACTICES);

 

(D)           CHANGE ANY OF ITS ACCOUNTING METHODS WITH RESPECT TO THE BUSINESS
OR THE TRANSFERRED ASSETS;

 

(E)           TERMINATE, WAIVE OR RELEASE ANY MATERIAL RIGHT OR MATERIAL CLAIM
WITH RESPECT TO THE BUSINESS OR ANY OF THE TRANSFERRED ASSETS;

 

(F)            LICENSE ANY OF THE TRANSFERRED TECHNOLOGY (EXCEPT FOR LICENSES
UNDER ITS STANDARD CUSTOMER AGREEMENT MADE IN THE ORDINARY COURSE OF BUSINESS
CONSISTENT WITH ITS PAST PRACTICES);

 

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(G)           (I) INITIATE ANY LITIGATION, ACTION, SUIT, PROCEEDING, CLAIM OR
ARBITRATION OR (II) SETTLE OR AGREE TO SETTLE ANY LITIGATION, ACTION, SUIT,
PROCEEDING, CLAIM OR ARBITRATION, IN EACH CASE WITH RESPECT TO THE BUSINESS OR
THE TRANSFERRED ASSETS;

 

(H)           CHANGE THE MANNER IN WHICH IT EXTENDS WARRANTIES, DISCOUNTS OR
CREDITS TO CUSTOMERS WITH RESPECT TO THE PRODUCTS;

 

(I)            MODIFY, ALLOW TO LAPSE OR OTHERWISE FAIL TO MAINTAIN INSURANCE
COVERAGE WITH RESPECT TO THE TRANSFERRED ASSETS AT LEVELS CONSISTENT WITH THE
AMOUNTS OF SUCH COVERAGE IN EFFECT AS OF THE DATE HEREOF;

 

(J)            SELL, DISPOSE OF OR ENCUMBER ANY OF THE TRANSFERRED ASSETS OR
LICENSE ANY TRANSFERRED ASSETS TO ANY PERSON;

 

(K)           ENTER INTO ANY AGREEMENTS OR COMMITMENTS RELATING TO THE
ACTIVITIES ASSOCIATED WITH THE TRANSFERRED ASSETS;

 

(L)            FAIL TO COMPLY IN ALL MATERIAL RESPECTS WITH ALL LAWS AND
REGULATIONS APPLICABLE TO THE ACTIVITIES ASSOCIATED WITH THE TRANSFERRED ASSETS;

 

(M)          CHANGE OR ANNOUNCE ANY CHANGE TO THE BUSINESS OR THE TRANSFERRED
ASSETS; OR

 

(N)           (I) AGREE TO DO ANY OF THE THINGS DESCRIBED IN THE PRECEDING
CLAUSES (A)-(M) OR (II) TAKE OR AGREE TO TAKE ANY ACTION WHICH WOULD REASONABLY
BE EXPECTED TO PREVENT SELLER FROM PERFORMING OR CAUSE SELLER NOT TO PERFORM ONE
OR MORE COVENANTS REQUIRED HEREUNDER OR UNDER ANY OTHER TRANSACTION DOCUMENT TO
BE PERFORMED BY SELLER.

 

Section 4.3            Financial Statements.

 

(A)           PRIOR TO THE TECHNOLOGY CLOSING, SELLER SHALL DELIVER TO PURCHASER
HISTORICAL FINANCIAL STATEMENTS FOR THE BUSINESS FOR THE FISCAL YEAR 2007 AND,
FOR EACH COMPLETED MONTH PERIOD OF 2008 AND FOR THE PERIOD BETWEEN THE LAST
COMPLETED MONTH AND THE TECHNOLOGY CLOSING DATE, IN EACH CASE IN A FORM THAT
COMPLIES WITH WHAT IS REQUIRED BY ITEM 9.01 OF FORM 8-K AND REGULATION S-X OF
THE FEDERAL SECURITIES LAWS FOR A BUSINESS ACQUISITION REQUIRED TO BE DESCRIBED
IN ANSWER TO ITEM 2.01 OF FORM 8-K, INCLUDING INFORMATION REQUIRED IN ORDER FOR
PURCHASER TO PREPARE THE PRO FORMA FINANCIAL INFORMATION REQUIRED BY ITEM 9.01
OF FORM 8-K.  THE HISTORICAL FINANCIAL STATEMENTS FOR THE BUSINESS FOR THE
FISCAL YEAR 2007 SHALL BE ACCOMPANIED BY AN UNQUALIFIED REPORT FROM SELLER’S
INDEPENDENT REGISTERED ACCOUNTING FIRM (WITH NOTES THERETO) STATING TO THE
EFFECT THAT SUCH FINANCIAL STATEMENTS PRESENT FAIRLY, IN ALL MATERIAL RESPECTS,
THE FINANCIAL POSITION OF THE BUSINESS, AS WELL AS THE RESULTS OF OPERATIONS AND
CASH FLOWS OF THE BUSINESS, FOR EACH OF THE PERIODS COVERED BY SUCH FINANCIAL
STATEMENTS, IN CONFORMITY WITH GAAP.

 

(B)           NOT LATER THAN THIRTY (30) DAYS AFTER THE COMPLETION OF EACH
FISCAL QUARTER OF SELLER THAT OCCURS DURING THE PERIOD FROM THE DATE OF THIS
AGREEMENT THROUGH AND UP TO THE TECHNOLOGY CLOSING DATE, SELLER SHALL DELIVER TO
PURCHASER QUARTERLY FINANCIAL STATEMENTS FOR THE BUSINESS (TOGETHER WITH ANY
REQUIRED NOTES) IN A FORM THAT SELLER PREPARES FOR INTERNAL FINANCIAL REPORTING;
PROVIDED, HOWEVER, THAT SELLER SHALL PROVIDE PURCHASER WITH SUCH ADDITIONAL
INFORMATION AS

 

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PURCHASER MAY REASONABLY REQUEST IN ORDER TO COMPLY WITH THE REQUIREMENTS FOR
FINANCIAL STATEMENTS INCLUDED IN QUARTERLY REPORTS ON FORM 10-Q FILED UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

(C)           ON OR PRIOR TO THE TECHNOLOGY CLOSING DATE, SELLER SHALL DELIVER
TO PURCHASER THE AUDITED BALANCE SHEETS AND STATEMENTS OF INCOME, CHANGES IN
STOCKHOLDERS’ EQUITY AND CASH FLOWS OF THE BUSINESS AS OF THE END OF AND FOR
EACH OF THE FISCAL YEARS ENDED DECEMBER 31, 2006 AND DECEMBER 31, 2007 OR SUCH
OTHER PERIODS AS SHALL BE REQUIRED TO BE REPORTED BY PURCHASER BY ITEM 9.01 OF
FORM 8-K AND REGULATION S-X OF THE FEDERAL SECURITIES LAWS FOR A BUSINESS
ACQUISITION REQUIRED TO BE DESCRIBED IN ANSWER TO ITEM 2.01 OF FORM 8-K (THE
“AUDITED FINANCIAL STATEMENTS”).  THE AUDITED FINANCIAL STATEMENTS SHALL BE
ACCOMPANIED BY AN UNQUALIFIED REPORT FROM SELLER’S INDEPENDENT REGISTERED
ACCOUNTING FIRM STATING TO THE EFFECT THAT THE AUDITED FINANCIAL STATEMENTS
PRESENT FAIRLY, IN ALL MATERIAL RESPECTS, THE FINANCIAL POSITION OF THE
BUSINESS, AS WELL AS THE RESULTS OF OPERATIONS AND CASH FLOWS OF THE BUSINESS,
FOR EACH OF THE PERIODS COVERED BY THE AUDITED FINANCIAL STATEMENTS, IN
CONFORMITY WITH GAAP.

 

(D)           AFTER THE TECHNOLOGY CLOSING, AT THE REASONABLE REQUEST OF
PURCHASER, SELLER SHALL, AND SHALL CAUSE ITS AFFILIATES TO, COOPERATE FULLY IN
THE PREPARATION OF ALL FINANCIAL STATEMENTS REASONABLY DETERMINED BY PURCHASER
TO BE NECESSARY TO MEET ITS FINANCIAL REPORTING AND TAX OBLIGATIONS IN
CONNECTION WITH THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY. 
SELLER SHALL PROVIDE PURCHASER WITH ANY RECORDS AND OTHER INFORMATION IN
SELLER’S POSSESSION OR CONTROL AS SHALL BE REASONABLY REQUESTED BY PURCHASER IN
CONNECTION THEREWITH AND SHALL USE COMMERCIALLY REASONABLE EFFORTS TO CAUSE TO
BE PROVIDED TO PURCHASER ANY RECORDS AND OTHER INFORMATION THAT IS NOT IN THE
POSSESSION OR CONTROL OF SELLER AS SHALL BE REASONABLY REQUESTED BY PURCHASER IN
CONNECTION THEREWITH AND SHALL USE COMMERCIALLY REASONABLE EFFORTS TO PROVIDE
PURCHASER WITH ACCESS TO SELLER’S ACCOUNTANTS.

 

Section 4.4            Post-Technology Closing Receipts.  Seller shall hold in
trust for, and promptly remit to Purchaser without deduction, any amounts
collected or received by Seller that relate to the Business or Purchaser
following the Technology Closing.  Purchaser shall hold in trust for, and
promptly remit to Seller without deduction, any amounts collected or received by
Purchaser that either constitute accounts receivable related to Product sold by
Seller prior to the Technology Closing Date or that do not relate to the
Transferred Assets.

 

SECTION 4.5            CONFIDENTIALITY.  SELLER WILL MAINTAIN CONFIDENTIAL ALL
INFORMATION RELATED TO THE BUSINESS, THE PRODUCT AND THE TRANSFERRED ASSETS
INCLUDING, WITHOUT LIMITATION, BUSINESS PLANS AND PROPOSALS, MARKETING
STRATEGIES, STANDARD OPERATING PROCEDURES, PERSONNEL DATA, PRICING, INTELLECTUAL
PROPERTY AND ALL OTHER INFORMATION THAT WOULD BE CONSIDERED CONFIDENTIAL AND
PROPRIETARY (“CONFIDENTIAL INFORMATION”).

 

(B)           FOR A PERIOD OF FIVE (5) YEARS FROM THE TECHNOLOGY CLOSING DATE,
SELLER WILL TREAT ALL CONFIDENTIAL INFORMATION WITH THE SAME DEGREE OF CARE THAT
IT EMPLOYS WITH RESPECT TO ITS OWN CONFIDENTIAL INFORMATION WHICH IT DOES NOT
DESIRE TO HAVE PUBLISHED OR DISSEMINATED.  IN NO EVENT WILL THAT DEGREE OF CARE
BE LESS THAN THAT EMPLOYED BY A REASONABLE PERSON.  NOTWITHSTANDING THE
FOREGOING, SELLER SHALL HAVE NO SUCH OBLIGATION WITH RESPECT TO THAT PORTION OF
THE CONFIDENTIAL INFORMATION THAT SELLER CAN DEMONSTRATE IS (I) IN THE PUBLIC
DOMAIN OR ENTERS THE PUBLIC DOMAIN WITHOUT THE WRONGFUL ACT OR BREACH OF THIS
AGREEMENT BY SELLER, (II) APPROVED IN ADVANCE IN

 

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WRITING BY PURCHASER FOR RELEASE BY SELLER OR (III) DISCLOSED BY ORDER OF A
COURT OF COMPETENT JURISDICTION, PROVIDED THAT SUCH DISCLOSURE IS SUBJECT TO ALL
APPLICABLE GOVERNMENTAL OR JUDICIAL PROTECTION FOR LIKE MATERIAL AND REASONABLE
ADVANCE NOTICE IS GIVE BY SELLER TO PURCHASER.

 

The fact that Confidential Information may be in or becomes part of the public
domain, in and of itself, does not exclude any specific information from
obligations of this Agreement.

 

Section 4.6            No Other Bids.

 

(A)           UNTIL THE EARLIER TO OCCUR OF (A) THE MANUFACTURING CLOSING OR
(B) THE EARLIER TERMINATION OF THIS AGREEMENT PURSUANT TO ITS TERMS, NEITHER
SELLER NOR ANY OF SELLER’S OFFICERS, MANAGERS, EMPLOYEES, AGENTS OR OTHER
REPRESENTATIVES SHALL, DIRECTLY OR INDIRECTLY, (I) INITIATE, SOLICIT, ENTERTAIN
OR ENCOURAGE (INCLUDING BY WAY OF FURNISHING INFORMATION REGARDING THE
TRANSFERRED ASSETS) ANY ASSET ACQUISITION PROPOSAL, OR MAKE ANY STATEMENTS TO
THIRD PARTIES WHICH MAY REASONABLY BE EXPECTED TO LEAD TO ANY ASSET ACQUISITION
PROPOSAL OR (II) NEGOTIATE, ENGAGE IN ANY SUBSTANTIVE DISCUSSIONS, OR ENTER INTO
ANY AGREEMENT, WITH ANY PERSON CONCERNING ANY ASSET ACQUISITION PROPOSAL. 
NOTWITHSTANDING THE FOREGOING, IF AT ANY TIME PRIOR TO OBTAINING THE STOCKHOLDER
APPROVAL (I) SELLER RECEIVES AN UNSOLICITED BONA FIDE WRITTEN ASSET ACQUISITION
PROPOSAL THAT DID NOT RESULT FROM ANY BREACH OF THIS SECTION 4.6, (II) THE BOARD
OF DIRECTORS OF SELLER SHALL HAVE FIRST DETERMINED IN GOOD FAITH THAT SUCH ASSET
ACQUISITION PROPOSAL CONSTITUTES A SUPERIOR PROPOSAL, (III) THE BOARD OF
DIRECTORS OF SELLER SHALL HAVE FIRST DETERMINED IN GOOD FAITH, AFTER
CONSULTATION WITH OUTSIDE COUNSEL, THAT FAILURE TO TAKE SUCH ACTION WOULD RESULT
IN A BREACH OF ITS FIDUCIARY DUTIES UNDER THE DELAWARE GENERAL CORPORATION LAW
(“DGCL”), AND (IV) SELLER SHALL HAVE NOTIFIED PURCHASER OF SUCH DETERMINATION (A
“NOTICE OF SUPERIOR PROPOSAL”) AND OFFERED TO DISCUSS IN GOOD FAITH WITH
PURCHASER (AND, IF PURCHASER ACCEPTS, THEREAFTER NEGOTIATED IN GOOD FAITH), FOR
A PERIOD OF NO LESS THAN FIVE (5) BUSINESS DAYS, ANY ADJUSTMENTS IN THE TERMS
AND CONDITIONS OF THIS AGREEMENT PROPOSED BY PURCHASER.  IF, FOLLOWING SUCH
NOTICE AND DISCUSSIONS, THE BOARD OF DIRECTORS OF SELLER (AFTER CONSULTATION
WITH ITS OUTSIDE COUNSEL AND REGIONALLY-RECOGNIZED INDEPENDENT FINANCIAL
ADVISOR) SHALL HAVE RESOLVED, AFTER TAKING INTO ACCOUNT THE RESULTS OF SUCH
DISCUSSIONS AND PROPOSALS BY PURCHASER, IF ANY, THAT THE ASSET ACQUISITION
PROPOSAL REMAINS A SUPERIOR PROPOSAL, THEN SELLER MAY (A) FURNISH NON-PUBLIC
INFORMATION WITH RESPECT TO SELLER TO THE PERSON OR GROUP MAKING SUCH ASSET
ACQUISITION PROPOSAL AND THEIR REPRESENTATIVES PURSUANT TO A CUSTOMARY
CONFIDENTIALITY AGREEMENT, AND (B) PARTICIPATE IN DISCUSSIONS OR NEGOTIATIONS
WITH SUCH PERSON OR GROUP AND THEIR RESPECTIVE REPRESENTATIVES REGARDING SUCH
ASSET ACQUISITION PROPOSAL, PROVIDED, HOWEVER, THAT SELLER SHALL PROVIDE OR MAKE
AVAILABLE TO PURCHASER ANY MATERIAL NON-PUBLIC INFORMATION CONCERNING SELLER,
THE BUSINESS OR THE TRANSFERRED ASSETS THAT IS PROVIDED TO THE PERSON MAKING
SUCH ASSET ACQUISITION PROPOSAL OR ITS REPRESENTATIVES WHICH WAS NOT PREVIOUSLY
PROVIDED OR MADE AVAILABLE TO PURCHASER.  EACH NOTICE OF SUPERIOR PROPOSAL
DELIVERED PURSUANT TO THIS SECTION 4.6(A) SHALL INCLUDE THE FORMS OF AGREEMENTS
PURSUANT TO WHICH THE SUPERIOR PROPOSAL WOULD BE IMPLEMENTED OR, IF NO SUCH
AGREEMENTS HAVE BEEN PROPOSED, A WRITTEN SUMMARY OF THE MATERIAL TERMS AND
CONDITIONS OF SUCH SUPERIOR PROPOSAL (IT BEING UNDERSTOOD THAT SELLER MUST
DELIVER A NEW NOTICE OF SUPERIOR PROPOSAL AND THEREAFTER NEGOTIATE AS PROVIDED
HEREIN IN THE EVENT OF ANY MODIFICATION TO AN ASSET ACQUISITION PROPOSAL IF SUCH
MODIFICATION RESULTS IN THE DETERMINATION THAT SUCH ASSET ACQUISITION PROPOSAL
IS A SUPERIOR PROPOSAL).

 

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(B)           NOTHING CONTAINED IN THIS SECTION 4.6 OR IN SECTION 4.21 SHALL
PROHIBIT SELLER FROM TAKING AND DISCLOSING TO ITS STOCKHOLDERS A POSITION WITH
RESPECT TO A TENDER OFFER CONTEMPLATED BY RULE 14D-9 OR RULE 14E-2 PROMULGATED
UNDER THE EXCHANGE ACT OR FROM MAKING ANY DISCLOSURE TO SELLER’S STOCKHOLDERS
IF, IN THE GOOD FAITH JUDGMENT OF THE BOARD OF DIRECTORS OF SELLER, AFTER
CONSULTATION WITH OUTSIDE COUNSEL, FAILURE TO SO DISCLOSE WOULD RESULT IN A
BREACH OF ITS FIDUCIARY DUTIES UNDER THE DGCL; PROVIDED THAT DISCLOSURE TO
STOCKHOLDERS PURSUANT TO RULE 14E-2 RELATING TO AN ASSET ACQUISITION PROPOSAL
SHALL BE DEEMED TO BE A CHANGE IN THE SELLER BOARD RECOMMENDATION UNDER
SECTION 4.21(C) UNLESS THE BOARD OF DIRECTORS OF SELLER EXPRESSLY, AND WITHOUT
QUALIFICATION, CONCURRENTLY WITH SUCH DISCLOSURE REAFFIRMS THE SELLER BOARD
RECOMMENDATION.

 

(C)           SELLER WILL PROMPTLY INFORM PURCHASER IN WRITING OF ANY ASSET
ACQUISITION PROPOSAL (WHETHER OR NOT SUCH ASSET ACQUISITION PROPOSAL SHALL BE
DETERMINED BY THE BOARD OF DIRECTORS OF SELLER TO CONSTITUTE A SUPERIOR
PROPOSAL) RECEIVED BY THEM AND SHALL PROVIDE TO PURCHASER THE NAME OF SUCH THIRD
PARTY AND THE TERMS OF ANY SUCH ASSET ACQUISITION PROPOSAL.  THE COVENANTS IN
THIS SECTION 4.6 WILL APPLY TO ANY AND ALL DISCUSSIONS IN WHICH SELLER IS
CURRENTLY INVOLVED WITH THIRD PARTIES WITH RESPECT TO AN ASSET ACQUISITION
PROPOSAL, AND SELLER SHALL IMMEDIATELY TERMINATE ALL SUCH DISCUSSIONS.

 

SECTION 4.7            POST-TECHNOLOGY CLOSING COOPERATION RELATING TO
TRANSFERRED ASSETS.

 

(A)           SELLER AGREES THAT, DURING THE TERM OF THE MANUFACTURING
AGREEMENT, IF REASONABLY REQUESTED BY PURCHASER, IT WILL COOPERATE WITH
PURCHASER IN ENFORCING THE TERMS OF ANY ASSUMED CONTRACT AS WELL AS THE
PROTECTION OF ANY AND ALL INTELLECTUAL PROPERTY RIGHTS RELATED TO THE
TRANSFERRED TECHNOLOGY (“INTELLECTUAL PROPERTY RIGHTS”).  IN THE EVENT THAT
PURCHASER IS UNABLE TO ENFORCE ITS INTELLECTUAL PROPERTY RIGHTS AGAINST A THIRD
PARTY AS A RESULT OF A RULE OR LAW BARRING ENFORCEMENT OF SUCH RIGHTS BY A
TRANSFEREE OF SUCH RIGHTS, SELLER AGREES TO, DURING THE PERIOD COMMENCING ON THE
TECHNOLOGY CLOSING DATE AND ENDING ON THE DATE THAT IS EIGHTEEN (18) MONTHS
FOLLOWING THE MANUFACTURING CLOSING DATE, REASONABLY COOPERATE WITH PURCHASER BY
ASSIGNING TO PURCHASER SUCH RIGHTS AS MAY BE REASONABLY REQUIRED BY PURCHASER TO
ENFORCE ITS INTELLECTUAL PROPERTY RIGHTS IN ITS OWN NAME.

 

(B)           SELLER AGREES FURTHER THAT, FOLLOWING THE TECHNOLOGY CLOSING DATE,
IF ANY CONSENT OR WAIVER SET FORTH IN SCHEDULE 5.2(F) HAS NOT BEEN DELIVERED TO
PURCHASER BY SELLER AT OR PRIOR TO THE TECHNOLOGY CLOSING DATE, SELLER SHALL USE
COMMERCIALLY REASONABLE EFFORTS TO OBTAIN SUCH APPROVAL OR PERMIT AT THE SOLE
EXPENSE OF SELLER FOLLOWING THE TECHNOLOGY CLOSING DATE.

 

(C)           SELLER AGREES FURTHER THAT, FOLLOWING THE TECHNOLOGY CLOSING DATE,
SELLER SHALL, UPON THE REQUEST OF PURCHASER AND AT THE SOLE COST AND EXPENSE OF
PURCHASER, REASONABLY COOPERATE WITH PURCHASER TO ENFORCE SELLER’S AND/OR
PURCHASER’S RIGHTS WITH RESPECT TO CONFIDENTIALITY AND NON-DISCLOSURE COVENANTS
EXECUTED BY ANY PERSON IN FAVOR OF SELLER WITH RESPECT TO THE BUSINESS AND/OR
THE TRANSFERRED ASSETS PRIOR TO THE TECHNOLOGY CLOSING DATE.

 

(D)           SELLER AGREES FURTHER THAT, IF REASONABLY REQUESTED BY PURCHASER,
SELLER SHALL REASONABLY COOPERATE WITH PURCHASER TO PROVIDE REASONABLE ACCESS TO
RECORDS AND PERSONNEL OF SELLER TO THE EXTENT PURCHASER FINDS SUCH ACCESS
NECESSARY IN ORDER TO TRANSITION THE TRANSFERRED ASSETS INTO SERVICE OF
PURCHASER.

 

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(E)           AT OR PRIOR TO THE TECHNOLOGY CLOSING DATE, SELLER SHALL CAUSE
PURCHASER TO BE DESIGNATED AS AN ADDITIONAL LOSS PAYEE WITH RESPECT TO ANY LOSS
RELATED TO THE MANUFACTURING ASSETS ON ALL INSURANCE POLICIES IDENTIFIED ON
SCHEDULE 2.16.  FROM THE TECHNOLOGY CLOSING THROUGH THE DATE IMMEDIATELY
FOLLOWING THE MANUFACTURING CLOSING, SELLER SHALL MAINTAIN EACH SUCH INSURANCE
POLICY IN FULL FORCE AND EFFECT (OR REPLACE WITH COVERAGE OF SIMILAR LEVEL) AND
PAY ALL PREMIUMS THEREON WHEN DUE AND PAYABLE AND COMPLY IN ALL MATERIAL
RESPECTS WITH THE PROVISIONS OF SUCH POLICIES.

 

(F)            SELLER HEREBY CONSTITUTES AND APPOINTS PURCHASER (AND ITS
SUCCESSORS AND ASSIGNS), FROM AND AFTER THE TECHNOLOGY CLOSING DATE, THE TRUE
AND LAWFUL ATTORNEY OR ATTORNEYS OF SELLER, WITH FULL POWER OF SUBSTITUTION, FOR
SELLER AND IN ITS NAME AND STEAD, OR OTHERWISE, BUT ON BEHALF AND FOR THE
BENEFIT OF PURCHASER (AND ITS SUCCESSORS AND ASSIGNS), TO (I) FROM AND AFTER THE
TECHNOLOGY CLOSING DATE, DEMAND AND RECEIVE FROM TIME TO TIME THE TECHNOLOGY
ASSETS SOLD, TRANSFERRED, ASSIGNED, SET OVER, CONVEYED AND DELIVERED HEREUNDER
AND UNDER THE BILL OF SALE — TECHNOLOGY ASSETS AND (II) FROM AND AFTER THE
MANUFACTURING CLOSING DATE, DEMAND AND RECEIVE FROM TIME TO TIME THE
MANUFACTURING ASSETS SOLD, TRANSFERRED, ASSIGNED, SET OVER, CONVEYED AND
DELIVERED HEREUNDER AND UNDER THE BILL OF SALE — MANUFACTURING ASSETS, AND TO
GIVE RECEIPTS AND RELEASES FOR AND IN RESPECT OF THE SAME AND ANY PART THEREOF,
AND FROM TIME TO TIME TO INSTITUTE AND PROSECUTE IN THE NAME OF SELLER OR
OTHERWISE, BUT FOR THE BENEFIT OF PURCHASER (AND ITS SUCCESSORS AND ASSIGNS),
ANY AND ALL PROCEEDINGS AT LAW, IN EQUITY OR OTHERWISE, WHICH PURCHASER (AND ITS
SUCCESSORS OR ASSIGNS) MAY DEEM PROPER IN ORDER TO COLLECT, ASSERT OR ENFORCE
ANY CLAIM, RIGHT OR TITLE OF ANY KIND IN AND TO THE TECHNOLOGY ASSETS AND
MANUFACTURING ASSETS SOLD, TRANSFERRED, ASSIGNED, SET OVER, CONVEYED AND
DELIVERED HEREUNDER AND UNDER THE BILL OF SALE — TECHNOLOGY ASSETS AND BILL OF
SALE — MANUFACTURING ASSETS, AND TO DEFEND OR COMPROMISE ANY OR ALL ACTIONS,
SUITS OR PROCEEDINGS IN RESPECT OF THE TECHNOLOGY ASSETS AND/OR THE
MANUFACTURING ASSETS AND DO ALL SUCH ACTS AND THINGS IN RELATION THERETO AS
PURCHASER (AND ITS SUCCESSORS AND ASSIGNS) SHALL REASONABLY DEEM ADVISABLE,
SELLER HEREBY DECLARING THAT THE APPOINTMENT MADE AND THE POWERS HEREBY GRANTED
ARE COUPLED WITH AN INTEREST AND ARE AND SHALL BE IRREVOCABLE BY SELLER IN ANY
MANNER AND FOR ANY REASON.

 

Section 4.8            No Post-Technology Closing Retention of Copies. 
Immediately after (i) the Technology Closing with respect to the Technology
Assets and (ii) the Manufacturing Closing with respect to the Manufacturing
Assets, Seller shall deliver to Purchaser or destroy copies of any Transferred
Assets in Seller’s possession that are in addition to those delivered to
Purchaser, whether such copies are in paper form, on computer media or stored in
another form; provided, however, that Seller may retain and use copies of books
and records (financial or otherwise) relating to the activities associated with
the Transferred Assets to the extent necessary to comply with applicable law.

 

Section 4.9            Noncompetition and Nonsolicitation.

 

(A)           FROM THE TECHNOLOGY CLOSING DATE TO THE DATE THAT IS EIGHTEEN (18)
MONTHS FOLLOWING THE MANUFACTURING CLOSING (SUCH PERIOD, THE “RESTRICTED
PERIOD”), SELLER AGREES THAT SELLER WILL NOT, WHETHER ON SELLER’S OWN BEHALF OR
ON BEHALF OF OR IN CONJUNCTION WITH ANY PERSON, DIRECTLY OR INDIRECTLY;
(I) ENGAGE IN ANY BUSINESS OR ACTIVITIES THAT COMPETE WITH THE BUSINESS (A
“COMPETITIVE BUSINESS”); (II) ENTER THE EMPLOY OF, OR RENDER SERVICES TO, ANY
PERSON (OR ANY AFFILIATE OF ANY PERSON) WHO OR WHICH IS ENGAGED IN A COMPETITIVE
BUSINESS WITH RESPECT TO SUCH

 

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COMPETITIVE BUSINESS (WHETHER DIRECTLY OR INDIRECTLY); OR (III) ACQUIRE A
FINANCIAL INTEREST IN, OR OTHERWISE BECOME ACTIVELY INVOLVED WITH, ANY
COMPETITIVE BUSINESS, DIRECTLY OR INDIRECTLY, AS A PARTNER, SHAREHOLDER,
OFFICER, DIRECTOR, PRINCIPAL, AGENT, TRUSTEE OR CONSULTANT.  NOTWITHSTANDING THE
FOREGOING, NOTHING IN THIS SECTION 4.9 SHALL PREVENT, PROHIBIT, RESTRICT OR
OTHERWISE LIMIT SELLER’S RIGHT OR ABILITY TO, SUBJECT TO PURCHASER’S RIGHTS
PURSUANT TO SECTION 4.13 HEREOF (I) ENGAGE IN OR OPERATE THE BUSINESS OF ANY
SECOND GENERATION MESENCHYMAL STEM CELLS PRODUCT FOR BONE REPAIR UTILIZING
CULTURALLY-EXPANDED MESENCHYMAL STEM CELLS TO CREATE A SYNTHETIC VERSION OF THE
PRODUCT, INCLUDING, WITHOUT LIMITATION, OSTEOCEL® XC OR (II) CONSUMMATE A
TRANSACTION WITH A THIRD PARTY, THROUGH STOCK OR ASSET ACQUISITION, MERGER,
CONSOLIDATION OR OTHERWISE, WHERE ANY SUCH THIRD PARTY ACQUIRES ALL OR A PORTION
OF THE OUTSTANDING COMMON STOCK OR ASSETS OF SELLER, PROVIDED THAT ANY SUCH
THIRD PARTY WHO ACQUIRES ALL OF THE OUTSTANDING COMMONS STOCK OR SUBSTANTIALLY
ALL OF THE ASSETS OF SELLER SHALL EXPRESSLY AGREE, IN WRITING, TO BE BOUND BY
THE TERMS OF THIS SECTION 4.9, PROVIDED FURTHER, HOWEVER. THAT ANY SUCH THIRD
PARTY ACQUIROR WILL NOT BE PREVENTED FROM ENGAGING IN A COMPETITIVE BUSINESS IF,
AND TO THE EXTENT TO WHICH, SUCH ACQUIROR ENGAGED IN THE COMPETITIVE BUSINESS
PRIOR TO SUCH TRANSACTION.

 

(B)           DURING THE RESTRICTED PERIOD, SELLER WILL NOT, WHETHER ON SELLER’S
OWN BEHALF OR ON BEHALF OF OR IN CONJUNCTION WITH ANY PERSON, DIRECTLY OR
INDIRECTLY: (I) SOLICIT, ENCOURAGE OR ATTEMPT TO SOLICIT OR ENCOURAGE ANY PERSON
WHO IS AT THE TIME OF SUCH SOLICITATION, ENCOURAGEMENT, OR ATTEMPTED
SOLICITATION OR ENCOURAGEMENT AN EMPLOYEE OF PURCHASER OR ANY OF ITS AFFILIATES
AND WHO WAS IMMEDIATELY PRIOR TO THE TECHNOLOGY CLOSING OR MANUFACTURING CLOSING
(AS APPLICABLE), A SELLER EMPLOYEE TO LEAVE THE EMPLOYMENT OF PURCHASER OR ITS
AFFILIATES; (II) HIRE ANY SELLER EMPLOYEE WHO LEFT THE EMPLOYMENT OF SELLER OR
ITS AFFILIATES COINCIDENT WITH OR IN CONNECTION WITH THE TECHNOLOGY CLOSING OR
THE MANUFACTURING CLOSING; OR (III) HIRE ANY SELLER EMPLOYEE WHO TERMINATES
EMPLOYMENT WITH PURCHASER OR ITS AFFILIATES IN THE ONE YEAR PERIOD FOLLOWING THE
MANUFACTURING CLOSING.

 

(C)           DURING THE RESTRICTED PERIOD, SELLER AGREES THAT SELLER WILL NOT,
WHETHER ON SELLER’S OWN BEHALF OR ON BEHALF OF OR IN CONJUNCTION WITH ANY
PERSON, DIRECTLY OR INDIRECTLY SOLICIT, ENCOURAGE OR ATTEMPT TO SOLICIT OR
ENCOURAGE TO CEASE TO WORK WITH PURCHASER OR ITS AFFILIATES ANY EMPLOYEE OF, OR
CONSULTANT THEN UNDER CONTRACT WITH, PURCHASER OR ITS AFFILIATES WHO IS OR HAS
BEEN ENGAGED IN THE BUSINESS.

 

(D)           DURING THE RESTRICTED PERIOD, SELLER AGREES THAT SELLER WILL NOT,
DIRECTLY OR INDIRECTLY (I) SOLICIT, INDUCE OR ATTEMPT TO INDUCE ANY CUSTOMER TO
CEASE DOING BUSINESS IN WHOLE OR IN PART WITH PURCHASER OR ITS AFFILIATES WITH
RESPECT TO THE BUSINESS; (II) ATTEMPT TO LIMIT OR INTERFERE WITH ANY BUSINESS
AGREEMENT EXISTING BETWEEN THE PURCHASER AND/OR ITS AFFILIATES AND ANY THIRD
PARTY; OR (III) DISPARAGE THE BUSINESS REPUTATION OR EMPLOYEES OF PURCHASER, OR
ANY OF ITS AFFILIATES, OR TAKE ANY ACTIONS, KNOWINGLY, WILLFULLY OR, RECKLESSLY,
THAT ARE HARMFUL TO THE PURCHASER’S OR ITS AFFILIATES’ GOODWILL WITH THEIR
CUSTOMERS, CLIENTS, PUBLISHERS, ADVERTISERS, MARKETERS, VENDORS, EMPLOYEES,
SERVICE PROVIDERS, MEDIA OR THE PUBLIC.

 

Section 4.10         Notice of Breaches.  From the date of this Agreement until
(i) the Technology Closing date with respect to all Transferred Assets and
(ii) the Manufacturing Closing with respect to the Manufacturing Assets, the
Seller shall promptly deliver to the Purchaser a written notice containing
supplemental information concerning events or circumstances first occurring
subsequent to the date hereof which would render any

 

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representation, warranty or statement in this Agreement inaccurate or
incomplete, or any covenant breached, as of any date after the date of this
Agreement, specifying the applicable section of this Agreement to which such
supplemental information applies (including any changes pursuant to subsection
(b) of this Section, the “Notice of Breach”).  Following the delivery of any
such Notice of Breach, Seller shall promptly deliver to Purchaser all additional
information reasonably requested by Purchaser with respect to the content of
such Notice of Breach.  No delivery of any Notice of Breach pursuant to this
Section 4.10 or knowledge of any such breach (however obtained) shall be deemed
to amend or supplement any schedule to this Agreement or affect the rights and
remedies of Purchaser under Article VIII of this Agreement.

 

Section 4.11         Certain Employee Matters.

 

(A)           AS SOON AS REASONABLY PRACTICABLE FOLLOWING THE DATE HEREOF,
SELLER SHALL PROVIDE PURCHASER REASONABLE ACCESS DURING NORMAL WORKING HOURS TO
ACTIVE EMPLOYEES OF SELLER PERFORMING SERVICES WITH RESPECT TO THE BUSINESS
(“SELLER EMPLOYEES”) TO ENABLE PURCHASER TO DISCUSS COMPENSATION TERMS AND
PRESENT OFFERS OR EMPLOYMENT OR SERVICE TO SUCH EMPLOYEES.

 

(B)           PURCHASER MAY, IN ITS SOLE DISCRETION, OFFER EMPLOYMENT TO SELLER
EMPLOYEES COMMENCING AS OF THE MANUFACTURING CLOSING (EACH SELLER EMPLOYEE WHO
EXECUTES AND DELIVERS TO THE PURCHASER SUCH AN OFFER OF EMPLOYMENT, A
“TRANSFERRED EMPLOYEE”).  WITH RESPECT TO ANY SELLER EMPLOYEE WHO RECEIVES AN
OFFER OF EMPLOYMENT FROM PURCHASER PRIOR TO THE MANUFACTURING CLOSING DATE,
SELLER SHALL ASSIST PURCHASER WITH ITS EFFORTS TO ENTER INTO AN OFFER LETTER
WITH SUCH EMPLOYEE AS SOON AS REASONABLY PRACTICABLE AFTER THE DATE HEREOF AND
IN ANY EVENT PRIOR TO THE MANUFACTURING CLOSING DATE.  NOTWITHSTANDING ANY OF
THE FOREGOING, PURCHASER SHALL NOT HAVE ANY OBLIGATION TO MAKE AN OFFER OF
EMPLOYMENT TO ANY SELLER EMPLOYEE.  PURCHASER AGREES THAT PURCHASER WILL NOT,
DIRECTLY OR INDIRECTLY, SOLICIT, ENCOURAGE OR ATTEMPT TO SOLICIT OR ENCOURAGE TO
CEASE TO WORK WITH SELLER ANY SELLER EMPLOYEE FOR EMPLOYMENT WITH PURCHASER
COMMENCING PRIOR TO THE MANUFACTURING CLOSING DATE WITHOUT THE CONSENT OF
SELLER, WHICH CONSENT SHALL NOT BE UNREASONABLY WITHHELD.

 

(C)           FROM AND AFTER THE TECHNOLOGY CLOSING DATE OR THE MANUFACTURING
CLOSING DATE, AS APPLICABLE, PURCHASER SHALL RECOGNIZE EACH TRANSFERRED
EMPLOYEE’S ORIGINAL HIRE DATE WITH SELLER AND PRIOR SERVICE WITH SELLER (AS
RECOGNIZED BY SELLER IMMEDIATELY PRIOR TO THE TECHNOLOGY CLOSING DATE OR THE
MANUFACTURING CLOSING DATE, AS APPLICABLE) AS SERVICE WITH PURCHASER FOR
PURPOSES OF ELIGIBILITY TO PARTICIPATE IN, AND DETERMINING VESTING AND ANY
ACCRUED BENEFITS BASED ON LENGTH OF SERVICE UNDER,  PURCHASER’S EMPLOYEE BENEFIT
PLANS, POLICIES, ARRANGEMENTS AND PAYROLL POLICIES, INCLUDING VACATION BENEFITS.

 

(D)           SELLER SHALL MAKE EMPLOYMENT FILES OF THE SELLER EMPLOYEES
AVAILABLE FOR INSPECTION BY PURCHASER, TO THE EXTENT PERMITTED BY AND IN
ACCORDANCE WITH APPLICABLE LAW.

 

(E)           SELLER SHALL, AT PURCHASERS REQUEST, ACCELERATE THE VESTING OF ANY
SELLER OPTIONS HELD BY ONE OR MORE TRANSFERRED EMPLOYEES AT OR FOLLOWING THE
TECHNOLOGY CLOSING ON THE TERMS AND SUBJECT TO THE CONDITIONS AS PURCHASER SHALL
REASONABLY REQUEST AND IN A MANNER CONSISTENT WITH THE APPLICABLE PLAN OPTION
AGREEMENTS AND RELATED DOCUMENTS.

 

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Section 4.12         Right of First Negotiation; Purchase Option.

 

(A)           PURCHASE OPTION.  FOR A PERIOD COMMENCING ON THE TECHNOLOGY
CLOSING DATE AND ENDING AT 11:59 P.M. PACIFIC TIME ON DECEMBER 31, 2009,
PURCHASER SHALL HAVE THE RIGHT TO ACQUIRE, AND SELLER SHALL BE OBLIGATED TO
PROVIDE, THE EXCLUSIVE RIGHTS TO ANY SECOND GENERATION MESENCHYMAL STEM CELL
PRODUCT FOR BONE REPAIR UTILIZING CULTURE EXPANDED MESENCHYMAL STEMCELLS TO
CREATE A SYNTHETIC VERSION OF THE PRODUCT (“OSTEOCEL XC®”) ON THE TERMS AND
CONDITIONS SET FORTH ON SCHEDULE 4.12.

 

(B)           RIGHT OF FIRST NEGOTIATION.  FROM THE TECHNOLOGY CLOSING DATE
UNTIL DECEMBER 31, 2009, AND SUBJECT TO PURCHASER’S RIGHTS UNDER
SECTION 4.12(A) HEREOF, IF SELLER DESIRES TO ENTER INTO A TRANSACTION OR ACCEPT
A THIRD-PARTY PROPOSAL FOR THE SALE (WHETHER DIRECTLY OR BY MERGER, ACQUISITION
OR ANY OTHER ASSET SALE OR CHANGE OF CONTROL TRANSACTION), LICENSE,
JOINT-VENTURE ARRANGEMENT, TRANSFER OR PARTIAL TRANSFER (OR SIMILAR ARRANGEMENT)
OF OSTEOCEL XC® (AN “OSTEOCEL XC TRANSACTION”), IT SHALL FIRST PROVIDE PURCHASER
WITH A NOTICE OF SUCH DESIRED OSTEOCEL XC TRANSACTION (A “NEGOTIATION NOTICE”). 
THE NEGOTIATION NOTICE SHALL INCLUDE IN REASONABLE DETAIL ALL MATERIAL ECONOMIC,
LEGAL AND BUSINESS TERMS OF THE OSTEOCEL XC TRANSACTION PROPOSED BY SELLER.  IF,
WITHIN FIVE (5) BUSINESS DAYS OF RECEIPT OF A NEGOTIATION NOTICE, PURCHASER
GIVES SELLER WRITTEN NOTICE OF ITS INTEREST TO NEGOTIATE SUCH OSTEOCEL XC
TRANSACTION ON THE TERMS CONTAINED IN THE NEGOTIATION NOTICE (AN “AFFIRMATIVE
RESPONSE NOTICE”), THEN SELLER AND PURCHASER AGREE, PROMPTLY AND IN GOOD FAITH,
TO EXCLUSIVELY NEGOTIATE A LEGALLY-BINDING AGREEMENT TO CARRY OUT SUCH OSTEOCEL
XC TRANSACTION.  IF PURCHASER FAILS TO RESPOND TO THE NEGOTIATION NOTICE WITHIN
SAID FIVE (5) BUSINESS DAY PERIOD, OR IF SELLER AND PURCHASER FAIL, AFTER GOOD
FAITH EFFORTS, TO ENTER INTO A WRITTEN AGREEMENT FOR SUCH OSTEOCEL XC
TRANSACTION WITHIN THIRTY (30) DAYS AFTER DELIVERY OF SELLER’S NEGOTIATION
NOTICE, THEN NEITHER PURCHASER NOR SELLER SHALL HAVE A RIGHT OR BE UNDER ANY
OBLIGATION TO ENTER INTO SUCH OSTEOCEL XC TRANSACTION, AND SELLER (SUBJECT TO
THE RIGHT OF PURCHASER TO EXERCISE ITS RIGHT PURSUANT TO SECTION 4.12(A)) MAY
CONSUMMATE WITH A THIRD-PARTY A TRANSACTION ON TERMS NOT MATERIALLY LESS
FAVORABLE TO SELLER, TAKEN AS A WHOLE, THAN THE TERMS CONTAINED IN THE
NEGOTIATION NOTICE.  IF PURCHASER DELIVERS AN AFFIRMATIVE RESPONSE NOTICE TO
SELLER PURSUANT TO THIS SECTION 4.12(B), PURCHASER SHALL PROVIDE TO SELLER A
DRAFT DEFINITIVE AGREEMENT FOR THE OSTEOCEL XC TRANSACTION.

 

Section 4.13         Brand and Trademarks. Except as expressly provided in this
Agreement or in the Manufacturing Agreement, Purchaser shall have no rights to
any of Seller’s intellectual property other than the Transferred Technology, and
Seller shall have no rights to any of Purchaser’s intellectual property.

 

Section 4.14         Consents.  Prior to the Technology Closing Date, Seller
shall use its commercially reasonable efforts to obtain in writing and at its
own expense all consents and waivers referred to on Schedule 2.5 hereto.  To the
extent that an attempted assignment or transfer of any Assumed Contract would
constitute a breach thereof, this Agreement shall not constitute an assignment
or attempted assignment thereof.  In such a case, Seller shall establish with
Purchaser any back-to-back arrangement reasonably requested by Purchaser in
order to provide for Purchaser the benefits intended to be assigned under any
such Assumed Contract (subject to the right of any third party thereunder to
terminate such Assumed Contract), including, without limitation, the enforcement
by Seller for the benefit of Purchaser, at Purchaser’s sole cost and expense, of
any and all rights of Seller against a third party to such Assumed Contract
arising out of the breach by such third party or otherwise.

 

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Section 4.15         Hart-Scott-Rodino Notification.

 

(A)           SELLER AND PURCHASER SHALL EACH PROMPTLY PREPARE, EXECUTE AND FILE
A NOTIFICATION WITH THE UNITED STATES JUSTICE DEPARTMENT AND THE FEDERAL TRADE
COMMISSION AS REQUIRED BY THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF
1976, AS AMENDED (“HSR”).  SELLER AND PURCHASER SHALL COOPERATE WITH EACH OTHER
IN CONNECTION WITH THE PREPARATION OF SUCH NOTIFICATION, INCLUDING SHARING
INFORMATION CONCERNING SALES AND OWNERSHIP AND SUCH OTHER INFORMATION AS MAY BE
NEEDED TO COMPLETE SUCH NOTIFICATION, AND PROVIDING A COPY OF SUCH NOTIFICATION
TO THE OTHER PRIOR TO FILING.  EACH OF SELLER AND PURCHASER SHALL KEEP ALL
INFORMATION ABOUT THE OTHER OBTAINED IN CONNECTION WITH THE PREPARATION OF SUCH
NOTIFICATION CONFIDENTIAL.  PURCHASER AND SELLER SHALL EACH PAY ONE-HALF OF THE
FILING FEE REQUIRED UNDER BY THE REGULATIONS PROMULGATED PURSUANT TO HSR. 
PURCHASER AND SELLER SHALL PROMPTLY INFORM THE OTHER OF ANY MATERIAL
COMMUNICATION BETWEEN SUCH PARTY AND ANY GOVERNMENTAL ENTITY REGARDING ANY OF
THE TRANSACTIONS CONTEMPLATED HEREBY.  IF EITHER PARTY RECEIVED ANY FORMAL OR
INFORMAL REQUEST FOR SUPPLEMENTAL INFORMATION OR DOCUMENTARY MATERIAL FROM ANY
GOVERNMENTAL ENTITY WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREBY, THEN
THE RECIPIENT OF SUCH REQUEST SHALL MAKE, OR CASE TO BE MADE, AS SOON AS
REASONABLY PRACTICABLE, A RESPONSE IN COMPLIANCE WITH SUCH REQUEST AND, IN
MAKING ANY SUCH RESPONSE, THE RESPONDING PARTY SHALL CONSIDER IN GOOD FAITH THE
VIEWS OF THE OTHER PARTY HERETO.  SELLER AND PURCHASER COVENANT AND AGREE THAT
THE TECHNOLOGY CLOSING SHALL BE SUBJECT AND CONDITIONED UPON THE RECEIPT OF
REQUISITE APPROVALS OR THE EXPIRATION OF THE APPLICABLE WAITING PERIOD UNDER
HSR.

 

(B)           NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IF ANY
ADMINISTRATIVE OR JUDICIAL ACTION OR PROCEEDING IS INSTITUTED (OR THREATENED TO
BE INSTITUTED) CHALLENGING ANY TRANSACTION CONTEMPLATED BY THIS AGREEMENT AS
VIOLATIVE OF ANY FEDERAL, STATE OR FOREIGN STATUTES, RULES, REGULATIONS, ORDERS
OR DECREES THAT ARE DESIGNED TO PROHIBIT, RESTRICT OR REGULATE ACTIONS HAVING
THE PURPOSE OR EFFECT OF MONOPOLIZATION OR RESTRAINING O TRADE (COLLECTIVELY,
“ANTITRUST LAWS”), IT IS EXPRESSLY UNDERSTOOD AND AGREED THAT: (I) PURCHASER AND
SELLER SHALL PROVIDE INFORMATION REQUIRED BY LAW OR GOVERNMENTAL REGULATION AND
SHALL USE COMMERCIALLY REASONABLY EFFORTS TO SUBSTANTIALLY COMPLY AS PROMPTLY AS
PRACTICABLE WITH ANY “SECOND REQUEST” FOR INFORMATION PURSUANT TO THE ANTITRUST
LAWS; (II) PURCHASER AND SELLER SHALL USE THEIR COMMERCIALLY REASONABLY EFFORTS
TO RESOLVE SUCH OBJECTIONS, IF ANY, AS MAY BE ASSERTED BY ANY GOVERNMENTAL
ENTITY WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT UNDER
ANTITRUST LAWS; PROVIDED, HOWEVER, THAT (A) NEITHER PURCHASER NOR SELLER SHALL
HAVE ANY OBLIGATION TO LITIGATE OR CONTEST ANY ADMINISTRATIVE OR JUDICIAL ACTION
OR PROCEEDING OR ANY DECREE, JUDGMENT, INJUNCTION OR OTHER ORDER, WHETHER
TEMPORARY, PRELIMINARY OR PERMANENT; AND (B) PURCHASER SHALL BE UNDER NO
OBLIGATION TO MAKE PROPOSALS, EXECUTE OR CARRY OUT AGREEMENTS OR SUBMIT TO
ORDERS PROVIDING FOR (1) THE SALE, LICENSE OR OTHER DISPOSITION OR HOLDING
SEPARATE (THROUGH THE ESTABLISHMENT OF A TRUST OR OTHERWISE) OF ANY ASSETS OR
CATEGORIES OF ASSETS OF PURCHASER OR ANY OF ITS AFFILIATES OR THE TRANSFERRED
ASSETS, OR (2) THE IMPOSITION OF ANY LIMITATION OR REGULATION ON THE ABILITY OF
PURCHASER OR ANY OF ITS AFFILIATES TO FREELY CONDUCT THEIR BUSINESS OR OWN SUCH
ASSETS.

 

Section 4.16         Public Announcement.  Except as required by law, neither
party (nor any director, officer, employee or affiliate of either party) shall
make any public announcement, whether written or oral, concerning this Agreement
or the subject matter hereof without the prior written consent of the other.

 

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Section 4.17         Bulk Sales Laws.  Seller shall comply, in connection with
transactions contemplated by this Agreement, with any applicable bulk sales laws
and any other applicable bulk sales laws with respect to or requiring notice to
Seller’s creditors, in effect as of the Technology Closing Date with respect to
the Technology Assets and the Manufacturing Closing Date with respect to the
Manufacturing Assets.

 

Section 4.18         Transfer Taxes. All sales or use, transfer, real property
gains, excise, stamp, business and occupation, or other similar Taxes, resulting
or arising out of or in connection with the consummation of the transactions
contemplated hereby (“Transfer Taxes”) and imposed on Seller shall be paid by
Seller and Seller shall promptly discharge such Transfer Taxes when due.  All
Transfer Taxes imposed on Purchaser other than Transfer Taxes resulting from
Seller’s breach of this Section 4.19 shall be paid by Purchaser.

 

Section 4.19         Termination of Certain Contracts.  At or prior to the
Technology Closing Date, Seller shall deliver to each party to those Contracts
identified on Schedule 2.9(c) a notice of termination, which termination shall
be effective as of the date set forth opposite each such Contract on Schedule
2.9(c).  Notwithstanding the foregoing, Seller shall give any such notice of
termination following the Technology Closing Date within two (2) business days
of receipt of a written request of Purchaser to earlier deliver such notice of
termination.  Seller acknowledges that Seller’s failure to comply with the
provisions of this Section 4.20 shall be a material breach of this Agreement for
purposes of Section 5.2(b) hereof.

 

Section 4.20         Preparation of Proxy Statement; Stockholder Meeting.

 

(A)           AS PROMPTLY AS REASONABLY PRACTICABLE FOLLOWING THE DATE OF THIS
AGREEMENT, SELLER SHALL PREPARE AND FILE WITH THE SECURITIES AND EXCHANGE
COMMISSION (THE “SEC”) A PROXY STATEMENT RELATING TO THE APPROVAL OF THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT BY SELLER’S STOCKHOLDERS (AS AMENDED
OR SUPPLEMENTED FROM TIME TO TIME, THE “PROXY STATEMENT”) AND SELLER SHALL USE
ITS REASONABLE BEST EFFORTS TO RESPOND AS PROMPTLY AS PRACTICABLE TO ANY
COMMENTS OF THE SEC WITH RESPECT THERETO AND TO CAUSE THE PROXY STATEMENT TO BE
MAILED TO SELLER’S STOCKHOLDERS AS PROMPTLY AS REASONABLY PRACTICABLE FOLLOWING
THE DATE OF THIS AGREEMENT.  SELLER SHALL PROMPTLY NOTIFY PURCHASER UPON THE
RECEIPT OF ANY COMMENTS FROM THE SEC OR ITS STAFF OR ANY REQUEST FROM THE SEC OR
ITS STAFF FOR AMENDMENTS OR SUPPLEMENTS TO THE PROXY STATEMENT AND SHALL PROVIDE
PURCHASER WITH COPIES OF ALL CORRESPONDENCE BETWEEN SELLER AND ITS
REPRESENTATIVES, ON THE ONE HAND, AND THE SEC AND ITS STAFF, ON THE OTHER HAND. 
NOTWITHSTANDING ANYTHING TO THE CONTRARY STATED ABOVE, PRIOR TO FILING OR
MAILING THE PROXY STATEMENT (OR ANY AMENDMENT OR SUPPLEMENT THERETO) OR
RESPONDING TO ANY COMMENTS OF THE SEC WITH RESPECT THERETO, SELLER SHALL
(I) PROVIDE PURCHASER THE REASONABLE OPPORTUNITY TO REVIEW AND COMMENT ON SUCH
DOCUMENT OR RESPONSE PRIOR TO ANY FILING OF SUCH DOCUMENT OR RESPONSE TO ANY
COMMENTS OF THE SEC AND CONSIDER IN GOOD FAITH PURCHASER’S COMMENTS,
(II) INCLUDE IN SUCH DOCUMENT OR RESPONSE ALL COMMENTS REASONABLY PROPOSED BY
PURCHASER WITH RESPECT TO ANY STATEMENT OR INFORMATION SPECIFICALLY RELATING TO
THE PURCHASER.

 

(B)           SELLER SHALL, AS PROMPTLY AS REASONABLY PRACTICABLE FOLLOWING THE
DATE OF THIS AGREEMENT (TAKING INTO CONSIDERATION REGULATORY REVIEW PROCESSES
AND TIMING THEREFORE), ESTABLISH A RECORD DATE FOR, DULY CALL, GIVE NOTICE OF,
CONVENE AND HOLD A MEETING OF ITS STOCKHOLDERS (THE “STOCKHOLDERS MEETING”) FOR
THE PURPOSE OF OBTAINING THE AFFIRMATIVE VOTE OF

 

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THE HOLDERS OF A MAJORITY OF THE OUTSTANDING SHARES OF SELLER’S COMMON STOCK,
PAR VALUE $0.001 PER SHARE, IN FAVOR OF APPROVAL OF THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT (THE “STOCKHOLDER APPROVAL”).  SELLER SHALL CAUSE
THE STOCKHOLDERS MEETING TO BE HELD AS PROMPTLY AS REASONABLY PRACTICABLE AFTER
THE DATE OF THIS AGREEMENT.  EXCEPT AS SET FORTH IN SECTION 4.6(B), SELLER
SHALL, THROUGH ITS BOARD OF DIRECTORS, RECOMMEND TO ITS STOCKHOLDERS THAT THEY
APPROVE THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY, AND SHALL
INCLUDE SUCH RECOMMENDATION IN THE PROXY STATEMENT (“SELLER BOARD
RECOMMENDATION”).

 

(C)           EXCEPT AS SET FORTH IN THIS SECTION 4.20(C), THE BOARD OF
DIRECTORS OF SELLER SHALL NOT (I) WITHDRAW OR MODIFY IN A MANNER ADVERSE TO
PURCHASER, OR PUBLICLY PROPOSE TO WITHDRAW OR MODIFY IN A MANNER ADVERSE TO
PURCHASER, THE SELLER BOARD RECOMMENDATION; (II) APPROVE OR RECOMMEND ANY LETTER
OF INTENT, AGREEMENT IN PRINCIPLE, ACQUISITION AGREEMENT, OPTION AGREEMENT OR
SIMILAR AGREEMENT CONSTITUTING OR RELATING TO, OR THAT IS INTENDED TO BE OR
WOULD REASONABLY BE LIKELY TO RESULT IN, ANY ASSET ACQUISITION PROPOSAL; OR
(III) APPROVE OR RECOMMEND, OR PUBLICLY PROPOSE TO APPROVE, ENDORSE OR
RECOMMEND, ANY ASSET ACQUISITION PROPOSAL.  NOTWITHSTANDING THE FOREGOING, IF,
PRIOR TO RECEIPT OF THE STOCKHOLDER APPROVAL, THE BOARD OF DIRECTORS OF SELLER
DETERMINES IN GOOD FAITH THAT AN UNSOLICITED BONA FIDE WRITTEN ALTERNATIVE
PROPOSAL RECEIVED BY SELLER CONSTITUTES A SUPERIOR PROPOSAL (AFTER COMPLIANCE
WITH THE NOTIFICATION AND NEGOTIATION PROVISIONS SET FORTH HEREIN), THE BOARD OF
DIRECTORS OF SELLER MAY WITHDRAW, MODIFY OR QUALIFY ITS SELLER BOARD
RECOMMENDATION (A “CHANGE IN SELLER BOARD RECOMMENDATION”) AND MAY RECOMMEND
SUCH SUPERIOR PROPOSAL.

 

ARTICLE V.

CONDITIONS TO CLOSING

 

Section 5.1            Conditions to Obligations of Each Party.  The respective
obligations of each of Purchaser and Seller to consummate the transactions
contemplated in this Agreement are subject to the satisfaction of the following
conditions:

 

(A)           ALL APPLICABLE WAITING PERIODS (AND ANY EXTENSIONS THEREOF) UNDER
HSR SHALL HAVE EXPIRED OR OTHERWISE BEEN TERMINATED;

 

(B)           NO LAW OR REGULATION SHALL HAVE BEEN ADOPTED OR PROMULGATED, AND
NO TEMPORARY RESTRAINING ORDER, PRELIMINARY OR PERMANENT INJUNCTION OR OTHER
JUDGMENT OR ORDER ISSUED BY ANY GOVERNMENTAL ENTITY SHALL BE IN EFFECT, IN EACH
CASE WHICH HAS THE EFFECT OF MAKING THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT ILLEGAL, OR OTHERWISE ENJOINING OR PROHIBITING THE CONSUMMATION OF THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT; AND

 

(C)           THE STOCKHOLDER APPROVAL SHALL HAVE BEEN OBTAINED.

 

Section 5.2            Conditions to the Obligations of the Purchaser.  The
obligation of Purchaser to consummate the transactions contemplated in this
Agreement are subject to the satisfaction (or waiver by Purchaser) of the
following additional conditions:

 

(A)           (I) THE REPRESENTATIONS AND WARRANTIES OF SELLER SET FORTH IN
SECTIONS 2.1, 2.2, 2.3 AND 2.4 SHALL BE TRUE AND CORRECT IN ALL RESPECTS AT AND
AS OF THE TECHNOLOGY CLOSING DATE AS IF FIRST MADE ON THE TECHNOLOGY CLOSING
DATE, AND (II) THE OTHER REPRESENTATIONS AND WARRANTIES OF SELLER SET FORTH IN
ARTICLE II SHALL BE TRUE AND CORRECT IN ALL MATERIAL RESPECTS (EXCEPT FOR ANY
SUCH

 

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REPRESENTATIONS AND WARRANTIES THAT ARE QUALIFIED BY MATERIALITY, WHICH SHALL BE
TRUE AND CORRECT IN ALL RESPECTS) ON AND AS OF THE DATE HEREOF AND ON AND AS OF
THE TECHNOLOGY CLOSING DATE, AS THOUGH FIRST MADE ON AND AS OF THE TECHNOLOGY
CLOSING DATE (OTHER THAN REPRESENTATIONS AND WARRANTIES MADE AS OF A SPECIFIED
DATE, WHICH NEED BE TRUE AND CORRECT ONLY AS OF THE SPECIFIED DATE);

 

(B)           SELLER SHALL HAVE (I) PERFORMED AND COMPLIED WITH ITS AGREEMENTS
AND COVENANTS UNDER SECTION 4.3 (FINANCIAL STATEMENTS), INCLUDING, FOR AVOIDANCE
OF DOUBT, DELIVERY OF THE AUDITED FINANCIAL STATEMENTS PURSUANT TO
SECTION 4.3(C) HEREOF AND (II) PERFORMED AND COMPLIED IN ALL MATERIAL RESPECTS
WITH ALL OF ITS OTHER AGREEMENTS AND COVENANTS REQUIRED TO BE PERFORMED OR
COMPLIED WITH UNDER THIS AGREEMENT AS OF THE TECHNOLOGY CLOSING;

 

(C)           THERE SHALL NOT HAVE OCCURRED, FROM THE DATE OF THIS AGREEMENT
THROUGH THE TECHNOLOGY CLOSING DATE, ANY BUSINESS MATERIAL ADVERSE EFFECT OR ANY
EVENT OR DEVELOPMENT WHICH, INDIVIDUALLY OR IN THE AGGREGATE, WOULD HAVE A
BUSINESS MATERIAL ADVERSE EFFECT;

 

(D)           NO ACTION SUIT, PROCEEDING CLAIM, ARBITRATION OR INVESTIGATION
BEFORE ANY GOVERNMENTAL ENTITY OR BEFORE ANY ARBITRATOR SHALL BE PENDING THAT
WOULD REASONABLY BE EXPECTED TO RESULT IN AN UNFAVORABLE JUDGMENT, ORDER,
DECREE, STIPULATION OR INJUNCTION THAT WOULD: (I) PREVENT CONSUMMATION OF THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR (II) CAUSE THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT TO BE RESCINDED FOLLOWING CONSUMMATION;

 

(E)           SELLER SHALL HAVE DELIVERED TO PURCHASER A CERTIFICATE EXECUTED BY
AN AUTHORIZED OFFICER OF THE SELLER TO THE EFFECT THAT EACH OF THE CONDITIONS
SPECIFIED IN CLAUSES (A), (B), (C) AND (D) OF THIS SECTION 5.2 HAS BEEN
SATISFIED AS OF IMMEDIATELY PRIOR TO THE TECHNOLOGY CLOSING IN ALL RESPECTS;

 

(F)            SELLER SHALL HAVE GIVEN SUCH NOTICES AND OBTAINED IN WRITING AND
AT ITS OWN EXPENSE ALL CONSENTS AND WAIVERS REFERRED TO ON SCHEDULE
5.2(F) HERETO, AND SELLER SHALL HAVE DELIVERED TO PURCHASER COPIES OF EACH SUCH
FULLY EXECUTED NOTICE, CONSENT AND/OR WAIVER;

 

(G)           SELLER SHALL HAVE DELIVERED TO PURCHASER A BILL OF SALE AND
ASSIGNMENT AND ASSUMPTION AGREEMENT IN THE FORM ATTACHED HERETO AS EXHIBIT A
(THE “BILL OF SALE — TECHNOLOGY ASSETS”) DATED AS OF THE TECHNOLOGY CLOSING DATE
AND DULY EXECUTED BY AN AUTHORIZED OFFICER OF SELLER;

 

(H)           SELLER SHALL HAVE DELIVERED TO PURCHASER (I) AN ASSIGNMENT OF
INTELLECTUAL PROPERTY IN THE FORM ATTACHED HERETO AS EXHIBIT B (THE “IP
ASSIGNMENT AGREEMENT — PATENTS”) AND (II) AN ASSIGNMENT OF INTELLECTUAL PROPERTY
IN THE FORM ATTACHED HERETO AS EXHIBIT C (THE “IP ASSIGNMENT AGREEMENT —
TRADEMARKS”), IN EACH CASE DATED AS OF THE TECHNOLOGY CLOSING DATE AND DULY
EXECUTED BY AN AUTHORIZED OFFICER OF SELLER;

 

(I)            SELLER SHALL HAVE DELIVERED TO PURCHASER A MANUFACTURING AND
SUPPLY AGREEMENT IN THE FORM ATTACHED HERETO AS EXHIBIT D (THE “MANUFACTURING
AGREEMENT”) DATED AS OF THE TECHNOLOGY CLOSING DATE AND DULY EXECUTED BY AN
AUTHORIZED OFFICER OF SELLER;

 

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(J)            SELLER SHALL HAVE DELIVERED TO PURCHASER A LICENSE AGREEMENT IN
THE FORM ATTACHED HERETO AS EXHIBIT E (THE “LICENSE AGREEMENT”) DATED AS OF THE
TECHNOLOGY CLOSING DATE AND DULY EXECUTED BY AN AUTHORIZED OFFICER OF SELLER;

 

(K)           MCKENNA LONG & ALDRIDGE LLP, COUNSEL TO SELLER, SHALL HAVE
DELIVERED TO PURCHASER AN OPINION IN THE FORM ATTACHED HERETO AS EXHIBIT F,
DATED AS OF THE TECHNOLOGY CLOSING DATE;

 

(L)            ALL LIENS OTHER THAN PERMITTED LIENS TO WHICH ANY OF THE
TECHNOLOGY ASSETS ARE SUBJECT OR BY WHICH ANY OF THE TECHNOLOGY ASSETS ARE BOUND
SHALL HAVE BEEN REMOVED AND SELLER SHALL HAVE DELIVERED TO PURCHASER EVIDENCE OF
THE REMOVAL OF SUCH LIENS THAT IS REASONABLY ACCEPTABLE TO PURCHASER;

 

(M)          SELLER SHALL HAVE DELIVERED TO PURCHASER A SECRETARY’S CERTIFICATE
IN THE FORM ATTACHED HERETO AS EXHIBIT G, DATED AS OF THE TECHNOLOGY CLOSING
DATE AND DULY EXECUTED BY THE SECRETARY OR ASSISTANT SECRETARY OF SELLER; AND

 

(N)           SELLER SHALL HAVE OBTAINED FROM THE SECRETARY OF STATE OF THE
STATE OF DELAWARE, AND DELIVERED TO PURCHASER, A CERTIFICATE OF GOOD STANDING OF
SELLER.

 

Section 5.3            Conditions to the Obligations of Seller.  The obligation
of Seller to consummate the transactions contemplated in this Agreement are
subject to the satisfaction (or waiver by Seller) of the following additional
conditions:

 

(A)           (I) THE REPRESENTATIONS AND WARRANTIES OF PURCHASER SET FORTH IN
SECTIONS 3.1, 3.2 AND 3.3 SHALL BE TRUE AND CORRECT IN ALL RESPECTS AT AND AS OF
THE TECHNOLOGY CLOSING DATE AS IF FIRST MADE ON THE TECHNOLOGY CLOSING DATE, AND
(II) THE OTHER REPRESENTATIONS AND WARRANTIES OF PURCHASER SET FORTH IN
ARTICLE III SHALL BE TRUE AND CORRECT IN ALL MATERIAL RESPECTS (EXCEPT FOR ANY
SUCH REPRESENTATIONS AND WARRANTIES THAT ARE QUALIFIED BY MATERIALITY, WHICH
SHALL BE TRUE AND CORRECT IN ALL RESPECTS) ON AND AS OF THE DATE HEREOF AND ON
AND AS OF THE TECHNOLOGY CLOSING DATE, AS IF FIRST MADE AT AND AS OF THE
TECHNOLOGY CLOSING DATE (OTHER THAN REPRESENTATIONS AND WARRANTIES MADE AS OF A
SPECIFIED DATE, WHICH NEED BE TRUE AND CORRECT ONLY AS OF THE SPECIFIED DATE);

 

(B)           PURCHASER SHALL HAVE PERFORMED AND COMPLIED IN ALL MATERIAL
RESPECTS WITH ALL OF ITS AGREEMENT AND COVENANTS REQUIRED TO BE PERFORMED OR
COMPLIED WITH UNDER THIS AGREEMENT AS OF THE TECHNOLOGY CLOSING;

 

(C)           NO ACTION, SUIT, PROCEEDING CLAIM, ARBITRATION OR INVESTIGATION
BEFORE ANY GOVERNMENTAL ENTITY OR BEFORE ANY ARBITRATOR SHALL BE PENDING THAT
WOULD REASONABLY BE EXPECTED TO RESULT IN AN UNFAVORABLE JUDGMENT, ORDER,
DECREE, STIPULATION OR INJUNCTION THAT WOULD: (I) PREVENT CONSUMMATION OF THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR (II) CAUSE THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT TO BE RESCINDED FOLLOWING CONSUMMATION;

 

(D)           PURCHASER SHALL HAVE DELIVERED TO SELLER A CERTIFICATE EXECUTED BY
AN AUTHORIZED OFFICER OF THE SELLER TO THE EFFECT THAT EACH OF THE CONDITIONS
SPECIFIED IN CLAUSES (A), (B) AND (C) OF THIS SECTION 5.3 HAS BEEN SATISFIED AS
OF IMMEDIATELY PRIOR TO THE TECHNOLOGY CLOSING IN ALL RESPECTS;

 

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(E)           PURCHASER SHALL HAVE DELIVERED TO SELLER THE BILL OF SALE —
TECHNOLOGY ASSETS DATED AS OF THE TECHNOLOGY CLOSING DATE AND DULY EXECUTED BY
AN AUTHORIZED OFFICER OF PURCHASER;

 

(F)            PURCHASER SHALL HAVE DELIVERED TO SELLER THE MANUFACTURING
AGREEMENT DATED AS OF THE TECHNOLOGY CLOSING DATE AND DULY EXECUTED BY AN
AUTHORIZED OFFICER OF PURCHASER;

 

(G)           PURCHASER SHALL HAVE DELIVERED TO SELLER THE LICENSE AGREEMENT
DATED AS OF THE TECHNOLOGY CLOSING DATE AND DULY EXECUTED BY AN AUTHORIZED
OFFICER OF PURCHASER;

 

(H)           DLA PIPER US LLP, COUNSEL TO PURCHASER, SHALL HAVE DELIVERED TO
PURCHASER AN OPINION IN THE FORM ATTACHED HERETO AS EXHIBIT H, DATED AS OF THE
TECHNOLOGY CLOSING DATE;

 

(I)            PURCHASER SHALL HAVE DELIVERED TO SELLER A SECRETARY’S
CERTIFICATE IN THE FORM ATTACHED HERETO AS EXHIBIT I, DATED AS OF THE TECHNOLOGY
CLOSING DATE AND DULY EXECUTED BY THE SECRETARY OR ASSISTANT SECRETARY OF
PURCHASER; AND

 

(J)            PURCHASER SHALL HAVE OBTAINED FROM THE SECRETARY OF STATE OF THE
STATE OF DELAWARE, AND DELIVERED TO SELLER, A CERTIFICATE OF GOOD STANDING OF
PURCHASER.

 

ARTICLE VI.

CONDITIONS TO THIRD MILESTONE PAYMENT

 

Section 6.1            Conditions to Third Milestone Payment.  Purchaser’s
obligation to make the Third Milestone Payment on the Manufacturing Closing Date
shall be subject to the satisfaction (or waiver by Purchaser) of the following
conditions:

 

(A)           (I) THE REPRESENTATIONS AND WARRANTIES OF SELLER SET FORTH IN
SECTIONS 2.1, 2.2, 2.3 AND 2.4 SHALL BE TRUE AND CORRECT IN ALL RESPECTS WITH
RESPECT TO SELLER AND THE MANUFACTURING ASSETS, AS APPLICABLE, AT AND AS OF THE
MANUFACTURING CLOSING DATE AS IF FIRST MADE ON THE MANUFACTURING CLOSING DATE,
AND (II) THE OTHER REPRESENTATIONS AND WARRANTIES OF SELLER SET FORTH IN
ARTICLE II SHALL BE TRUE AND CORRECT IN ALL MATERIAL RESPECTS WITH RESPECT TO
SELLER AND THE MANUFACTURING ASSETS, AS APPLICABLE, AT AND AS OF THE
MANUFACTURING CLOSING DATE, AS IF FIRST MADE AT AND AS OF SUCH TIME;

 

(B)           SELLER SHALL HAVE PERFORMED AND COMPLIED IN ALL MATERIAL RESPECTS
WITH ALL OF ITS AGREEMENTS AND COVENANTS REQUIRED TO BE PERFORMED OR COMPLIED
WITH UNDER THIS AGREEMENT WITH RESPECT TO THE MANUFACTURING ASSETS AS OF THE
MANUFACTURING CLOSING DATE;

 

(C)           THERE SHALL NOT HAVE OCCURRED, FROM THE DATE OF THIS AGREEMENT
THROUGH THE MANUFACTURING CLOSING DATE, ANY EVENT, CIRCUMSTANCE, DEVELOPMENT
WITH RESPECT TO, CHANGE IN OR EFFECT ON THE MANUFACTURING ASSETS THAT IS, OR
COULD REASONABLY BE EXPECTED TO BE, MATERIALLY ADVERSE TO SUCH MANUFACTURING
ASSETS, TAKEN AS A WHOLE;

 

(D)           NO ACTION, SUIT, PROCEEDING, CLAIM, ARBITRATION OR INVESTIGATION
BEFORE ANY GOVERNMENTAL ENTITY OR BEFORE ANY ARBITRATOR SHALL BE PENDING THAT
WOULD REASONABLY BE EXPECTED TO RESULT IN AN UNFAVORABLE JUDGMENT, ORDER,
DECREE, STIPULATION OR INJUNCTION THAT WOULD: (I) PREVENT THE TRANSFER OF THE
MANUFACTURING ASSETS AS CONTEMPLATED HEREBY OR (II) CAUSE THE TRANSFER

 

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OF THE MANUFACTURING ASSETS AS CONTEMPLATED HEREUNDER TO BE RESCINDED FOLLOWING
CONSUMMATION;

 

(E)           NONE OF THE WORK IN PROCESS SHALL BE HELD UNDER A CONSIGNMENT OR
SIMILAR ARRANGEMENT OR BE IN TRANSIT.  THE WORK IN PROCESS SHALL HAVE BEEN
MANUFACTURED IN ACCORDANCE WITH THEN CURRENT GOOD TISSUE PRACTICES, AS SET FORTH
BY THE FDA, AND ALL APPLICABLE LAWS, RULES, REGULATIONS, ORDINANCES, STANDARDS
AND GUIDELINES, INCLUDING, WITHOUT LIMITATION, THE UNITED STATES FEDERAL FOOD,
DRUG AND COSMETIC ACT, 21 U.S.C. §301 ET SEQ., AND THE UNITED STATES NATIONAL
ORGAN TRANSPLANT ACT, TITLE 21 OF THE CODE OF FEDERAL REGULATIONS PART 1271,
HUMAN CELLS, TISSUES, AND CELLULAR AND TISSUE BASED PRODUCTS.

 

(F)            SELLER SHALL HAVE DELIVERED TO PURCHASER A CERTIFICATE EXECUTED
BY AN AUTHORIZED OFFICER OF THE SELLER TO THE EFFECT THAT EACH OF THE CONDITIONS
SPECIFIED IN CLAUSES (A), (B), (C), (D) AND (E) OF THIS SECTION 6.1 HAS BEEN
SATISFIED AS OF THE MANUFACTURING CLOSING DATE IN ALL RESPECTS;

 

(G)           SELLER SHALL HAVE DELIVERED TO PURCHASER A BILL OF SALE AND
ASSIGNMENT AND ASSUMPTION AGREEMENT IN THE FORM ATTACHED HERETO AS EXHIBIT J
(THE “BILL OF SALE — MANUFACTURING ASSETS”) DATED AS OF THE MANUFACTURING
CLOSING DATE AND DULY EXECUTED BY AN AUTHORIZED OFFICER OF SELLER;

 

(H)           ALL LIENS OTHER THAN PERMITTED LIENS TO WHICH ANY OF THE
MANUFACTURING ASSETS ARE SUBJECT OR BY WHICH ANY OF THE MANUFACTURING ASSETS ARE
BOUND SHALL HAVE BEEN REMOVED AND SELLER SHALL HAVE DELIVERED TO PURCHASER
EVIDENCE OF THE REMOVAL OF SUCH LIENS THAT IS REASONABLY ACCEPTABLE TO
PURCHASER; AND

 

(I)            SELLER SHALL HAVE OBTAINED FROM THE SECRETARY OF STATE OF THE
STATE OF DELAWARE, AND DELIVERED TO PURCHASER, A CERTIFICATE OF GOOD STANDING OF
SELLER.

 

ARTICLE VII.

TERMINATION

 

Section 7.1            Termination of Agreement.  This Agreement may be
terminated at any time prior to the Technology Closing:

 

(A)           BY MUTUAL WRITTEN CONSENT OF PURCHASER AND SELLER;

 

(B)           BY PURCHASER OR SELLER IF, WITHOUT THE FAULT OF THE TERMINATING
PARTY, THE TECHNOLOGY CLOSING SHALL NOT HAVE OCCURRED ON OF BEFORE SEPTEMBER 8,
2008 (THE “END DATE”); PROVIDED THAT, IF BY THE END DATE THE CONDITION SET FORTH
IN SECTION 5.1(A) SHALL NOT HAVE BEEN SATISFIED BUT ALL OTHER CONDITIONS SHALL
BE OR ARE CAPABLE OF BEING SATISFIED, THE END DATE MAY BE EXTENDED BY EITHER
PURCHASER OR SELLER, IN ITS DISCRETION, BY THREE (3) MONTHS FROM ITS SCHEDULED
EXPIRY (IN WHICH CASE ANY REFERENCES TO THE END DATE HEREIN SHALL MEAN THE END
DATE AS EXTENDED);

 

(C)           BY PURCHASER, IF SELLER SHALL BE IN MATERIAL BREACH OF ANY OF ITS
REPRESENTATIONS, WARRANTIES, COVENANTS OR AGREEMENTS SET FORTH IN THIS
AGREEMENT, WHICH BREACH IS NOT CURED BY SELLER WITHIN TEN (10) CALENDAR DAYS
FOLLOWING RECEIPT OF WRITTEN NOTICE OF SUCH BREACH OR FAILURE TO PERFORM FROM
PURCHASER, PROVIDED THAT PURCHASER IS NOT IN MATERIAL BREACH OF ANY OF ITS

 

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REPRESENTATIONS, WARRANTIES, COVENANTS OR AGREEMENTS SET FORTH IN THIS AGREEMENT
AT THE TIME SUCH NOTICE IS DELIVERED;

 

(D)           BY SELLER, IF PURCHASER SHALL BE IN MATERIAL BREACH OF ANY OF ITS
REPRESENTATIONS, WARRANTIES, COVENANTS OR AGREEMENTS SET FORTH IN THIS
AGREEMENT, WHICH BREACH IS NOT CURED BY PURCHASER WITHIN TEN (10) CALENDAR DAYS
FOLLOWING RECEIPT OF WRITTEN NOTICE OF SUCH BREACH OR FAILURE TO PERFORM FROM
SELLER, PROVIDED THAT SELLER IS NOT IN MATERIAL BREACH OF ANY OF ITS
REPRESENTATIONS, WARRANTIES, COVENANTS OR AGREEMENTS SET FORTH IN THIS AGREEMENT
AT THE TIME SUCH NOTICE IS DELIVERED;

 

(E)           BY PURCHASER OR SELLER IF ANY GOVERNMENTAL ENTITY SHALL HAVE
ENTERED A FINAL, NON-APPEALABLE ORDER OR INJUNCTION RESTRAINING, ENJOINING OR
OTHERWISE PROHIBITING THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, PROVIDED
THAT SUCH RIGHT OF TERMINATION SHALL NOT BE AVAILABLE TO ANY PARTY IF SUCH PARTY
SHALL HAVE FAILED TO TAKE REASONABLE EFFORTS TO PREVENT OR CONTEST THE
IMPOSITION OF SUCH ORDER OR INJUNCTION;

 

(F)            BY PURCHASER OR SELLER IF THE STOCKHOLDER APPROVAL SHALL NOT HAVE
BEEN OBTAINED AT THE STOCKHOLDERS MEETING DULY CONVENED OR AT ANY ADJOURNMENT OR
POSTPONEMENT THEREOF; PROVIDED, HOWEVER, THAT THE RIGHT TO TERMINATE THIS
AGREEMENT UNDER THIS SECTION 7.1(F) SHALL NOT BE AVAILABLE TO SELLER WHERE THE
FAILURE TO OBTAIN THE STOCKHOLDER APPROVAL SHALL HAVE BEEN CAUSED BY THE ACTION
OR FAILURE TO ACT OF SELLER AND SUCH ACTION OR FAILURE TO ACT CONSTITUTES A
BREACH BY SELLER OF THIS AGREEMENT; OR

 

(G)           BY PURCHASER IF THERE SHALL HAVE BEEN A CHANGE IN SELLER BOARD
RECOMMENDATION.

 

SECTION 7.2            PROCEDURES AND EFFECT OF TERMINATION.  IN THE EVENT OF
TERMINATION OF THIS AGREEMENT BY PURCHASER OR SELLER PURSUANT TO SECTION 7.1,
ALL OBLIGATIONS OF THE PARTIES HEREUNDER SHALL TERMINATE WITHOUT ANY LIABILITY
OF ANY PARTY TO THE OTHER PARTY, EXCEPT FOR ANY LIABILITY OF A PARTY FOR
BREACHES OF THIS AGREEMENT PRIOR TO SUCH TERMINATION.  THIS SECTION 7.2,
SECTION 4.5 (CONFIDENTIALITY), SECTION 7.3 AND ARTICLE IX SHALL SURVIVE ANY
TERMINATION OF THIS AGREEMENT.

 

Section 7.3            Reimbursement of Expenses.  Seller agrees that, if
Purchaser or Seller terminates this Agreement (i) pursuant to
Section 7.1(b) hereto and, at the time of such termination, the Stockholder
Approval shall not have been obtained or (ii) pursuant to Section 7.1(f), then
Seller shall pay to Purchaser promptly (but in any even no later than two
business days after such termination) an amount of Three Hundred Fifty Thousand
Dollars ($350,000.00) as reimbursement for Purchaser’s costs and expenses
associated with the negotiation, implementation and performance of this
Agreement prior to such termination.  Seller further agrees that, (i) if
Purchaser or Seller terminates this Agreement pursuant to Section 7.1(f) hereto
and at the time of such termination the Stockholder Meeting shall have been
held, the Stockholder Approval shall not have been obtained and, prior to the
Stockholder Meeting, there shall have been a Change in Seller Board
Recommendation or (ii) Purchaser terminates this Agreement pursuant to
Section 7.1(g), then Seller shall pay to Purchaser promptly (but in any event no
later than two business days after such termination) an amount of Two Million
Dollars ($2,000,000).  All amounts payable by Seller to Purchaser pursuant to
this Section 7.3 shall be

 

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paid in a wire transfer of United States dollars in immediately available funds
to an account designated by Purchaser to Seller in writing.

 

ARTICLE VIII.

INDEMNIFICATION

 

Section 8.1            Indemnification by Seller.  Seller hereby agrees to
indemnify, defend and save harmless Purchaser and its directors, officers,
employees, affiliates, agents, advisors, representatives, stockholders and
assigns (collectively, the “Purchaser Indemnified Parties”) from, against and in
respect of any and all Losses incurred or suffered by any Purchaser Indemnified
Party arising out of, or related to, the following (each, a “Purchaser Claim”):

 

(A)           ANY MISREPRESENTATION OR BREACH OF WARRANTY MADE BY THE SELLER IN
ANY TRANSACTION DOCUMENT OR IN ANY DOCUMENT, CERTIFICATE OR OTHER INSTRUMENT
REQUIRED TO BE DELIVERED BY THE SELLER UNDER ANY TRANSACTION DOCUMENT;

 

(B)           ANY BREACH OR NON FULFILLMENT BY THE SELLER WHEN REQUIRED TO BE
PERFORMED OF ANY COVENANT OR AGREEMENT MADE OR TO BE PERFORMED BY THE SELLER IN
ANY TRANSACTION DOCUMENT OR IN ANY AGREEMENT OR INSTRUMENT ENTERED IN CONNECTION
WITH ANY TRANSACTION DOCUMENT;

 

(C)           ANY FRAUD OR INTENTIONAL MISREPRESENTATION WITH RESPECT TO, OR
INTENTIONAL BREACH OF, ANY TRANSACTION DOCUMENT BY THE SELLER; AND

 

(D)           THE RETAINED LIABILITIES.

 

Except as set forth in Section 8.6 with respect to third party Actions, in the
event of any Purchaser Claim, Purchaser shall notify Seller and such notice
shall be in writing and shall describe with reasonable specificity the nature
and amount of such Purchaser Claim (a “Purchaser Notice of Claim”).  A delay on
the part of a Purchaser Indemnified Party in giving Seller a Purchaser Notice of
Claim shall relieve Seller from its obligations under this Section 8.1 only to
the extent that Seller is materially prejudiced thereby.  A Purchaser Notice of
Claim may be delivered at any time during the applicable survival period for
such claim as set forth in Section 8.3 of this Agreement.

 

Section 8.2            Indemnification by Purchaser.  Purchaser hereby agrees to
indemnify, defend and save harmless Seller and its directors, officers,
employees, affiliates, agents, advisors, representatives, stockholders and
assigns (collectively, the “Seller Indemnified Parties”) from, against and in
respect of any and all Losses incurred or suffered by any Seller Indemnified
Party arising out of, or related to, the following (each, a “Seller Claim”):

 

(A)           ANY MISREPRESENTATION OR BREACH OF WARRANTY MADE BY THE PURCHASER
IN ANY TRANSACTION DOCUMENT OR IN ANY DOCUMENT, CERTIFICATE OR OTHER INSTRUMENT
REQUIRED TO BE DELIVERED BY THE PURCHASER UNDER ANY TRANSACTION DOCUMENT;

 

(B)           ANY BREACH OR NON FULFILLMENT OF ANY COVENANT OR AGREEMENT MADE OR
TO BE PERFORMED BY THE PURCHASER IN ANY TRANSACTION DOCUMENT OR IN ANY AGREEMENT
OR INSTRUMENT ENTERED IN CONNECTION WITH ANY TRANSACTION DOCUMENT;

 

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(C)           ANY FRAUD OR INTENTIONAL MISREPRESENTATION WITH RESPECT TO, OR
INTENTIONAL BREACH OF, ANY TRANSACTION DOCUMENT BY PURCHASER; AND

 

(D)           THE ASSUMED LIABILITIES.

 

Except as set forth in Section 8.6 with respect to third party Actions, in the
event of any Seller Claim, Seller shall notify Purchaser and such notice shall
be in writing and shall describe with reasonable specificity the nature and
amount of such Seller Claim (a “Seller Notice of Claim”).  A delay on the part
of a Seller Indemnified Party in giving Purchaser a Seller Notice of Claim shall
relieve Purchaser from its obligations under this Section 8.2 only to the extent
that Purchaser is materially prejudiced thereby.  A Seller Notice of Claim may
be delivered at any time during the applicable survival period for such claim as
set forth in Section 8.3 of this Agreement.

 

Section 8.3            Survival.  If the Technology Closing occurs, all
representations and warranties of Purchaser and Seller contained herein or in
any other Transaction Document or document, certificate or other instrument
required to be delivered hereunder or thereunder in connection with the
transactions contemplated hereby shall survive the Technology Closing and shall
continue until eighteen months (18) months after the Manufacturing Closing,
provided that the representations and warranties set forth in Section 2.6
(Taxes), Section 2.9(c) (Disposition of Certain Contracts), Section 2.15
(Intellectual Property), Section 2.18 (Authorizations; Regulatory Compliance),
Section 2.20 (Environmental), Section 2.22 (Brokers), shall survive until sixty
(60) days after the expiration of the applicable statutes of limitations
(including any extensions or waivers thereof) (the “Specified Representations”);
provided, further, that the representations and warranties on which any Claims
for indemnification are based shall continue in effect until final resolution of
such claims and such expiration thereof shall not effect the right of any
Indemnified Party to seek indemnification for Losses pursuant to Article 8
hereof.

 

Section 8.4            Limitations.  Notwithstanding anything contained in this
Agreement to the contrary:

 

(A)           NEITHER PARTY SHALL BE LIABLE OR BE OBLIGATED TO MAKE ANY PAYMENT
IN RESPECT OF LOSSES SUFFERED BY AN INDEMNIFIED PARTY UNDER
SECTION 8.1(A) (OTHER THAN THE REPRESENTATIONS AND WARRANTIES SET FORTH IN
SECTION 2.4 HEREOF), 8.1(B), 8.2(A) OR 8.2(B) HEREOF (AS THE CASE MAY BE) UNTIL
THE AGGREGATE OF ALL LOSSES SUFFERED BY SUCH INDEMNIFIED PARTY UNDER THIS
ARTICLE VIII EXCEEDS TWO HUNDRED FIFTY THOUSAND DOLLARS ($250,000) (THE “BASKET
AMOUNT”); AFTER WHICH SUCH OTHER PARTY SHALL BE ENTITLED TO RECOVER ALL SUCH
LOSSES (SUBJECT TO THE GENERAL CAP AMOUNT); PROVIDED THAT IN NO EVENT SHALL THE
AGGREGATE INDEMNITY AMOUNT PAYABLE BY ANY INDEMNIFYING PARTY PURSUANT TO
SECTION 8.1(A), 8.1(B) OR 8.2(A) HEREOF (OTHER THAN WITH RESPECT TO ANY
SPECIFIED REPRESENTATIONS) EXCEED FIFTEEN MILLION DOLLARS ($15,000,000) (THE
“GENERAL CAP AMOUNT”).

 

(B)           NEITHER PARTY SHALL BE LIABLE OR BE OBLIGATED TO MAKE ANY PAYMENT
IN RESPECT OF LOSSES SUFFERED BY AN INDEMNIFIED PARTY UNDER
(I) SECTION 8.1(A) WITH RESPECT TO ANY SPECIFIED REPRESENTATION (OTHER THAN THE
REPRESENTATIONS SET FORTH IN SECTION 2.9(C) HEREOF), OR (II) SECTION 8.2(B) (THE
“SPECIAL CAP LIABILITIES”) UNTIL THE AGGREGATE OF ALL LOSSES SUFFERED BY SUCH
INDEMNIFIED PARTY UNDER THIS ARTICLE VIII EXCEEDS THE BASKET AMOUNT, AFTER WHICH
SUCH OTHER PARTY SHALL BE ENTITLED TO RECOVER ALL SUCH LOSSES (SUBJECT TO THE
SPECIAL CAP AMOUNT), PROVIDED

 

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THAT IN NO EVENT SHALL THE AGGREGATE INDEMNITY AMOUNT PAYABLE BY ANY
INDEMNIFYING PARTY WITH RESPECT TO THE SPECIAL CAP LIABILITIES AND LIABILITY
UNDER SECTION 8.1(A) WITH RESPECT TO THE REPRESENTATIONS SET FORTH IN
SECTION 2.9(C) HEREOF, WHEN TAKEN TOGETHER WITH ALL LOSSES PAID OR PAYABLE TO AN
INDEMNIFIED PARTY PURSUANT TO SECTION 8.4(A) ABOVE, EXCEED TWENTY MILLION
DOLLARS ($20,000,000) PLUS ANY APPLICABLE MILESTONE PAYMENTS THAT BECOME PAYABLE
(PRIOR TO PURCHASER’S RIGHTS OF SET-OFF) PURSUANT TO SECTION 1.5 HEREOF;
PROVIDED, HOWEVER, THAT IN NO EVENT SHALL THE AGGREGATE INDEMNITY AMOUNT FOR
LOSSES PAYABLE BY ANY INDEMNIFYING PARTY UNDER THIS SECTION 8.4(B), WHEN TAKEN
TOGETHER WITH ALL LOSSES PAID OR PAYABLE BY AN INDEMNIFYING PARTY PURSUANT TO
SECTION 8.4(A), EXCEED THIRTY FIVE MILLION DOLLARS ($35,000,000) (THE “SPECIAL
CAP AMOUNT”).

 

(C)           EACH PARTY’S LIABILITY AND OBLIGATION TO MAKE ANY PAYMENT IN
RESPECT OF LOSSES SUFFERED BY AN INDEMNIFIED PARTY UNDER (I) SECTIONS 8.1(C) AND
8.1(D) OR (II) SECTIONS 8.2(C) AND 8.2(D) SHALL BE UNLIMITED.

 

(D)           THE AMOUNT OF ANY LOSSES INDEMNIFIABLE BY EITHER PARTY PURSUANT TO
THIS ARTICLE VIII SHALL BE ADJUSTED TO REFLECT THE VALUE OF ANY INSURANCE
PROCEEDS ACTUALLY RECEIVED (NET OF ANY DEDUCTIBLES, RETENTION OR SELF-INSURANCE)
BY THE INDEMNIFIED PARTY OR ITS SUCCESSORS OR ASSIGNS IN RESPECT OF SUCH LOSSES
PROVIDED, HOWEVER, THAT NO INDEMNIFIED PARTY SHALL HAVE ANY OBLIGATION TO PURSUE
SUCH INSURANCE PROCEEDS OR RECOVERY FROM THIRD PERSONS.  IF ANY SUCH PROCEEDS OR
RECOVERIES ARE RECEIVED BY AN INDEMNIFIED PARTY (OR ANY OF ITS AFFILIATES) WITH
RESPECT TO ANY CLAIMS AFTER A PARTY HERETO HAS MADE A PAYMENT TO THE INDEMNIFIED
PARTY WITH RESPECT TO SUCH CLAIM, THE INDEMNIFIED PARTY (OR SUCH AFFILIATE)
SHALL PAY TO SUCH PARTY THE AMOUNT OF SUCH PROCEEDS OR RECOVERIES (UP TO THE
AMOUNT OF SUCH PARTY’S PAYMENT WITH RESPECT TO SUCH CLAIM).

 

(E)           NO INDEMNIFIED PARTY SHALL BE ENTITLED TO RECOVER UNDER THIS
ARTICLE VIII AN AMOUNT IN RESPECT OF LOSSES, OR OTHERWISE OBTAIN REIMBURSEMENT
OR RESTITUTION FROM ANY PARTY TO THIS AGREEMENT, MORE THAN ONCE IN RESPECT OF
THE SAME LOSS.

 

Section 8.5            Resolution of Notice of Claim.  Each Purchaser Notice of
Claim and Seller Notice of Claim (each, a “Notice of Claim”) delivered hereunder
shall be resolved as follows:

 

(A)           IF, WITHIN THIRTY (30) DAYS AFTER A NOTICE OF CLAIM IS RECEIVED BY
THE INDEMNIFYING PARTY, THE INDEMNIFYING PARTY DOES NOT CONTEST SUCH NOTICE OF
CLAIM IN WRITING TO THE INDEMNIFIED PARTY, THE INDEMNIFYING PARTY SHALL BE
CONCLUSIVELY DEEMED TO HAVE CONSENTED TO THE RECOVERY BY THE INDEMNIFIED PARTY
OF THE FULL AMOUNT OF LOSSES (SUBJECT TO THE LIMITS CONTAINED IN THIS
ARTICLE VIII) SPECIFIED IN THE NOTICE OF CLAIM IN ACCORDANCE WITH THIS
ARTICLE VIII, AND THE INDEMNIFYING PARTY SHALL BE OBLIGATED TO PAY TO THE
INDEMNIFIED PARTY THE TOTAL AMOUNT OF LOSSES SET FORTH IN THE NOTICE OF CLAIM
WITHIN FIFTEEN (15) DAYS FOLLOWING SUCH THIRTY (30) DAY PERIOD.

 

(B)           FOLLOWING THE DELIVERY OF A NOTICE OF CLAIM TO AN INDEMNIFYING
PARTY, THE INDEMNIFYING PARTY SHALL BE GIVEN SUCH ACCESS AS THEY MAY REASONABLY
REQUIRE DURING THE INDEMNIFIED PARTY’S NORMAL BUSINESS HOURS (OR SUCH OTHER
TIMES AS THE PARTIES MAY AGREE) TO THOSE BOOKS AND RECORDS OF THE INDEMNIFIED
PARTY RELATING TO THE CLAIM IN THE POSSESSION OF, AND/OR UNDER THE CONTROL OF,
THE INDEMNIFIED PARTY, AND ACCESS TO SUCH PERSONNEL OR REPRESENTATIVES OF

 

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THE INDEMNIFIED PARTY AS THEY MAY REASONABLY REQUIRE FOR THE PURPOSES OF
DETERMINING WHETHER TO CONTEST ALL OR ANY PORTION OF A NOTICE OF CLAIM.

 

(C)           IF THE INDEMNIFYING PARTY GIVES THE INDEMNIFIED PARTY WRITTEN
NOTICE CONTESTING ALL OR ANY PORTION OF A NOTICE OF CLAIM (A “CONTESTED CLAIM”)
WITHIN THE THIRTY (30) DAY PERIOD SPECIFIED IN SECTION 8.5(A) ABOVE, THEN SUCH
CONTESTED CLAIM SHALL BE RESOLVED BY EITHER (I) A WRITTEN SETTLEMENT AGREEMENT
OR MEMORANDUM EXECUTED BY THE INDEMNIFIED PARTY AND THE INDEMNIFYING PARTY OR
(II) IN THE ABSENCE OF SUCH A WRITTEN SETTLEMENT AGREEMENT WITHIN FIFTEEN (15)
DAYS FOLLOWING RECEIPT BY THE INDEMNIFIED PARTY OF THE WRITTEN NOTICE FROM THE
INDEMNIFYING PARTY, BY BINDING ARBITRATION BETWEEN THE INDEMNIFIED PARTY AND
INDEMNIFYING PARTY IN ACCORDANCE WITH THE TERMS AND PROVISIONS OF SECTION 9.1
BELOW.  THE DECISION OF THE ARBITRATORS AS TO THE VALIDITY AND AMOUNT OF ANY
CLAIM IN ANY DISPUTED NOTICE OF CLAIM SHALL BE BINDING AND CONCLUSIVE UPON THE
PARTIES TO THIS AGREEMENT, AND THE INDEMNIFIED PARTY SHALL BE ENTITLED TO ACT IN
ACCORDANCE WITH AND IN RELIANCE ON SUCH DECISION, AND THE INDEMNIFYING PARTY
SHALL BE OBLIGATED TO PAY TO THE INDEMNIFIED PARTY THE TOTAL AMOUNT OF LOSSES AS
DETERMINED BY THE ARBITRATOR WITHIN FIFTEEN (15) DAYS FOLLOWING SUCH DECISION.

 

(D)           JUDGMENT UPON ANY AWARD RENDERED BY THE ARBITRATORS MAY BE ENTERED
IN ANY COURT HAVING JURISDICTION.  SELLER AND PURCHASER SHALL INSTRUCT THE
ARBITRATORS TO DETERMINE AND SET FORTH IN JUDGMENT OF THE ARBITRATORS THE
NON-PREVAILING PARTY TO AN ARBITRATION AND SUCH NON-PREVAILING PARTY SHALL PAY
ITS OWN EXPENSES, THE FEES OF EACH ARBITRATOR, THE ADMINISTRATIVE FEE OF THE
AMERICAN ARBITRATION ASSOCIATION, AND THE EXPENSES, INCLUDING, WITHOUT
LIMITATION, THE REASONABLE ATTORNEYS’ FEES AND COSTS, INCURRED BY THE PREVAILING
PARTY TO THE ARBITRATION.  THE ARBITRATION PANEL SHALL BE AUTHORIZED TO
DETERMINE WHICH PARTY TO THE ARBITRATION IS THE PREVAILING PARTY AND WHICH PARTY
IS THE NON-PREVAILING PARTY.

 

(E)           ANY AMOUNTS OWED TO ANY PURCHASER INDEMNIFIED PARTY FOLLOWING THE
RESOLUTION OF A PURCHASER CLAIM, AS DETERMINED BY THIS SECTION 8.5, SHALL BE
SATISFIED, AT THE SOLE DISCRETION OF PURCHASER, BY PAYMENT OF SELLER TO
PURCHASER, FROM ANY EARNED BUT UNPAID PORTION OF THE MAXIMUM MILESTONE AMOUNT.

 

Section 8.6            Third Party Actions.  In the event any Action is
instituted against an Indemnified Party, which involves a Claim for which
indemnification may be sought, the Indemnified Party will, promptly after
receipt of notice of any such Action, notify the indemnifying party of the
commencement thereof.  The failure to so notify the indemnifying party of the
commencement of any such Action will relieve the indemnifying party from
liability in connection therewith only to the extent that such failure
materially and adversely affects the ability of the indemnifying party to defend
the interests of the indemnifying party in such Action.  Except as set forth on
Schedule 8.6 hereto, the Indemnified Party shall have the right to control the
defense or settlement of such Action; provided that the indemnifying party and
its counsel (at such party’s sole expense) may participate in (but not control
the conduct of) the defense of such Action, but only to the extent that such
participation does no affect any privilege relating to the Indemnified Party. 
Any settlement by the Indemnified Party of any such Action with third party
claimants, or any judgment by any governmental entity with respect to such
Action with third party claimants, shall be determinative of the amount of
Losses relating to such matter for purposes of this Article VIII.

 

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Section 8.7            Exclusive Remedy.  If the Technology Closing occurs,
except for the rights of Purchaser set forth in Section 9.1(b) hereto, following
the Technology Closing the right of the parties hereto to demand and receive
indemnification pursuant to this Article VIII shall be the sole and exclusive
remedy exercisable by a party with respect to this Agreement or the transactions
contemplated hereby except for the right to seek specific performance of any of
the agreements contained herein, and except in the case of fraud or intentional
misrepresentation.

 

Section 8.8            Reliance.  No Indemnified Party shall be required to show
reliance on any representation, warranty, certificate or other agreement in
order for such Indemnified Party to be entitled to indemnification hereunder.

 

Section 8.9            Tax Treatment of Indemnity Payments.  Any payment
pursuant to this Article VIII shall be considered an adjustment to the initial
Purchase Price for Tax purposes, to the maximum extent permitted by law.

 

ARTICLE IX.

MISCELLANEOUS

 

Section 9.1            Disputes.

 

(a)           Any dispute, controversy, difference or claim arising out of,
relating to or in connection with this Agreement, any other Transaction
Document, any transaction hereunder or thereunder or breach hereof or thereof
shall be finally settled by arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association (the “Rules”) then in
effect by one (1) arbiter appointed with the consent of both Seller and
Purchaser (and in the event such consent cannot be obtained within thirty (30)
days following the request by Seller or Purchaser for the consent of the other,
in accordance with the Rules).  The arbiter’s award shall be final and binding,
and, in all instances, be subject to the limitations set forth in Article VIII
hereof.  Judgment upon the award rendered by the arbiter may be entered in any
court having jurisdiction thereof.  The arbitration shall take place in the Cook
County in the State of Illinois, or such other place as the parties may agree. 
The arbiter’s award shall be in writing and shall include (i) a provision that
the prevailing party in the arbitration shall recover its costs of the
arbitration and reasonable attorneys’ fees from the other party, and (ii) the
amount of such costs and fees.

 

(B)           NOTWITHSTANDING SUBSECTION (A), (I) EITHER PARTY MAY, IF IT
BELIEVES THAT IT REQUIRES OR IS ENTITLED TO INJUNCTIVE RELIEF, FILE A CIVIL
ACTION IN ANY COURT HAVING JURISDICTION SEEKING INJUNCTIVE RELIEF,
(II) PURCHASER SHALL BE ENTITLED TO SPECIFIC PERFORMANCE TO REMEDY ANY BREACH BY
SELLER OF ITS REPRESENTATIONS AND WARRANTIES CONTAINED IN SECTION 2.4 (TITLE AND
SUFFICIENCY OF TRANSFERRED ASSETS) AND THE COVENANTS CONTAINED IN SECTION 4.1
(FURTHER ASSURANCES) AND SHALL BE ENTITLED TO FILE A CIVIL ACTION IN ANY COURT
HAVING JURISDICTION SEEKING SUCH RELIEF AND (III) PURCHASER SHALL BE ENTITLED TO
SPECIFIC PERFORMANCE AND SHALL BE ENTITLED TO FILE A CIVIL ACTION IN ANY COURT
HAVING JURISDICTION SEEKING SUCH RELIEF IF SELLER IS IN BREACH OF ITS
OBLIGATIONS UNDER SECTION 4.6 (NO OTHER BIDS) HEREOF OR IF FOLLOWING THE
TERMINATION OF THE MANUFACTURING AGREEMENT, PURCHASER HAS REQUESTED THAT THE
MANUFACTURING CLOSING TAKE PLACE AND THE

 

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MANUFACTURING ASSETS BE TRANSFERRED TO PURCHASER IN ACCORDANCE WITH THE TERMS OF
THIS AGREEMENT AND SELLER HAS NOT, WITHIN TEN (10) BUSINESS DAYS FOLLOWING SUCH
REQUEST, DELIVERED AND TRANSFERRED THE MANUFACTURING ASSETS TO PURCHASER.  ANY
CLAIM TO OR DEMAND FOR MONETARY DAMAGES SHALL, HOWEVER, BE GOVERNED EXCLUSIVELY
BY THE PROVISIONS FOR ARBITRATION SET FORTH IN SUBSECTION (A).

 

Section 9.2            Merger Clause.  This Agreement, the other Transaction
Documents and the agreements, documents and instruments to be executed and
delivered in connection herewith and therewith contain the final, complete and
exclusive statement of the agreement between the parties with respect to the
transactions contemplated herein and all other prior or contemporaneous oral
communications (including, for avoidance of doubt, communications in connection
with the preparation of this Agreement and the other Transaction Documents) and
agreements, and all prior written communications (including, for avoidance of
doubt, written drafts of this Agreement and the other Transaction Documents) and
agreements, with respect to the subject matter hereof are merged herein and
superseded.  For the avoidance of doubt, it is the parties’ intent that no term
contained in or omitted from any prior written draft of this Agreement or the
other Transaction Documents be used as extrinsic evidence under any state law or
judicial interpretation to determine the intent of the parties hereto.

 

Section 9.3            Amendments.  No amendment to, or any waiver with respect
to any provision of, this Agreement shall be effective unless in writing and
executed, in the case of an amendment by each party to this Agreement or, in the
case of a waiver by each party against whom the waiver is to be effective.  No
course of dealing and no failure or delay on the part of any party hereto in
exercising any right, power or remedy conferred by this Agreement shall operate
as a waiver thereof or otherwise prejudice such party’s rights, powers and
remedies.  The failure of either party to this Agreement to require the
performance of a term or obligation under this Agreement or the waiver by the
other party to this Agreement of any breach hereunder shall not prevent
subsequent enforcement of such term or obligation or be deemed a waiver of any
subsequent breach hereunder.  No single or partial exercise of any right, power
or remedy conferred by this Agreement shall preclude any other or further
exercise thereof or the exercise of any other right, power or remedy.

 

Section 9.4            Notices.  All notices, requests and demands and other
communications hereunder must be in writing and shall be deemed to have been
duly given (i) if given by telecopy, when such telecopy is transmitted to the
telecopy number specified in this Agreement, if written confirmation of receipt
thereof is obtained, (ii) on the date of delivery shown on the return receipt
(or, if none shown, three (3) days after deposit in the mail) if placed in the
United States mails and forwarded by registered or certified mail, return
receipt requested, postage prepaid, or (iii) one (1) business day after deposit
in the mail, if delivered, prepaid, to an overnight courier.  All such
communications shall be addressed as follows:

 

(A)           IF TO SELLER:

 

Osiris Therapeutics, Inc.

7015 Albert Einstein Avenue

Columbia, Maryland 21046

Attention:  Chief Executive Officer

 

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Facsimile: (443) 283-4259

 

with a required copy to:

 

McKenna Long & Aldridge LLP

303 Peachtree St., NE, Suite 5300

Atlanta, Georgia 30308

Attention:  Michael Cochran, Esq.

Facsimile: (404) 527-4198

 

(B)           IF TO PURCHASER:

 

NuVasive, Inc.

7473 Lusk Boulevard

San Diego, California 92121

Attention:  General Counsel

Facsimile: (858) 909-2479

 

with a required copy (which shall not constitute notice) to:

 

DLA Piper US LLP

4365 Executive Drive, Suite 1100

San Diego, California 92122

Attention:  Michael Kagnoff

Facsimile: (858) 456-3075

 

Any party may change the address(es) to which notices to it are to be sent by
giving notice of such change to the other parties in accordance with this
Section.

 

Section 9.5            Captions.  The captions are for convenience of reference
only and shall not be construed as a part of this Agreement.

 

Section 9.6            Governing Law.  This Agreement, including the validity
hereof and the rights and obligations of the parties hereunder, shall be
construed, interpreted, enforced and governed by and under the laws of the State
of Delaware applicable to contracts made and to be performed entirely in such
state, without regard to its rules regarding conflicts of law provisions.

 

Section 9.7            Schedules and Exhibits.  All the schedules and exhibits
referenced in and attached to this Agreement are incorporated herein by
reference and shall be deemed to be a part of this Agreement for all purposes. 
If any provision of this Agreement is so broad as to be unenforceable, such
provision shall be interpreted to be only so broad as if enforceable.

 

Section 9.8            Severability.  The invalidity, unenforceability or
illegality of any one or more phrases, sentences, clauses or provisions of this
Agreement shall not affect the validity, enforceability or legality of the
remaining portions of this Agreement or any part thereof (so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party), it being intended that
each party’s rights and privileges shall be enforceable to the fullest extent
permitted by applicable law, and any such invalidity,

 

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unenforceability or illegality in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction (so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party).

 

Section 9.9            Counterparts.  This Agreement may be executed in any
number of counterparts, each of which shall constitute an original but all of
which shall constitute one and the same instrument.  The parties need not sign
the same counterpart.

 

Section 9.10         Fees and Expenses.  Except as expressly set forth herein,
Seller on the one hand, and Purchaser, on the other hand, shall each bear their
own expenses in connection with the negotiation and preparation of this
Agreement, all agreements, documents, and instruments contemplated hereby, and
the consummation of the transactions contemplated hereby, including, without
limitation, the fees and expenses of their respective counsel, accountants, and
consultants.

 

Section 9.11         Benefits and Binding Effect.  No party may assign or
transfer any of their respective rights, benefits or obligations under this
Agreement without the consent in writing of the other party hereto; provided,
however, that any party may assign its rights, benefits and obligations
hereunder in whole or in part to any successor or successors to (i) in the case
of Purchaser, all or part of the Transferred Assets or its business in the event
of a reorganization, merger or consolidation, sale or other transfer of a
substantial portion of its assets or (ii) in the case of Seller, all of its
business in the event of a reorganization, merger or consolidation (each of the
events in (i) and (ii), a “Corporate Event”); provided that any acquiror or
successor of Purchaser or Seller, as applicable, in connection with a Corporate
Event shall, in the consenting parties reasonable discretion, be at least as
creditworthy as the assigning party; provided further, however, that Seller may
not assign or transfer any of its rights, benefits or obligations under this
Agreement in connection with a Corporate Event prior to the Manufacturing
Closing Date to any person identified on Schedule 9.11. Notwithstanding the
foregoing, no assignment shall relieve the assigning party of responsibility for
the performance of its obligations hereunder.

 

Section 9.12         No Third Party Beneficiary.  The parties hereto do not
intend to create any third party beneficiary rights or remedies with respect to
any person, including without limitation any employees or former employees of
Seller or other person or entity who is providing, or has provided services to
Seller as a result of the provisions in this Agreement, and specifically hereby
negate any such intention or construction.

 

Section 9.13         Definitions; Interpretation.  For purposes of this
Agreement, (a) the terms defined in this Agreement and in this Section 9.13
shall have the meanings assigned to them in this Agreement and this Section 9.13
and include the plural as well as the singular, (b) all accounting terms not
otherwise defined herein have the meanings assigned under GAAP, (c) all
references in this Agreement to designated “Section” or other subdivisions are
to be designated Sections and other subdivisions of the body of this Agreement,
(d) pronouns of either gender or neutral shall include, as appropriate, the
other pronoun forms, and (e) the words “herein,” “hereof” and “hereunder” and
other words of similar import refer to this Agreement as a whole and not to any
particular Section or other subdivision.   Each of the parties has participated
in the drafting and negotiation of this Agreement.  If an ambiguity or question
of intent or interpretation arises, this Agreement must be construed as if it is
drafted by both parties, and no

 

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presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of authorship of any of the provisions of this Agreement.

 

                As used in this Agreement and the exhibits and schedules
delivered pursuant to this Agreement, the following definitions will apply:

 

“Action” means any action, suit, claim, charge, cause of action or suit (whether
in contract or tort or otherwise), litigation (whether at law or in equity,
whether civil or criminal), controversy, assessment, arbitration, investigation,
hearing, complaint, demand or other proceeding to, from, by or before any
arbitrator, court, tribunal or other governmental entity.

 

“Additional Product Delivery Payment” means the product of (i) (A) the Excess
Delivery Amount divided by (B) 58,300, rounded down to the nearest whole number
multiplied by (ii) Two Million, Five Hundred Thousand Dollars ($2,500,000);
provided, however, that in no event shall the Additional Product Delivery
Payment exceed Seven Million, Five Hundred Thousand Dollars ($7,500,000).

 

“Allowable Work in Process” means the maximum total amount of Work in Process
and Finished Inventory existing on the Manufacturing Closing Date which is
reasonably necessary to support the sales forecasts provided by Purchaser to
Seller.

 

“Asset Acquisition Proposal” means any proposal, inquiry or offer from any
person (other than Purchaser) concerning the acquisition or license of all or
any portion of the Transferred Assets.

 

“Business Intellectual Property” means any and all intellectual property and
other intangible rights and property used in, held for use in, intended for use
in, related to or necessary for the operation of the Business as presently
conducted, including any or all of the following, and all rights in, arising out
of, or associated therewith, including, but not limited to, all such rights used
in the operation of the Business: (i) any and all Patent Rights; (ii) all
inventions (whether patentable or not), invention disclosures, discoveries,
improvements, trade secrets, proprietary information, technology, technical
information, data (including data from scientific and clinical and pre-clinical
studies and other research), customer, physician and supplier lists, procedures,
processes, specifications, methods, techniques, ideas, results, marketing
studies, plans and proposals, market research and all other information and
know-how, whether or not patentable or protected as a trade secret, and all
documentation relating to any of the foregoing; (iii) all trademarks, service
marks, trade names, domain names, and registrations and applications relating to
any of the foregoing, all logos, designs, brand names, trade dress and slogans,
and all other rights corresponding thereto throughout the world (“Trademark
Rights”); (iv) all copyrights, copyrights registrations and applications
therefor, works of authorship and derivative works (including advertising,
marketing and promotional materials, artwork, labels and other works of
authorship) mask works, moral rights, and all other rights corresponding thereto
throughout the world; (“Copyright Rights”) (v) all industrial designs and any
registrations and applications therefor throughout the world; (vi) all software,
including but not limited to source code, object, executable or binary code,
templates, manuals and other items and documentation related thereto or
associated therewith; (vii) all databases and data collections and all rights
therein throughout the world; (viii) all Actions and rights to sue at law or in
equity for any,

 

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present or future infringement or other impairment thereto, including the right
to receive all proceeds and damages therefrom, and all rights to obtain
renewals, continuations, divisions or other extensions of legal protections
pertaining thereto; and (ix) any similar or equivalent rights to any of the
foregoing anywhere in the world, together with the goodwill and the business
appurtenant thereto and any rights, claims or choses in action relating to or
deriving from any of the foregoing.

 

“Business Material Adverse Effect” means any event, circumstance, development
with respect to, change in or effect on the Business or the Transferred Assets
that is, or would reasonably be expected to have, a material adverse effect on
the business, assets, liabilities, financial condition or results of operations
of the Business, taken as whole; provided, however, that any event,
circumstance, development, change or effect arising out of or relating to the
following shall not be taken into account in determining whether a Business
Material Adverse Effect shall have occurred: (i) changes in general economic
conditions which do not have a disproportionate impact on the Business,
(ii) changes affecting generally the industry in which the Seller conducts the
Business which do not have a disproportionate impact on the Business, (iii) the
public announcement by Purchaser and Seller of the execution of this Agreement,
(iv) any action taken or omitted to be taken by Seller pursuant to the express
terms of this Agreement, (v) any change resulting solely from an action taken by
Purchaser or its affiliates without the prior written consent of Seller, and
(vi) any action taken at, and in accordance with, the written request of
Purchaser.

 

“Claims” means, as the context dictates, any Purchaser Claim or Seller Claim.

 

“Contract” means any written or oral legally binding contract, agreement,
instrument, commitment or undertaking of any nature (including leases, licenses,
mortgages, notes, guarantees, sublicenses, subcontracts, letters of intent and
purchase orders).

 

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

 

“Excess Delivery Amount” means the positive number, if any, by which the total
number of cubic centimeters of Product that Seller shall have delivered to
Purchaser prior to the Manufacturing Closing in accordance with the terms and
provisions of, and subject to the specifications set forth in, the Manufacturing
Agreement, exceeds the Second Delivery Threshold.

 

“Finished Inventory” means all finished goods inventory of Product.

 

“GAAP” means United States generally accepted accounting principals and
practices in effect from time to time applied consistently throughout the
periods involved.

 

“Indemnified Party” means, as the context dictates, any Purchaser Indemnified
Party or Seller Indemnified Party.

 

“Knowledge” means, with respect to Seller, the actual knowledge of the
individuals listed on Schedule 9.14 hereto or the knowledge that any such
individual could obtain by reasonable inquiry.

 

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“Losses” shall mean the amount of any loss, claim, Tax, demand, loss,
deficiency, damage, liability, judgment, fine, penalty, fee, cost or expense
(including, without limitation, reasonable attorneys’, consultants’ and experts’
fees and expenses) incurred, paid, accrued or sustained by the Purchaser
Indemnified Parties, including, without limitation, any costs of defending any
Actions or enforcing the Purchaser Indemnified Party’s rights under this
Agreement.  In determining the amount of any Loss (but, for avoidance of doubt,
not in determining whether a breach of representation, warranty or covenant
exists), any qualifications in the representations, warranties and covenants
with respect to a Business Material Adverse Effect, materiality, material or
similar terms shall be disregarded and will not have any effect with respect to
the calculation of the amount of any Losses attributable to a breach of any
representation, warranty or covenant of the Seller set forth in the Transaction
Documents, and the exhibits, schedules or certificates delivered in connection
therewith.

 

“Net Sales” means (i) the gross amount invoiced by Purchaser and its affiliates
for Product sold in bona fide arms-length transactions to any non-affiliated
third party customer or distributor and (ii) the gross royalties and license
fees payable to Purchaser by licensees, sublicensees and distributors for
Product sold in bona fide, arms-length transactions, in each case, less the
following offsets and deductions: (a) quantity and/or cash discounts from the
gross invoice price which are actually allowed and taken; (b) freight, postage
and insurance included in the invoice price; (c) amounts repaid or credited by
reasons of rejections or return of goods or because of retroactive price
reductions specifically identifiable to such Product; (d) amounts payable
resulting from government (or agency thereof) mandated rebate programs;
(e) third party rebates or charge-backs to the extent actually allowed; and
(f) invoiced customs duties and sales Taxes (excluding income, value-added and
similar Taxes), if any, all as determined in accordance with GAAP.  Where there
is an initial disposal by Purchaser or any of its affiliates to Purchaser or any
of its affiliates, as applicable, and a subsequent sale to a person or entity
other than the Purchaser or its affiliates, the “Net Sales” shall be calculated
by reference to the invoiced ex-work pertaining to the first sale or other
disposal to a person or entity other than Purchaser or its affiliates.

 

“Patent Rights” means any and all (A) patents, (B) patent applications,
including, without limitation, all provisional applications, substitutions,
continuations, continuations-in-part, divisions, renewals, and all patents
granted thereon, (C) all patents-of-addition, reissues, reexaminations and
extensions or restorations by existing or future extension or restoration
mechanisms, including, without limitation, supplementary protection certificates
or the equivalent thereof, and (D) any other form of government-issued right
substantially equivalent to any of the foregoing used in, necessary for or
related to the Business.

 

“Purchaser Common Stock Value” means the average closing sales price of one
share of Purchaser Common Stock on the principal exchange on which the Purchaser
Common Stock is traded over the ten-day trading period ending on the second
trading day preceding the date of issuance of such Purchaser Common Stock to the
Seller.

 

“Superior Proposal” shall mean an unsolicited bona fide Asset Acquisition
Proposal by a third party to enter into a sale, lease, exchange transfer,
license, acquisition or disposition of all of the Business and the Transferred
Assets in a single transaction or a series of related transactions that (a) was
not obtained or made as a direct or indirect result of a failure to comply

 

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with or breach of (or in violation of) the Agreement; and (b) is on terms and
conditions that the Board of Directors of Seller determines, in its reasonable,
good faith judgment, after obtaining and taking into account such matters that
it deems relevant (taking into account all financial, regulatory, legal and
other aspects thereof) following consultation with its outside legal counsel and
regionally-recognized financial advisor: (x) is more favorable, from a financial
point of view, to Seller’s stockholders than the terms of this Agreement (taking
into account any offer by the Purchaser to amend the terms of this Agreement,);
and (y) is reasonably capable of being consummated on the terms proposed and on
a timely basis (taking into account all financial, regulatory, legal and other
aspects thereof); provided, however, that any such Asset Acquisition Proposal
shall not be deemed to be a “Superior Proposal” if any financing required to
consummate the transaction contemplated by such Asset Acquisition Proposal is
not firmly committed and reasonably capable of being obtained by such third
party, or if the consummation of such transaction is contingent on any such
financing being obtained.

 

“Taxes” means (A) any and all foreign, and U.S. federal, state, local or other
Taxes of any kind (together with any and all interest, penalties, additions to
Tax and additional amounts imposed with respect thereto) imposed by any
governmental entity, including Taxes on or with respect to income, franchises,
windfall or other profits, gross receipts, property, sales, use, capital stock,
payroll, employment, unemployment, social security, workers’ compensation or net
worth, and Taxes in the nature of excise, withholding, ad valorem or value
added; (B) any liability for the payment of any amounts of the type described in
clause (A) as a result of being or ceasing to be a member of an affiliated,
consolidated, combined or unitary group for any period; and (C) any liability
for the payment of any amounts of the type described in clause (A) or (B) as a
result of any express or implied obligation to indemnify any other Person or as
a result of any obligations under any agreements or arrangements with any other
Person with respect to such amounts and including any liability for Taxes of a
predecessor or a transferor or otherwise by operation of law.

 

“Tax Return” means any return, report or similar filing (including the attached
schedules) required to be filed with respect to Taxes, including any information
return, claim for refund, amended return or declaration of estimated Taxes.

 

“Technology Assets” means all Transferred Assets other than the Manufacturing
Assets.

 

“WIP Value” shall mean the positive or negative number equal to (i) with respect
to Allowable Work in Process held by Seller as of the Manufacturing Closing Date
that but for receipt of the documentation necessary for the Allowable Work in
Process to constitute Finished Product, the product of (x) the aggregate cubic
centimeters of such Allowable Work in Process, times (y) the then current
Product Fee under the Manufacturing Agreement times (z) 0.7 minus (ii) the
product of 17,500 times then current Product Fee under the Manufacturing
Agreement.

 

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Index of Other Defined Terms:

 

Defined Terms

 

Section Reference

510(k)

 

Section 2.18(d)

Affirmative Response Notice

 

Section 4.12(b)

Agreement

 

Preamble

Antitrust Laws

 

Section 4.15(b)

Applicable Milestone Payment

 

Section 1.5(a)

Assumed Contracts

 

Section 1.1(a)(x)

Assumed Liabilities

 

Section 1.2(a)

Audited Financial Statements

 

Section 4.3(c)

Balance Sheet

 

Section 2.7

Balance Sheet Date

 

Section 2.7

Basket Amount

 

Section 8.4(a)

Bill of Sale — Manufacturing Assets

 

Section 6.1(g)

Bill of Sale — Technology Assets

 

Section 5.2(g)

Business

 

Recital A

Change in Seller Board Recommendation

 

Section 4.20(c)

COBRA

 

Section 2.14

Competitive Business

 

Section 4.9(a)

Confidential Information

 

Section 4.5

Contested Claim

 

Section 8.5(c)

Corporate Event

 

Section 9.11

DGCL

 

Section 4.6(a)

End Date

 

Section 7.1(b)

ERISA

 

Section 2.13(a)

Excluded Assets

 

Section 1.1(b)

FDA

 

Section 2.18

 

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Fifth Milestone Payment

 

Section 1.5(a)(v)

Financial Information

 

Section 2.7

First Delivery Threshold

 

Section 1.5(a)(i)

First Milestone Payment

 

Section 1.5(a)(i)

Fourth Milestone Payment

 

Section 1.5(a)(iv)

General Cap Amount

 

Section 8.4(a)

Hazardous Material

 

Section 2.20(a)

HSR

 

Section 4.15(a)

Independent Contractors

 

Section 2.12(b)

Initial Purchaser Price

 

Section 1.4

Intellectual Property Rights

 

Section 4.7(a)

IP Assignment Agreement — Patents

 

Section 5.2(h)

IP Assignment Agreement — Trademark

 

Section 5.2(h)

JPA Opinions

 

Section 2.15(o)

License Agreement

 

Section 5.2(j)

Licensed Technology

 

Section 2.15(c)

Liens

 

Section 2.4

Manufacturing Agreement

 

Section 5.2(i)

Manufacturing Assets

 

Section 1.1(a)

Manufacturing Asset Transfer

 

Section 1.1(c)

Manufacturing Closing

 

Section 1.3

Manufacturing Closing Date

 

Section 1.3

Maximum Milestone Amount

 

Section 1.5(a)

Milestone

 

Section 1.5(a)

Milestone Assessment Notice

 

Section 1.5(b)(ii)

 

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Milestone Dispute Notice

 

Section 1.5(b)(iii)

Milestone Expiration Date

 

Section 1.5(a)

Negotiation Notice

 

Section 4.12(b)

Net Sales Threshold

 

Section 1.5(b)(vi)

Notice of Breach

 

Section 4.10

Notice of Claim

 

Section 8.5

Notice of Superior Proposal

 

Section 4.6(a)

Osteocel XC

 

Section 4.12(a)

Osteocel XC Transaction

 

Section 4.12(b)

Permitted Liens

 

Section 2.4

PHSA

 

Section 2.11

Product

 

Recital A

Product Development

 

Section 1.1(a)(iv)

Proxy Statement

 

Section 4.20(a)

Purchaser

 

Preamble

Purchaser Claim

 

Section 8.1

Purchaser Common Stock

 

Section 1.5(a)

Purchaser Indemnified Parties

 

Section 8.1

Purchaser Notice of Claim

 

Section 8.1

Purchaser Organizational Documents

 

Section 3.2(a)

Records

 

Section 1.1(a)(v)

Restricted Period

 

Section 4.9(a)

Retained Liabilities

 

Section 1.2(b)

Rights of Set-Off

 

Section 1.5(c)

Rules

 

Section 9.1(a)

 

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SEC

 

Section 4.20(a)

Second Delivery Threshold

 

Section 1.5(a)(ii)

Second Milestone Payment

 

Section 1.5(a)(ii)

Securities Act

 

Section 1.5(a)

Seller

 

Preamble

Seller Benefit Plan

 

Section 2.13(a)

Seller Board Recommendation

 

Section 4.20(b)

Seller Claim

 

Section 8.2

Seller Employees

 

Section 2.12(a)

Seller Indemnified Parties

 

Section 8.2

Seller Notice of Claim

 

Section 8.2

Seller Options

 

Section 2.12(a)

Seller Organizational Documents

 

Section 2.2(a)

Sixth Milestone Payment

 

Section 1.5(a)(vi)

Special Cap Amount

 

Section 8.4(b)

Special Cap Liabilities

 

Section 8.4(b)

Specified Representations

 

Section 8.3

Stockholder Approval

 

Section 4.20(b)

Stockholders Meeting

 

Section 4.20(b)

Technology Asset Transfer

 

Section 1.1(c)

Technology Closing

 

Section 1.3

Technology Closing Date

 

Section 1.3

Third Milestone Payment

 

Section 1.5(a)(iii)

Transaction Documents

 

Section 1.2(b)(viii)

Transfer Taxes

 

Section 4.18

 

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Transferred Assets

 

Section 1.1

Transferred Employee

 

Section 4.11(b)

Transferred Technology

 

Section 1.1(a)(i)

Work in Process

 

Section 1.1(a)(ii)

 

[Signature Page to Follow]

 

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IN WITNESS WHEREOF, Seller and Purchaser have each caused this Agreement to be
executed by their respective duly authorized officers, all as of the date first
above written.

 

SELLER:

 

 

OSIRIS THERAPEUTICS, INC.

 

 

 

By:

C. RANDAL MILLS

 

Name:

C. Randal Mills

 

Title:

President & CEO

 

 

PURCHASER:

 

 

NUVASIVE, INC.

 

 

 

By:

ALEXIS V. LUKIANOV

 

Name:

Alexis V. Lukianov

 

Title:

CEO and Chairman of the Board

 

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MANUFACTURING AGREEMENT

 

THIS MANUFACTURING AGREEMENT (the “Agreement”) is made and entered into as of
                                , 2008 (the “Effective Date”), by and between
Osiris Therapeutics, Inc. (“Osiris”), a Delaware corporation, and NuVasive, Inc.
(“NuVasive”), a Delaware corporation.

 

RECITALS

 

WHEREAS, Osiris and NuVasive are parties to that certain Asset Purchase
Agreement, dated                       , 2008 (the “Asset Purchase Agreement”),
pursuant to which Osiris sold, and NuVasive purchased, technology related to
manufacturing the Osteocel product line (as more specifically set forth
therein); and

 

WHEREAS, NuVasive and Osiris desire to herein set forth an arrangement whereby
Osiris shall manufacture and deliver to NuVasive, and NuVasive shall purchase,
the Product (as defined below).

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereto agree as
follows:

 

ARTICLE 1
DEFINED TERMS

 

As used herein, certain capitalized terms shall have the meanings ascribed to
them as provided below:

 

1.1.          “AATB” MEANS THE AMERICAN ASSOCIATION OF TISSUE BANKS.

 

1.2.          “ACTION” SHALL HAVE THE MEANING AS SUCH TERM IS DEFINED IN
SECTION 6.3 OF THIS AGREEMENT.

 

1.3.          “AFFILIATE” MEANS, WITH RESPECT TO A PARTY, ANY PERSON OR ENTITY
WHICH, DIRECTLY OR INDIRECTLY THROUGH ONE OR MORE INTERMEDIARIES, CONTROLS, IS
CONTROLLED BY, OR IS UNDER COMMON CONTROL WITH, SUCH PARTY.

 

1.4.          “CERTIFICATE OF ANALYSIS” MEANS, FOR EACH LOT PRODUCED, A DOCUMENT
PREPARED BY OSIRIS SETTING FORTH THE MEASURED AND OBSERVABLE CHARACTERISTICS OF
PRODUCT FROM THE LOT, CONFIRMING THAT SUCH LOT MEETS THE SPECIFICATIONS,
CERTIFYING THAT SUCH LOT WAS MANUFACTURED AND RELEASED IN ACCORDANCE WITH
APPLICABLE LAWS AND CGTP.

 

1.5.          “CGTP” MEANS CURRENT GOOD TISSUE PRACTICE AS DEFINED IN FDA
RULES AND REGULATIONS, INCLUDING THE UNITED STATES REGULATIONS SET FORTH AT 21
CFR PARTS 1270 AND 1271, SUBPARTS C AND D, AS IN EFFECT AND AS MAY BE AMENDED OR
REPLACED BY THE FDA FROM TIME TO TIME.

 

1.6.          “CONFIDENTIAL INFORMATION” MEANS INFORMATION WHICH IS DISCLOSED BY
A PARTY (THE “DISCLOSING PARTY”) TO THE OTHER PARTY (THE “RECEIVING PARTY”) IN
WHATEVER MEDIA, AND IS MARKED, IDENTIFIED OR OTHERWISE ACKNOWLEDGED TO BE
CONFIDENTIAL AT THE TIME OF DISCLOSURE; PROVIDED THAT INFORMATION SHALL NOT BE
DEEMED “CONFIDENTIAL INFORMATION” WHICH IS (A) PUBLICLY KNOWN, THROUGH NO FAULT
OF THE RECEIVING PARTY, (B) RECEIVED BY THE RECEIVING PARTY FROM A SOURCE HAVING
THE RIGHT TO

 

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DISCLOSE SUCH INFORMATION, (C) KNOWN BY THE RECEIVING PARTY PRIOR TO DISCLOSURE
OF SUCH INFORMATION, OR (D) INDEPENDENTLY DEVELOPED BY THE RECEIVING PARTY
WITHOUT USE OF THE DISCLOSING PARTY’S INFORMATION.  NOTWITHSTANDING THE
FOREGOING AND FOR THE AVOIDANCE OF DOUBT, THE CONFIDENTIAL INFORMATION OF
NUVASIVE INCLUDES ALL LICENSED TECHNOLOGY, WHETHER OR NOT MARKED, IDENTIFIED OR
OTHERWISE ACKNOWLEDGED TO BE CONFIDENTIAL AND WHETHER OR NOT KNOWN OR DEVELOPED
BY OSIRIS, AND THE USE AND DISCLOSURE OF LICENSED TECHNOLOGY BY OSIRIS (AS THE
RECEIVING PARTY HEREUNDER) SHALL BE SUBJECT TO SECTION 8.3.

 

1.7.          “CPI” SHALL MEAN THE “PRICE INDEX FOR ALL URBAN CONSUMERS, U.S.
CITY AVERAGE, ALL ITEMS, FOR THE THEN IMMEDIATELY PRECEDING 12-MONTH PERIOD” AS
PUBLISHED BY THE US GOVERNMENT.

 

1.8.          “DAMAGES” SHALL HAVE THE MEANING AS SUCH TERM IS DEFINED IN
SECTION 6.1 OF THIS AGREEMENT.

 

1.9.          “DELIVER” OR “DELIVERY” WITH RESPECT TO PRODUCT MEANS, AND SHALL
TAKE PLACE UPON, THE TRANSFER OF POSSESSION OF PRODUCT TO A CARRIER, FCA THE
FACILITY (INCOTERMS 2000).

 

1.10.        “DONOR” MEANS A HUMAN TISSUE DONOR.

 

1.11.        “DONOR TISSUE” MEANS HUMAN MUSCULOSKELETAL TISSUE, INCLUDING BONE
AND CONNECTIVE TISSUE.

 

1.12.        “EXCESS QUANTITIES” SHALL HAVE THE MEANING AS SUCH TERM IS DEFINED
IN SECTION 3.3 OF THIS AGREEMENT.

 

1.13.        “EXECUTIVES” SHALL HAVE THE MEANING AS SUCH TERM IS DEFINED IN
SECTION 9.8 OF THIS AGREEMENT.

 

1.14.        “FACILITY” MEANS THE FACILITY AT WHICH OSIRIS OR ITS SUBCONTRACTORS
SET FORTH ON SCHEDULE 3.11, OR OTHERWISE APPROVED BY NUVASIVE IN ACCORDANCE WITH
SECTION 3.11, WILL PROCESS PRODUCT UNDER THIS AGREEMENT.

 

1.15.        “FDA” MEANS THE U.S. FOOD AND DRUG ADMINISTRATION, AND ANY
SUCCESSOR OR REPLACEMENT AGENCY THERETO.

 

1.16.        “INVENTIONS” SHALL HAVE THE MEANING AS SUCH TERM IS DEFINED IN
SECTION 8.2 OF THIS AGREEMENT.

 

1.17.        “LATENT DEFECT” MEANS ANY DEFECT IN ANY LOT OR OTHER SHIPMENT OF
PRODUCT THAT COULD NOT REASONABLY BE FOUND BY THE EXERCISE OF ORDINARY CARE IN
AN INITIAL PHYSICAL INSPECTION BY NUVASIVE, SUCH AS, BUT NOT LIMITED TO, THE
PRESENCE OF A CONTAMINANT OR OSIRIS’ FAILURE TO PROCESS PRODUCT IN ACCORDANCE
WITH CGTP.

 

1.18.        “LAWS” MEANS ALL LAWS, RULES, REGULATIONS, ORDINANCES, STANDARDS
AND GUIDELINES THAT APPLY TO THE PROCESSING OF PRODUCT OR THE PERFORMANCE OF
EITHER PARTY’S OBLIGATIONS UNDER THIS AGREEMENT, AS THE CONTEXT REQUIRES UNDER
THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, THE PUBLIC HEALTH SERVICE ACT, 42
U.S.C. §201 ET SEQ., THE UNITED STATES NATIONAL ORGAN TRANSPLANT ACT, TITLE 21
OF THE CODE OF FEDERAL REGULATIONS PARTS 1270 AND 1271, HUMAN CELLS, TISSUES,
AND CELLULAR AND TISSUE BASED PRODUCTS, OTHER RULES, REGULATIONS OR STANDARDS
PROMULGATED BY THE FDA OR ANY OTHER APPLICABLE GOVERNMENTAL AGENCY, AND OF THE
AATB, AS EACH MAY BE AMENDED FROM TIME TO TIME.

 

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1.19.        “LICENSED TECHNOLOGY” MEANS THE INTELLECTUAL PROPERTY (INCLUDING
PATENTS AND PATENTS PENDING OF NUVASIVE), METHODS, TECHNOLOGY, AND KNOW-HOW
OWNED OR LICENSED BY NUVASIVE AND USED IN, HELD FOR USE IN, INTENDED FOR USE IN,
RELATED TO OR NECESSARY FOR PROCESSING THE PRODUCT.  LICENSED TECHNOLOGY SHALL
INCLUDE ALL TRANSFERRED TECHNOLOGY AS DEFINED IN AND PURCHASED BY NUVASIVE UNDER
THE ASSET PURCHASE AGREEMENT.

 

1.20.        “LOT” MEANS THE PRODUCT, PROCESSED IN ACCORDANCE WITH THE
SPECIFICATIONS, RESULTING FROM A SINGLE PRODUCTION RUN, TRACEABLE TO A SINGLE
SOURCE DONOR.

 

1.21.        “LOT RECORDS” MEANS MANUFACTURING, PACKAGING AND TEST RECORDS,
DONOR SUITABILITY DETERMINATION DOCUMENTATION, CLEANING, LABELING AND
“STERILIZATION” PROCESSES DOCUMENTATION AND DOCUMENTATION RELATING TO PROCESSING
AND RELEASE OF EACH LOT, INCLUDING EXCEPTION DOCUMENTATION,
DEVIATIONS/DISCREPANCIES, RAW DATA OR DATA WORKSHEETS AND ADDITIONAL
DOCUMENTATION GENERATED AND/OR PROCESSED AS PART OF THE PRODUCTION RECORD OF THE
RELATED LOT.

 

1.22.        “MINIMUM PERFORMANCE LEVEL” SHALL HAVE THE MEANING AS SUCH TERM IS
DEFINED IN SECTION 3.3 OF THIS AGREEMENT.

 

1.23.        “NUVASIVE INDEMNITEE” SHALL HAVE THE MEANING AS SUCH TERM IS
DEFINED IN SECTION 6.1 OF THIS AGREEMENT.

 

1.24.        “NUVASIVE RESPONSIBLE PARTY” SHALL HAVE THE MEANING AS SUCH TERM IS
DEFINED IN SECTION 6.2 OF THIS AGREEMENT.

 

1.25.        “ORDER” SHALL HAVE THE MEANING AS SUCH TERM IS DEFINED IN
SECTION 3.2 OF THIS AGREEMENT.

 

1.26.        “OSIRIS INDEMNITEE” SHALL HAVE THE MEANING AS SUCH TERM IS DEFINED
IN SECTION 6.2 OF THIS AGREEMENT.

 

1.27.        “OSIRIS PRODUCT WARRANTY” SHALL HAVE THE MEANING AS SUCH TERM IS
DEFINED IN SECTION 3.7 OF THIS AGREEMENT.

 

1.28.        “OSIRIS RESPONSIBLE PARTY” SHALL HAVE THE MEANING AS SUCH TERM IS
DEFINED IN SECTION 6.1 OF THIS AGREEMENT.

 

1.29.        “PARTIES” SHALL MEAN OSIRIS AND NUVASIVE; “PARTY” SHALL MEAN OSIRIS
OR NUVASIVE,

 

1.30.        “PROCESS” OR “PROCESSING” SHALL MEAN ANY OR ALL OF THE ACTS OF
MANUFACTURING (INCLUDING PROCURING MATERIALS, DONOR TISSUE AND DONORS
SUITABILITY FOR DETERMINATION, FOR MANUFACTURING), HANDLING, STORING, ANALYZING,
TESTING, PACKAGING, LABELING AND PREPARING FOR SHIPMENT PRODUCT BY OSIRIS
PURSUANT TO THIS AGREEMENT.

 

1.31.        “PRODUCT” MEANS OSTEOBIOLOGIC ALLOGRAFT MATERIAL CONTAINING
CANCELLOUS BONE (WHICH CONTAINS VIABLE MESENCHYMAL STEM CELLS) PROCESSED BY
OSIRIS USING THE LICENSED TECHNOLOGY AND MEETING THE SPECIFICATIONS ATTACHED
HERETO AS EXHIBIT A, AND WHICH HAS PASSED ALL REQUIRED INSPECTIONS AND TESTING
AND HAS BEEN RELEASED FOR DISTRIBUTION FOR HUMAN IMPLANTATION.

 

1.32.        “PRODUCT FEES” SHALL HAVE THE MEANING AS SUCH TERM IS DEFINED IN
SECTION 4.1.

 

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1.33.        “PRODUCT-RELATED INSPECTION” SHALL HAVE THE MEANING AS SUCH TERM IS
DEFINED IN SECTION 5.1 OF THIS AGREEMENT.

 

1.34.        “PRODUCT WITHDRAWAL” SHALL HAVE THE MEANING AS SUCH TERM IS DEFINED
IN SECTION 5.7 OF THIS AGREEMENT.

 

1.35.        “PUBLICATION” SHALL HAVE THE MEANING AS SUCH TERM IS DEFINED IN
SECTION 8.4 OF THIS AGREEMENT.

 

1.36.        “SPECIFICATIONS” MEANS THE PRODUCT SPECIFICATIONS SET FORTH IN
EXHIBIT A ATTACHED HERETO, AS THE SAME MAY BE AMENDED IN ACCORDANCE WITH THIS
AGREEMENT.

 

1.37.        “TERM” SHALL HAVE THE MEANING AS SUCH TERM IS DEFINED IN
SECTION 7.1 OF THIS AGREEMENT.

 

ARTICLE 2
PROCUREMENT AND SUPPLY OF DONORS

 

               DONOR PROCUREMENT OBLIGATIONS.  OSIRIS SHALL USE ITS COMMERCIALLY
REASONABLE BEST EFFORTS TO PROCURE DONOR TISSUE AS NECESSARY TO MEET THE MINIMUM
PERFORMANCE LEVELS AND TO PROCESS PRODUCT IN ACCORDANCE WITH THE TERMS OF THIS
AGREEMENT.

 

ARTICLE 3
MANUFACTURING OF PRODUCT; TECHNOLOGY LICENSE

 

3.1.          MANUFACTURING OBLIGATIONS.  OSIRIS SHALL PROCESS FOR AND SUPPLY TO
NUVASIVE PRODUCT IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT.  OSIRIS SHALL
PROCESS AND SUPPLY THE PRODUCT TO NUVASIVE HEREUNDER IN CONFORMITY WITH THE
SPECIFICATIONS AND IN COMPLIANCE WITH CGTP AND ALL APPLICABLE LAWS.  IF EITHER
PARTY SEEKS A CHANGE TO THE SPECIFICATIONS OR THERE IS A CHANGE IN APPLICABLE
LAWS THAT WOULD NECESSITATE A CHANGE IN THE SPECIFICATIONS, THE PARTIES WILL
MEET AND CONFER IN GOOD FAITH TO DETERMINE WHETHER AND WHAT CHANGES (IF ANY)
SHOULD BE MADE THERETO. ANY AND ALL AMENDMENTS OR MODIFICATIONS IN THE
SPECIFICATIONS MUST BE AGREED UPON IN WRITING BY BOTH PARTIES.

 

3.2.          FORECASTING AND ORDERS.  ON OR BEFORE SIXTY (60) DAYS PRIOR TO
EACH CALENDAR QUARTER, NUVASIVE SHALL PROVIDE TO OSIRIS A BINDING ORDER
(“ORDER”) FOR THE QUANTITY AND SIZE OF PRODUCT TO BE DELIVERED BY OSIRIS TO
NUVASIVE IN THE FOLLOWING CALENDAR QUARTER.  EACH ORDER SHALL BE IN WRITING, AND
SHALL SPECIFY THE QUANTITY OF UNITS OF PRODUCT BY SIZE, THE BRAND NAME OF EACH
UNIT OF PRODUCT ORDERED, THE REQUESTED DELIVERY DATE(S), THE DESTINATION
SHIPPING ADDRESS(ES), AND THE PRODUCT FEES THEREFOR. OSIRIS SHALL BE REQUIRED TO
SUPPLY TO NUVASIVE ALL SUCH QUANTITIES OF PRODUCT AS NUVASIVE ORDERS PURSUANT TO
SUCH ORDERS IN ACCORDANCE WITH THE PRODUCT UNIT SIZES AND BRAND NAMES SPECIFIED
IN SUCH ORDERS AND SHALL USE ITS COMMERCIALLY REASONABLE BEST EFFORTS TO CONFORM
TO THE REQUESTED DELIVERY DATE(S) SET FORTH IN SUCH ORDERS, PROVIDED IN EACH
CASE SUCH ORDERS DO NOT EXCEED THE MINIMUM PERFORMANCE LEVELS DURING THE
APPLICABLE PERIODS SET FORTH IN SECTION 3.3 BELOW.  OSIRIS SHALL DELIVER THE
PRODUCT TO NUVASIVE PURSUANT TO THE ORDERS, SUBJECT TO AVAILABLE PRODUCT BEING
RELEASED FOR TRANSPLANTATION; PROVIDED, THAT THE PARTIES UNDERSTAND AND AGREE
THE FINAL DELIVERY DATES FOR ORDERS MAY VARY FROM THE REQUESTED DATES BASED UPON
DONOR TISSUE PROCUREMENT.

 

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3.3.          PERFORMANCE LEVELS.

 

3.3.1.       MINIMUM PERFORMANCE LEVELS. OSIRIS SHALL USE ITS COMMERCIALLY
REASONABLE BEST EFFORTS TO DELIVER PRODUCT TO NUVASIVE AT LEAST IN THE
QUANTITIES SET FORTH BELOW DURING THE APPLICABLE PERIODS (“MINIMUM PERFORMANCE
LEVELS”) AND SHALL DELIVER ANY SUCH PRODUCT ACCORDING TO PRODUCT UNIT SIZE AND
BRAND NAME SPECIFICATIONS ESTABLISHED BY NUVASIVE AND SET FORTH IN EACH ORDER. 
NUVASIVE SHALL PROVIDE ORDERS TO PURCHASE FROM OSIRIS PRODUCT IN QUANTITIES OF
AT LEAST THE MINIMUM PERFORMANCE LEVEL FOR THE APPLICABLE PERIOD.

 

Applicable Period

 

Minimum Performance
Level Delivered (cc)

Effective Date to April 15, 2009

 

125,000

April 16, 2009 to eighteen (18) months following the Technology Closing Date (as
defined in the Asset Purchase Agreement)

 

125,000

 

3.3.2.       ADDITIONAL PRODUCT. OSIRIS SHALL HAVE THE RIGHT, IN ITS DISCRETION,
TO PROCESS AND DELIVER PRODUCT HEREUNDER IN QUANTITIES THAT EXCEED NUVASIVE’S
ORDERS (THE “EXCESS QUANTITIES”), PROVIDED THAT OSIRIS GIVES ADVANCE WRITTEN
NOTICE TO NUVASIVE OF ITS INTENT TO PROCESS AND DELIVER THE EXCESS QUANTITIES. 
FOLLOWING RECEIPT OF SUCH WRITTEN NOTICE, THE PARTIES SHALL DISCUSS AND ATTEMPT
IN GOOD FAITH TO REACH AGREEMENT ON THE UNIT SIZES OF THE EXCESS QUANTITIES.  IF
THE PARTIES ARE UNABLE TO REACH AGREEMENT ON THE UNIT SIZES OF ANY EXCESS
QUANTITIES WITHIN TEN (10) DAYS FROM THE NOTICE, OSIRIS SHALL PROCESS AND
DELIVER TO NUVASIVE UNIT SIZES OF SUCH EXCESS QUANTITIES IN THE SAME PROPORTION
AS THE UNIT SIZES OF PRODUCT SET FORTH IN NUVASIVE’S MOST RECENT ORDER.  SUBJECT
TO THE NOTICE AND SIZING PROVISIONS IMMEDIATELY ABOVE, IN ADDITION TO NUVASIVE’S
REQUIREMENT TO PURCHASE FROM OSIRIS PRODUCT IN QUANTITIES OF AT LEAST THE
MINIMUM PERFORMANCE LEVEL (PROVIDED THAT OSIRIS AND/OR ITS SUBCONTRACTORS
PROCESSES AT LEAST SUCH QUANTITIES) FOR THE APPLICABLE PERIOD, NUVASIVE SHALL
PURCHASE FROM OSIRIS THE EXCESS QUANTITIES THAT OSIRIS PROCESSES IN ACCORDANCE
WITH THIS AGREEMENT DURING THE TERM; PROVIDED, HOWEVER, THAT NUVASIVE SHALL HAVE
NO OBLIGATION HEREUNDER TO PURCHASE PRODUCT IN QUANTITIES GREATER THAN
                 CUBIC CENTIMETERS, AND THE DELIVERY AND PURCHASE OF SUCH
GREATER QUANTITIES OF PRODUCT, IF ANY, SHALL BE BY MUTUAL WRITTEN AGREEMENT OF
BOTH PARTIES. FOR ALL PRODUCT PROCESSED HEREUNDER, OSIRIS SHALL PROVIDE NUVASIVE
WITH A MONTHLY FORECAST OF PROJECTED PRODUCT MANUFACTURING QUANTITIES FOR SUCH
MONTH.

 

3.4.          SHIPMENT AND DELIVERY.  ALL PRODUCT SHALL BE SHIPPED TO NUVASIVE
OR NUVASIVE’S CUSTOMERS AS DIRECTED BY NUVASIVE USING A SHIPPING COMPANY
DESIGNATED BY NUVASIVE.  OSIRIS SHALL TENDER PRODUCT FOR DELIVERY, FCA THE
FACILITY, IN ACCORDANCE WITH THE SPECIFICATIONS AND ADDRESSED TO THE SHIPPING
ADDRESS SPECIFIED BY NUVASIVE IN THE ORDERS OR TO SUCH OTHER ADDRESS AS NUVASIVE
MAY PROVIDE TO OSIRIS IN WRITING IN ADVANCE OF ANY DELIVERY.  NUVASIVE SHALL
PROVIDE OSIRIS WITH STANDARD SHIPPING INSTRUCTIONS PRIOR TO THE FIRST REQUESTED
SHIPPING DATE HEREUNDER; THEREAFTER, SUCH SHIPPING INSTRUCTIONS MAY BE CHANGED
UPON WRITTEN NOTICE GIVEN TO OSIRIS BY NUVASIVE.  OSIRIS SHALL NOT DELIVER ANY
PRODUCT PRIOR TO COMPLETION OF QUALITY CONTROL AND RELEASE TESTING BY OSIRIS.
NUVASIVE SHALL BE RESPONSIBLE FOR ALL SHIPPING AND INSURANCE CHARGES AND RISK OF
LOSS ASSOCIATED WITH THE SHIPMENT OF PRODUCT HEREUNDER (FROM AND AFTER
DELIVERY), PROVIDED THAT OSIRIS HAS COMPLIED WITH THE SHIPPING INSTRUCTIONS OF
NUVASIVE AND THAT THE PRODUCT IS TENDERED FOR DELIVERY IN ACCORDANCE

 

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WITH THE SPECIFICATIONS. TITLE TO PRODUCT SHALL PASS TO NUVASIVE UPON DELIVERY
OF PRODUCT TO THE CARRIER SELECTED BY NUVASIVE.

 

3.5.          QUALITY CONTROL; RELEASE TESTING; DOCUMENTATION. OSIRIS SHALL BE
RESPONSIBLE FOR QUALITY CONTROL TESTS TO ENSURE THAT EACH LOT CONFORMS TO THE
SPECIFICATIONS AND IS PRODUCED IN ACCORDANCE WITH APPLICABLE LAWS AND CGTP, AND
OSIRIS SHALL BE RESPONSIBLE FOR ALL RELEASE TESTING.  ALL QUALITY CONTROL TEST
RESULTS AND RELEASE TESTING AND OTHER DOCUMENTS RELATED TO QUALITY CONTROL AND
QUALITY ASSURANCE AND COPIES THEREOF SHALL BE MADE AVAILABLE TO NUVASIVE AT
OSIRIS’S OFFICES UPON WRITTEN REQUEST OF NUVASIVE.  SUCH INFORMATION IS
CONSIDERED NUVASIVE’S CONFIDENTIAL INFORMATION IN ACCORDANCE WITH THIS AGREEMENT
AND SHALL BE TRANSFERRED TO NUVASIVE UPON THE TERMINATION OF THIS AGREEMENT. 
ANY TESTING PERFORMED BY OR ON BEHALF OF OSIRIS (INCLUDING TESTS TO CONFIRM THAT
EACH LOT MEETS THE SPECIFICATIONS) SHALL BE PERFORMED AT OSIRIS’S SOLE COST AND
EXPENSE AND MAY BE USED BY NUVASIVE FOR FINAL RELEASE OF EACH LOT WITHOUT
ADDITIONAL TESTING BY NUVASIVE; PROVIDED, HOWEVER, THAT NUVASIVE MAY CONDUCT ITS
OWN RELEASE TESTING OF EACH LOT IN ITS DISCRETION. NUVASIVE (IN ITS SOLE
DISCRETION) SHALL DETERMINE THE FORM AND SUBSTANCE OF ANY RELEASE TESTING
INFORMATION THAT IS SUBMITTED TO ANY REGULATORY AUTHORITY.  AT THE TIME OF
DELIVERY OF EACH LOT, OSIRIS SHALL SEND TO NUVASIVE A SIGNED CERTIFICATE OF
ANALYSIS WITH RESPECT TO SUCH LOT. WITHIN THIRTY (30) DAYS FOLLOWING THE
DELIVERY OF EACH LOT, OSIRIS SHALL PROVIDE NUVASIVE WITH PROPERLY COMPLETED
COPIES OF LOT RECORDS FOR SUCH LOT PREPARED IN ACCORDANCE WITH THE
SPECIFICATIONS AND APPLICABLE LAWS.

 

3.6.          REJECTION AND CURE.  UPON RECEIPT OF EACH SHIPMENT OF PRODUCT,
NUVASIVE OR ITS CUSTOMERS SHALL PERFORM AN INITIAL PHYSICAL INSPECTION OF SUCH
PRODUCT AND REVIEW ANY RELATED DOCUMENTATION.  IF ANY PRODUCT (INCLUDING WITHOUT
LIMITATION ANY DOCUMENTATION RELATED THERETO) FAILS, IN WHOLE OR IN PART, TO
CONFORM TO THE APPLICABLE SPECIFICATIONS AND THE TERMS HEREOF, OR IF ANY PRODUCT
IS NOT PROCESSED IN ACCORDANCE WITH CGTP OR APPLICABLE LAWS, THEN NUVASIVE SHALL
HAVE THE RIGHT TO REJECT SUCH NONCONFORMING PRODUCT.  NUVASIVE SHALL GIVE
WRITTEN NOTICE TO OSIRIS OF ITS REJECTION HEREUNDER AS SOON AS POSSIBLE, BUT NO
MORE THAN THIRTY (30) DAYS AFTER NUVASIVE’S OR ITS CUSTOMER’S RECEIPT OF SUCH
SHIPMENT, SPECIFYING THE GROUNDS FOR SUCH REJECTION.  IF AT ANY TIME THEREAFTER
NUVASIVE DISCOVERS A LATENT DEFECT, NUVASIVE SHALL GIVE WRITTEN NOTICE TO OSIRIS
OF ITS REJECTION HEREUNDER AS SOON AS POSSIBLE, BUT NO MORE THAN NINETY (90)
DAYS AFTER NUVASIVE’S RECEIPT OF THE PRODUCT, SPECIFYING THE GROUNDS FOR SUCH
REJECTION.  THE NONCONFORMING PRODUCT SHALL BE HELD FOR OSIRIS’S DISPOSITION, OR
SHALL BE RETURNED TO OSIRIS, IN EACH CASE AT OSIRIS’S EXPENSE, AS DIRECTED BY
OSIRIS.  OSIRIS SHALL USE COMMERCIALLY REASONABLE BEST EFFORTS TO CORRECT THE
ROOT CAUSE OF THE NONCONFORMANCE IN ORDER TO COMPLY WITH THE REQUIREMENTS OF THE
APPLICABLE SPECIFICATION.  IN ADDITION, OSIRIS SHALL, AT ITS EXPENSE, PROMPTLY
REPLACE EACH NONCONFORMING PRODUCT WITH CONFORMING PRODUCT.

 

3.7.          WARRANTY.  WITH RESPECT TO PRODUCT SUPPLIED HEREUNDER, OSIRIS
WARRANTS (“OSIRIS PRODUCT WARRANTY”) THAT THE (A) PRODUCT SHALL CONFORM WITH THE
APPLICABLE SPECIFICATIONS THEREFOR, SHALL BE FREE FROM DEFECTS IN MATERIALS OR
WORKMANSHIP, AND SHALL NOT BE ADULTERATED, MISBRANDED, CONTAMINATED, TAMPERED
WITH OR OTHERWISE ALTERED OR MISHANDLED WHILE IN THE CUSTODY AND CONTROL OF
OSIRIS; AND (B) PRODUCT SHALL BE PROCESSED IN ACCORDANCE WITH THE APPLICABLE
SPECIFICATIONS, AND IN COMPLIANCE WITH CGTP AND ALL APPLICABLE LAWS.  OSIRIS
HEREBY REPRESENTS, WARRANTS AND COVENANTS THAT IT WILL NOT, AND HAS NOT,
EMPLOYED OR OTHERWISE USED IN ANY CAPACITY THE SERVICES OF ANY PERSON DEBARRED
UNDER SECTION 21 U.S.C. 335A IN PERFORMING ANY PORTION OF THE PROCESSING OF
PRODUCT.  EXCEPT AS PROVIDED HEREIN, OSIRIS MAKES NO OTHER WARRANTIES, EXPRESS
OR IMPLIED, WITH RESPECT TO THE PRODUCT, INCLUDING, WITHOUT LIMITATION, ANY
WARRANTY OF MERCHANTABILITY OR WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE.

 

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3.8.          PACKAGING; LABELING; MARKETING.  OSIRIS SHALL PACKAGE AND LABEL
THE PRODUCT ACCORDING TO THE SPECIFICATIONS AND IN COMPLIANCE WITH CGTP AND ALL
APPLICABLE LAWS, RULES, REGULATIONS, AND/OR STANDARDS. PRODUCT SUPPLIED TO
NUVASIVE SHALL BE LABELED AS DETERMINED BY NUVASIVE, PROVIDED THAT NUVASIVE
SHALL PROVIDE OSIRIS WITH AT LEAST THIRTY (30) DAYS PRIOR WRITTEN NOTICE OF ANY
LABELING CHANGES (INCLUDING, BUT NOT LIMITED TO, BRAND NAMES), AND OSIRIS SHALL
BE ENTITLED TO RECOVER, AND NUVASIVE SHALL BE RESPONSIBLE TO PAY TO OSIRIS, ALL
REASONABLE OUT OF POCKET COSTS THAT OSIRIS INCURS ASSOCIATED WITH SUCH LABELING
CHANGE. EACH UNIT OF PRODUCT SHALL HAVE A UNIQUE IDENTIFICATION NUMBER.

 

3.9.          REGULATORY APPROVALS.  PRODUCT IS CURRENTLY REGULATED UNDER 21 CFR
PARTS 1270 AND 1271 AS A HUMAN CELLULAR AND TISSUE BASED TISSUE PRODUCT.
NUVASIVE SHALL OBTAIN AT ITS EXPENSE ALL REGULATORY APPROVAL BY THE FDA OR OTHER
REGULATORY AUTHORITY NECESSARY OR REQUIRED FOR THE DISTRIBUTION, SALE AND
MARKETING OF PRODUCT UNDER CURRENT LAWS AS OF THE EFFECTIVE DATE.  AT NUVASIVE’S
REQUEST DURING THE TERM, OSIRIS WILL ASSIST NUVASIVE IN PREPARING THE PORTIONS
OF NUVASIVE’S REGULATORY FILINGS THAT PERTAIN TO PROCESSING AND WILL MAKE
APPROPRIATE OSIRIS PERSONNEL REASONABLY AVAILABLE FOR MEETINGS WITH REGULATORY
AUTHORITIES RELATING TO PROCESSING, PROVIDED THAT ALL SUCH REGULATORY FILINGS
SHALL BE THE SOLE AND EXCLUSIVE PROPERTY OF NUVASIVE AND NUVASIVE SHALL HAVE
SOLE AUTHORITY AND RESPONSIBILITY WITH RESPECT TO CONTACTS AND COMMUNICATIONS
WITH REGULATORY AUTHORITIES RELATING TO THE PRODUCT. IN THE EVENT OF CHANGES IN
APPLICABLE LAWS, OR SIGNIFICANT REGULATORY DIFFERENCES IN FOREIGN COUNTRIES
WHERE NUVASIVE DISTRIBUTES PRODUCT, THE PARTIES SHALL COOPERATE TO DETERMINE
WHAT ACTIONS, IF ANY, ARE REQUIRED TO MEET ANY NEW OR FOREIGN REGULATIONS AND
SHALL NEGOTIATE IN GOOD FAITH CHANGES TO THIS AGREEMENT INCLUDING BUT NOT
LIMITED TO, CHANGES TO ORDERS, PRODUCT FEES AND MINIMUM PERFORMANCE LEVELS TO
REFLECT ANY CHANGE IN PRODUCT MANUFACTURING COSTS. NO CHANGE IN PRODUCT-SPECIFIC
MANUFACTURING PROCESSES, TEST METHODS, OR OTHER PROCEDURES OR DOCUMENTATION
RELATING TO PROCESSING SHALL BE IMPLEMENTED BY OSIRIS UNLESS AND UNTIL THE
PARTIES HAVE AGREED IN WRITING TO SUCH CHANGE.

 

3.10.        TECHNOLOGY LICENSE. NUVASIVE HEREBY GRANTS TO OSIRIS DURING THE
TERM, FOR THE SOLE PURPOSE OF PERFORMING ITS DUTIES AND FULFILLING ITS
OBLIGATIONS UNDER THIS ARTICLE 3, A NON-EXCLUSIVE AND NON-TRANSFERABLE LICENSE,
WITHOUT A RIGHT TO SUBLICENSE, TO USE THE LICENSED TECHNOLOGY SOLELY TO THE
EXTENT NECESSARY TO PROCESS THE PRODUCT UNDER THE TERMS AND CONDITIONS OF THIS
AGREEMENT. NOTWITHSTANDING THE FOREGOING, NUVASIVE HEREBY CONSENTS TO THE
SUBLICENSE BY OSIRIS OF THE LICENSED TECHNOLOGY TO THE PERSONS LISTED ON
SCHEDULE 3.11 SOLELY TO THE EXTENT NECESSARY FOR SUCH SUBCONTRACTOR TO PROVIDE
PROCESSING SERVICES TO OSIRIS, PROVIDED THAT THE TERMS OF ANY SUCH SUBLICENSE
ARRANGEMENT SHALL EITHER BE PURSUANT TO (I) THE TERMS OF THOSE CONTRACTS BETWEEN
SELLER AND SUCH PERSONS WHICH ARE IDENTIFIED ON SCHEDULE 3.11 HERETO AS SUCH
CONTRACTS ARE IN EFFECT ON THE DATE HEREOF OR (II) REQUIRE THE PRIOR WRITTEN
CONSENT OF NUVASIVE, WHICH CONSENT SHALL NOT BE UNREASONABLY WITHHELD.

 

3.11.        SUBCONTRACTING.  EXCEPT AS PROVIDED ON SCHEDULE 3.11, OSIRIS SHALL
NOT ASSIGN, SUBCONTRACT, OR DELEGATE ANY OF ITS RESPONSIBILITIES UNDER THIS
AGREEMENT WITHOUT THE PRIOR WRITTEN CONSENT OF NUVASIVE, WHICH CONSENT MAY BE
GRANTED OR WITHHELD IN NUVASIVE’S SOLE DISCRETION.  SUCH SUBCONTRACTORS SHALL BE
SUBJECT TO CONFIDENTIALITY OBLIGATIONS AT LEAST AS STRINGENT, WHEN TAKEN AS A
WHOLE, AS PROVIDED IN THIS AGREEMENT.  NO SUBCONTRACTOR MAY FURTHER SUBCONTRACT
ANY RESPONSIBILITIES UNDER THIS AGREEMENT WITHOUT THE PRIOR WRITTEN CONSENT OF
NUVASIVE, WHICH CONSENT MAY BE GRANTED OR WITHHELD IN NUVASIVE’S SOLE
DISCRETION.  ANY APPROVED SUBCONTRACTOR SHALL BE SUBJECT TO ALL OF THE TERMS AND
CONDITIONS APPLICABLE TO OSIRIS UNDER THIS AGREEMENT.  OSIRIS SHALL BE
RESPONSIBLE, AND SHALL REMAIN LIABLE, FOR THE PERFORMANCE OF ALL OF ITS
OBLIGATIONS UNDER THIS AGREEMENT AND FOR ANY BREACH BY ANY SUBCONTRACTOR
THEREOF.  NUVASIVE SHALL HAVE THE RIGHT TO AUDIT

 

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AND INSPECT ALL SUBCONTRACTORS WITH WHOM OSIRIS MAY ENTER INTO AGREEMENTS IN THE
PERFORMANCE OF ITS RESPONSIBILITIES UNDER THIS AGREEMENT.  SUCH AUDIT AND
INSPECTION RIGHTS SHALL BE SUBSTANTIALLY SIMILAR TO THE RIGHTS OF NUVASIVE TO
AUDIT AND INSPECT OSIRIS UNDER THIS AGREEMENT.

 

ARTICLE 4
FEES

 

4.1.          PRODUCT FEES.  NUVASIVE SHALL PAY TO OSIRIS $       PER CUBIC
CENTIMETER OF PRODUCT (“PRODUCT FEES”) DELIVERED TO NUVASIVE AND THAT IS NOT
TIMELY REJECTED BY NUVASIVE PURSUANT TO SECTION 3.6 ABOVE.  ALL PAYMENTS DUE
HEREUNDER SHALL BE MADE IN U.S. DOLLARS, WITHOUT SET-OFF OR COUNTERCLAIM. FOR
THE AVOIDANCE OF DOUBT, NUVASIVE SHALL BE RESPONSIBLE FOR PAYING TO OSIRIS THE
PRODUCT FEE FOR ALL CONFORMING PRODUCT THAT IS DELIVERED TO NUVASIVE AS A
REPLACEMENT OF PRODUCT REJECTED IN ACCORDANCE WITH SECTION 3.6 TO THE EXTENT
THAT PAYMENT FOR SUCH PRODUCT WAS NOT PREVIOUSLY MADE.

 

4.2.          ADJUSTMENTS TO PRODUCT FEES.  THE PRODUCT FEES SHALL BE ESCALATED
ON JANUARY 1, 2009 BY THE THEN CURRENT INCREASE IN CPI. ADJUSTMENTS TO PRODUCT
FEES SHALL BE EFFECTIVE JANUARY 1ST AND SHALL APPLY TO ALL SHIPMENTS OF PRODUCT
MADE ON OR AFTER JANUARY 1ST.

 

4.3.          BILLING.  NUVASIVE SHALL PAY TO OSIRIS THE PRODUCT FEES WITHIN
THIRTY (30) DAYS OF DELIVERY OF THE CONFORMING PRODUCT.  IN THE EVENT NUVASIVE
FAILS TO PAY IN ACCORDANCE WITH THIS SECTION 4.3, OSIRIS MAY, IN ADDITION TO ANY
OTHER REMEDIES AVAILABLE TO IT, ASSESS INTEREST AT A RATE OF ONE AND ONE-HALF
PERCENT (1.5%) PER MONTH ON ALL UNPAID AMOUNTS.

 

4.4.          TAXES.  ALL PAYMENTS REQUIRED UNDER THIS AGREEMENT ARE EXCLUSIVE
OF ANY APPLICABLE FEDERAL, STATE AND LOCAL TAXES.  EACH OF THE PARTIES SHALL BE
RESPONSIBLE FOR THE PAYMENT OF TAXES AND OTHER ASSESSMENTS FOR WHICH IT IS
LIABLE UNDER LAWS.

 

ARTICLE 5
ADDITIONAL OBLIGATIONS

 

5.1.          INSPECTIONS. UPON REASONABLE PRIOR WRITTEN NOTICE, NUVASIVE MAY,
AT ITS EXPENSE, AUDIT OSIRIS DURING NORMAL BUSINESS HOURS FOR QUALITY CONTROL
AND ASSURANCE, COMPLIANCE WITH LAWS, CGTP, AND OTHER APPLICABLE REGULATIONS OR
STANDARDS, AND THE TERMS HEREOF, AND OTHERWISE INSPECT FACILITIES AND RECORDS,
EACH AS RELATED TO THE PROCESSING OF PRODUCT HEREUNDER; PROVIDED, HOWEVER, THAT
SUCH AUDITS AND INSPECTIONS MAY BE CONDUCTED NO MORE THAN TWICE DURING THE TERM
HEREOF, OTHER THAN “FOR CAUSE” AUDITS, WHICH NUVASIVE SHALL BE ENTITLED TO
CONDUCT AS NECESSARY TO ADDRESS SPECIFIC QUALITY PROBLEMS RELATING TO PRODUCT,
AS WELL AS IN PREPARATION FOR REGULATORY FILINGS AND IN RESPONSE TO REGULATORY
AUTHORITY REQUIREMENTS. ANY CORRECTIVE ACTION MUTUALLY AGREED UPON BY THE
PARTIES IN RESPONSE TO NUVASIVE’S AUDIT OR INSPECTION SHALL BE IMPLEMENTED BY
OSIRIS, AT OSIRIS’ EXPENSE, PRIOR TO FILLING NEW OR OUTSTANDING ORDERS.  OSIRIS
HEREBY AGREES TO ADVISE NUVASIVE PROMPTLY (AND, IN ANY EVENT, WITHIN THIRTY-SIX
(36) HOURS) OF ANY PROPOSED OR UNANNOUNCED VISIT OR INSPECTION BY ANY AGENT OF A
REGULATORY AUTHORITY TO THE FACILITY WHERE SUCH VISIT OR INSPECTION IS
SPECIFICALLY RELATED TO THE PRODUCT OR ITS PROCESSING (A “PRODUCT-RELATED
INSPECTION”).  OSIRIS AGREES TO PERMIT, TO THE EXTENT REASONABLY PRACTICAL, ONE
OR MORE QUALIFIED REPRESENTATIVE(S) OF NUVASIVE TO BE PRESENT DURING A
PRODUCT-RELATED INSPECTION IF REQUESTED BY NUVASIVE.  IF NUVASIVE IS NOT PRESENT
DURING A PRODUCT-RELATED INSPECTION, OSIRIS SHALL PROMPTLY PROVIDE A SUMMARY
REPORT OF THE RESULTS OF THE PRODUCT-RELATED INSPECTION TO NUVASIVE.  OSIRIS
SHALL PROMPTLY NOTIFY NUVASIVE OF THE RESULTS OF ANY INSPECTION, COMMENTS,
RESPONSES OR NOTICES RECEIVED FROM THE FDA, AATB, OR OTHER APPLICABLE REGULATORY
AUTHORITIES, WHICH RELATE TO THE PROCESSING OF PRODUCT HEREUNDER.  WITH RESPECT
TO THE

 

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FORGOING, EACH PARTY SHALL PROVIDE THE OTHER PARTY AT SUCH OTHER PARTY’S REQUEST
WITH COPIES OF ANY NOTICES OR CORRESPONDENCE FROM OR TO SUCH REGULATORY
AUTHORITIES THAT DIRECTLY RELATE TO PRODUCT.  SUCH NOTICES AND CORRESPONDENCE
ARE CONSIDERED CONFIDENTIAL INFORMATION IN ACCORDANCE WITH THIS AGREEMENT. THE
PARTIES WILL COOPERATE IN THE DEVELOPMENT AND REVIEW OF RESPONSES THAT ARE
REQUIRED TO BE SUBMITTED TO ANY REGULATORY AUTHORITY RELATING TO THE PROCESSING
OF PRODUCT PRIOR TO SUBMISSION TO THE REGULATORY AUTHORITY.

 

5.2.          RECORDS; SAFETY.  OSIRIS SHALL MAINTAIN ACCURATE AND COMPLETE
RECORDS OF ITS PROCUREMENT, PROCESSING AND SUPPLY OF PRODUCT HEREUNDER FOR THE
LONGER OF FIVE (5) YEARS AFTER SHIPMENT OF ANY SUCH PRODUCT, OR THE PERIOD OF
TIME REQUIRED BY APPLICABLE LAWS, REGULATIONS AND/OR STANDARDS, WHICHEVER IS
GREATER.  NO RECORDS REQUIRED BY THIS AGREEMENT SHALL BE DISCARDED BY OSIRIS
WITHOUT SPECIFIC PRIOR WRITTEN NOTIFICATION OF OSIRIS’ INTENT TO DISCARD TO
NUVASIVE.  THOSE RECORDS (OR COPIES OF THOSE RECORDS) THAT OSIRIS IS UNWILLING
TO RETAIN WILL BE TRANSFERRED TO NUVASIVE FOR STORAGE.  OSIRIS SHALL PROMPTLY
(AND, IN ANY EVENT, WITHIN TWENTY FOUR (24) HOURS) NOTIFY NUVASIVE OF ANY
INFORMATION OF WHICH IT BECOMES AWARE CONCERNING PRODUCT SUPPLIED TO NUVASIVE. 
ANY SUCH NOTIFICATION WILL INCLUDE ALL RELATED INFORMATION IN REASONABLE
DETAIL.  UPON SUCH NOTIFICATION, THE PARTIES SHALL CONSULT WITH EACH OTHER IN AN
EFFORT TO ARRIVE AT A MUTUALLY ACCEPTABLE PROCEDURE FOR TAKING APPROPRIATE
ACTION; PROVIDED, HOWEVER, THAT NOTHING CONTAINED HEREIN SHALL BE CONSTRUED AS
RESTRICTING THE RIGHT OF EITHER PARTY TO MAKE A TIMELY REPORT OF SUCH MATTER TO
ANY REGULATORY AUTHORITY OR TAKE OTHER ACTION THAT IT DEEMS TO BE APPROPRIATE OR
REQUIRED BY APPLICABLE LAWS.

 

5.3.          REGULATORY COMPLIANCE.  WITH RESPECT TO EACH PARTY’S PERFORMANCE
UNDER THIS AGREEMENT, OSIRIS AND NUVASIVE SHALL EACH COMPLY WITH ALL APPLICABLE
LAWS, REGULATIONS, AND STANDARDS.

 

5.4.          AATB ACCREDITATION.  THE PARTIES AGREE THAT OSIRIS IS ACTIVELY
PURSUING AATB ACCREDITATION, AND THAT NUVASIVE SHALL CONTINUE TO PERFORM ITS
OBLIGATIONS UNDER THIS AGREEMENT DESPITE THE PENDENCY OF SUCH AATB ACCREDITATION
FOR SO LONG AS OSIRIS IS USING REASONABLE COMMERCIAL EFFORTS TO OBTAIN SUCH
ACCREDITATION.  ONCE OBTAINED, OSIRIS AGREES TO MAINTAIN ITS ACCREDITATION WITH
THE AATB AND SHOULD OSIRIS’ ACCREDITATION LAPSE AT ANY TIME OR FOR ANY REASON,
IT SHALL PROMPTLY COMMUNICATE TO THE NUVASIVE THE REASONS FOR SUCH LAPSE AND THE
ACTIONS TAKEN TO CURE THE LOSS OF AATB ACCREDITATION. IN THE EVENT THAT OSIRIS
FAILS TO CURE SUCH LOSS WITHIN SIX MONTHS, NOTWITHSTANDING ANY PROVISION TO THE
CONTRARY CONTAINED IN THIS AGREEMENT, NUVASIVE SHALL BE IMMEDIATELY AND FOREVER
RELIEVED OF ANY OBLIGATION TO ORDER PRODUCT OR TO PAY ANY FEES WITH RESPECT
THERETO AND SHALL HAVE THE RIGHT TO CANCEL OR AMEND, WITHOUT LIABILITY, ANY
ORDERS THEN PENDING; PROVIDED, HOWEVER, NUVASIVE SHALL PAY THE PRODUCT FEES FOR
ALL ORDERS SHIPPED AS LONG AS SUCH ORDERS ARE FILLED WITH PRODUCT PROCESSED
WHILE OSIRIS WAS ACCREDITED.

 

5.5.          COMPLAINTS.  OSIRIS HEREBY AGREES TO ADVISE NUVASIVE PROMPTLY
(AND, IN ANY EVENT, WITHIN THIRTY-SIX (36) HOURS) OF ANY COMPLAINT INFORMATION
(INCLUDING ADVERSE EVENT INFORMATION) OSIRIS RECEIVES RELATING TO PRODUCT.
OSIRIS WILL ASSIST NUVASIVE IN INVESTIGATING AND RESOLVING ALL COMPLAINTS AND
ADVERSE EVENTS RELATED TO THE PROCESSING OF PRODUCT.  NUVASIVE WILL BE
RESPONSIBLE FOR EVALUATING AND INVESTIGATING COMPLAINTS AND THE PARTIES WILL
COOPERATE IN PREPARING  COMMUNICATIONS TO ANY REGULATORY AUTHORITIES REGARDING
PRODUCT COMPLAINTS OR ADVERSE EVENTS.  OSIRIS WILL TAKE ANY CORRECTIVE ACTIONS
AGREED TO BY THE PARTIES TO AVOID FUTURE OCCURRENCES OF PRODUCT COMPLAINTS OR
ADVERSE EVENTS RELATED TO THE PROCESSING OF THE PRODUCT.

 

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5.6.          PRODUCT TRACKING.  NUVASIVE SHALL BE RESPONSIBLE FOR MAINTAINING
TRACKABILITY FOR ALL PRODUCTS PROVIDED BY OSIRIS. TRACKING RECORDS SHALL BE
MAINTAINED BY NUVASIVE IN ACCORDANCE WITH ALL APPLICABLE LAWS.

 

5.7.          PRODUCT WITHDRAWAL.  IN THE EVENT OSIRIS OR NUVASIVE BELIEVES IT
MAY BE NECESSARY TO CONDUCT A RECALL, FIELD CORRECTION, MARKET WITHDRAWAL, STOCK
RECOVERY, OR OTHER SIMILAR ACTION WITH RESPECT TO PRODUCT (A “PRODUCT
WITHDRAWAL”), NUVASIVE SHALL MAKE ALL DECISIONS AS TO SUCH PRODUCT WITHDRAWAL
AND OSIRIS SHALL COOPERATE WITH NUVASIVE IN ANY PRODUCT WITHDRAWAL. NUVASIVE
SHALL BEAR ALL COSTS IN CONNECTION WITH ANY SUCH PRODUCT WITHDRAWAL AND NUVASIVE
SHALL REIMBURSE OSIRIS FOR ALL REASONABLE OUT-OF-POCKET EXPENSES INCURRED BY
OSIRIS IN CONNECTION WITH ANY SUCH PRODUCT WITHDRAWAL; PROVIDED, HOWEVER, THAT
IF SUCH PRODUCT WITHDRAWAL IS ATTRIBUTABLE TO ANY BREACH, MISREPRESENTATION OR
NON-FULFILLMENT OF ANY COVENANT, AGREEMENT, REPRESENTATION OR WARRANTY MADE OR
TO BE PERFORMED BY OSIRIS UNDER THE ASSET PURCHASE AGREEMENT OR THIS AGREEMENT
(INCLUDING, WITHOUT LIMITATION, THE FAILURE OF ANY PRODUCT SUPPLIED HEREUNDER TO
MEET THE OSIRIS PRODUCT WARRANTY) OR TO THE NEGLIGENT ACT OR OMISSION OR WILLFUL
MISCONDUCT OF OSIRIS, OSIRIS SHALL REIMBURSE NUVASIVE FOR ALL COSTS REASONABLY
INCURRED BY NUVASIVE IN CONNECTION WITH ANY SUCH PRODUCT WITHDRAWAL.

 

ARTICLE 6
INDEMNIFICATION AND INSURANCE

 

6.1.          OSIRIS’S INDEMNITY OBLIGATIONS.  OSIRIS SHALL DEFEND, INDEMNIFY
AND HOLD HARMLESS NUVASIVE, ITS AFFILIATES AND THEIR RESPECTIVE SUCCESSORS AND
PERMITTED ASSIGNS (THE “NUVASIVE INDEMNITEES”) FROM AND AGAINST ANY AND ALL
LOSSES, LIABILITIES, CLAIMS, ACTIONS, PROCEEDINGS, DAMAGES AND EXPENSES
(INCLUDING WITHOUT LIMITATION REASONABLE ATTORNEYS’ FEES AND EXPENSES) (HEREIN
“DAMAGES”) RELATING TO OR RESULTING FROM A CLAIM THAT ARISES OUT OF (A) ANY
BREACH BY OSIRIS OR ITS AFFILIATES, SUBLICENSEES, CONTRACTORS OR SUBCONTRACTORS,
OR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, OR AGENTS (THE
“OSIRIS RESPONSIBLE PARTIES”) OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION,
THE FAILURE OF ANY PRODUCT SUPPLIED HEREUNDER TO MEET OR COMPLY WITH THE
SPECIFICATIONS OR OSIRIS PRODUCT WARRANTY, (B) THE NEGLIGENCE OR WILLFUL
MISCONDUCT OF ANY OF THE OSIRIS RESPONSIBLE PARTIES, (C) ANY VIOLATION OF LAW BY
ANY OF THE OSIRIS RESPONSIBLE PARTIES; OR (D) THE UNAUTHORIZED USE OF LICENSED
TECHNOLOGY BY ANY OF THE OSIRIS RESPONSIBLE PARTIES; PROVIDED, HOWEVER, THIS
SECTION 6.1 SHALL NOT IMPOSE ANY OBLIGATION ON OSIRIS TO INDEMNIFY THE NUVASIVE
INDEMNITEES TO THE EXTENT OF ANY DAMAGES FOR WHICH NUVASIVE IS OBLIGATED TO
INDEMNIFY THE OSIRIS INDEMNITEES PURSUANT TO SECTION 6.2.

 

6.2.          NUVASIVE’ INDEMNITY OBLIGATIONS.  NUVASIVE SHALL DEFEND, INDEMNIFY
AND HOLD HARMLESS OSIRIS AND ITS AFFILIATES, AND THEIR RESPECTIVE SUCCESSORS AND
PERMITTED ASSIGNS (THE “OSIRIS INDEMNITEES”) FROM AND AGAINST ANY AND ALL
DAMAGES RELATING TO OR RESULTING FROM A CLAIM THAT ARISES OUT OF (A) ANY BREACH
BY NUVASIVE OR ITS AFFILIATES, SUBLICENSEES, CONTRACTORS OR SUBCONTRACTORS, OR
ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, OR AGENTS (THE “NUVASIVE
RESPONSIBLE PARTIES”) OF THIS AGREEMENT, (B) THE NEGLIGENCE OR WILLFUL
MISCONDUCT OF ANY OF THE NUVASIVE RESPONSIBLE PARTIES, (C) ANY CHANGES TO THE
SPECIFICATIONS REQUESTED BY NUVASIVE IN WRITING, OR (D) ANY VIOLATION OF LAW BY
ANY OF THE NUVASIVE RESPONSIBLE PARTIES; PROVIDED, HOWEVER, THIS SECTION 6.2
SHALL NOT IMPOSE ANY OBLIGATION ON NUVASIVE TO INDEMNIFY THE OSIRIS INDEMNITEES
TO THE EXTENT OF ANY DAMAGES FOR WHICH OSIRIS IS OBLIGATED TO INDEMNIFY THE
NUVASIVE INDEMNITEES PURSUANT TO SECTION 6.1.

 

6.3.          NOTICE OF CLAIM.  THE INDEMNIFICATION OBLIGATIONS OF THE PARTIES
PURSUANT TO THIS AGREEMENT SHALL BE PROPORTIONAL TO THE RELATIVE RESPONSIBILITY
OR FAULT OF EACH PARTY FOR THE DAMAGES

 

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INCURRED AS A RESULT OF THE ACTIONS OR INACTIONS OF SUCH PARTY.  PROMPTLY AFTER
RECEIPT BY A NUVASIVE INDEMNITEE OR OSIRIS INDEMNITEE OF THE COMMENCEMENT OF ANY
SUCH CLAIM, DEMAND, ACTION, SUIT OR PROCEEDING (COLLECTIVELY, “ACTION”) WHICH IS
THE SUBJECT OF THE OTHER PARTY’S INDEMNIFICATION OBLIGATIONS HEREUNDER, SUCH
INDEMNITEE SHALL NOTIFY THE OTHER PARTY OF THE COMMENCEMENT OF THE ACTION.  ANY
FAILURE TO PROVIDE SUCH NOTICE SHALL ONLY RELIEVE THE OTHER PARTY OF ITS
INDEMNIFICATION OBLIGATIONS HEREUNDER TO THE EXTENT THE INDEMNIFYING PARTY HAS
BEEN MATERIALLY PREJUDICED BY SUCH FAILURE.  THE INDEMNIFYING PARTY SHALL HAVE
SOLE RIGHT TO SELECT AND RETAIN ATTORNEYS (REASONABLY ACCEPTABLE TO THE
INDEMNITEE) TO ASSERT OR NEGOTIATE, AND SOLE RIGHT TO CONTROL, THE DEFENSE AND
ANY SETTLEMENT OF THE ACTION, TO THE EXTENT OF THE INDEMNIFYING PARTY’S
CORRESPONDING INDEMNIFICATION AND DEFENSE OBLIGATIONS, EXCEPT THAT UNDER NO
CIRCUMSTANCES SHALL THE INDEMNIFYING PARTY ENTER INTO ANY SETTLEMENT THAT
INVOLVES AN ADMISSION OF LIABILITY, NEGLIGENCE OR OTHER CULPABILITY BY THE
INDEMNITEE, OR REQUIRES THE INDEMNITEE TO CONTRIBUTE TO THE SETTLEMENT, WITHOUT
THE INDEMNITEE’S PRIOR WRITTEN CONSENT.  WITHOUT LIMITING THE INDEMNIFYING
PARTY’S FOREGOING RIGHT TO SELECT AND RETAIN ATTORNEYS AND TO SOLE CONTROL OF
THE DEFENSE AND SETTLEMENT OF SUCH ACTION, THE INDEMNITEE MAY, AT ITS OWN
EXPENSE, PARTICIPATE IN THE DEFENSE OF, OR OTHERWISE CONSULT WITH COUNSEL OF ITS
OWN CHOICE IN CONNECTION WITH, AN ACTION THAT IS THE SUBJECT OF THE OTHER
PARTY’S INDEMNIFICATION OBLIGATIONS.

 

6.4.          LIMITATION OF LIABILITY.  IN NO EVENT SHALL EITHER PARTY BE
LIABLE, WHETHER AS A RESULT OF CONTRACTUAL BREACH, TORT OR OTHERWISE, TO THE
OTHER PARTY FOR ANY CONSEQUENTIAL, SPECIAL, OR INCIDENTAL DAMAGES INCURRED BY
SUCH OTHER PARTY, INCLUDING BUT NOT LIMITED TO INJURY TO GOODWILL, OR DIRECT,
INDIRECT OR SPECULATIVE LOST PROFITS.  THE FOREGOING LIMITATION OF LIABILITY
SHALL NOT APPLY TO A PARTY’S LIABILITY FOR BREACH OF ITS CONFIDENTIALITY
OBLIGATIONS HEREUNDER OR TO THE EXTENT SUCH DAMAGES ARE PAID TO A THIRD PARTY IN
CONNECTION WITH A THIRD PARTY CLAIM THAT IS INDEMNIFIED HEREUNDER.

 

6.5.          INSURANCE.  EACH PARTY AGREES TO PROCURE AND MAINTAIN IN FULL
FORCE AND EFFECT DURING THE TERM OF THIS AGREEMENT, AT ITS SOLE COST AND
EXPENSE, GENERAL LIABILITY AND PRODUCT LIABILITY INSURANCE IN AMOUNTS OF NOT
LESS THAN $2,000,000 PER INCIDENT AND $7,000,000 ANNUAL AGGREGATE, WHICH
INSURANCE SHALL BE WRITTEN ON AN “OCCURRENCE” BASIS POLICY FORM, OR, IN THE
ALTERNATIVE, SHALL CONTINUE FOR A PERIOD OF TEN (10) YEARS FOLLOWING THE
TERMINATION OR EXPIRATION OF THIS AGREEMENT, WITH A REPUTABLE INSURANCE CARRIER
AND NAME THE OTHER PARTY AS AN ADDITIONAL INSURED.  EACH PARTY SHALL, ON
REQUEST, PROVIDE TO THE OTHER PARTY A COPY OF A CERTIFICATE OF COVERAGE OR OTHER
WRITTEN EVIDENCE REASONABLY SATISFACTORY TO SUCH REQUESTING PARTY OF SUCH
INSURANCE COVERAGE.

 

ARTICLE 7
TERM AND TERMINATION

 

7.1.          TERM.  UNLESS TERMINATED EARLIER PURSUANT TO THE TERMS OF THIS
AGREEMENT, THIS AGREEMENT SHALL COMMENCE ON THE EFFECTIVE DATE AND REMAIN IN
EFFECT FOR EIGHTEEN (18) MONTHS THEREFROM (THE “TERM”).

 

7.2.          TERMINATION.

 

7.2.1.       THIS AGREEMENT MAY BE TERMINATED, PRIOR TO THE EXPIRATION OF ITS
TERM, BY EITHER PARTY IMMEDIATELY UPON WRITTEN NOTICE TO THE OTHER PARTY AFTER
THE MATERIAL BREACH OF ANY PROVISION OF THIS AGREEMENT BY THE OTHER PARTY IF THE
OTHER PARTY HAS NOT CURED SUCH BREACH WITHIN THIRTY (30) DAYS AFTER RECEIPT OF
WRITTEN NOTICE THEREOF FROM THE NON-BREACHING PARTY.

 

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7.2.2.       THIS AGREEMENT MAY BE TERMINATED, PRIOR TO THE EXPIRATION OF ITS
TERM, IMMEDIATELY UPON WRITTEN NOTICE BY EITHER PARTY IF THE OTHER PARTY SHALL
HAVE BECOME INSOLVENT OR BANKRUPT, OR SHALL HAVE MADE A GENERAL ASSIGNMENT FOR
THE BENEFIT OF ITS CREDITORS, OR ANY CASE OR PROCEEDING SHALL HAVE BEEN
COMMENCED BY OR AGAINST THE OTHER PARTY IN BANKRUPTCY OR SEEKING REORGANIZATION,
LIQUIDATION, DISSOLUTION, OR ANY OTHER RELIEF UNDER ANY BANKRUPTCY, INSOLVENCY,
REORGANIZATION OR OTHER SIMILAR ACT OR LAW, AND ANY SUCH EVENT SHALL HAVE
CONTINUED FOR SIXTY (60) DAYS UNDISMISSED OR UNDISCHARGED.

 

7.2.3.       THIS AGREEMENT MAY BE TERMINATED, PRIOR TO THE EXPIRATION OF ITS
TERM, BY NUVASIVE AT ANY TIME AND FOR ANY REASON, IMMEDIATELY UPON WRITTEN
NOTICE TO OSIRIS, AFTER OSIRIS HAS DELIVERED TO NUVASIVE AN AGGREGATE OF
           CUBIC CENTIMETERS OF PRODUCT HEREUNDER.

 

7.3.          EFFECT OF TERMINATION OR EXPIRATION.  AFTER EITHER PARTY PROVIDES
NOTICE OF TERMINATION UNDER SECTION 7.2.1 OR 7.2.2 AND PENDING TERMINATION OF
THIS AGREEMENT UNDER SUCH SECTIONS, THE PARTIES SHALL CONTINUE TO PERFORM THEIR
RESPECTIVE OBLIGATIONS HEREUNDER.  EXPIRATION OR TERMINATION OF THIS AGREEMENT
SHALL NOT RELIEVE THE PARTIES OF ANY OBLIGATION ACCRUING PRIOR TO SUCH
EXPIRATION OR TERMINATION.  THE PROVISIONS OF SECTIONS 3.7, 5.2, 6.1, 6.2, 6.3,
6.4, 6.5, 8.1, 8.2, AND 8.3 AND THE APPLICABLE PROVISIONS OF ARTICLE 9 SHALL
SURVIVE ANY EXPIRATION OR TERMINATION OF THIS AGREEMENT.  EACH PARTY AGREES TO
RETURN UPON THE EXPIRATION OR TERMINATION OF THIS AGREEMENT ALL CONFIDENTIAL
INFORMATION ACQUIRED FROM THE OTHER PARTY, EXCEPT AS TO SUCH INFORMATION IT MAY
BE REQUIRED TO RETAIN UNDER APPLICABLE LAWS, AND EXCEPT FOR ONE COPY OF SUCH
INFORMATION MAY BE RETAINED BY SUCH PARTY’S LEGAL DEPARTMENT; PROVIDED, THAT IF
OSIRIS ELECTS NOT TO RETAIN A COPY OF ANY SUCH CONFIDENTIAL INFORMATION PROVIDED
TO NUVASIVE PURSUANT TO SECTION 3.5 HEREOF, THEN NUVASIVE SHALL, UPON REASONABLE
NOTICE TO NUVASIVE AND DURING NUVASIVE’S NORMAL BUSINESS HOURS, PROVIDE OSIRIS
WITH ACCESS TO SUCH CONFIDENTIAL INFORMATION AS IS REASONABLY NECESSARY FOR
PURPOSES OF OSRIS’ COMPLIANCE WITH APPLICABLE LAWS OR IN CONNECTION WITH OSIRIS’
DEFENSE OF ANY THIRD PARTY CLAIMS RELATED THERETO.

 

ARTICLE 8
INTELLECTUAL PROPERTY AND CONFIDENTIALITY

 

8.1.          INTELLECTUAL PROPERTY.  SUBJECT TO THE LICENSE EXPRESSLY GRANTED
BY THIS AGREEMENT, NUVASIVE IS THE SOLE AND EXCLUSIVE OWNER OF ALL RIGHT, TITLE
AND INTEREST IN AND TO THE METHODS OF PROCESSING PRODUCT AND ALL OF NUVASIVE’S
PATENTS, TRADEMARKS, INVENTIONS, COPYRIGHTS, KNOW-HOW, AND TRADE SECRETS.

 

8.2.          OTHER INVENTIONS. THE PARTIES DO NOT CONTEMPLATE THAT ANY
INVENTIONS, DISCOVERIES, IMPROVEMENTS, MODIFICATIONS, DERIVATIONS, INFORMATION,
KNOW-HOW AND THE LIKE THAT ARISE OUT OF THE PERFORMANCE OF THIS AGREEMENT
(COLLECTIVELY, THE “INVENTIONS”), INCLUDING THOSE RELATED TO PROCESSES,
COMPOSITIONS OF MATTER AND METHODS OF USE, WHETHER PROTECTABLE BY PATENT OR AS A
TRADE SECRET, SHALL BY OSIRIS.  ACCORDINGLY, ANY AND ALL INVENTIONS MADE BY
EITHER PARTY INDIVIDUALLY OR JOINTLY HEREUNDER, INCLUDING ANY INVENTIONS
HEREUNDER PERTAINING TO PROCESSING OF PRODUCT, SHALL BE OWNED SOLELY BY
NUVASIVE, AND OSIRIS HEREBY ASSIGNS TO NUVASIVE ALL RIGHT, TITLE AND INTEREST IN
AND TO ALL INVENTIONS.  OSIRIS SHALL, UPON NUVASIVE’S REQUEST, EXECUTE SUCH
DOCUMENTS, INCLUDING ANY AND ALL APPLICATIONS, ASSIGNMENTS OR OTHER INSTRUMENTS,
GIVE ANY TESTIMONY AND TAKE SUCH OTHER ACTIONS AS NUVASIVE DEEMS NECESSARY FOR
NUVASIVE TO OBTAIN SUCH OWNERSHIP AND TO APPLY FOR, SECURE, AND MAINTAIN PATENT
OR OTHER PROPRIETARY PROTECTION IN THE UNITED STATES OR ANY OTHER COUNTRY WITH
RESPECT TO PRODUCT OR INVENTIONS, PROVIDED THAT NUVASIVE SHALL COMPENSATE OSIRIS
FOR ITS REASONABLE OUT OF POCKET COSTS AND EXPENSES ASSOCIATED WITH SUCH
ACTIONS.  ALL INVENTIONS AND ANY INFORMATION WITH RESPECT THERETO SHALL BE THE
CONFIDENTIAL INFORMATION OF NUVASIVE.

 

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8.3.          CONFIDENTIALITY.  THE RECEIVING PARTY SHALL ENSURE THE
CONFIDENTIALITY OF THE DISCLOSING PARTY’S CONFIDENTIAL INFORMATION IT RECEIVES
BY TAKING SUBSTANTIALLY THE SAME PRECAUTIONS AS THE RECEIVING PARTY DOES WITH
ITS OWN CONFIDENTIAL INFORMATION, BUT NOT LESS THAN A REASONABLE STANDARD OF
CARE.  THE RECEIVING PARTY SHALL NOT USE THE DISCLOSING PARTY’S CONFIDENTIAL
INFORMATION FOR ANY PURPOSE OTHER THAN TO CARRY OUT THE RECEIVING PARTY’S
OBLIGATIONS HEREUNDER.  THE OBLIGATIONS OF CONFIDENTIALITY SHALL NOT APPLY TO
INFORMATION THAT THE RECEIVING PARTY IS REQUIRED BY APPLICABLE LAWS TO DISCLOSE;
PROVIDED, HOWEVER, THAT THE RECEIVING PARTY SHALL SO NOTIFY THE DISCLOSING PARTY
OF THE RECEIVING PARTY’S INTENT TO DISCLOSE AND SHALL COOPERATE WITH THE
DISCLOSING PARTY AT THE DISCLOSING PARTY’S EXPENSE ON REASONABLE MEASURES TO
PROTECT THE CONFIDENTIALITY OF THE DISCLOSING PARTY’S CONFIDENTIAL INFORMATION.
THE RECEIVING PARTY MAY NOT DISCLOSE THE DISCLOSING PARTY’S CONFIDENTIAL
INFORMATION RECEIVED PURSUANT TO THIS AGREEMENT EXCEPT TO THE RECEIVING PARTY’S
DIRECTORS, OFFICERS, EMPLOYEES, CONSULTANTS, ATTORNEYS AND ACCOUNTANTS WHO
REASONABLY REQUIRE DISCLOSURE OF SUCH CONFIDENTIAL INFORMATION FOR THE RECEIVING
PARTY TO EXERCISE ITS RIGHTS OR PERFORM ITS OBLIGATIONS UNDER THIS AGREEMENT,
PROVIDED THAT SUCH PERSONS AND ENTITIES ARE OBLIGATED TO HOLD THE CONFIDENTIAL
INFORMATION IN CONFIDENCE IN ACCORDANCE WITH RESTRICTIONS AND PROCEDURES NO LESS
STRINGENT THAN PROVIDED FOR HEREIN AND SUCH PERSONS ENTER INTO A WRITTEN
CONFIDENTIALITY AGREEMENT WHEREUNDER THEY AGREE NOT TO DISCLOSE SUCH
INFORMATION. THE FACT THAT GENERAL INFORMATION MAY BE IN OR BECOME PART OF THE
PUBLIC DOMAIN, IN AND OF ITSELF, DOES NOT EXCLUDE ANY SPECIFIC CONFIDENTIAL
INFORMATION FROM THE OBLIGATIONS OF THIS AGREEMENT.  THE PARTIES HERETO
UNDERSTAND AND AGREE THAT THIS SECTION 8.3 IS REASONABLE AND NECESSARY TO
PROTECT NUVASIVE’S AND OSIRIS’ RESPECTIVE BUSINESS INTERESTS.  THE PARTIES
FURTHER AGREE THAT THE OTHER MAY SUFFER IRREPARABLE HARM FROM A BREACH OF THIS
SECTION 8.3.  THUS, IN ADDITION TO ANY OTHER RIGHTS OR REMEDIES, ALL OF WHICH
SHALL BE DEEMED CUMULATIVE, A PARTY SHALL BE ENTITLED TO PURSUE INJUNCTIVE
RELIEF TO ENFORCE THE TERMS OF THIS SECTION 8.3.

 

8.4.          PUBLICATIONS.  NO ANNOUNCEMENT, NEWS RELEASE, PUBLIC STATEMENT,
PUBLICATION, OR PRESENTATION RELATING TO THIS AGREEMENT OR EITHER PARTY’S
PERFORMANCE HEREUNDER (COLLECTIVELY, A “PUBLICATION”) SHALL BE MADE WITHOUT THE
OTHER PARTY’S PRIOR WRITTEN APPROVAL, EXCEPT AS REQUIRED BY LAW.  EACH PARTY
AGREES TO SUBMIT EACH PUBLICATION IT PROPOSES TO MAKE TO THE OTHER PARTY FOR
PURPOSES OF SUCH OTHER PARTY’S REVIEW, COMMENT AND APPROVAL.  EACH PARTY FURTHER
AGREES TO RESPOND AS PROMPTLY AS REASONABLY POSSIBLE.

 

ARTICLE 9
MISCELLANEOUS

 

9.1.          NO ASSIGNMENT.  EXCEPT AS OTHERWISE SET FORTH HEREIN, NEITHER
PARTY SHALL TRANSFER, ASSIGN OR CEDE ANY RIGHTS OR DELEGATE ANY OBLIGATIONS
HEREUNDER, IN WHOLE OR IN PART, WHETHER VOLUNTARILY OR BY OPERATION OF LAW,
WITHOUT THE PRIOR WRITTEN CONSENT OF THE OTHER PARTY, WHICH CONSENT MAY BE
WITHHELD AT THE OTHER PARTY’S REASONABLE BUSINESS DISCRETION, PROVIDED, THAT
(A) OSIRIS MAY TRANSFER THIS AGREEMENT WITHOUT PRIOR WRITTEN CONSENT OF NUVASIVE
TO AN AFFILIATE OR IN CONNECTION WITH A MERGER OR SALE OF ALL OR SUBSTANTIALLY
ALL OF THE STOCK OR ASSETS OF OSIRIS TO ANY PARTY THAT NUVASIVE DOES NOT
REASONABLY DEEM TO BE A COMPETITOR, AND (B)  NUVASIVE MAY TRANSFER THIS
AGREEMENT WITHOUT PRIOR WRITTEN CONSENT OF OSIRIS TO AN AFFILIATE OF NUVASIVE OR
IN CONNECTION WITH A MERGER OR SALE OF ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF
NUVASIVE.

 

9.2.          NOTICES.  ALL NOTICES OR OTHER COMMUNICATIONS GIVEN PURSUANT
HERETO SHALL BE IN WRITING AND DEEMED GIVEN (A) WHEN DELIVERED BY MESSENGER,
(B) WHEN SENT BY FACSIMILE, (WITH RECEIPT CONFIRMED), (C) WHEN RECEIVED BY THE
ADDRESSEE, IF SENT BY FEDERAL EXPRESS OR OTHER EXPRESS DELIVERY SERVICE (RECEIPT
REQUESTED), OR (D) FIVE DAYS AFTER BEING MAILED IN THE U.S., FIRST-CLASS

 

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POSTAGE PREPAID, REGISTERED OR CERTIFIED, IN EACH CASE TO THE APPROPRIATE
ADDRESSES AND FACSIMILE NUMBERS SET FORTH BELOW (OR TO SUCH OTHER ADDRESSES AND
FACSIMILE NUMBERS AS A PARTY MAY DESIGNATE AS TO ITSELF BY NOTICE TO THE OTHER
PARTY):

 

If to Osiris:

 

If to NuVasive

 

 

 

Osiris Therapeutics, Inc.

7015 Albert Einstein Drive

Columbia, MD 21046

Attention: Chief Executive Officer

Fax No.: 443-545-1701

 

With a copy to:

 

McKenna Long & Aldridge LLP

303 Peachtree St., NE, Suite 5300

Atlanta, GA 30308

Attention: Michael Cochran, Esq.

Fax No.: 404-527-4198

 

NuVasive, Inc.

7473 Lusk Boulevard

San Diego, CA 92121

Attention: General Counsel

Fax No.: [*]

 

With a copy (which shall not constitute notice) to:

 

DLA Piper US LLP

4365 Executive Drive

Suite 1100

San Diego, CA 92122

Attention: Michael Kagnoff

Fax No.: 858-638-5022

 

9.3.          FORCE MAJEURE.  NONPERFORMANCE BY EITHER PARTY HERETO SHALL BE
EXCUSED TO THE EXTENT THAT PERFORMANCE IS RENDERED IMPOSSIBLE BY STRIKE, FIRE,
EXPLOSION, FLOOD, ACTS OF GOD, TERRORISM, WAR OR CIVIL COMMOTION, GOVERNMENTAL
ACTS OR ORDERS OR RESTRICTIONS, FAILURE OF SUPPLIERS, PUBLIC UTILITIES OR COMMON
CARRIERS, OR ANY OTHER REASON WHERE FAILURE TO PERFORM IS BEYOND THE REASONABLE
CONTROL OF AND IS NOT CAUSED BY THE NEGLIGENCE OF THE NON-PERFORMING PARTY. 
SUCH NON-PERFORMING PARTY SHALL EXERCISE BEST EFFORTS TO ELIMINATE THE FORCE
MAJEURE EVENT AND TO RESUME PERFORMANCE OF ITS AFFECTED OBLIGATIONS AS SOON AS
PRACTICABLE.  IN THE EVENT THAT, AS A RESULT OF SUCH FORCE MAJEURE EVENT, A
PARTY DOES NOT PERFORM ALL OF ITS OBLIGATIONS HEREUNDER FOR ANY PERIOD OF NINETY
(90) CONSECUTIVE DAYS, IN ADDITION TO ANY OTHER RIGHTS HEREUNDER, THE OTHER
PARTY MAY TERMINATE THIS AGREEMENT ON THIRTY (30) DAYS’ PRIOR WRITTEN NOTICE TO
THE NON-PERFORMING PARTY.

 

9.4.          COUNTERPARTS.  THIS AGREEMENT MAY BE EXECUTED IN TWO OR MORE
COUNTERPARTS, EACH OF WHICH SHALL BE DEEMED AN ORIGINAL AND ALL OF WHICH
TOGETHER SHALL CONSTITUTE ONE AND THE SAME INSTRUMENT.

 

9.5.          PARTIAL INVALIDITY.  IF ANY PROVISION OF THIS AGREEMENT IS HELD TO
BE INVALID, THE REMAINING PROVISIONS SHALL NEVERTHELESS REMAIN IN FULL FORCE AND
EFFECT.  IN ADDITION, THE PARTIES SHALL RENEGOTIATE IN GOOD FAITH ANY TERM HELD
TO BE INVALID, AND BE BOUND BY THE MUTUALLY AGREED UPON SUBSTITUTE PROVISION.

 

9.6.          ENTIRE AGREEMENT; INCONSISTENT TERMS; WAIVER.  THIS AGREEMENT
CONSTITUTES THE ENTIRE AGREEMENT BETWEEN THE PARTIES HERETO WITH RESPECT TO THE
SUBJECT MATTER HEREOF AND MAY NOT BE AMENDED, MODIFIED, WAIVED OR CANCELLED
EXCEPT BY A WRITING SIGNED BY EACH OF THE PARTIES OR, IN CASE OF A WAIVER, BY
THE PARTY EFFECTING SUCH WAIVER.  IF ANY TERMS OR CONDITIONS OF ANY STANDARD
FORM

 

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(E.G., PURCHASE ORDER, ORDER ACKNOWLEDGMENT, ETC.) OF OSIRIS OR NUVASIVE
CONFLICT OR ARE INCONSISTENT WITH ANY TERMS OR CONDITIONS OF THIS AGREEMENT, THE
TERMS AND CONDITIONS OF THIS AGREEMENT SHALL GOVERN.  FAILURE TO REQUIRE
PERFORMANCE OF ANY PROVISION HEREOF SHALL IN NO MANNER AFFECT THE RIGHT OF SUCH
PARTY AT A LATER TIME TO ENFORCE THE SAME, AND NO WAIVER IN ANY ONE INSTANCE
SHALL BE DEEMED TO BE A FURTHER OR CONTINUING WAIVER OF THE SAME OR ANY OTHER
PROVISION.

 

9.7.          GOVERNING LAW; CONSENT TO JURISDICTION.  THIS AGREEMENT SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO CONFLICTS OF
LAWS PRINCIPLES.

 

9.8.          DISPUTE RESOLUTION.  IN THE EVENT OF A DISPUTE ARISING UNDER THIS
AGREEMENT, EACH PARTY AGREES TO NOTIFY THE OTHER PARTY OF THE SPECIFIC
COMPLAINTS OR POINTS OF DISAGREEMENT, AND TO USE ITS GOOD FAITH EFFORTS TO
RESOLVE SUCH DISPUTE, WITHOUT LEGAL ACTION, BY REFERRING SUCH DISPUTE TO THE
[TITLE] OF OSIRIS AND [TITLE]OF NUVASIVE (COLLECTIVELY, “EXECUTIVES”) FOR
RESOLUTION.  THE EXECUTIVES SHALL MEET PROMPTLY AFTER SUCH REFERRAL TO ATTEMPT
TO RESOLVE SUCH DISPUTE THROUGH GOOD FAITH DISCUSSIONS.  IN THE EVENT THE
EXECUTIVES CANNOT RESOLVE SUCH DISPUTE WITHIN FIFTEEN (15) DAYS OF SUCH INITIAL
MEETING, EITHER PARTY MAY REQUEST THAT SUCH DISPUTE BE RESOLVED BY BINDING
ARBITRATION BEFORE ONE (1) NEUTRAL ARBITRATOR IN ACCORDANCE WITH THE
THEN-CURRENT COMMERCIAL ARBITRATION RULES OF THE AMERICAN ARBITRATION
ASSOCIATION, APPLYING THE SUBSTANTIVE LAW SPECIFIED IN SECTION 9.7.  THE PARTIES
SHALL JOINTLY SELECT THE ARBITRATOR.  WITHIN THREE (3) MONTHS OF THE CONCLUSION
OF AN ARBITRATION PROCEEDING, THE ARBITRATION DECISION SHALL BE RENDERED IN
WRITING AND SHALL SPECIFY THE BASIS ON WHICH THE DECISION WAS MADE.  ANY AWARD
RENDERED BY THE ARBITRATOR SHALL BE FINAL AND BINDING UPON THE PARTIES, AND
JUDGMENT UPON ANY SUCH AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION
THEREOF.  ARBITRATION SHALL BE CONDUCTED IN CHICAGO, ILLINOIS.  THE PARTIES
AGREE THAT, ANY PROVISION OF APPLICABLE LAW NOTWITHSTANDING, THEY WILL NOT
REQUEST, AND THE ARBITRATOR SHALL HAVE NO AUTHORITY TO AWARD, PUNITIVE OR
EXEMPLARY DAMAGES AGAINST EITHER PARTY.  THE COSTS OF THE ARBITRATION, INCLUDING
ADMINISTRATION FEES, SHALL BE SHARED BY THE PARTIES IN PROPORTION TO THEIR
FAULT, AS DETERMINED BY THE ARBITRATOR.  NOTWITHSTANDING THE FOREGOING, THE
PARTIES AGREE THAT IF ANY BREACH OR THREATENED BREACH OF THIS AGREEMENT WOULD
NECESSARILY RESULT IN IMMEDIATE, IRREPARABLE INJURY TO A PARTY, THAT PARTY, IN
ADDITION TO ANY OTHER REMEDIES AVAILABLE UNDER THIS AGREEMENT, SHALL HAVE THE
RIGHT TO SEEK INJUNCTIVE RELIEF IN ANY COURT OF COMPETENT JURISDICTION. 
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, THIS SECTION 9.8
SHALL NOT APPLY TO ANY DISPUTES ARISING UNDER SECTION 8.3 (CONFIDENTIALITY) OR
TO ANY DISPUTES RELATING TO A PARTY’S INTELLECTUAL PROPERTY (INCLUDING, WITHOUT
LIMITATION, DISPUTES RELATING TO OWNERSHIP OR INVENTORSHIP OF INVENTIONS,
VALIDITY OR INFRINGEMENT OF PATENTS, OR SCOPE OF PATENT CLAIMS).

 

9.9.          INDEPENDENT CONTRACTOR.  THE RELATIONSHIP BETWEEN NUVASIVE AND
OSIRIS ESTABLISHED BY THIS AGREEMENT IS THAT OF INDEPENDENT CONTRACTORS. 
NEITHER PARTY SHALL HAVE AUTHORITY TO CONCLUDE CONTRACTS OR OTHERWISE TO ACT FOR
OR BIND THE OTHER PARTY IN ANY MANNER, WHATSOEVER, AS AGENT OR OTHERWISE.

 

9.10.        FURTHER ACTIONS.  EACH PARTY AGREES TO EXECUTE, ACKNOWLEDGE AND
DELIVER SUCH FURTHER INSTRUMENTS, AND TO DO ALL SUCH OTHER ACTS, AS MAY BE
REASONABLY NECESSARY OR APPROPRIATE IN ORDER TO CARRY OUT THE PURPOSE AND INTENT
OF THIS AGREEMENT.

 

9.11.        REPRESENTATIONS AND WARRANTIES.  EACH OF THE PARTIES REPRESENTS AND
WARRANTS THAT (I) IT IS FULLY AUTHORIZED TO ENTER INTO THIS AGREEMENT; (II) ITS
ENTERING INTO AND PERFORMANCE UNDER THIS AGREEMENT DOES NOT VIOLATE OR BREACH IT
CERTIFICATE OF INCORPORATION OR CORPORATE BYLAWS OR ANY AGREEMENT OR CONTRACT TO
WHICH IT IS A PARTY; (III) THERE IS NO CLAIM, DEMAND, ACTION, SUIT OR PROCEEDING
OR INVESTIGATION PENDING OR CURRENTLY THREATENED AGAINST IT OR ANY OF ITS
AFFILIATES INVOLVING OR RELATING TO THE SUBJECT MATTER HEREOF, OR WHICH, IF
ADVERSELY DETERMINED, WOULD RESTRICT IT FROM

 

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ENTERING INTO THIS AGREEMENT AND CARRYING OUT ITS OBLIGATIONS UNDER THIS
AGREEMENT; AND (IV) IT HAS NO LEGAL OBLIGATIONS WHICH WOULD PREVENT THIS
AGREEMENT FROM BEING FULLY IMPLEMENTED IN ACCORDANCE WITH ITS TERMS.

 

IN WITNESS WHEREOF, the undersigned caused this Agreement to be executed as of
the Effective Date.

 

OSIRIS THERAPEUTICS, INC.

 

NUVASIVE, INC.

 

 

 

By:

 

 

By:

 

Name:

 

Name:

Its:

 

Its:

 

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EXHIBIT A PRODUCT SPECIFICATIONS

 

Osiris Materials Specifications numbers 90055, 90067, 90080, 90081, 90103, 9012,
90129, 90149, and 90188, as may be amended by mutual written agreement of the
parties.

 

 

 

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