Document:

ex10_1.htm

EXHIBIT 10.1

 

ASSET PURCHASE AGREEMENT

 

by and between

 

ST. JUDE MEDICAL, CARDIOLOGY DIVISION, INC.,

 

and

 

VASCULAR SOLUTIONS, INC.

 

DATE:  AUGUST 16, 2012

 

  

  

  

 

TABLE OF CONTENTS

	 	  	  	
Page

	 	  	  	  
	ARTICLE I                  DEFINITIONS	
1

	 	 	 
	ARTICLE II                 THE TRANSACTIONS	
4

	 	 	 
	 	
2.1

	
Purchase and Sale of Assets

	
4

	 	
2.2

	
Retention of Excluded Liabilities and Excluded Assets

	
4

	 	
2.3

	
Purchase Price

	
4

	 	
2.4

	
Closing

	
4

	 	
2.5

	
Deliveries at the Closing

	
4

	 	
2.6

	
License Grant; Covenant Not to Sue

	
5

	 	
2.7

	
Allocation of Purchase Price

	
5

	 	
2.8

	
Investigation; Limitation of Seller Warranties

	
5

	 	 	 	 
	ARTICLE III                REPRESENTATIONS AND WARRANTIES OF SELLER	
6

	 	 	 
	 	
3.1

	
Organization; Capitalization

	
6

	 	
3.2

	
Due Authorization

	
6

	 	
3.3

	
No Breach

	
6

	 	
3.4

	
Title to Acquired Assets

	
7

	 	
3.5

	
Legal Proceedings

	
7

	 	
3.6

	
No Brokers

	
7

	 	
3.7

	
Product Sales Records

	
7

	 	
3.8

	
Inventory

	
7

	 	
3.9

	
Regulatory Compliance

	
7

	 	
3.10

	
Product Liability

	
7

	 	 	 	 
	ARTICLE IV                REPRESENTATIONS AND WARRANTIES OF BUYER	
8

	 	 	 
	 	
4.1

	
Organization

	
8

	 	
4.2

	
Due Authorization

	
8

	 	
4.3

	
No Breach

	
8

	 	
4.4

	
Legal Proceedings

	
8

	 	
4.5

	
No Brokers

	
8

	 	
4.6

	
Financing

	
8

  

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TABLE OF CONTENTS

(continued)

	 	  	  	
Page

	 	  	  	  
	ARTICLE V                 POST-CLOSING COVENANTS	
9

	 	 	 	 
	 	
5.1

	
Press Releases and Public Announcements; Customer Referrals

	
9

	 	
5.2

	
Production Transfer; Milestone Payment

	
9

	 	
5.3

	
Indemnification

	
9

	 	
5.4

	
Noncompetition

	
10

	 	
5.5

	
Nonsolicitation

	
11

	 	
5.6

	
Assignment of Biocoat Agreement

	
11

	 	 	 	 
	ARTICLE VI                MISCELLANEOUS	
11

	 	 
	 	
6.1

	
Confidentiality

	
11

	 	
6.2

	
No Third-Party Beneficiaries

	
11

	 	
6.3

	
Entire Agreement

	
11

	 	
6.4

	
Succession and Assignment

	
11

	 	
6.5

	
Counterparts

	
11

	 	
6.6

	
Headings

	
11

	 	
6.7

	
Notices

	
12

	 	
6.8

	
Governing Law; Venue

	
13

	 	
6.9

	
Amendments and Waivers

	
13

	 	
6.10

	
Severability

	
13

	 	
6.11

	
Expenses

	
13

	 	
6.12

	
Construction

	
13

	 	
6.13

	
Incorporation of Schedule

	
13

	 	
6.14

	
Specific Performance

	
13

	 	 	 	 
	SCHEDULE 1 ACQUIRED ASSETS

  

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ASSET PURCHASE AGREEMENT

 

THIS ASSET PURCHASE AGREEMENT (this “Agreement”), dated as of August 16, 2012, is made and entered into by and between St. Jude Medical, Cardiology Division, Inc., a Minnesota corporation (“Seller”), and Vascular Solutions, Inc., a Minnesota corporation (“Buyer”).  Seller and Buyer are sometimes referred to herein as the “Parties” and individually as a “Party”.

 

RECITALS

 

WHEREAS, Seller is engaged in the business of designing, developing, manufacturing, marketing and selling the Venture® Wire Control Catheter used as a deflectable tip catheter for steering an .014 inch guidewire via the arterial system to the coronary or peripheral vasculature (in the models and lengths set forth on Schedule 1 hereto, the “Product”); and

 

WHEREAS, Buyer desires to purchase, and Seller desires to sell, transfer, convey, assign and deliver to Buyer, certain intellectual property and other assets of Seller related to the Product.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties, agreements and conditions set forth in this Agreement, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

For purposes of this Agreement, the following terms have the meanings specified:

 

“Acquired Assets” means any and all of Seller’s right, title, and interest in and to the assets set forth on Schedule 1 hereto, together with all goodwill related to the same.

 

“Acquired IP” has the meaning set forth in Schedule 1 hereto.

 

“Affiliate” means a Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the Person specified.

 

“Affiliated Group” means any affiliated group within the meaning set forth in Section 1504(a) of the Code.

 

“Applicable Laws” means any and all laws, ordinances, constitutions, regulations, statutes, treaties, rules, codes, and Injunctions adopted, enacted, implemented, promulgated, issued, entered or deemed applicable by or under the authority of any Governmental Body having jurisdiction over a specified Person or any of such Person’s properties or assets.

 

“Buyer Related Documents” has the meaning set forth in Section 4.2.

 

  

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“Closing” has the meaning set forth in Section 2.4.

 

“Closing Date” means the date hereof.

 

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

 

“Constituent Documents” means the organizational and other governing documents of a Party, including the articles of incorporation, bylaws, shareholder agreement, voting agreement, and any other similar agreement.

 

“Contract” means any agreement, lease agreement, license agreement, contract, consensual obligation, commitment, arrangement, understanding or undertaking (whether written or oral and whether express or implied) of any type, nature or description that is legally binding.  As used herein, the word “Contract” will be limited in scope if modified by an adjective specifying the type of contract to which this Agreement refers.

 

“Encumbrance” means any security or other property interest or right, claim, lien, pledge, encumbrance, hypothecation, option, charge, security interest, contingent or conditional sale, or other title claim or retention agreement or lease, license or use agreement in the nature thereof, whether voluntarily incurred or arising by operation of law, and including any agreement to grant or submit to any of the foregoing in the future.

 

“Excluded Assets” means any and all assets, properties and rights of Seller other than the Acquired Assets.

 

“Excluded Liabilities” means any and all Liabilities of Seller arising prior to the date hereof, and any and all Liabilities of Seller arising after the date hereof that are unrelated to the Acquired Assets.

 

“Governmental Body” means any:

 

(a)           nation, state, county, city, town, village, district or other jurisdiction of any nature;

 

(b)           federal, state, local, municipal, foreign or other government;

 

(c)           governmental or quasi-governmental authority of any nature (including any governmental agency, branch, board, commission, department, instrumentality, office or other entity, and any court or other tribunal);

 

(d)           multi-national organization or body; and/or

 

(e)           body exercising, or entitled or purporting to exercise, any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power of any nature.

 

“Injunction” means any and all writs, rulings, awards, directives, injunctions (whether temporary, preliminary or permanent), judgments, decrees or orders (whether executive, judicial or otherwise) adopted, enacted, implemented, promulgated, issued, entered or deemed applicable by or under the authority of any Governmental Body.

 

  

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“Knowledge” as it relates to any Person means the actual knowledge of such Person if the Person is an individual, or the knowledge of any officer, director, governor or similar position of such Person if such Person is a corporation, partnership, association, limited liability company, trust, unincorporated organization, other entity or group.

 

“Liability” or “Liabilities” means any and all debts, liabilities and/or obligations of any type, nature or description (whether known or unknown, asserted or unasserted, secured or unsecured, absolute or contingent, accrued or unaccrued, liquidated or unliquidated and whether due or to become due).

 

“Permits” means all of the federal, state and local governmental permits (including occupancy permits), licenses, consents and authorizations held by Seller or any of its Affiliates, or required in connection with the use, operation or ownership of the Acquired Assets.

 

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

 

“Proceeding” means any claim, suit, litigation, arbitration, hearing, audit, investigation or other action (whether civil, criminal, administrative or investigative) commenced, brought, conducted, or heard by or before, or otherwise involving, any Governmental Body or arbitrator.

 

“Seller Related Documents” has the meaning set forth in Section 3.2.

 

“Tax” means all taxes, assessments, charges, duties, fees, levies or other governmental charges, including all federal, state, local, foreign and other income, franchise, profits, capital gains, capital stock, transfer, sales, use, occupation, property, excise, severance, windfall profits, stamp, license, payroll, withholding and other taxes, assessments, charges, duties, fees, levies or other governmental charges of any kind whatsoever (whether payable directly or by withholding and whether or not requiring the filing of a Tax Return), all estimated taxes, deficiency assessments, additions to tax, penalties and interest and any Liability for such amounts as a result either of being a member of a combined, consolidated, unitary or Affiliated Group or of a contractual obligation to indemnify any Person.

 

“Tax Return” means any return, declaration, report, claim for refund or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof, filed or required to be filed with any Person.

 

“Threatened” means a demand or statement has been made in writing, or any other notice has been given that would lead a reasonably prudent Person to conclude that a claim, Proceeding, dispute, action, or other matter will, with reasonable likelihood, be asserted, commenced, taken or otherwise pursued in the future.

 

  

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ARTICLE II

 

THE TRANSACTIONS

 

2.1           Purchase and Sale of Assets.  On and subject to the terms and conditions of this Agreement, including the license granted under Section 2.6(a), Buyer agrees to purchase from Seller, and Seller agrees to sell, transfer, convey, assign and deliver, as applicable, to Buyer at the Closing, the Acquired Assets, free and clear of any and all Encumbrances, for the consideration specified in this Article II.

 

2.2           Retention of Excluded Liabilities and Excluded Assets.  Buyer will not assume or have any responsibility or Liability with respect to the Excluded Liabilities, and Seller will retain all of the Excluded Assets.  Notwithstanding the foregoing, Buyer shall be responsible for all Liabilities relating to the Acquired Assets arising on or after the date hereof, and shall indemnify and hold harmless Seller and any of its officers, directors, shareholders, agents or representatives, and defend Seller and any of its officers, directors, shareholders, agents or representatives, against any and all claims, demands, damages, obligations, Liabilities, contractual obligations, and causes of action, of any nature whatsoever, at law or in equity, asserted or unasserted, known or unknown, fixed or contingent, liquidated or unliquidated relating to the Acquired Assets arising on or after the date hereof.

 

2.3           Purchase Price.  In consideration of the conveyance of the Acquired Assets to Buyer hereunder, Buyer will make the following payments (collectively, the “Purchase Price”), by wire transfer of immediately available funds, to Seller:

 

(a)           $2,250,000 upon the execution of this Agreement and the delivery of the documents set forth in Section 2.5(a) below; and

 

(b)           $750,000 upon the successful qualification by Buyer or its Affiliates of the manufacturing processes for the manufacture of the RX and OTW Product models (in any size) for use in humans.

 

2.4           Closing.  The closing of the transactions contemplated by this Agreement (the “Closing”) will take place simultaneously with the execution hereof (a) at the offices of Briggs and Morgan, P.A., 2200 IDS Center, 80 South 8th Street, Minneapolis, Minnesota 55402, or (b) remotely by electronic exchange of documents and signatures.  The Closing will be effective as of 12:01 a.m. central daylight savings time on the Closing Date.

 

2.5           Deliveries at the Closing.

 

(a)           Seller’s Deliverables.  At the Closing, Seller will execute, where necessary or appropriate, and deliver to Buyer each and all of the following:

 

(i)           a Patent Assignment (the “Patent Assignment”) and a Trademark Assignment (the “Trademark Assignment”), in form and substance mutually acceptable to Buyer and Seller (the “IP Assignments”);

 

(ii)          a Bill of Sale in form and substance mutually acceptable to Buyer and Seller (the “Bill of Sale”); and

 

  

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(iii)         the inventory, marketing materials, and customer lists described on Schedule 1 hereto.

 

(b)           Buyer’s Deliverables.  At the Closing, Buyer will execute, where necessary or appropriate, and deliver to Seller each and all of the following:

 

(i)           the IP Assignments, duly executed by an authorized officer of Buyer; and

 

(ii)          a copy of the resolutions adopted by Buyer’s board of directors authorizing the execution of this Agreement and the consummation of the transactions contemplated hereby certified by an officer of Buyer.

 

2.6           License Grant; Covenant Not to Sue.

 

(a)           Buyer hereby grants to Seller a perpetual, irrevocable, royalty-free, worldwide, nonexclusive, sub-licensable license to the Acquired IP in any field of use except directing, steering, controlling, and supporting a guide wire to access discrete regions of the coronary and peripheral vasculature.

 

(b)           Buyer, on behalf of itself and its Affiliates and any of their respective successors, assigns, affiliated entities, directors, officers, shareholders, legal representatives, distributors and resellers, hereby covenants not (i) to pursue any claim or cause of action against Seller or its Affiliates, any of their respective successors, assigns, affiliated entities, directors, officers, shareholders, legal representatives, distributors, resellers, customers, or end users alleging that any product manufactured, marketed or sold by Seller or any of its Affiliates as of the date hereof or any future iteration thereof infringes any of the Acquired IP, or (ii) to take any other action, either directly or indirectly, that interferes with Seller’s ability to exercise the license granted to Seller herein.

 

(c)           Except as set forth above, neither Party grants to the other Party any license to use any of its patents, trademarks, service marks, copyrights or other intellectual property.

 

2.7           Allocation of Purchase Price.  Buyer and Seller will agree on the allocation of the Purchase Price among the Acquired Assets in accordance with the applicable Treasury Regulations.  All Tax Returns and reports filed by Buyer and Seller (including Internal Revenue Service Form 8594) will be prepared consistently with such allocation.

 

2.8           Investigation; Limitation of Seller Warranties.  Buyer is an informed and sophisticated participant in the transactions contemplated by this Agreement and has undertaken such investigation, and has been provided with and has evaluated such documents and information, as it deems necessary in connection with the execution, delivery and performance of this Agreement.  Except as otherwise expressly set forth in this Agreement, the Acquired Assets are being sold by Seller “AS IS,” “WHERE IS” AND, SUBJECT TO THE REPRESENTATIONS AND WARRANTIES CONTAINED IN ARTICLE III, WITH ALL FAULTS AND WITHOUT ANY OTHER REPRESENTATION OR WARRANTY OF ANY NATURE WHATSOEVER, EXPRESS OR IMPLIED, ORAL OR WRITTEN, AND IN PARTICULAR, WITHOUT ANY IMPLIED WARRANTY OR REPRESENTATION AS TO CONDITION, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR SUITABILITY.

 

  

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ARTICLE III

 

REPRESENTATIONS AND WARRANTIES OF SELLER

 

To induce Buyer to enter into this Agreement, Seller hereby represents and warrants to Buyer that each and all of the following statements contained in this Article III are true and correct as of the date hereof.

 

3.1           Organization; Capitalization.  Seller is duly organized, legally existing and in good standing under the laws of the State of Delaware.

 

3.2           Due Authorization.  The execution, delivery and performance of this Agreement and the other documents, instruments and agreements to be executed and/or delivered by Seller pursuant to this Agreement (such other documents, instruments and agreements being hereinafter referred to as the “Seller Related Documents”), and the consummation of the transactions contemplated hereby and thereby, have been duly and validly authorized by all necessary action in accordance with Applicable Law and Seller’s Constituent Documents.  This Agreement and the Seller Related Documents have been duly and validly executed and delivered by Seller, and the obligations of Seller hereunder and thereunder are valid, legally binding and enforceable against Seller in accordance with their respective terms.

 

3.3           No Breach.  Seller has full power and authority to sell, assign, transfer, convey and deliver to Buyer the Acquired Assets.  Seller has full power and authority to otherwise perform its obligations under this Agreement and the Seller Related Documents.  The execution and delivery of this Agreement and the Seller Related Documents and the consummation of the transactions contemplated hereby and thereby, will not: (a) violate any provision of Seller’s Constituent Documents, (b) violate any Applicable Laws or Injunction applicable to Seller, (c)  require any filing with, Permit from, authorization, consent or approval of, or the giving of any notice to, any Person, (d) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give another party any rights of termination, cancellation or acceleration) under any of the terms, conditions or provisions of any note, bond, mortgage, indenture, license, franchise, Permit (including any Permits, approvals or authorizations of any Governmental Body), lease, or other Contract to which Seller is a party, or by which Seller or any of its properties or assets may be bound, or (e) result in the creation or imposition of any Encumbrance on any of the Acquired Assets.

 

3.4           Title to Acquired Assets.  Seller holds good, valid and marketable title to all of the Acquired Assets, free and clear of any and all Encumbrances of any kind, nature and description whatsoever.  Seller owns, licenses or otherwise has adequate rights to use the Acquired Assets in the manner in which they are presently being used.  None of the Acquired Assets or Seller’s rights thereto is subject to any actual or, to the Knowledge of Seller, Threatened, Proceeding which could reasonably be expected to result in the revocation, termination, supervision, cancellation or adverse modification of any such property or rights thereto.  Upon execution and delivery by Seller of the instruments of conveyance at the Closing, Buyer will become the true and lawful owner of, and will receive good and marketable title to, the Acquired Assets, free and clear of all liens and encumbrances.

 

  

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3.5           Legal Proceedings.  There are no Proceedings pending or, to Seller’s Knowledge, Threatened against Seller that would adversely affect Seller’s performance under this Agreement or the consummation of the transactions contemplated herein.

 

3.6           No Brokers.  No broker, finder or similar agent has been employed by or on behalf of Seller, and no Person with which Seller has had any dealings or communications of any kind is entitled to any brokerage commission, finder’s fee or any similar compensation in connection with this Agreement or the transactions contemplated hereby.

 

3.7           Product Sales Records.  Attached in Schedule 1 are true, correct and complete copies of Seller’s internally prepared sales records for the Product for the period from January 1, 2010 through June 30, 2012 which are based upon the books and records of Seller and, in all material respect, accurately present the information set forth therein for the respective periods indicated.

 

3.8           Inventory.  The inventory delivered at the Closing consists of items of a quality which is usable and, with respect to finished goods inventory, salable in each case, in the ordinary course of Seller’s business.  The finished goods inventory is not obsolete, damaged or defective.

 

3.9           Regulatory Compliance. Seller has no Knowledge of any actual or threatened enforcement action or investigation by the Food and Drug Administration (the “FDA”) or any other Governmental Body that has jurisdiction over Seller’s operations relating to the Acquired Assets or the Product.  Seller does not have any Knowledge that the FDA or any other Governmental Body is considering such action.  Seller’s operation of business relating to the Acquired Assets and the Product is, and at all times has been, in material compliance with all applicable laws relating to the Acquired Assets or the Product.  Seller has not either voluntarily or involuntarily initiated, conducted or issued, or caused to be initiated, conducted or issued, any recall, field notifications, field corrections, market withdrawal or replacement, safety alert, warning, “dear doctor” letter, investigator notice, safety alert or other notice or action relating to an alleged lack of safety, efficacy or regulatory compliance of Seller with respect to any Acquired Asset or the Product.  Seller has no Knowledge of any facts which are reasonably likely to cause (1) the recall, market withdrawal or replacement of the Product; (2) a change in the marketing classification or a material change in the labeling of the Product; or (3) a termination or suspension of the marketing of the Product.

 

3.10         Product Liability.  Seller has had no liability (and there is no known basis for any present or future action, lawsuit, proceeding, hearing, investigation, charge, complaint, claim, or demand against any of them giving rise to any liability) arising out of any injury to individuals or property as a result of the ownership, possession, or use of the Product.

 

  

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ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES OF BUYER

 

To induce Seller to enter into this Agreement, Buyer represents and warrants to Seller that each and all of the following statements contained in this Article IV are true and correct as of the date hereof.

 

4.1           Organization.  Buyer is duly organized, legally existing and in good standing under the laws of the State of Minnesota.

 

4.2           Due Authorization.  The execution, delivery and performance of this Agreement and the other documents, instruments and agreements to be executed and/or delivered by Buyer pursuant to this Agreement (such other documents, instruments and agreements being hereinafter referred to as the “Buyer Related Documents”), and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary action, including approval of Buyer’s board of directors in accordance with Applicable Law and Buyer’s Constituent Documents.  This Agreement and the Buyer Related Documents have been duly and validly executed and delivered by Buyer (or duly and validly adopted by Buyer’s board of directors in the case of the resolutions described in Section 2.5(b)(iii) above) and the obligations of Buyer hereunder and thereunder are valid, legally binding and enforceable against Buyer in accordance with their respective terms.

 

4.3           No Breach.  Buyer has full power and authority to perform its obligations under this Agreement and the Buyer Related Documents.  The execution and delivery of this Agreement and the Buyer Related Documents and the consummation of the transactions contemplated hereby and thereby will not:  (a) violate any provision of Buyer’s Constituent Documents, (b) violate any Applicable Laws or Injunction applicable to Buyer, (c)  require any filing with, Permit from, authorization, consent or approval of, or the giving of any notice to, any Person, (d) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give another party any rights of termination, cancellation or acceleration) under any of the terms, conditions or provisions of any note, bond, mortgage, indenture, license, franchise, Permit (including any Permits, approvals or authorizations of any Governmental Body), lease, or other Contract to which Buyer is a party, or by which Buyer or any of its properties or assets may be bound.

 

4.4           Legal Proceedings.  There are no Proceedings pending or, to Buyer’s Knowledge, Threatened against Buyer that would adversely affect Buyer’s performance under this Agreement or the consummation of the transactions contemplated herein.

 

4.5           No Brokers.  No broker, finder or similar agent has been employed by or on behalf of Buyer, and no Person with which Buyer has had any dealings or communications of any kind is entitled to any brokerage commission, finder’s fee or any similar compensation in connection with this Agreement or the transactions contemplated hereby.

 

4.6           Financing.  Buyer currently has and will maintain sufficient funds to deliver the Purchase Price and otherwise to perform its obligations hereunder.

 

  

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ARTICLE V

 

POST-CLOSING COVENANTS

 

5.1           Press Releases and Public Announcements; Customer Referrals.  Neither Party will issue any press release or make any public announcement relating to the subject matter of this Agreement without the prior written approval of the other Party.  Notwithstanding the foregoing, Buyer shall be entitled to issue a press release announcing this Agreement provided that such press release is mutually agreed upon by the Parties.  Concurrently with or promptly following such press release, if any, Seller will notify all customers that have purchased the Product within one year preceding the Closing that commercial rights to the Product have been transferred to Buyer.  Following the Closing Date, Seller will forward all unfulfilled electronic orders, fax orders and phone orders received for the Product to Buyer’s customer service department.

 

5.2           Production Transfer; Milestone payment.  Within 14 days after the Closing Date, Seller shall deliver to Buyer all of the manufacturing assets included in the Acquired Assets.  For up to 120 days after the Closing Date, or through the earlier successful qualification of all manufacturing processes for the manufacture of human use product (the “Production Transfer Period”), Seller shall designate at least one of Seller’s employees with sufficient experience in manufacturing the Product to provide at no additional charge to Buyer, by telephone and/or in person, the necessary consultation and reasonable training for Buyer’s employees to become proficient in the manufacturing processes, vendors, inspection processes and validations for the Product.  Seller shall not be required to provide such consultation and training outside of its customary business hours or in excess of 20 hours per week.  Following the closing, Buyer and its Affiliates shall use their commercially reasonable best efforts to successfully qualify all manufacturing processes for the manufacture of Products for use in humans.  Buyer shall notify Seller in writing within five (5) business days of such successful qualification and shall pay to Seller the amount referenced in Section 2.3(b) hereof within ten (10) days of such notice.

 

5.3           Indemnification.

 

(a)           Following the Closing,

 

(i)           Seller shall defend, indemnify, and hold harmless Buyer and its Affiliates, and their officers, directors, employees, attorneys, agents, successors and assigns (collectively, the “Buyer Indemnified Parties”), against any and all legal expenses, costs, settlements, judgments, claims, controversies, demands, rights, disputes, grievances, causes of action, damages, enhanced damages, injunctions, attorneys’ fees or prejudgment interest (“Losses”) imposed on or incurred by any of the Buyer Indemnified Parties by reason of the manufacture, marketing or sale of the Product by Seller prior to the Closing.

 

(ii)          Buyer shall defend, indemnify, and hold harmless Seller and its Affiliates, and their officers, directors, employees, attorneys, agents, successors and assigns (collectively, the “Seller Indemnified Parties”), against any and all Losses imposed on or incurred by any of the Seller Indemnified Parties by reason of the manufacture, marketing or sale of the Product by Buyer after the Closing.

 

  

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(b)           Each Party’s obligations under this Section 5.3 are conditioned on (i) the Party to be indemnified (the “Indemnified Party”) notifying the other Party (the “Indemnifying Party”) promptly in writing of such Losses, (ii) the Indemnified Party giving the Indemnifying Party sole control of the defense of any related Proceeding and any related settlement negotiations; provided, however, that the Indemnified Party will have the right to approve the terms of any settlement or compromise that restricts its rights granted under this Agreement, subjects it to any ongoing obligations or subjects it to any Losses for which it would not be indemnified hereunder, and (iii) the Indemnified Party cooperating with the Indemnifying Party in such defense (including, without limitation, by making available to the Indemnifying Party all documents and information in the Indemnified Party’s possession or control that are relevant to the Proceeding, and by making the Indemnified Party’s personnel available to testify or consult with the Indemnifying Party or its attorneys in connection with such defense).

 

(c)           The Losses for which an Indemnified Party is entitled to indemnification pursuant to this Section 5.3 will be reduced by:

 

(i)           all insurance or other third party indemnification proceeds actually received by the Indemnified Party.  An Indemnified Party shall use commercially reasonable best efforts to claim and recover any Losses suffered by the Indemnified Party under any such insurance policies or other third party indemnities, and shall remit to the Indemnifying Party any such insurance or other third party proceeds which are paid to the Indemnified Party with respect to Losses for which the Indemnified Party have been previously compensated pursuant to this Section 5.3.

 

(ii)          the net amount of the Tax benefits actually realized by the Indemnified Party by reason of such Loss.  An Indemnified Party shall use commercially reasonable best efforts to claim and realize all such Tax benefits.

 

(d)           No Indemnified Party will be entitled to indemnification pursuant to this Section 5.3 for diminution in value, multiples of earnings or cash flows, punitive damages, or for lost profits, consequential, exemplary, incidental, indirect or special damages, except to the extent awarded to a third party.

 

(e)           An Indemnified Party shall use commercially reasonable best efforts to mitigate any and all Losses that would otherwise be indemnifiable hereunder.

 

(f)           All indemnification payments made pursuant to this Section 5.3 will be treated as an adjustment to the Purchase Price unless otherwise required by law.

 

5.4           Noncompetition.  Neither Seller nor its Affiliates will sell any product manufactured by Seller and used by interventional cardiologists that directly competes with the Product for a period of three (3) years following the Closing Date; provided, however, that this restriction shall not apply to products and/or technologies acquired by Seller or any of its Affiliates after the date of this Agreement.

 

  

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5.5           Nonsolicitation.  Neither Party nor any of its Affiliates will solicit to hire any employee of the other Party who is involved in this transaction or the production transfer contemplated in Section 5.2 for a period of three (3) years following the Closing Date, provided, however, that the foregoing shall not prohibit a general employment solicitation to the public, general advertising, or similar methods of solicitation not specifically directed at employees of the other Party.

 

5.6           Assignment of Biocoat Agreement. The parties will use their reasonable efforts (understanding that Seller will not be obligated to incur any further cost or expense) following the Closing to contact Biocoat, Incorporated (“Biocoat”) and assign that certain License Agreement, dated as of March 17, 2004, by and between Seller (formerly known as Velocimed, Incorporated) and Biocoat, as amended, from Seller to Buyer.

 

ARTICLE VI

 

MISCELLANEOUS

 

6.1           Confidentiality.  Except as set forth in Section 5.1 above, Buyer and Seller will maintain in confidence, and will cause their officers, employees, agents and advisors to maintain in confidence, the existence and terms of the Parties’ discussions and this Agreement and any written, oral or other information provided by either Party to the other in connection with this Agreement or the transactions contemplated hereby unless (a) such information is already known to such Party or to others not bound by a duty of confidentiality, or such information becomes publicly available, through no fault of such Party, or (b) the furnishing or use of such information is required in connection with any Proceedings.

 

6.2           No Third-Party Beneficiaries.  This Agreement will not confer any rights or remedies on any Person other than the Parties and their successors and permitted assigns.

 

6.3           Entire Agreement.  This Agreement (including the documents referred to herein) constitutes the entire agreement among the Parties and supersedes any prior understandings, agreements or representations by or between the Parties, written or oral, to the extent they related in any way to the subject matter hereof.

 

6.4           Succession and Assignment.  This Agreement will be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns but nothing in this Agreement is to be construed as an authorization or right of any Party to assign its rights or delegate its duties under this Agreement without the prior written consent of the other Party.

 

6.5           Counterparts.  This Agreement may be executed in one or two counterparts, including by facsimile, each of which will be deemed an original but both of which together will constitute one and the same instrument.

 

6.6           Headings.  The section headings contained in this Agreement are inserted for convenience only and will not affect in any way the meaning or interpretation of this Agreement.

 

  

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6.7           Notices.  All notices, demands and other communications to be given or delivered under or by reason of the provisions of this Agreement will be in writing and will be deemed to have been given when personally delivered or three business days after being mailed by first class U.S. mail, return receipt requested, or when receipt is acknowledged, if sent by facsimile, telecopy or other electronic transmission device.  Notices, demands and communications to Seller and Buyer will, unless another address is specified in writing, be sent to the address indicated below:

If to Seller:

 

St. Jude Medical, Cardiology Division, Inc.

177 East County Road B

St. Paul, Minnesota 55117

Attention:        Aron Allen

Facsimile:         (651) 756-4420

E-mail:               aallen@sjm.com

 

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

 

St. Jude Medical, Inc.

One St. Jude Medical Drive

St. Paul, Minnesota 55117

Attention:        General Counsel

Facsimile:         (651) 756-2156

 

and

 

Briggs and Morgan, P.A.

2200 IDS Center

80 South Eighth Street

Minneapolis, MN  55402

Attention:        Steve Kozachok

Facsimile:         (612) 977-8650

E-mail:               skozachok@briggs.com

 

If to Buyer:

 

Vascular Solutions, Inc.

6464 Sycamore Court

Minneapolis, Minnesota 55369

Attention:        Chief Executive Officer

Facsimile:         (763) 656-4250

 

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

 

Vascular Solutions, Inc.

6464 Sycamore Court

Maple Grove, Minnesota 55369

Attention:        General Counsel

Facsimile:         (763) 656-4250

 

  

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6.8           Governing Law; Venue.  This Agreement, including the documents, instruments and agreements to be executed and/or delivered by the parties pursuant hereto, will be construed, governed by and enforced in accordance with the internal laws of the State of Minnesota, without giving effect to the principles of comity or conflicts of laws thereof.  The state and federal courts of Hennepin County, Minnesota shall serve as the exclusive forum for any dispute, claim or action arising out of or in connection with this Agreement.  Each Party hereby irrevocably waives any objection which it may have at any time to the venue of any suit, action or proceeding brought in such courts and, specifically, any claim that such suit, action or proceeding is brought in an inconvenient forum and any claim that such courts do not have jurisdiction over such Party.  Notwithstanding the foregoing, either Party may seek equitable relief to enforce the confidentiality provisions or other restrictive covenants in any court of competent jurisdiction.

 

6.9           Amendments and Waivers.  No amendment of any provision of this Agreement will be valid unless the same will be in writing and signed by Seller and Buyer.  No waiver by either Party of any default, misrepresentation or breach of warranty or covenant hereunder, whether intentional or not, will be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.

 

6.10         Severability.  Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction will not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction.

 

6.11         Expenses.  Each of the Parties will be responsible for and bear all of its own costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby.

 

6.12         Construction.  The Parties have participated jointly in the negotiation and drafting of this Agreement and the Seller Related Documents and the Buyer Related Documents (collectively, the “Related Documents”).  In the event an ambiguity or question of intent or interpretation arises, this Agreement and the Related Documents will be construed as if drafted jointly by the Parties and no presumption or burden of proof will arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement or the Related Documents.  Any reference to any federal, state, local or foreign statute or law will be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise.  The word “including” will mean including, without limitation.

 

6.13         Incorporation of Schedule.  The Schedule identified in this Agreement is incorporated herein by reference and made a part hereof.

 

6.14         Specific Performance.  Each of the Parties acknowledges and agrees that the other Parties would be damaged irreparably in the event any of the provisions of this Agreement are not performed in accordance with their specific terms or otherwise are breached.

 

  

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Accordingly, each of the Parties acknowledges and agrees that the other Parties will be entitled to an Injunction or Injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically this Agreement and the terms and provisions hereof in any action instituted in any court of the United States or any state thereof having jurisdiction over the Parties and the matter, in addition to any other remedy to which they may be entitled, at law or in equity, without the necessity of posting bond or proving the inadequacy of money damages.

[SIGNATURE PAGE FOLLOWS]

 

  

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above.

	
SELLER:

	 	
BUYER:

	  	 	  
	
St. Jude Medical, Cardiology Division, Inc.,

a Delaware corporation

	 	
Vascular Solutions, Inc.,

a Minnesota corporation

	  	 	  
	By:	 	 	By:	 
	Name: 	 	 	Name:	 
	Title:	 	 	Title:	 

[SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT]

 

  

 

  

 

SCHEDULE 1

 

Acquired Assets

	
  

	
(1)

	
Product models and lengths

 

	
Model

	
Length

	 	 
	
Venture RX

	
145 cm

	 	 
	
Venture OTW

	
140 cm

	 	 
	
Venture CPS

	
70 cm

 

	
  

	
(2)

	
Inventory

 

All raw material, work-in-process and finished goods inventory of the Product; provided, that, prior to a sale of such inventory, Buyer will add a label alongside the SJM label stating “Now manufactured by Vascular Solutions, Inc. ...” and provide additional contact and reorder information of Vascular Solutions on such label.

 

	
  

	
(3)

	
Marketing materials

 

All brochures, training materials, photographs, drawings, computer files, advertisements and other materials related solely to marketing the Product, in Seller’s possession, and used by Seller within the last three (3) years.  Notwithstanding the foregoing, Buyer shall not be entitled to distribute any marketing materials that include any trade names or logos not included in the Acquired Assets.

 

	
  

	
(4)

	
Customer lists

 

A list of all customers that have purchased the Product from the Seller from January 1, 2010 through June 30, 2012, consisting of the name, address, unit volume and purchase price history for each customer.

 

	
  

	
(5)

	
Manufacturing assets

 

Those assets in possession of Seller that are dedicated solely to the manufacture of the Product, listed in the exhibit attached hereto.

 

	
  

	
(6)

	
Intellectual property

 

The following patents and trademarks owned by Seller related to the Product (collectively, the “Acquired IP”):

 

Issued Patents

U.S.

7,763,012 – issued 7/27/10

 

  

 

  

 

Foreign

JP 4546250 – granted 7/9/10

JP 4680907 – granted 2/10/11

 

Pending Patent Applications

 

U.S.

12/207,391 – pending/published (US-2009-0005755)

 

Foreign

EP 03783618.6 – pending/published (1562666)

PCT/US03/036783 – nationalized

EP 04781984.2 – withdrawn

EP 07023966.0 – withdrawn

PCT/US04/027405 – nationalized

 

Venture Trademarks

U.S.

3,700,341

 

Foreign

China – 4252225

European Community – 3999828

Japan – 4966215

Korea – 714677

Norway - 228276

 

For purposes of clarity, Seller is not selling to Buyer hereunder any of Seller’s right, title or interest in the mark “CPS”, which the parties agree Seller will continue to own and use in conjunction with its existing business.

 

	
  

	
(7)

	
Regulatory approvals

 

The following regulatory approvals related to the Product:

 

510(k)s: K061843 (RX), K040922 (CPS) and K042910 (OTW)

CE Mark #571847 (covers each of the three Product models)

 

  

 

  

 

Exhibit of Manufacturing Assetsex10_2.htm

EXHIBIT 10.2

 

VASCULAR SOLUTIONS, INC.

 

STOCK OPTION AND STOCK AWARD PLAN

 

(Amended and Restated July 27, 2012)

 

1.      Purpose of Plan.  This Plan shall be known as the “Vascular Solutions, Inc. Stock Option and Stock Award Plan” and is hereinafter referred to as the “Plan”.  The Plan shall provide for the issuance of shares of common stock, par value $.01 (the “Common Stock”), of Vascular Solutions, Inc. (the “Corporation”).  The purpose of the Plan is to aid in maintaining and developing a mutually beneficial relationship with employees and non-employees of the Corporation who perform valuable services for or on behalf of the Corporation, to offer such persons additional incentives to put forth maximum efforts for the success of the business, and to afford them an opportunity to acquire a proprietary interest in the Corporation.  It is intended that this purpose be effected through the granting of stock options, the awarding of Common Stock subject to restrictions (the “Restricted Shares”) and the awarding of stock appreciation rights to such persons as hereinafter provided.  Options granted under the Plan may be either incentive stock options (“Incentive Stock Options”) within the meaning of the Internal Revenue Code of 1986, as amended (the “Code”), or options which do not qualify as Incentive Stock Options.

 

2.      Stock Subject to the Plan.  Subject to the provisions of Section 10 hereof, the stock to be subject to options and which may be awarded as Restricted Shares under the Plan shall be shares of the Corporation’s authorized Common Stock.  Such shares may be either authorized but unissued shares or issued shares which have been reacquired by the Corporation.  Subject to the adjustment as provided in Section 10 hereof, the maximum number of shares on which options may be exercised or which may be awarded as Restricted Shares under this Plan from its inception shall be 5,000,000, plus an automatic annual increase on the first day of each of the Corporation’s fiscal years beginning in 2013 and ending in 2016 equal to the lesser of (i) 500,000 shares, (ii) five percent (5%) of the common-equivalent shares outstanding on the last day of the immediately preceding fiscal year, or (iii) such lesser number of shares as determined by the Board of Directors or the Stock Option Committee.  Notwithstanding the foregoing, the number of shares available for granting Incentive Stock Options under the Plan after January 25, 2006 shall not exceed 3,900,000 shares, subject to adjustment as provided in the Plan and Section 422 or 424 of the Code or any successor provisions.  Any shares subject to an option under the Plan which, for any reason, expires or is terminated unexercised, shall be available for options or awards thereafter granted during the term of the Plan.  If any award of Restricted Shares is forfeited in accordance with the terms and conditions of such award, the Restricted Shares so forfeited shall also become available for further grants or awards under the Plan.

 

3.      Administration of Plan.

 

(a)    The Plan shall be administered by the Board of Directors of the Corporation.  The Board of Directors may authorize, at any time, the formation of a Stock Option Committee (the “Committee”), consisting of two or more members who shall be appointed from time to time by the Board of Directors.  The Stock Option Committee will, if formed, have authority to exercise the powers conferred on the Board of Directors under the Plan, other than the power under Section 11 herein to terminate or amend the Plan or to accelerate the exercisability of any option or lift the restrictions on any Restricted Shares granted or awarded under the Plan.

 

  

  

  

 

(b)    The Board of Directors shall have plenary authority in its discretion, subject to the express provisions of this Plan, to:  (i) determine the purchase price of the Common Stock covered by each option and the terms of exercise of each such option, (ii) determine the persons to whom and the time or times at which options (a person receiving an option is hereinafter referred to as an “Optionee”) or awards of Restricted Shares (a person receiving an award of Restricted Shares is hereinafter referred to as a “Grantee”) shall be granted or made and the number of shares to be subject to each such option or award (iii) determine the period during which Restricted Shares shall remain subject to restrictions and the nature and type of restrictions that may be imposed on Restricted Shares (iv) interpret the Plan, (v) prescribe, amend and rescind rules and regulations relating to the Plan, (vi) determine the terms and provisions (and amendments thereof) of each option and Restricted Share agreement under this Plan (which agreements need not be identical), including the designation of those options intended to be Incentive Stock Options, (vii) the form of payment to be made upon the exercise of an SAR (as hereinafter defined) as provided in Section 16, which payment may be either cash, common stock of the Corporation or a combination thereof, and (viii) make all other determinations necessary or advisable for the administration of the Plan.

 

(c)    The Committee shall select one of its members as its Chairman and shall hold its meetings at such times and places as it may determine.  A majority of its members shall constitute a quorum.  All determinations of the Committee shall be made by not less than a majority of its members.  Any decision or determination reduced to writing and signed by a majority of the members of the Committee shall be fully effective as if it had been made by a majority vote at a meeting duly called and held.

 

(d)    The granting of an option or an award pursuant to the Plan shall be effective only if a written agreement shall have been duly executed and delivered by and on behalf of the Corporation and the Optionee or Grantee to whom such right is granted.

 

(e)    The Board of Directors or the Committee shall, to the extent necessary or desirable, establish any special rules for Optionees or Grantees located in any particular country other than the United States.  Such rules shall be set forth in Appendices to the Plan, which shall be deemed incorporated into and form part of the Plan.

 

4.      Eligibility.

 

(a)    Incentive Stock Options (as determined pursuant to Section 14 herein) may be granted only to employees of the Corporation and its subsidiary corporations.  Options which do not qualify as Incentive Stock Options and awards of Restricted Shares may be granted or made to both employees and to individuals or other entities (including but not limited to consultants) who perform services for the Corporation but who are not employed by the Corporation, when granting an option or award to such person would be of benefit to the Corporation.

 

  

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(b)    Notwithstanding any other provision in the Plan, if at the time an option is otherwise to be granted pursuant to the Plan the Optionee owns directly or indirectly (within the meaning of Section 425(d) of the Code (as hereinafter defined) Common Stock of the Corporation possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Corporation or its parent or subsidiary corporations, if any, (within the meaning of Section 422(b)(6) of the Code) then any Incentive Stock Option to be granted to such Optionee pursuant to the Plan shall satisfy the requirements of Section 422A(c)(6) of the Code, and the option price shall not be less than 110% of the fair market value of the Common Stock of the Corporation, determined as described in Section 5, and such option by its terms shall not be exercisable after the expiration of five (5) years from the date such option is granted.

 

5.      Price.  The option price for all options granted under the Plan shall be determined by the Board of Directors but shall not be less than 100% of the fair market value of the Common Stock at the date of granting of such option, as determined in good faith by such Board.  The option price shall be payable at the time written notice of exercise is given to the Corporation.  An Optionee shall be entitled to pay the exercise price in cash, by tendering to the Corporation shares of Common Stock, previously owned by the Optionee, having a fair market value on the date of exercise equal to the option price, or, with the consent of the Board of Directors, by the issuance of a promissory note to the Corporation.  The fair market value of such shares shall be (i) the closing price of the Common Stock as reported for composite transactions if the Common Stock is then traded on a national securities exchange, (ii) the last sales price if the Common Stock is then traded on the NASDAQ National Market System, or (iii) the average of the closing representative bid and asked prices as reported on NASDAQ if the Common Stock is then traded on NASDAQ.  If the Common Stock is not so traded, the Board of Directors shall determine in good faith the fair market value.

 

6.      Term.  Each option and each Restricted Share award and all rights and obligations thereunder shall (subject to the provisions of Section 8) expire on the date determined by the Board of Directors and specified in the option agreement or agreement relating to the award of the Restricted Shares.  The Board of Directors shall be under no duty to provide terms of like duration for options or awards granted under the Plan; provided, however, that the term of any Incentive Stock Option shall not extend more than ten (10) years from the date of granting of the option.

 

7.      Exercise of Options and Awards.

 

(a)    The Board of Directors shall have full and complete authority (subject to the provisions of Section 8) to determine, at the time of granting or making, whether an option or Restricted Share award will be exercisable in full at any time or from time to time during the term of the option or award, or to provide for the exercise or receipt thereof in such installments and at such times during the term of the option or award as Board may determine.

 

  

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(b)    Notwithstanding any provision of the Plan or the terms of any option granted or award of Restricted Shares made under the Plan, the exercise of any option or the transferring of any shares of Common Stock on the books and records of the Corporation pursuant to a Restricted Share award may be made contingent upon receipt from the Optionee or Grantee (or other person rightfully exercising the option or receiving certificates for the shares granted pursuant to a Restricted Share award) of a representation that, at the time of such exercise or receipt, it is their then intention to acquire the shares so received thereunder for investment and not with a view to distribution thereof.  Certificates for shares issued or transferred pursuant to the exercise of any option or the granting of any Restricted Share award may be restricted as to further transfers upon advice of legal counsel that such restriction is appropriate to comply with applicable securities laws.

 

(c)    Notwithstanding any provision of the Plan or the terms of any option granted or award of Restricted Shares made under the Plan, the Company shall not be required to issue any shares of Common Stock, deliver any certificates for shares of Common Stock or transfer on its books and records any shares of Common Stock if such issuance, delivery or transfer would, in the judgment of the Board of Directors, constitute a violation of any state or Federal law, or of the rules and regulations of any governmental regulatory body or any securities exchange.

 

(d)    An Optionee electing to exercise an option shall give written notice to the Corporation of such election and of the number of shares subject to such exercise.  The full purchase price of such shares shall be tendered, in accordance with the provisions of Section 5, with such notice of exercise.  Until such person has been issued a certificate or certificates for the shares subject to such exercise, he shall possess no rights as a stockholder with respect to such shares.

 

(e)    Nothing in the Plan or in any agreement thereunder shall confer on any employee any right to continue in the employ of the Corporation or any of its subsidiaries or affect, in any way, the right of the Corporation or any of its subsidiaries to terminate his or her employment at any time.

 

8.      Effect of Termination of Employment or Death.  Unless otherwise stated in the option agreement, the following provisions shall govern the treatment of an option upon termination of employment:

 

(a)    In the event that the Optionee shall cease to be employed by the Corporation or its subsidiaries, if any, for any reason other than such holder’s gross and willful misconduct or death or disability, such Optionee shall have the right to exercise the option at any time within three months after such termination of employment to the extent of the full number of shares such holder was entitled to purchase under the option on the date of termination, subject to the condition that no option shall be exercisable after the expiration of the term of the option.

 

(b)    In the event that an Optionee shall cease to be employed by the Corporation or its subsidiaries, if any, by reason of such holder’s gross and willful misconduct during the course of employment, including but not limited to wrongful appropriation of funds of the Corporation or the commission of a gross misdemeanor or felony, the option shall be terminated as of the date of the misconduct.

 

  

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(c)    If the Optionee shall die while in the employ of the Corporation or any subsidiary, if any, or within three (3) months after termination of employment for any reason other than gross and willful misconduct, or become disabled (within the meaning of Section 105(d)(4) of the Code) while in the employ of the Corporation or a subsidiary, if any, and such Optionee shall not have fully exercised the option, such option may be exercised at any time within twelve months after such holder’s death or such disability by the personal representatives, administrators, or, if applicable, guardian, of the Optionee or by any person or persons to whom the option is transferred by will or the applicable laws of descent and distribution to the extent of the full number of shares such holder was entitled to purchase under the option on the date of death, disability or termination of employment, if earlier, and subject to the condition that no option shall be exercisable after the expiration of the term of the option.

 

9.      Nontransferability of Options.  No option granted under the Plan shall be transferable by an Optionee, otherwise than by will or the laws of descent or distribution or pursuant to a qualified domestic relations order as defined by the Code.

 

10.    Dilution or Other Adjustments.  If the number of outstanding shares of the Common Stock of the Corporation shall, at any time, be increased or decreased as a result of a subdivision or consolidation of shares, stock dividend, stock split, spin-off or other distribution of assets to shareholders, recapitalization, merger, consolidation or other corporate reorganization in which the Corporation is the surviving corporation, the number and kind of shares subject to the Plan and to any option, SAR or Restricted Share award previously granted or made, as well as the option price or amount payable upon the exercise of any previously granted option or SAR, shall be appropriately adjusted in order to prevent the dilution or enlargement of rights of holders of outstanding options, SARs or Restricted Share awards.  Any fractional shares resulting from any such adjustment shall be eliminated.

 

11.    Amendment or Discontinuance of Plan.  The Board of Directors may amend or discontinue the Plan at any time; however, no amendment of the Plan shall, without shareholder approval, amend the Plan in a way which would violate the rules or regulations of the National Association of Securities Dealers, Inc. or any other securities exchange that are applicable to the Corporation.  Except as provided in Section 10, the Board of Directors shall not alter or impair any option, SAR or Restricted Share award thereto granted or made under the Plan without the consent of the holder of the option, SAR or award; provided, however, that the Board of Directors may accelerate the exercisability of options (and any related SARs) or lift any restrictions imposed on Restricted Shares at any time during the term of such options or awards without the consent of the holder thereof.

 

12.    Time of Granting.  Nothing contained in the Plan or in any resolution adopted or to be adopted by the Board of Directors or by the shareholders of the Corporation, and no action taken by the Board of Directors (other than the execution and delivery of an option or the making of an Award Agreement (as hereinafter defined)), shall constitute the granting of an option or the making of a Restricted Share award hereunder.  The granting of an option or the making of a Restricted Share award pursuant to the Plan shall take place only when a written option or Award Agreement shall have been duly executed and delivered by or on behalf of the Corporation to the Optionee or Grantee to whom such option or award is granted or made.

 

13.    Termination of Plan.  Unless the Plan shall have been discontinued as provided in Section 11 hereof, the Plan shall terminate on April 18, 2016.  No option or Restricted Share award may be granted or made after such termination, but termination of the Plan shall not, without the consent of the Optionee or Grantee, alter or impair any rights or obligations under any option, SAR or Restricted Share award theretofore granted or made.

 

  

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14.    Determination of Incentive Stock Option.  The Board shall determine, upon the granting of each option, whether such option shall be an Incentive Stock Option or an option that does not qualify as an Incentive Stock Option.

 

15.    Restricted Share Awards.  Each award of Restricted Shares under the Plan shall be evidenced by an instrument (an “Award Agreement”).  Each Award Agreement shall be subject to the terms and conditions of the Plan but may contain additional terms and conditions (which terms and conditions may vary from Grantee to Grantee) that are not inconsistent with the Plan as the Board of Directors may deem necessary and desirable.  Each Award Agreement shall comply with the following terms and conditions:

 

(a)    The Board of Directors shall determine the number of Restricted Shares to be awarded to a Grantee.

 

(b)    At the time of the award of Restricted Shares, a certificate representing the appropriate number of shares of Common Stock awarded to a Grantee shall be registered in the name of such Grantee but shall be held by the Corporation or any custodian appointed by the Corporation for the account of the Grantee subject to the terms and conditions of the Plan.  The Grantee shall have all rights of a stockholder as to such shares of Common Stock, including the right to receive dividends and the right to vote such Common Stock, subject to the following restrictions:  (i) the Grantee shall not be entitled to delivery of the stock certificate until the expiration of the Restricted Period (as hereinafter defined); (ii) the Restricted Shares may not be sold, transferred, assigned, pledged, or otherwise encumbered or disposed of during the Restricted Period; and (iii) all or a specified portion of the Restricted Shares shall be forfeited and all rights of the Grantee to any forfeited Restricted Shares shall terminate without further obligation on the part of the Corporation unless the Grantee remains in the continuous employment of the Corporation for the period in relation to which all or such portion of the Restricted Shares were granted ( the “Restricted Period”).  The Board of Directors shall have the power to determine which portion of an award of Restricted Shares shall be forfeited in the event of a Grantee’s failure to remain in the continuous employment of the Corporation during the Restricted Period relating to such award.  In addition, the Board of Directors may specify additional restrictions or events that must occur during the Restricted Period or the Restricted Shares, or a portion thereof, shall be forfeited as stated in the award thereof.  Any shares of Common Stock received as a result of a stock distribution to holders of Restricted Shares shall be subject to the same restrictions as such Restricted Shares.

 

(c)    At the end of each applicable Restricted Period or at such earlier time as otherwise provided by the Board of Directors, all restrictions contained in an Award Agreement and in the Plan shall lapse as to such portion of the Restricted Shares granted in relation to such Restricted Period, and a stock certificate for the appropriate number of shares of Common Stock, free of restrictions, shall be delivered to the Grantee or the Grantee’s beneficiary or estate, as the case may be.

 

  

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(d)    There shall be no limitation on the number of shares of Common Stock which a Grantee may be awarded except that no Grantee may be awarded shares of Common Stock in excess of the number of shares remaining available for option grants and awards of Restricted Shares under the Plan.

 

16.    Alternative Stock Appreciation Rights.

 

(a)    Grant.  At the time of grant of an option under the Plan (or at any time thereafter as to options which are not Incentive Stock Options), the Board of Directors, in its discretion, may grant to the holder of such option an alternative Stock Appreciation Right (“SAR”) for all or any part of the number of shares covered by the holder’s option.  Any such SAR may be exercised as an alternative, but not in addition to, an option granted hereunder, and any exercise of an SAR shall reduce an option by the same number of shares as to which the SAR is exercised.  An SAR granted to an Optionee shall provide that such SAR, if exercised, must be exercised within the time period specified therein.  Such specified time period may be less than (but may not be greater than) the time period during which the corresponding option may be exercised.  An SAR may be exercised only when the corresponding option is eligible to be exercised.  The failure of the holder of an SAR to exercise such SAR within the time period specified shall not reduce such holder’s option rights.  If an SAR is granted for a number of shares less than the total number of shares covered by the corresponding option, the Board of Directors may later (as to options which are not Incentive Stock Options) grant to the Optionee an additional SAR covering additional shares; provided, however, that the aggregate amount of all SARs held by any Optionee shall at no time exceed the total number of shares covered by such Optionee’s unexercised options.

 

(b)    Exercise.  The holder of any option that by its terms is exercisable who also holds an SAR may, in lieu of exercising their option, elect to exercise their SAR, subject, however, to the limitation on time of exercise hereinafter set forth.  Such SAR shall be exercised by the delivery to the Corporation of a written notice which shall state that the Optionee elects to exercise their SAR as to the number of shares specified in the notice and which shall further state what portion, if any, of the SAR exercise amount (hereinafter defined) the holder thereof requests be paid in cash and what portion, if any, such holder requests be paid in Common Stock of the Corporation.  The Board of Directors shall promptly cause to be paid to such holder the SAR exercise amount either in cash, in Common Stock of the Corporation, or any combination of cash and stock as the Board of Directors may determine.  Such determination may be either in accordance with the request made by the holder of the SAR or in the sole and absolute discretion of the Board of Directors.  The SAR exercise amount is the excess of the fair market value of one share of the Corporation’s Common Stock on the date of exercise over the per share option price for the option in respect of which the SAR was granted multiplied by the number of shares as to which the SAR is exercised.  For the purposes hereof, the fair market value of the Corporation’s shares shall be determined as provided in Section 5 herein.  An SAR may be exercised only when the SAR exercise amount is positive.

 

(c)    Limitation on Date of Exercise.  A cash settlement of an SAR by an officer or director of the Corporation may only be accomplished in compliance with Rule 16b-3(e) of the Securities Exchange Act of 1934 as presently in effect or as subsequently modified by amendment.

 

  

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(d)    Other Provisions of Plan Applicable.  All provisions of this Plan applicable to options granted hereunder shall apply with equal effect to an SAR.  No SAR shall be transferable otherwise than by will or the laws of descent and distribution and an SAR may be exercised during the lifetime of the holder thereof, only by such holder.

 

17.    Tax Indemnification Payments.  The Board shall have the authority, at the time of the grant of an option or the making of a Restricted Share award under the Plan or at any time thereafter, to approve tax indemnification payments to designated Optionees and Grantees to be paid upon their exercise of stock options which do not qualify as incentive stock options or recognition of a taxable gain by reason of their receipt of an award of Restricted Shares, as the case may be.  The amount of any such payments shall not exceed the amount of tax generally payable by an Optionee or Grantee by reason of such exercise or recognition, and shall not, in any case, exceed sixty percent of the amount imputed as taxable income to a particular Optionee or Grantee by reason of either of the above-described events.  The Board of Directors shall have full authority, in its discretion, to determine the amount of any such payment, the terms and conditions affecting the exercise, vesting and payment of any payment, and whether any payment shall be payable in cash or other property.

 

18.    Income Tax Withholding.

 

(a)    In order to assist an Optionee or Grantee in paying federal and state income taxes required to be withheld upon the exercise of an option or receipt of a Restricted Share award granted or made hereunder, the Board of Directors, in its discretion and subject to such additional terms and conditions as it may adopt, may permit the Grantee or Optionee to elect to satisfy such income tax withholding obligation by delivering previously owned shares or by having the Corporation withhold a portion of the shares otherwise to be delivered upon exercise of such option or award with a fair market value, determined in accordance with the provisions of Section 5 hereof, in an amount up to the Optionee’s maximum marginal tax rate.  Any such election by an officer or director of the Corporation must comply with the provisions of Rule 16b-3 under the Securities Exchange Act of 1934 or any successor rule.

 

(b)    Optionees and Grantees are responsible for the payment of all income taxes, employment, social insurance, welfare and other taxes under applicable law relating to any amounts deemed under the laws of the country of their residency or of the organization of the subsidiary which employs them to constitute income arising out of the Plan, the purchase and sale of shares pursuant to the Plan and the distribution of shares or cash to the participant in accordance with the Plan.  Each participant, by participating in the Plan, authorizes the Company or the relevant subsidiary to make appropriate withholding deductions from each participant’s compensation, and to pay such amounts to the appropriate tax authorities in the relevant country or countries in order to satisfy any of the above tax liabilities of the participant under applicable law.

 

19.    Omitted.

 

  

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20.    Award Limitations Under the Plan.  No person eligible to receive an award under the Plan may be granted any award or awards under the Plan, the value of which awards is based solely on an increase in the value of the shares after the date of grant of such awards, for more than 500,000 shares (subject to adjustment as provided for in Section 10), in the aggregate in any calendar year.  The foregoing annual limitation specifically includes the grant of any awards representing “qualified performance-based compensation” within the meaning of Section 162(m) of the Code.

 

21.    Miscellaneous.  Nothing in this Plan shall confer on any Optionee or Grantee any express or implied right of continued employment by the Company or any subsidiary, whether for the duration of the Plan or otherwise.  Nothing in this Plan shall confer on any person any legal or equitable right against the Company or any of its affiliates, directly or indirectly, or give rise to any cause of action at law or in equity against the Company or any of its affiliates.  None of the options granted hereunder, the shares purchased hereunder or any other benefits conferred hereby shall form any part of the wages or salary of any employee for purposes of severance pay or termination indemnities, irrespective of the reason for termination of employment.  Under no circumstances shall any person ceasing to be an employee of the Company or any of its affiliates be entitled to any compensation for any loss or any right or benefit under this Plan which such employee might otherwise have enjoyed but for termination of employment, whether such compensation is claimed by way of damages for wrongful or unfair dismissal, breach of contract or otherwise.

 

22.    Acceptance of Terms.  By participating in the Plan, each Optionee and Grantee shall be deemed to have accepted all the conditions of the Plan and the terms and conditions of any rules and regulations adopted by the Board of Directors or the Committee and shall be fully bound thereby.

 

 

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