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WEST\275532193.26
MEMBERSHIP INTEREST PURCHASE AGREEMENT
by and among
TISSUE REGENIX HOLDINGS INC.,
CELLRIGHT TECHNOLOGIES, LLC,
THE MEMBERS OF CELLRIGHT TECHNOLOGIES, LLC
JESUS HERNANDEZ, in
his capacity as the Seller Representative
and
TISSUE REGENIX LIMITED, as Guarantor
dated as of
July 20, 2017
WEST\275532193.26 i
TABLE OF CONTENTS
ARTICLE I DEFINITIONS ................................................................................................................ 1
ARTICLE II PURCHASE AND SALE ............................................................................................. 13
Section 2.01 Purchase and Sale .................................................................................................. 13 Section 2.02 Consideration for Membership Interests ............................................................... 13 Section 2.03 Transactions to be Effected Prior to Admission and on the Closing Date ............ 14 Section 2.04 Purchase Price Adjustment ................................................................................... 15 Section 2.05 Closing .................................................................................................................. 17 Section 2.06 Withholding Tax ................................................................................................... 17 Section 2.07 Milestone Payments .............................................................................................. 18 Section 2.08 Spreadsheet ........................................................................................................... 22 Section 2.09 Set-Off Rights ....................................................................................................... 22
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY ......................... 22
Section 3.01 Organization, Authority and Qualification of the Company ................................. 22 Section 3.02 Capitalization ........................................................................................................ 23 Section 3.03 No Subsidiaries ..................................................................................................... 23 Section 3.04 No Conflicts; Consents ......................................................................................... 23 Section 3.05 Financial Statements ............................................................................................. 23 Section 3.06 Undisclosed Liabilities .......................................................................................... 24 Section 3.07 Absence of Certain Changes, Events, and Conditions .......................................... 24 Section 3.08 Material Contracts ................................................................................................. 26 Section 3.09 Title to Assets; Real Property ............................................................................... 28 Section 3.10 Condition and Sufficiency of Assets ..................................................................... 29 Section 3.11 Intellectual Property .............................................................................................. 30 Section 3.12 Inventory ............................................................................................................... 32 Section 3.13 Accounts Receivable ............................................................................................. 32 Section 3.14 Customers, Suppliers and Distributors .................................................................. 33 Section 3.15 Insurance ............................................................................................................... 33 Section 3.16 Legal Proceedings; Governmental Orders ............................................................ 34 Section 3.17 Product Liability; Warranty .................................................................................. 34 Section 3.18 Regulatory Matters ................................................................................................ 34 Section 3.19 Compliance with NOTA ....................................................................................... 36 Section 3.20 Anti-Corruption Laws ........................................................................................... 36 Section 3.21 Customer Inventory ............................................................................................... 37 Section 3.22 Compliance With Laws; Permits .......................................................................... 37 Section 3.23 Environmental Matters .......................................................................................... 37 Section 3.24 Employee Benefit Matters ..................................................................................... 38 Section 3.25 Employment Matters ............................................................................................. 41 Section 3.26 Taxes ..................................................................................................................... 43 Section 3.27 Books and Records ................................................................................................ 45 Section 3.28 Brokers .................................................................................................................. 46
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SELLERS ............................ 46
Section 4.01 Legal Capacity / Power and Authority .................................................................. 46 Section 4.02 Execution and Delivery ......................................................................................... 47
WEST\275532193.26 ii
Section 4.03 Title to Membership Interests ............................................................................... 47 Section 4.04 No Conflicts; Consents ......................................................................................... 47 Section 4.05 Legal Proceedings ................................................................................................. 47
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER AND GUARANTOR .... 48
Section 5.01 Organization and Authority of Buyer.................................................................... 48 Section 5.02 No Conflicts; Consents ......................................................................................... 48 Section 5.03 Brokers .................................................................................................................. 48 Section 5.04 Legal Proceedings ................................................................................................. 49 Section 5.05 Investment Representation .................................................................................... 49 Section 5.06 Solvency ................................................................................................................ 49 Section 5.07 Financing ............................................................................................................... 49 Section 5.08 No Other Representations ..................................................................................... 50
ARTICLE VI COVENANTS .............................................................................................................. 51
Section 6.01 Conduct of Business Prior to the Closing ............................................................. 51 Section 6.02 Access to Information ........................................................................................... 51 Section 6.03 No Solicitation of Other Bids ................................................................................ 52 Section 6.04 Notice of Certain Events ....................................................................................... 53 Section 6.05 Confidentiality ...................................................................................................... 53 Section 6.06 Non-competition; Non-solicitation ....................................................................... 54 Section 6.07 Governmental Approvals and Consents ................................................................ 55 Section 6.08 Books and Records ................................................................................................ 56 Section 6.09 Closing Conditions ................................................................................................ 57 Section 6.10 Indemnification of Officers and Directors ............................................................ 57 Section 6.11 Public Announcements.......................................................................................... 57 Section 6.12 Further Assurances ................................................................................................ 58 Section 6.13 Employee Matters ................................................................................................. 58 Section 6.14 Financing ............................................................................................................... 58 Section 6.15 Retransfer of Membership Interests ...................................................................... 59
ARTICLE VII TAX MATTERS ........................................................................................................... 60
Section 7.01 Tax Covenants ....................................................................................................... 60 Section 7.02 Termination of Existing Tax Sharing Agreements ............................................... 61 Section 7.03 Tax Indemnification .............................................................................................. 61 Section 7.04 Straddle Period ...................................................................................................... 61 Section 7.05 Contests ................................................................................................................. 61 Section 7.06 Cooperation and Exchange of Information ........................................................... 62 Section 7.07 Tax Treatment of Indemnification Payments ........................................................ 62 Section 7.08 Survival ................................................................................................................. 62 Section 7.09 Overlap .................................................................................................................. 62 Section 7.10 Intended Tax Treatment, Purchase Price Allocation ............................................. 62 Section 7.11 Refunds and Credits .............................................................................................. 63
ARTICLE VIII CONDITIONS TO CLOSING...................................................................................... 64
Section 8.01 Conditions to Obligations of All Parties ............................................................... 64 Section 8.02 Conditions to Obligations of Buyer ...................................................................... 64
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Section 8.03 Conditions to Obligations of Sellers ..................................................................... 65
ARTICLE IX INDEMNIFICATION ................................................................................................... 66
Section 9.01 Survival ................................................................................................................. 66 Section 9.02 Indemnification By Sellers .................................................................................... 67 Section 9.03 Indemnification By Buyer ..................................................................................... 67 Section 9.04 Certain Limitations................................................................................................ 68 Section 9.05 Indemnification Procedures .................................................................................. 69 Section 9.06 Tax Treatment of Indemnification Payments ........................................................ 73 Section 9.07 Effect of Investigation ........................................................................................... 73 Section 9.08 Exclusive Remedies .............................................................................................. 73
ARTICLE X TERMINATION ........................................................................................................... 73
Section 10.01 Termination ........................................................................................................... 73 Section 10.02 Effect of Termination ............................................................................................ 74
ARTICLE XI MISCELLANEOUS ..................................................................................................... 74
Section 11.01 Appointment and Authority of the Seller Representative ..................................... 74 Section 11.02 Expenses ................................................................................................................ 77 Section 11.03 Notices .................................................................................................................. 77 Section 11.04 Interpretation ......................................................................................................... 78 Section 11.05 Headings ................................................................................................................ 79 Section 11.06 Severability ........................................................................................................... 79 Section 11.07 Entire Agreement .................................................................................................. 79 Section 11.08 Successors and Assigns ......................................................................................... 79 Section 11.09 No Third-party Beneficiaries ................................................................................ 79 Section 11.10 Amendment and Modification; Waiver................................................................. 80 Section 11.11 Governing Law; Submission to Jurisdiction; Waiver of Jury Trial ...................... 80 Section 11.12 Specific Performance ............................................................................................ 81 Section 11.13 Counterparts .......................................................................................................... 81 Section 11.14 Disclosure Schedules ............................................................................................ 81 Section 11.15 Waiver of Conflicts; Privilege .............................................................................. 81
ARTICLE XII GUARANTEE .............................................................................................................. 82
Section 12.01 Obligations of the Guarantor ................................................................................. 82
WEST\275532193.26 1
MEMBERSHIP INTEREST PURCHASE AGREEMENT
This Membership Interest Purchase Agreement (this “Agreement”), dated as of July 20, 2017, is
entered into by and among (i) the individuals and entities set forth on the Schedule of Sellers attached as
Exhibit A hereto (each a “Seller” and collectively, the “Sellers”), (ii) CellRight Technologies, LLC, a
Delaware limited liability company (the “Company”), (iii) Tissue Regenix Holdings Inc., a Delaware
corporation (“Buyer”), (iv) Tissue Regenix Limited, a limited company formed under the laws of England
and Wales (“Guarantor”) and (v) Jesus Hernandez in his capacity as the representative of the Sellers (the
“Seller Representative”).
RECITALS
WHEREAS, Sellers own all of the issued and outstanding Units (the “Membership Interests”) of
the Company;
WHEREAS, Sellers wish to sell to Buyer, and Buyer wishes to purchase from Sellers, the
Membership Interests, subject to the terms and conditions set forth herein;
WHEREAS, Guarantor desires to guarantee the performance and payment of Buyer’s obligations
under this Agreement; and
NOW, THEREFORE, in consideration of the representations, warranties, covenants and other
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 I
DEFINITIONS
The following terms have the meanings specified or referred to in this Article I:
“Acquisition Proposal” has the meaning set forth in Section 6.03(a).
“Action” means any claim, action, cause of action, demand, lawsuit, arbitration, audit, notice of
violation, proceeding, litigation, citation, summons, or subpoena of any nature, civil, criminal,
administrative, regulatory or otherwise, by or before a Governmental Authority, whether at law or in
equity.
"Admission" means the admission of the Placing Shares of Tissue Regenix Group plc to trading
on AIM becoming effective in accordance with the AIM Rules.
“Affiliate” of a Person means any other Person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with, such Person. The term
“control” (including the terms “controlled by” and “under common control with”) means the possession,
directly or indirectly, of the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or otherwise.
“Agreement” has the meaning set forth in the preamble.
"AIM" means AIM, a market operated by the London Stock Exchange plc.
"AIM Rules" means the AIM Rules for Companies published by the London Stock Exchange plc.
WEST\275532193.26 2
“Anti-Kickback Statute” has the meaning set forth in Section 3.18(a).
“Assignment Agreement” has the meaning set forth in Section 2.03(b)(ii).
“Audited Financial Statements” has the meaning set forth in Section 3.05.
“Balance Sheet” has the meaning set forth in Section 3.05.
“Balance Sheet Date” has the meaning set forth in Section 3.05.
“Base Purchase Price” has the meaning set forth in Section 2.02.
“Basket” has the meaning set forth in Section 9.04(a).
“Benefit Plan” has the meaning set forth in Section 3.24(a).
“Business Day” means any day except Saturday, Sunday or any other day on which commercial
banks located in the State of Texas or London, England are authorized or required by Law to be closed for
business.
“Buyer” has the meaning set forth in the preamble.
“Buyer Change of Control” has the meaning set forth in Section 2.07(f)(iv).
“Buyer Indemnitees” has the meaning set forth in Section 9.02.
“Buyer’s Accountants” means KPMG (UK).
“Cap” has the meaning set forth in Section 9.04(a).
“Cause” means (i) an employee’s conviction (which is no longer subject to appeal) for (or plea of
guilty or nolo contendere to) a felony or other act of fraud, misappropriation or embezzlement, (ii) an
employee’s failure or refusal to fulfill his material obligations with respect to his employment (for a
reason other than illness or incapacity), which failure, if able to be cured, remains uncured or continues or
recurs ten (10) days after written notice from the Company, (iii) an employee acting in a manner
involving malfeasance in the performance of the employee’s duties and responsibilities if such act or
failure damages the Company (or any of its Affiliates) and is not corrected within ten (10) days after
written notice to the employee, or (iv) an employee engaging in any fraudulent, dishonest, willful or
reckless misconduct or fraudulent act that could be reasonably expected to result in damage to the
Company (or any of its Affiliates).
“CellRight Processing Technology” means the Company’s proprietary BioRinse™ sterilization
technology.
“CellRight Products” means the Company’s (a) Matrix OI® product, (b) MatrixCellect® 100
DBM Putty product, (c) MatrixCellect® 100 DBM Crunch product, (d) ConCelltrate® 100 product, (e)
sports medicine graft products (f) Matrix IQ® Dermis product, and (g) conventional graft products (e.g.,
ilium tricortical blocks, unicortical blocks, and dental blocks), in each case of clauses (a) – (g) processed,
licensed, manufactured, developed or otherwise commercialized by or on behalf of the Company as of the
Closing Date.
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“CERCLA” means the Comprehensive Environmental Response, Compensation, and Liability
Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. §§
9601 et seq.
“Class A Units” has the meaning ascribed to such term in the Company Operating Agreement.
“Closing” has the meaning set forth in Section 2.05.
“Closing Cash Consideration” has the meaning set forth in Section 2.03(c)(i).
“Closing Date” has the meaning set forth in Section 2.05.
“Closing Working Capital” means: (a) the Current Assets of the Company, less (b) the Current
Liabilities of the Company, determined as of the open of business on the Closing Date.
“Code” means the Internal Revenue Code of 1986, as amended.
“Company” has the meaning set forth in the preamble.
“Company Closing Cash” means an amount equal to the Company’s total cash, cash equivalents
and marketable securities on hand (including checks, other wire transfers and drafts deposited or available
for deposit for the accounts of the Company as immediately prior to the Closing), net of the amount of all
uncleared outstanding checks and wires issued as payment for an account, as of immediately prior to the
Closing, all as determined in accordance with GAAP.
“Company Group” has the meaning set forth in Section 3.20.
“Company Intellectual Property” means all Intellectual Property that is owned or held for use by
the Company.
“Company IP Agreements” means all licenses, sublicenses, consent to use agreements,
settlements, coexistence agreements, covenants not to sue, permissions and other Contracts (including any
right to receive or obligation to pay royalties or any other consideration), whether written or oral, relating
to Intellectual Property to which the Company is a party, beneficiary or otherwise bound.
“Company IP Registrations” means all registrations, applications or other filings by, to or with
any Governmental Authority or authorized private registrar in any jurisdiction for Company Intellectual
Property, including registered trademarks, domain names and copyrights, issued and reissued patents and
pending applications for any of the foregoing.
“Company Operating Agreement” means the Amended and Restated Limited Liability Company
Operating Agreement of CellRight Technologies, LLC, originally dated July 23, 2012, and as amended
by that First Amendment to Amended and Restated Limited Liability Company Operating Agreement of
CellRight Technologies, LLC, dated March 11, 2013.
“Company Organizational Documents” has the meaning set forth in Section 3.27(a).
“Company Transaction Expenses” means all out of pocket fees and expenses of the Company in
connection with the preparation of this Agreement and the transactions contemplated by this Agreement,
including but not limited to, (a) the fees and expenses of legal counsel and accountants of the Company,
WEST\275532193.26 4
(b) fifty percent (50%) of the fees and expenses of the Escrow Agent, and (c) the fees and expenses
payable to financial advisors, investment bankers and brokers of the Company.
“Contracts” means all contracts, leases, deeds, mortgages, licenses, instruments, notes,
commitments, undertakings, indentures, joint ventures, and all other agreements, commitments and
legally binding arrangements, whether written or oral.
“Current Assets” means cash and cash equivalents, accounts receivable (net of a reserve for
uncollectable accounts), inventory (net of an inventory reserve) and prepaid expenses and other current
assets of the Company, but excluding (a) the portion of any prepaid expense of which Buyer will not
receive the benefit following the Closing, (b) all Tax assets, (c) receivables from any of the Company’s
Affiliates, managers, employees, officers or members and any of their respective Affiliates and (d) the
Company’s quarantine donors, in each case determined in accordance with GAAP applied using the same
accounting methods, practices, principles, policies and procedures, with consistent classifications,
judgments and valuation and estimation methodologies that were used in the preparation of the Audited
Financial Statements for the most recent fiscal year end as if such accounts were being prepared and
audited as of a fiscal year end.
“Current Liabilities” means accounts payable, and other accrued current liabilities of the
Company, but excluding (a) payables to any of the Company’s Affiliates, managers, employees, officers
or members and any of their respective Affiliates (b) all Tax liabilities, (c) accrued interest on outstanding
Indebtedness, (d) the current portion of Indebtedness and (e) payables in respect of the Company’s
quarantine donors, in each case, determined in accordance with GAAP applied using the same accounting
methods, practices, principles, policies and procedures, with consistent classifications, judgments and
valuation and estimation methodologies that were used in the preparation of the Audited Financial
Statements for the most recent fiscal year end as if such accounts were being prepared and audited as of a
fiscal year end.
“D&O Indemnified Persons” has the meaning set forth in Section 6.10(a).
“Direct Claim” has the meaning set forth in Section 9.05(c).
“Disclosure Schedule” has the meaning set forth in Article III.
“Disputed Amounts” has the meaning set forth in Section 2.04(c)(iii).
“Disputed Milestone Amounts” has the meaning set forth in Section 2.07(e)(iii).
“Distributor Group” has the meaning set forth in Section 3.20.
“DLA” has the meaning set forth in Section 2.03(a).
“Dollars or $” means the lawful currency of the United States.
“E.O. 11246” has the meaning set forth in Section 3.25(h).
“Encumbrance” means any charge, claim, community property interest, pledge, condition,
equitable interest, lien (statutory or other), option, security interest, mortgage, easement, encroachment,
right of way, right of first refusal, or restriction of any kind, including any restriction on use, voting,
transfer, receipt of income or exercise of any other attribute of ownership.
WEST\275532193.26 5
“Enforceability Limitations” means (i) applicable bankruptcy, insolvency, reorganization,
moratorium, and other Laws of general application affecting or relating to the enforcement of creditors’
rights generally, (ii) Laws relating to the availability of specific performance and/or other equitable
remedies and (iii) general equitable principles (regardless of whether enforcement is sought in a
proceeding at law or in equity).
“Environmental Claim” means any Action alleging liability of whatever kind or nature
(including liability or responsibility for the costs of enforcement proceedings, investigations, cleanup,
governmental response, removal or remediation, natural resources damages, property damages, personal
injuries, medical monitoring, penalties, contribution, indemnification and injunctive relief) arising out of,
based on or resulting from: (a) the presence, Release of, or exposure to, any Hazardous Materials; or (b)
any actual or alleged non-compliance with any Environmental Law or term or condition of any
Environmental Permit.
“Environmental Law” means any applicable Law, Governmental Order, or binding agreement
with any Governmental Authority: (a) relating to pollution (or the cleanup thereof) or the protection of
natural resources, endangered or threatened species, human health or safety (solely as it may be affected
by exposure to Hazardous Materials), or the environment (including ambient air, soil, surface water or
groundwater, or subsurface strata); or (b) concerning the presence of, exposure to, or the management,
manufacture, use, containment, storage, recycling, reclamation, reuse, treatment, generation, discharge,
transportation, processing, production, disposal or remediation of any Hazardous Materials. The term
“Environmental Law” includes, without limitation, the following (including their implementing
regulations and any state analogs): the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42
U.S.C. §§ 9601 et seq.; the Solid Waste Disposal Act, as amended by the Resource Conservation and
Recovery Act of 1976, as amended by the Hazardous and Solid Waste Amendments of 1984, 42 U.S.C.
§§ 6901 et seq.; the Federal Water Pollution Control Act of 1972, as amended by the Clean Water Act of
1977, 33 U.S.C. §§ 1251 et seq.; the Toxic Substances Control Act of 1976, as amended, 15 U.S.C. §§
2601 et seq.; the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. §§ 11001
et seq.; the Clean Air Act of 1966, as amended by the Clean Air Act Amendments of 1990, 42 U.S.C. §§
7401 et seq.; and the Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. §§ 651 et seq.
(solely as it may be affected by exposure to Hazardous Materials).
“Environmental Notice” means any written directive, written notice of violation or infraction, or
written notice of an Environmental Claim, in each case relating to actual or alleged non-compliance with
any Environmental Law or any term or condition of any Environmental Permit.
“Environmental Permit” means any Permit, letter, clearance, consent, waiver, closure,
exemption, decision or other action of a Governmental Authority required under or issued, granted, given,
authorized by or made pursuant to Environmental Law.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the
regulations promulgated thereunder.
“ERISA Affiliate” means all employers (whether or not incorporated) that would be treated
together with the Company or any of its Affiliates as a “single employer” within the meaning of Section
414 of the Code.
“Escrow Agent” means Citibank, N.A.
“Escrow Agreement” has the meaning set forth in Section 2.03(c)(ii).
WEST\275532193.26 6
“Escrow Amount” has the meaning set forth in Section 2.03(c)(ii).
“Escrow Fund” has the meaning set forth in Section 2.03(c)(ii).
“Estimated Closing Working Capital” has the meaning set forth in Section 2.04(a).
“Estimated Closing Working Capital Statement” has the meaning set forth in Section 2.04(a).
“False Claims Act” has the meaning set forth in Section 3.18(a).
“FCPA” has the meaning set forth in Section 3.20.
“Financial Statements” has the meaning set forth in Section 3.05.
“Financing” has the meaning set forth in Section 5.07.
“First Accelerated Milestone Amount” has the meaning set forth in Section 2.07(f)(iv).
“First Milestone Period” means the period beginning on the first day of the first full fiscal month
of Buyer that begins after the Closing Date and ending on the last day of the twelfth (12th) full fiscal
month of Buyer that begins after the Closing Date.
“First Milestone Revenue Target” has the meaning set forth in Section 2.07(a).
“FIRPTA Certificate” has the meaning set forth in Section 2.06.
“Fundamental Representations” has the meaning set forth in Section 9.01.
“GAAP” means United States generally accepted accounting principles in effect from time to
time.
“Government Contracts” has the meaning set forth in Section 3.08(a)(x).
“Governmental Authority” means any federal, state, local or foreign government or political
subdivision thereof, or any agency or instrumentality of such government or political subdivision,
including the United States Food and Drug Administration (the “FDA”) and all foreign counterparts, or
any self-regulated organization or other non-governmental regulatory authority or quasi-governmental
authority (to the extent that the rules, regulations or orders of such organization or authority have the
force of Law), or any arbitrator, court or tribunal of competent jurisdiction.
“Government Official” has the meaning set forth in Section 3.20.
“Governmental Order” means any order, writ, judgment, injunction, decree, stipulation,
determination or award entered by or with any Governmental Authority.
“Gross Revenue” means revenue of the Company or its Affiliates or subsidiaries from the sale or
license of CellRight Products and other products manufactured or processed using the CellRight
Processing Technology that is earned in the Ordinary Course of Business, determined in accordance with
GAAP applied consistently with the past accounting practices of the Company.
“GTP” has the meaning set forth in Section 3.12.
WEST\275532193.26 7
“Guarantor” has the meaning set forth in the preamble.
“Guaranty” has the meaning set forth in Section 12.01(a).
“Hazardous Materials” means: (a) any material, substance, chemical, waste, product, derivative,
compound, mixture, solid, liquid, mineral or gas, in each case, whether naturally occurring or manmade,
that is classified as hazardous, acutely hazardous, toxic, or words of similar import or regulatory effect
under Environmental Laws; and (b) any petroleum or petroleum-derived products, radon, radioactive
materials or wastes, asbestos in any form, lead or lead-containing materials, urea formaldehyde foam
insulation, and polychlorinated biphenyls.
“Health Authorities” has the meaning set forth in Section 3.18(a).
“Health Laws” has the meaning set forth in Section 3.18(a).
“Hernandez Restricted Period” means the period commencing on the Closing Date and ending
on the three-year anniversary of the Closing Date.
“HIPAA” has the meaning set forth in Section 3.18(a).
“Indebtedness” means without duplication, the principal, accrued and unpaid interest,
prepayment premiums or penalties (including breakage costs, penalties and fees), if any, unpaid fees or
expenses and other monetary obligations as of such time in respect of (a) all indebtedness of the Company
for borrowed money or for the deferred purchase price of property or services, (b) any other indebtedness
of the Company which is evidenced by a note, bond, debenture or similar instrument or commercial paper
(including a purchase money obligation), (c) all deferred obligations of the Company to reimburse any
bank or other Person in respect of amounts paid or advanced under a letter of credit, surety bond,
performance bond or other instrument, (d) all indebtedness of others guaranteed, directly or indirectly, by
the Company or as to which the Company has an obligation (contingent or otherwise) that is substantially
the economic equivalent of a guarantee, (e) all obligations of the Company under any leases that have
been or should be accounted for as capital leases in accordance with GAAP, (f) all indebtedness of others
secured by (or for which the holder of such obligation has an existing right, contingent or otherwise, to be
secured by) any lien on any property or assets of the Company (whether or not such obligation is assumed
by the Company), (g) the aggregate net liability pursuant to any derivative instruments, including any
interest rate or currency swaps, caps, collars, options, futures or purchase or repurchase obligations, or
other similar derivative instruments of the Company, (h) all Company Transaction Expenses, and (i) the
net value of all related party receivables and related party payables of the Company; provided, however,
“Indebtedness” shall not include any operating lease obligations, any trade payables and accrued expenses
of the Company arising in the Ordinary Course of Business or any other Current Liabilities (but only to
the extent taken into consideration for purposes of the Closing Working Capital).
“Indemnified Party” has the meaning set forth in Section 9.05.
“Indemnifying Party” has the meaning set forth in Section 9.05.
“Independent Accountant” has the meaning set forth in Section 2.04(c)(iii).
“Indemnity Payment Obligation” has the meaning set forth in Section 9.05(f).
“Information” means any data, results, and information of any type whatsoever, whether tangible
or intangible and regardless of the form or medium, including know-how, trade secrets, expertise,
WEST\275532193.26 8
knowledge, practices, techniques, methods, processes, protocols, inventions, discoveries, developments,
unpublished patent applications, operating records, development reports, instructions, processes,
formulas, inventions, manufacturing technology, validations, package specifications, copies of the
processing records (manufacturing and packaging), specifications, test methods, data, samples and
prototypes, non-clinical and clinical data, product and raw material specifications and test methods,
formulations, formulae, materials or compositions of matter of any type or kind (patentable or otherwise),
packaging component specifications, labeling specifications, manufacturing in-process and finished
product specifications and test methods, drawings and technology, assays, screens, software, algorithms,
models, data, databases, database rights, patent data, stability, technology, test data and results (including
pharmacological, biological, biochemical, toxicological and clinical test data), analytical and quality
control data, results or descriptions, studies and procedures, development, manufacturing and distribution
costs, and marketing and other reports.
“Insurance Policies” has the meaning set forth in Section 3.15.
“Intellectual Property” means all intellectual property and industrial property rights and assets,
and all rights, interests and protections that are associated with, similar to, or required for the exercise of,
any of the foregoing, however arising, pursuant to the Laws of any jurisdiction throughout the world,
whether registered or unregistered, including any and all: (a) trademarks, service marks, trade names,
brand names, slogans, logos, trade dress, design rights and other similar designations of source,
sponsorship, association or origin, and general intangibles of like nature, whether registered or
unregistered, and pending registrations and applications to register the foregoing, together with the
goodwill connected with the use of and symbolized by, and all registrations, applications and renewals
for, any of the foregoing; (b) internet domain names, whether or not trademarks, registered in any top-
level domain by any authorized private registrar or Governmental Authority, web addresses, web pages,
websites and related content, accounts with Twitter, Facebook and other social media companies and the
content found thereon and related thereto, and URLs; (c) works of authorship, expressions, designs and
design registrations, whether or not copyrightable, including copyrights, author, performer, moral and
neighboring rights, and all registrations, applications for registration and renewals of such copyrights
whether registered or unregistered, and pending applications to register the same; (d) inventions,
discoveries, business and technical information and Know-How, databases, data collections, proprietary
processing, including CellRight Processing Technology, and other confidential and proprietary
information and all rights therein; (e) trade secrets and confidential ideas, Know-How, concepts, methods,
processes, formulae, technology, algorithms, models, reports, data, customer lists, supplier lists, business
plans and other proprietary information, all of which derive value, monetary or otherwise, from being
maintained in confidence (“Trade Secrets”), (f) patents (including all reissues, divisionals, provisionals,
continuations and continuations-in-part, re-examinations, renewals, substitutions and extensions thereof),
patent applications, patent disclosures, and other patent rights and any other Governmental Authority-
issued indicia of invention ownership (including inventor's certificates, petty patents and patent utility
models) industrial designs, inventions (whether or not patentable or reduced to practice) and
improvements thereto; and (g) software and firmware, including data files, source code, object code,
application programming interfaces, architecture, files, records, schematics, computerized databases and
other related specifications and documentation.
“Interim Balance Sheet” has the meaning set forth in Section 3.05.
“Interim Balance Sheet Date” has the meaning set forth in Section 3.05.
“Interim Financial Statements” has the meaning set forth in Section 3.05.
“Key Employees” means Jesus Hernandez, Dean Mueller and Robin Sullivan.
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“Knowledge of Company” or “Company’s Knowledge” or any other similar knowledge
qualification, means the actual knowledge of Jesus Hernandez, Chief Executive Officer of the Company,
Dr. Robin Sullivan, Vice President of Regulatory Affairs of the Company and Dean Mueller, Vice
President of Operations of the Company after due inquiry of the employees of the Company who are
responsible for the matter in question. None of the individuals listed in this definition shall have any
personal liability with respect to such Company’s Knowledge.
“Know-How” means all factual knowledge or Information that gives a Person the ability to
develop, produce, manufacture or market something that it otherwise would not have known how to
develop, produce, manufacture or market.
“Law” means any statute, law, ordinance, regulation, rule, code, order, constitution, treaty,
common law, judgment, decree, other requirement or rule of law of any Governmental Authority.
“Liabilities” has the meaning set forth in Section 3.06.
“Loss Certificate” has the meaning set forth in Section 9.05(e).
“Losses” means losses, damages, liabilities, deficiencies, judgments, interest, awards, penalties,
fines, costs or expenses of whatever kind, including reasonable attorneys’ fees and the cost of enforcing
any right to indemnification hereunder and the cost of pursuing any applicable insurance coverage;
provided, however, that “Losses” shall not include punitive damages or other damages described in
Section 9.04(i), except in the case actually awarded to a Governmental Authority or other third party
(other than any Affiliate of an Indemnified Party).
“Material Adverse Effect” means any event, occurrence, fact, condition or change that is, or
could reasonably be expected to become, individually or in the aggregate, materially adverse to (a) the
business, results of operations, condition (financial or otherwise) or assets of the Company, or (b) the
ability of Sellers to consummate the transactions contemplated hereby on a timely basis; provided,
however, that “Material Adverse Effect” shall not include any event, occurrence, fact, condition or
change, directly or indirectly, arising out of or attributable to: (a) general economic or political
conditions; (b) conditions generally affecting the industries in which the Company operates; (c) any
changes in financial or securities markets in general; (d) act of war (whether or not declared), armed
hostilities or terrorism, or the escalation or worsening thereof; (e) any action required or permitted by this
Agreement; (f) any changes or prospective changes in applicable Laws or accounting rules, including
GAAP; (g) any actions taken or omitted in the course of performing obligations hereunder or which are
taken with Buyer’s consent or not taken because Buyer did not give its consent, (h) the effect of any
action taken by Buyer or any of its Affiliates with respect to the transactions contemplated hereby, or (i)
the public announcement, pendency or completion of the transactions contemplated by this Agreement;
provided further, however, that any event, occurrence, fact, condition or change referred to in clauses (a)
through (d) immediately above shall be taken into account in determining whether a Material Adverse
Effect has occurred or could reasonably be expected to occur to the extent that such event, occurrence,
fact, condition or change has a disproportionate effect on the Company compared to other participants in
the industries in which the Company conducts its businesses.
“Material Contracts” has the meaning set forth in Section 3.08(a).
“Material Customers” has the meaning set forth in Section 3.14(a).
“Material Suppliers” has the meaning set forth in Section 3.14(b).
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“Membership Interests” has the meaning set forth in the recitals.
“Milestone Advance Payment” has the meaning set forth in Section 2.07(b).
“Milestone Certificate” has the meaning set forth in Section 2.07(d).
“Milestone Consideration” has the meaning set forth in Section 2.02.
“Milestone Payment” has the meaning set forth in Section 2.07.
“Milestone Resolution Period” has the meaning set forth in Section 2.07(e)(ii).
“Milestone Review Period” has the meaning set forth in Section 2.07(e)(i).
“Milestone Sellers” means each of the Sellers other than the Non-Milestone Sellers.
“Milestone Statement of Objections” has the meaning set forth in Section 2.07(e)(ii).
“Multiemployer Plan” has the meaning set forth in Section 3.24(c).
“Non-Milestone Sellers” means Vise Lion, Ltd. and Hugocellr, Ltd.
“Non-U.S. Benefit Plan” has the meaning set forth in Section 3.24(a).
“NRF” has the meaning set forth in Section 2.03(b).
“Ordinary Course of Business” means the ordinary and usual course of operations of the
business of the Company through the date hereof consistent with past practice.
“Organizational Documents” means (a) in the case of a Person that is a corporation, its articles
or certificate of incorporation and its by-laws, regulations or similar governing instruments required by
the Laws of its jurisdiction of formation or organization; (b) in the case of a Person that is a partnership,
its articles or certificate of partnership, formation or association, and its partnership agreement (in each
case, limited, limited liability, general or otherwise); (c) in the case of a Person that is a limited liability
company, its articles or certificate of formation or organization, and its limited liability company
agreement or operating agreement; and (d) in the case of a Person that is none of a corporation,
partnership (limited, limited liability, general or otherwise), limited liability company or natural person,
its governing instruments as required or contemplated by the laws of its jurisdiction of organization.
“Pass-Through Tax Returns” means income Tax Returns of the Company for taxable periods
ending on or before the Closing Date and for which the items of income, gain, credit, loss or deduction
flow directly through to the Sellers.
“Permits” means all permits, licenses, franchises, approvals, authorizations, registrations,
certificates, regulatory clearance, variances and similar rights obtained, or required to be obtained, from
Governmental Authorities.
“Permitted Encumbrances” has the meaning set forth in Section 3.09(a).
“Period” has the meaning set forth in Section 2.07(d).
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“Person” means an individual, corporation, partnership, joint venture, limited liability company,
Governmental Authority, unincorporated organization, trust, association, or other entity.
“Placing Agreement” has the meaning set forth in Section 5.07.
“Placing Shares” has the meaning set forth in Section 5.07.
“Post-Closing Tax Period” means any taxable period beginning after the Closing Date and, with
respect to any taxable period beginning before and ending after the Closing Date, the portion of such
taxable period beginning after the Closing Date.
“Post-Closing Taxes” means Taxes of the Company for any Post-Closing Tax Period.
“Pre-Closing Tax Period” means any taxable period ending on or before the Closing Date and,
with respect to any taxable period beginning before and ending after the Closing Date, the portion of such
taxable period ending on and including the Closing Date.
“Pre-Closing Taxes” means Taxes of the Company for any Pre-Closing Tax Period.
“Privileged Communications” has the meaning set forth in Section 11.15(c).
“Pro Rata Percentage” means with respect to a Milestone Seller, the percentage set forth
opposite such Person’s name under the heading “Pro Rata Percentage” on the Spreadsheet.
“Pro Rata Share” means with respect to a Seller, the percentage set forth opposite such Person’s
name under the heading “Pro Rata Share” on the Spreadsheet.
“Purchase Price” has the meaning set forth in Section 2.02.
“Qualified Benefit Plan” has the meaning set forth in Section 3.24(c).
“Real Property” means the real property owned by, or leased or subleased to, the Company,
together with all buildings, structures and facilities owned, leased or subleased by the Company and
located thereon.
“Reconciled Closing Cash Consideration” has the meaning set forth in Section 2.04(c)(vi).
“Reconciled Closing Working Capital” has the meaning set forth in Section 2.04(b).
“Reconciled Closing Working Capital Statement” has the meaning set forth in Section 2.04(b).
“Regulatory Documentation” means all (a) documentation comprising Permits or other approvals
by a Governmental Authority, and (b) correspondence and reports submitted to or received from
Governmental Authority (including minutes and official contact reports relating to any written
communications with any such Governmental Authority) and all supporting documents with respect
thereto, including all regulatory lists, advertising and promotion documents and adverse event files.
“Release” means any actual or threatened release, spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, abandoning, disposing or allowing to
escape or migrate into or through the environment (including, without limitation, ambient air (indoor or
outdoor), surface water, groundwater, land surface or subsurface strata or within any building, structure,
facility or fixture).
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“Representative” means, with respect to any Person, any and all directors, managing members,
managers, officers, employees, consultants, financial advisors, legal counsel, accountants and other agents
and representatives of such Person.
“Resolution Period” has the meaning set forth in Section 2.04(c)(ii).
“Restricted Business” means any business of developing, processing, manufacturing, selling,
marketing or otherwise commercializing any products that compete directly with the CellRight Products
or Buyer’s or its Affiliate’s current product portfolio & pipeline.
“Review Period” has the meaning set forth in Section 2.04(c)(i).
“S&M Restricted Period” means the period commencing on the Closing Date and ending on the
two-year anniversary of the Closing Date.
“Second Accelerated Milestone Amount” has the meaning set forth in Section 2.07(f)(iv).
“Second Milestone Period” means the period beginning on the first day of the thirteenth full
fiscal month of Buyer that begins after the Closing Date and ending on the last day of the twenty-fourth
(24th) full fiscal month of Buyer that begins after the Closing Date.
“Second Milestone Revenue Target” has the meaning set forth in Section 2.07(c).
“Securities Act” has the meaning set forth in Section 5.05.
“Section 503” has the meaning set forth in Section 3.25(h).
“Seller” has the meaning set forth in the preamble.
“Seller Indemnitees” has the meaning set forth in Section 9.03.
“Seller Parties” has the meaning set forth in Section 11.15(b).
“Seller Representative” has the meaning set forth in the preamble.
“Seller Representative Expense Fund” means $250,000.
“Sellers” has the meaning set forth in the preamble.
“Sellers’ Accountants” means Akin, Doherty, Klein & Feuge, P.C.
“Set-Off Rights” has the meaning set forth in Section 2.09.
“Settlement Notice” has the meaning set forth in Section 9.05(a).
“Settlement Rejection Notice” has the meaning set forth in Section 9.05(a).
“Spreadsheet” has the meaning set forth in Section 2.08.
“Statement of Objections” has the meaning set forth in Section 2.04(c)(ii).
“Straddle Period” has the meaning set forth in Section 7.04.
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“Tail Policy” has the meaning set forth in Section 6.10(b).
“Target Working Capital” means $2,285,114.
“Tax Claim” has the meaning set forth in Section 7.05(a).
“Tax Return” means any return, declaration, report, claim for refund, information return, or
statement or other document relating to Taxes, including any schedule or attachment thereto, and
including any amendment thereof.
“Taxes” means all U.S. federal, state, local, foreign and other income, gross receipts, sales, use,
production, ad valorem, transfer, franchise, registration, profits, license, lease, service, service use,
withholding, payroll, employment, unemployment, estimated, excise, severance, environmental, stamp,
occupation, premium, property (real or personal), escheat or unclaimed property, real property gains,
windfall profits, customs, duties or other taxes, fees, assessments or charges of any kind whatsoever,
whether disputed or not, together with any interest, additions or penalties with respect thereto and any
interest in respect of such additions or penalties.
“Territory” means North America, including Mexico.
“Third Party Claim” has the meaning set forth in Section 9.05(a).
“Trade Secret SOP” has the meaning set forth in Section 3.11(k).
“Transaction Documents” means this Agreement, the Assignment Agreement and the Escrow
Agreement.
“Unadjusted Closing Cash Consideration” has the meaning set forth in Section 2.03(c)(i).
“Union” has the meaning set forth in Section 3.25(d).
“Units” has the meaning ascribed to such term in the Company Operating Agreement.
“VEVRAA” has the meaning set forth in Section 3.25(h).
“WARN Act” means the federal Worker Adjustment and Retraining Notification Act of 1988, and
similar state, local and foreign laws related to plant closings, relocations, mass layoffs and employment
losses.
ARTICLE II
PURCHASE AND SALE
Section 2.01 Purchase and Sale. Subject to the terms and conditions set forth herein, at the
Closing, Sellers shall sell to Buyer and Buyer shall purchase from Sellers, all of Sellers’ right, title, and
interest in and to the Membership Interests, free and clear of all Encumbrances (other than the restrictions
set forth in the Company Operating Agreement (including any restrictions on use, voting, transfer, receipt
of income or exercise of any other attributes of ownership set forth in the Company Operating
Agreement) or imposed by federal and state securities laws), for the consideration specified in Section
2.02. Prior to the Closing, the Company shall distribute the Company Closing Cash to the Sellers.
Section 2.02 Consideration for Membership Interests. The aggregate purchase price for the
Membership Interests shall be $25,927,597.09, as such amount is adjusted pursuant to Section 2.04 (the
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“Base Purchase Price”), plus an amount of up to $4,072,402.91 based on the achievement of certain
milestones (the “Milestone Consideration” and together with the Base Purchase Price, collectively, the
“Purchase Price”).
Section 2.03 Transactions to be Effected Prior to Admission and on the Closing Date.
(a) Prior to Admission, Buyer shall deliver to each of DLA Piper LLP (US) and
DLA Piper UK LLP (collectively, “DLA”) each of the following agreements, documents,
instruments and certificates to be held in escrow by DLA pursuant to an irrevocable instruction
from Buyer to DLA to release such agreements, documents, instruments and certificates from
escrow and to deliver such agreements, documents, instruments and certificates to Sellers, Seller
Representative and Escrow Agent, as applicable, upon Buyer’s delivery of the payments set forth
in Section 2.03(c):
(i) the Transaction Documents and all other agreements, documents,
instruments or certificates required to be delivered by Buyer or Guarantor at or prior to
the Closing pursuant to Section 8.03 of this Agreement.
(b) Prior to Admission, Sellers shall deliver to Norton Rose Fulbright US LLP
(“NRF”) each of the following agreements, documents, instruments and certificates to be held in
escrow by NRF pursuant to an irrevocable instruction from Sellers to NRF to release such
agreements, documents, instruments and certificates from escrow and to deliver such agreements,
documents, instruments and certificates to Buyer upon Buyer’s delivery of the payments set forth
in Section 2.03(c):
(i) the pay-off documents and all instruments and documents necessary to
release any and all liens securing Indebtedness of the Company, including any necessary
UCC termination statements or other releases, in each case, in form and substance
reasonably satisfactory to Buyer;
(ii) an instrument of assignment of the Membership Interests owned by each
Seller, duly executed by each such Person for transfer to Buyer, in the form attached
hereto as Exhibit C (the “Assignment Agreement”); and
(iii) the Transaction Documents and all other agreements, documents,
instruments or certificates required to be delivered by Sellers at or prior to the Closing
pursuant to Section 8.02 of this Agreement.
(c) On or prior to 4:00 p.m. (Eastern Daylight Time) on the Closing Date, Buyer
shall deliver each of the following:
(i) To the Sellers, the aggregate amount of $21,650,000 (the “Unadjusted
Closing Cash Consideration”), (i) plus the amount, if any, by which the Estimated
Closing Working Capital exceeds the Target Working Capital; provided that such
amount, if any, shall not exceed $100,000; (ii) less the amount, if any, by which the
Target Working Capital exceeds the Estimated Closing Working Capital; provided that
such amount, if any, shall not exceed $100,000; and (iii) less the Seller Representative
Expense Fund (the Unadjusted Closing Cash Consideration as adjusted pursuant to
clauses (i), (ii), and (iii) hereof, is referred to herein as the “Closing Cash
Consideration”), by wire transfer of immediately available funds to Sellers in the
respective amounts, and to the respective accounts, designated in the Spreadsheet;
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(ii) To the Escrow Agent, an amount equal to $2,036,201.46 (the “Escrow
Amount”), by wire transfer of immediately available funds to an escrow account
designated pursuant to the terms of an Escrow Agreement substantially in the form set
forth as Exhibit B hereto (the “Escrow Agreement”) to be executed by and among Buyer,
Seller Representative and the Escrow Agent. The Escrow Amount will be held in an
interest-bearing escrow account (the “Escrow Fund”) for the benefit of the Milestone
Sellers to satisfy indemnification claims of Buyer that may arise under this Agreement
and will be distributed in accordance with the provisions of this Agreement and the
Escrow Agreement; and
(iii) To the Non-Milestone Sellers, the aggregate amount equal to
$1,991,395.63 by wire transfer of immediately available funds to the Non-Milestone
Sellers in the respective amounts, and to the respective accounts, designated in the
Spreadsheet.
(iv) To a separate bank account designated by the Seller Representative, the
Seller Representative Expense Fund.
Section 2.04 Purchase Price Adjustment.
(a) Estimated Closing Working Capital. At least three (3) Business Days before the
Closing, the Company shall prepare and deliver to Buyer a statement setting forth its good faith
estimate of Closing Working Capital (the “Estimated Closing Working Capital”), which
statement shall contain an estimated balance sheet of the Company as of the Closing Date
(without giving effect to the transactions contemplated herein), a calculation of Estimated Closing
Working Capital (the “Estimated Closing Working Capital Statement”), and a certificate of the
Chief Executive Officer of the Company that the Estimated Closing Working Capital Statement
was prepared in accordance with GAAP applied using the same accounting methods, practices,
principles, policies and procedures, with consistent classifications, judgments and valuation and
estimation methodologies that were used in the preparation of the Audited Financial Statements
for the most recent fiscal year end as if such Estimated Closing Working Capital Statement was
being prepared and audited as of a fiscal year end.
(b) Post-Closing Adjustment of Closing Working Capital. Within sixty (60) days
after the Closing Date, Buyer shall prepare and deliver to Seller Representative a statement
setting forth its good faith calculation of Closing Working Capital (the “Reconciled Closing
Working Capital”), which statement shall contain a balance sheet of the Company as of the
Closing Date (without giving effect to the transactions contemplated herein), Buyer’s calculation
of Closing Working Capital (the “Reconciled Closing Working Capital Statement”) (providing
reasonable detail of each component included in the calculation of the Current Assets of the
Company and the Current Liabilities of the Company) and a certificate of the Chief Financial
Officer of Buyer that the Reconciled Closing Working Capital Statement was prepared in
accordance with GAAP applied using the same accounting methods, practices, principles, policies
and procedures, with consistent classifications, judgments and valuation and estimation
methodologies that were used in the preparation of the Audited Financial Statements for the most
recent fiscal year end as if such Reconciled Closing Working Capital Statement was being
prepared and audited as of a fiscal year end. If Buyer fails to deliver the Reconciled Closing
Working Capital Statement within sixty (60) days after the Closing Date, the Estimated Closing
Working Capital reflected in the Estimated Closing Working Capital Statement shall be deemed
to have been accepted by Buyer and be the final and binding amount of Closing Working Capital
and no adjustment shall be made pursuant to Section 2.04(c)(vi).
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(c) Examination and Review.
(i) Examination. After receipt of the Reconciled Closing Working Capital
Statement, the Seller Representative (on behalf of the Sellers) shall have thirty (30) days
(the “Review Period”) to review and object to the Reconciled Closing Working Capital
Statement. During the Review Period, Seller Representative and Sellers’ Accountants
and other advisers shall have full access to the books and records of the Company, the
personnel of, and work papers prepared by, Buyer and/or Buyer’s Accountants or other
advisers to the extent that they relate to the Reconciled Closing Working Capital
Statement and to such historical financial information of the Company (to the extent in
Buyer’s or its Affiliates’ possession or control) relating to the Reconciled Closing
Working Capital Statement as Seller Representative (on behalf of the Sellers) may
reasonably request for the purpose of reviewing the Reconciled Closing Working Capital
Statement and to prepare a Statement of Objections (defined below), provided, that such
access shall be in a manner that does not unreasonably interfere with the normal business
operations of Buyer or the Company.
(ii) Objection. On or prior to the last day of the Review Period, Seller
Representative (on behalf of the Sellers) may object to the Reconciled Closing Working
Capital Statement by delivering to Buyer a written statement setting forth Seller
Representative’s objections in reasonable detail, indicating each disputed item or amount
and the basis for Seller Representative’s disagreement therewith (the “Statement of
Objections”). If Seller Representative (on behalf of the Sellers) fails to deliver the
Statement of Objections before the expiration of the Review Period, the Reconciled
Closing Working Capital reflected in the Reconciled Closing Working Capital Statement
shall be deemed to have been accepted by Seller Representative (on behalf of the Sellers)
and be the final and binding amount of Closing Working Capital for purposes of making
the adjustment required pursuant to Section 2.04(c)(vi). If Seller Representative (on
behalf of the Sellers) delivers the Statement of Objections before the expiration of the
Review Period, Buyer and Seller Representative (on behalf of the Sellers) shall negotiate
in good faith to resolve such objections within thirty (30) days after the delivery of the
Statement of Objections (the “Resolution Period”), and, if all such objections are
resolved within the Resolution Period, then the amount of the Closing Working Capital
so agreed in writing by Buyer and Seller Representative (on behalf of the Sellers), shall
be the final and binding amount of Closing Working Capital for purposes of making any
adjustment required pursuant to Section 2.04(c)(vi).
(iii) Resolution of Disputes. If Seller Representative (on behalf of the
Sellers) and Buyer fail to reach an agreement with respect to all of the matters set forth in
the Statement of Objections before expiration of the Resolution Period, then any amounts
remaining in dispute (“Disputed Amounts”) shall be submitted for resolution to the office
of BDO USA, LLP or, if BDO USA, LLP is unable to serve, Buyer and Seller
Representative (on behalf of the Sellers) shall appoint by mutual agreement the office of
an impartial nationally recognized firm of independent certified public accountants other
than Sellers’ Accountants or Buyer’s Accountants (the “Independent Accountant”) who,
acting as experts and not arbitrators, shall resolve the Disputed Amounts only. The
Independent Accountant shall only decide the specific items under dispute by the parties
(without regard to materiality) and the Independent Accountant’s decision for each
Disputed Amount must be within the range of values assigned to each such item in the
Reconciled Closing Working Capital Statement and the Statement of Objections,
respectively.
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(iv) Fees of the Independent Accountant. The fees and expenses of the
Independent Accountant shall be paid by Sellers, on the one hand, and by Buyer, on the
other hand, based upon the percentage that the amount actually contested but not awarded
to Seller Representative (on behalf of the Sellers) or Buyer, respectively, bears to the
aggregate amount actually contested by Seller Representative (on behalf of the Sellers)
and Buyer, which allocation of fees and expenses shall be determined by the Independent
Accountant.
(v) Determination by Independent Accountant. The Independent Accountant
shall make a determination as soon as practicable within thirty (30) days (or such other
time as the parties hereto shall agree in writing) after their engagement, and their
resolution of the Disputed Amounts and their calculation of the Closing Working Capital
(after taking into account their resolution of the Disputed Amounts) will be the final
amount of the Closing Working Capital for purposes of making any adjustment required
pursuant to Section 2.04(c)(vi) and shall be conclusive and binding upon the parties
hereto and all other interested Persons.
(vi) Payments of Post-Closing Adjustment. Following the determination of
the final Closing Working Capital pursuant to Section 2.04(c)(ii), and if necessary
pursuant to Section 2.04(c)(iii) and Section 2.04(c)(v), the amount of Closing Cash
Consideration (originally calculated in, and paid to the Sellers pursuant to, Section
2.03(c)(i)) shall be recalculated using the final Closing Working Capital (the “Reconciled
Closing Cash Consideration”). The amount, if any, by which the Reconciled Closing
Cash Consideration exceeds the Closing Cash Consideration paid to Sellers on the
Closing Date pursuant to Section 2.03(c)(i) shall be paid by Buyer by wire transfer of
immediately available funds to such account or accounts as Seller Representative may
designate for disbursement to Sellers; provided that such amount, if any, shall not exceed
$100,000. The amount, if any, by which the Closing Cash Consideration paid to Sellers
on the Closing Date pursuant to Section 2.03(c)(i) exceeds the Reconciled Closing Cash
Consideration shall be paid by Seller Representative (on behalf of the Sellers) by wire
transfer of immediately available funds to such account as Buyer may designate for
disbursement to Buyer; provided that such amount, if any, shall not exceed $100,000.
Any payment pursuant to this Section 2.04(c)(vi) will be due and payable within five (5)
Business Days following determination of the final Closing Working Capital pursuant to
Section 2.04(c)(ii) and, if necessary Section 2.04(c)(iii) and Section 2.04(c)(v).
(d) Adjustments for Tax Purposes. Any payments made pursuant to Section
2.04(c)(vi) shall be treated as an adjustment to the Purchase Price by the parties for Tax purposes,
unless otherwise required by Law.
Section 2.05 Closing. Subject to the terms and conditions of this Agreement, the purchase
and sale of the Membership Interests contemplated hereby shall take place simultaneously with and upon
the occurrence of Admission (the “Closing”) to be effected via the electronic exchange of documents and
signatures, following the satisfaction or waiver of the conditions to Closing set forth in Article VIII (other
than conditions which, by their nature, are to be satisfied at Closing) (the day on which the Closing takes
place being the “Closing Date”).
Section 2.06 Withholding Tax. The Company shall provide Buyer with a certificate meeting
the requirements of Treasury Regulations Section 1.1445-11T(d)(2) (the “FIRPTA Certificate”) and each
Seller shall provide, as applicable, a completed Form W-8 or W-9. Buyer and the Company shall be
entitled to deduct and withhold from the consideration otherwise payable to any Person pursuant to this
WEST\275532193.26 18
Agreement such amounts that Buyer and the Company may be required to deduct and withhold under any
provision of Tax Law; provided, however, that except with respect to any required withholding resulting
from the failure by the Company to deliver the FIRPTA Certificate or by a Seller to deliver, as applicable,
a completed Form W-8 or W-9 at least three (3) days prior to the Closing, Buyer shall give the applicable
Seller sufficient advance notice prior to any such withholding to permit such Seller to take any reasonably
available steps to eliminate or minimize such withholding. All such withheld amounts shall be treated as
delivered to Sellers hereunder.
Section 2.07 Milestone Payments. After the Closing, Buyer will make additional payments
to the Milestone Sellers (each, a “Milestone Payment”) on the terms and subject to the conditions set
forth in this Section 2.07. Milestone Payments will be calculated with respect to Gross Revenue over two
periods, the First Milestone Period and the Second Milestone Period.
(a) First Milestone Period. If Gross Revenue during the First Milestone Period
equals or exceeds seven million dollars ($7,000,000) (the “First Milestone Revenue Target”),
Buyer will make a Milestone Payment to the Milestone Sellers in an amount equal to
$2,036,201.46 as further described in Section 2.07(d). If Gross Revenue during the First
Milestone Period is less than the First Milestone Revenue Target, but is equal to or greater than
six million dollars ($6,000,000), Buyer will make a Milestone Payment to the Milestone Sellers
(as further described in Section 2.07(d)) in an amount determined pursuant to the following
formula:
First MP = ((C-A)/(B-A)) * D
For purposes of the foregoing formula, the following definitions shall apply:
(i) “First MP” shall mean the aggregate amount of the Milestone Payment
for the First Milestone Period;
(ii) “A” shall mean six million dollars ($6,000,000);
(iii) “B” shall mean seven million dollars ($7,000,000);
(iv) “C” shall mean the Gross Revenue during the First Milestone Period; and
(v) “D” shall mean two million dollars ($2,000,000).
(b) Milestone Advance Payment. In addition to the Milestone Payment earned, if
any, pursuant to Section 2.07(a), if Gross Revenue during the First Milestone Period equals or
exceeds ten million dollars ($10,000,000), then Buyer will make an additional Milestone Payment
to the Milestone Sellers in the amount equal to one million dollars ($1,000,000) (the “Milestone
Advance Payment”) as further described in Section 2.07(d).
(c) Second Milestone Period. If Gross Revenue during the Second Milestone Period
equals or exceeds twelve million five hundred thousand dollars ($12,500,000) (the “Second
Milestone Revenue Target”), Buyer will make a Milestone Payment to the Milestone Sellers in
an amount equal to $2,036,201.46 less the amount of the Milestone Advance Payment, if any,
paid to the Milestone Sellers pursuant to Section 2.07(b). If Gross Revenue during the Second
Milestone Period is less than the Second Milestone Revenue Target, but is equal to or greater than
ten million dollars ($10,000,000), Buyer will make a Milestone Payment to the Milestone Sellers
WEST\275532193.26 19
(as further described in Section 2.07(d)) in an amount, in the aggregate, determined pursuant to
the following formula:
Second MP = (((C-A)/(B-A)) * D) - AP
For purposes of the foregoing formula, the following definitions shall apply:
(i) “Second MP” shall mean the aggregate amount of the Milestone
Payment for the Second Milestone Period;
(ii) “A” shall mean ten million dollars ($10,000,000);
(iii) “B” shall mean twelve million five hundred thousand dollars
($12,500,000);
(iv) “C” shall mean Gross Revenue during the Second Milestone Period;
(v) “D” shall mean two million dollars ($2,000,000);
(vi) “AP” shall mean the aggregate amount of the Milestone Advance
Payment, if any, paid to the Milestone Sellers pursuant to Section 2.07(b);
(d) Milestone Certificate and Payment of Undisputed Amount. As soon as
practicable after the end of the First Milestone Period and the Second Milestone Period (each, a
“Period”) (but in no event later than the fortieth (40th) day following the end of such Period), (i)
Buyer shall deliver to Seller Representative a certificate executed by the Chief Financial Officer
of Buyer (each, a “Milestone Certificate”), setting forth Buyer’s good faith determination of
Gross Revenue for such Period and Buyer’s calculation of the First MP, any Milestone Advance
Payment and the Second MP (as applicable) in accordance with the terms of this Agreement for
such Period and (ii) Buyer shall pay an aggregate amount equal to (A) the First MP and any
Milestone Advance Payment for the First Milestone Period, and (B) the Second MP for the
Second Milestone Period, in each case, as set forth in the Milestone Certificate by wire transfer of
immediately available funds to the Milestone Sellers in accordance with their respective Pro Rata
Percentage. In no event shall the aggregate Milestone Payments exceed $4,072,402.92.
(e) Examination and Review; Dispute Resolution.
(i) Examination. After receipt of the Milestone Certificate for each Period,
Seller Representative (on behalf of Milestone Sellers) shall have thirty (30) days (the
“Milestone Review Period”) to review and object to the Milestone Certificate. During
the Milestone Review Period, Seller Representative (on behalf of Milestone Sellers) and
Sellers’ Accountants and other advisors shall have full access to the books and records of
the Company, the personnel of, and work papers prepared by, Buyer, its Affiliates and/or
Buyer’s Accountants to the extent that they relate to the determinations and calculations
set forth in the Milestone Certificate as Seller Representative (on behalf of Milestone
Sellers) may reasonably request for the purpose of reviewing such determinations and
calculations and to prepare a Milestone Statement of Objections (defined below),
provided that such access shall be in a manner that does not unreasonably interfere with
the normal business operations of Buyer or the Company.
WEST\275532193.26 20
(ii) Objection. On or prior to the last day of the Milestone Review Period,
Seller Representative (on behalf of Milestone Sellers) may object to one or more of the
determinations and calculations set forth in the Milestone Certificate by delivering to
Buyer a written statement setting forth Seller Representative’s objections in reasonable
detail, indicating each disputed amount and the basis for Seller Representative’s
disagreement therewith (the “Milestone Statement of Objections”). If Seller
Representative (on behalf of Milestone Sellers) fails to deliver the Milestone Statement of
Objections before the expiration of the Milestone Review Period, the Milestone
Certificate for such Period and the amount of the Milestone Payment(s) set forth in such
Milestone Certificate shall be deemed to have been accepted by Seller Representative (on
behalf of Milestone Sellers). If Seller Representative (on behalf of Milestone Sellers)
delivers the Milestone Statement of Objections before the expiration of the Milestone
Review Period, Buyer and Seller Representative (on behalf of Milestone Sellers) shall
negotiate in good faith to resolve such objections within thirty (30) days after the delivery
of the Milestone Statement of Objections (the “Milestone Resolution Period”), and, if the
same is so resolved within the Milestone Resolution Period, the calculation of the
Milestone Payment(s) for such Period, with such changes as may have been previously
agreed in writing by Buyer and Seller Representative (on behalf of Milestone Sellers),
shall be final and binding.
(iii) Resolution of Disputes. If Seller Representative (on behalf of Milestone
Sellers) and Buyer fail to reach an agreement with respect to all of the matters set forth in
the Milestone Statement of Objections before expiration of the Milestone Resolution
Period, then any amounts remaining in dispute (“Disputed Milestone Amounts”) shall be
submitted for resolution to the Independent Accountant who, acting as experts and not
arbitrators, shall resolve the Disputed Milestone Amounts only and make any adjustments
to the Milestone Payments for such Period. The parties hereto agree that all adjustments
shall be made without regard to materiality. The Independent Accountant shall decide
only the specific items under dispute by the parties and their decision for each Disputed
Milestone Amount must be within the range of values assigned to each such item in the
Milestone Certificate and the Milestone Statement of Objections, respectively.
(iv) Fees of the Independent Accountant. The fees and expenses of the
Independent Accountant shall be paid by Milestone Sellers, on the one hand, and by
Buyer, on the other hand, based upon the percentage that the amount actually contested
but not awarded to Seller Representative (on behalf of Milestone Sellers) or Buyer,
respectively, bears to the aggregate amount actually contested by Seller Representative
(on behalf of Milestone Sellers) and Buyer, such allocation to be determined by the
Independent Accountants.
(v) Determination by Independent Accountant. The Independent Accountant
shall make a determination as soon as practicable within thirty (30) days (or such other
time as the parties hereto shall agree in writing) after their engagement, and their
resolution of the Disputed Milestone Amounts and their adjustments to the applicable
Milestone Payment(s) shall be conclusive and binding upon the parties hereto and all
other interested parties.
(vi) Payment of Adjustment. Any increase in the amount of the Milestone
Payment(s) agreed to by Buyer, or determined by the Independent Accountant shall be
due within five (5) Business Days following such agreement or determination and be paid
in the manner set forth in Section 2.07.
WEST\275532193.26 21
(f) Milestone Protection Covenants. Buyer covenants to Milestone Sellers that at all
times during the period beginning on the Closing Date and ending on the last day of the Second
Milestone Period, Buyer shall, and shall cause its Affiliates (including the Company) to, comply
with, observe and satisfy the following obligations and restrictions:
(i) Buyer will operate the Company, and will cause the Company to operate,
in the Ordinary Course of Business, and will provide the Company with adequate
working capital in which to conduct the Company’s business in the Ordinary Course of
Business.
(ii) Other than due to termination for Cause, Buyer shall not, and shall not
permit the Company to, transfer, terminate or re-assign the employment of any employee
of the Company set forth on Section 2.07(f)(ii) of the Disclosure Schedule with the
primary motivation, intention or purpose of reducing, avoiding or delaying the payment
of any Milestone Payment. In the event of any transfer, termination or re-assignment of
the employment of any employee set forth on Section 2.07(f)(ii) of the Disclosure
Schedule, Buyer will, and shall cause the Company to, use commercially reasonable
efforts to promptly retain comparably skilled and experienced replacement workers (as
determined in Buyer’s sole reasonable discretion), except to the extent that the hiring of
any replacement worker would not be commercially reasonable in light of the likelihood
of the underutilization of such worker in the Company’s business (as determined in
Buyer’s sole reasonable discretion).
(iii) In addition to, and without limitation of, the foregoing covenants,
(A) Buyer will use its commercially reasonable efforts to cause the Company to
maximize the recognition of Gross Revenue during each of the Periods and (B) Buyer
shall not, and shall not permit the Company to, enter into any transaction or take or omit
to take any action that is primarily motivated by an intention, or of which the primary
purpose is, to reduce, avoid or delay the payment of any Milestone Payment.
(iv) If a Buyer Change of Control occurs at any time during the First
Milestone Period, Buyer shall, contemporaneously with the effectiveness of such Buyer
Change of Control, make a final Milestone Payment in an amount (the “First Accelerated
Milestone Amount”) equal to $4,072,402.92 without regard to the amount of Gross
Revenue accumulated as of such time. If a Buyer Change of Control occurs at any time
during the Second Milestone Period, Buyer shall, contemporaneously with the
effectiveness of such Buyer Change of Control, make a final Milestone Payment in an
amount (the “Second Accelerated Milestone Amount”) equal to $2,036,201.46, less the
aggregate amount of any Milestone Advance Payment previously paid by Buyer pursuant
to Section 2.07(b), without regard to the amount of Gross Revenue accumulated as of
such time. Buyer shall pay the First Accelerated Milestone Amount or the Second
Accelerated Milestone Amount, to the extent applicable, by wire transfer of immediately
available funds to the Milestone Sellers in accordance with their respective Pro Rata
Percentage. Upon the payment of such amount, the obligations of Buyer to make any
further Milestone Payments pursuant Section 2.07(c) and to comply with the covenants
set forth in Section 2.07(f) shall terminate. In no event shall the aggregate Milestone
Payments exceed $4,072,402.92. “Buyer Change of Control” means any of the
following events:
(1) the sale, lease, exchange or other disposition (other than
a mortgage, pledge, hypothecation or grant of any other security interest to secure a bona fide obligation
WEST\275532193.26 22
to repay borrowed money) of fifty percent (50%) or more of the assets or profit- or revenue-generating
capacity of Buyer and its subsidiaries, taken together;
(2) the disposition (whether by sale, license, transfer or
otherwise) of any material assets of the Company (other than the sale of inventory in the ordinary course
of business, consistent with past practice) other than to an Affiliate or subsidiary of the Company;
(3) the consummation of a merger or consolidation of Buyer
with or into any other corporation or other entity in which the holders of the voting securities of Buyer
immediately prior to such merger or consolidation do not hold, immediately following such merger or
consolidation, securities of the surviving entity in such merger or consolidation (or any parent thereof)
representing fifty percent (50%) or more of the combined voting power of such Person’s then-outstanding
securities; or
(4) the consummation of any other transaction or series of
related transactions whereby any Person directly or indirectly becomes the beneficial owner (within the
meaning of Rule 13d-3 promulgated under the Securities and Exchange Act of 1934, as amended) of
voting securities of Buyer representing fifty percent (50%) or more of the combined voting power of
Buyer’s then-outstanding securities.
Section 2.08 Spreadsheet. The Company shall deliver to Buyer a spreadsheet (the
“Spreadsheet”), which shall be certified as complete and correct by an authorized officer of the Company
at least three (3) Business Days before the Closing Date, and which shall set forth (i) the name of each
Seller, (ii) the number and class of Units of the Company each Seller owns, (iii) the aggregate amount of
the Closing Cash Consideration that each Seller is entitled to receive under this Agreement, (iv) each
Milestone Seller’s Pro Rata Percentage applicable to any future Milestone Payments, (v) each Milestone
Seller’s Pro Rata Percentage of the Escrow Amount, (vi) each Seller’s wire instructions and (vii) the
calculation of the Closing Cash Consideration (including as a component thereof, (A) Estimated Closing
Working Capital, (B) the Company Transaction Expenses not paid prior to the Closing, and (C) the
aggregate amount of the Indebtedness of the Company as of the Closing.
Section 2.09 Set-Off Rights. Buyer shall have the right to set-off or deduct from any portion
of the Milestone Consideration that may become payable to Milestone Sellers hereunder amounts to
satisfy the indemnification obligations of the Milestone Sellers in accordance with, and subject to the
limitations set forth in Article IX (such rights, the “Set-Off Rights”).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in a document of even date herewith and delivered by the Seller
Representative (on behalf of Sellers) to Buyer concurrently with the execution and delivery of this
Agreement and referring by numbered section (and, where applicable, by lettered subsection) to the
representations and warranties in this Article III (the “Disclosure Schedule”), the Company represents
and warrants to Buyer as of the date hereof except for representations and warranties that speak as of a
specific date, in which case as of such date:
Section 3.01 Organization, Authority and Qualification of the Company. The Company is
a limited liability company duly organized, validly existing and in good standing under the Laws of the
State of Delaware and has full limited liability company power and authority to own, operate or lease the
properties and assets now owned, operated or leased by it and to carry on its business as it has been and is
currently conducted. Section 3.01 of the Disclosure Schedule sets forth each jurisdiction in which the
WEST\275532193.26 23
Company is licensed or qualified to do business, and the Company is duly licensed or qualified to do
business and is in good standing in each jurisdiction in which the properties owned or leased by it or the
operation of its business as currently conducted makes such licensing or qualification necessary except
where the failure to be so licensed or qualified would not have a Material Adverse Effect. All limited
liability company actions taken by the Company in connection with this Agreement and the other
Transaction Documents will be duly authorized on or prior to the Closing.
Section 3.02 Capitalization. The Membership Interests constitute 100% of the total issued
and outstanding Units of the Company. The Membership Interests have been duly authorized and are
validly issued, fully-paid and non-assessable. Upon consummation of the transactions contemplated by
this Agreement, Buyer shall own all of the Membership Interests, free and clear of all Encumbrances
(other than the restrictions set forth in the Company Operating Agreement (including any restrictions on
use, voting, transfer, receipt of income or exercise of any other attributes of ownership set forth in the
Company Operating Agreement) or imposed by federal and state securities laws). The Membership
Interests were issued in compliance with applicable Laws. The Membership Interests were not issued in
violation of the Company Organizational Documents or any other agreement, arrangement, or
commitment to which the Company is a party and are not subject to or in violation of any preemptive or
similar rights of any Person. There are no outstanding or authorized options, warrants, convertible
securities or other rights, agreements, arrangements or commitments of any character relating to any
membership interests in the Company or obligating the Company to issue or sell any membership
interests (including the Membership Interests), or any other interest, in the Company. Other than as set
forth in the Company Organizational Documents, there are no voting trusts, proxies or other agreements
or understandings in effect with respect to the voting or transfer of any of the Membership Interests.
Section 3.03 No Subsidiaries. The Company does not own, or have any interest in any shares
or have an ownership interest in any other Person.
Section 3.04 No Conflicts; Consents. The execution, delivery and performance by the
Company of this Agreement and the other Transaction Documents to which it is a party, and the
consummation of the transactions contemplated hereby and thereby, do not and will not: (a) conflict with
or result in a violation or breach of, or default under, any provision of the Company Organizational
Documents; (b) conflict with or result in a violation or breach of any provision of any Law or
Governmental Order applicable to the Company; (c) except as set forth in Section 3.04 of the Disclosure
Schedule, require the consent of, notice to, or other action by any Person under, conflict in any material
respect with, result in a material violation or breach of, constitute a material default or an event that, with
or without notice or lapse of time or both, would constitute a material default under, result in the
acceleration of any material right under or create in any party the right to accelerate any material right
under, terminate, modify or cancel any Material Contract to which the Company is a party or by which
the Company is bound or to which its properties or assets are subject or any material Permit affecting the
properties, assets or business of the Company; or (d) result in the creation or imposition of any
Encumbrance other than Permitted Encumbrances on any properties or assets of the Company. No
consent, approval, Permit, Governmental Order or declaration from, or filing with, or notice to, any
Governmental Authority is required by the Company in connection with the execution and delivery of this
Agreement and the other Transaction Documents and the consummation of the transactions contemplated
hereby and thereby.
Section 3.05 Financial Statements. Copies of the Company’s (a) audited financial statements
consisting of the balance sheet of the Company as of December 31, 2015 and December 31, 2016 and the
related statements of income and cash flow of the Company for each of the fiscal years then ended (the
“Audited Financial Statements”), and (b) unaudited financial statements consisting of the balance sheet
of the Company as of February 28, 2017 and the related statements of income and cash flow of the
WEST\275532193.26 24
Company for the two month period then ended (the “Interim Financial Statements” and together with
the Audited Financial Statements, the “Financial Statements”) have been delivered to Buyer. The
Financial Statements have been prepared in accordance with GAAP applied on a consistent basis
throughout the period indicated, subject, in the case of the Interim Financial Statements, to normal and
recurring year-end adjustments (the effect of which adjustments will not be materially adverse) and the
absence of notes (that, if presented, would not differ materially from those presented in the Audited
Financial Statements). The Financial Statements have been prepared from the books and records of the
Company, and fairly present in all material respects the financial condition and results of operations of the
Company as of the dates of, and for the periods covered by, the Financial Statements. The balance sheet
of the Company as of December 31, 2016 is referred to herein as the “Balance Sheet” and the date
thereof as the “Balance Sheet Date” and the balance sheet of the Company as of February 28, 2017 is
referred to herein as the “Interim Balance Sheet” and the date thereof as the “Interim Balance Sheet
Date.” Except as set forth on Section 3.05 of the Disclosure Schedule, the Company maintains a standard
system of accounting established and administered in all materials respects in accordance with GAAP.
Section 3.06 Undisclosed Liabilities. The Company has no liabilities, obligations or
commitments of any nature whatsoever, asserted or unasserted, known or unknown, absolute or
contingent, accrued or unaccrued, matured or unmatured, or otherwise (“Liabilities”), except (a)
Liabilities that are adequately reflected or reserved against in the Balance Sheet as of the Balance Sheet
Date, (b) executory Liabilities under Contracts, (c) Liabilities under this Agreement and the Transaction
Documents, (d) other Liabilities that have been incurred in the Ordinary Course of Business since the
Balance Sheet Date and (e) any Liabilities related to the Company’s quarantine donors.
Section 3.07 Absence of Certain Changes, Events, and Conditions. Since the Balance
Sheet Date, and other than in the Ordinary Course of Business, there has not been, with respect to the
Company, any:
(a) Material Adverse Effect;
(b) amendment of the Company Organizational Documents;
(c) split, combination or reclassification of any membership interests of the
Company;
(d) issuance by the Company of any membership interests in the Company, or grant
by the Company of any options, warrants or other rights to purchase or obtain (including upon
conversion, exchange or exercise) any membership interests in the Company;
(e) redemption, purchase or acquisition of any of the Company’s outstanding
Membership Interests;
(f) material change in any method of accounting or accounting practice of the
Company, except as required by GAAP or as disclosed in the notes to the Financial Statements;
(g) material change in the Company’s cash management practices and its policies,
practices and procedures with respect to collection of accounts receivable (including incentives or
discounts for payment of accounts receivable), establishment of reserves for uncollectible
accounts, accrual of accounts receivable, inventory control, prepayment of expenses, payment of
trade accounts payable, accrual of other expenses, deferral of revenue and acceptance of customer
deposits;
WEST\275532193.26 25
(h) entry into any Contract that would constitute a Material Contract;
(i) with respect to any customer of Company, receipt of any written notice that such
customer intends to materially reduce its business with or cease doing business with the
Company;
(j) incurrence, assumption or guarantee by the Company of any Indebtedness except
unsecured current Liabilities incurred in the Ordinary Course of Business;
(k) transfer, assignment, sale or other disposition of any of the assets shown or
reflected in the Balance Sheet outside the Ordinary Course of Business;
(l) transfer, assignment or grant of any license or sublicense of any material rights
under or with respect to any Company Intellectual Property or Company IP Agreements
(including, without limitation, the grant of any exclusive right to any of the Company Intellectual
Property);
(m) disclosure of any Information that the Company previously maintained as
confidential information (other than pursuant to agreements requiring the recipient to maintain the
confidentiality of and preserving all rights of the Company in such confidential information);
(n) experience of any material supply disruption, supplier dispute or slowdown or
stoppage of supply, with respect to any materials used in the CellRight Products;
(o) material damage, destruction or loss (whether or not covered by insurance) to any
assets shown or reflected in the Balance Sheet;
(p) entered into any compromise or settlement of any Action or investigation;
(q) any capital investment in, or any loan to, any other Person;
(r) acceleration, termination, material modification to or cancellation of any Material
Contract to which the Company is a party or by which it is bound;
(s) any capital expenditures in excess of $50,000 in the aggregate;
(t) imposition of any Encumbrance (other than Permitted Encumbrances) upon any
of the Company’s properties or assets shown or reflected in the Balance Sheet, tangible or
intangible;
(u) (i) grant of any bonus to any officer or employee of the Company, whether
monetary or otherwise, in an amount greater than the lesser of ten thousand dollars ($10,000) or
ten percent (10%) of such Person’s base salary as of December 31, 2016 or increase in the wages
or salary of any officer or employee of the Company by an amount greater than the lesser of ten
thousand dollars ($10,000) per year or ten percent (10%) of such Person’s base salary as of
December 31, 2016, or (ii) acceleration of the vesting or payment of any compensation or benefit
for any current or former employee, officer, manager, independent contractor or consultant of the
Company;
(v) hiring or promotion of any person except to fill a vacancy or need in the Ordinary
Course of Business;
WEST\275532193.26 26
(w) termination or closure of any material facility, line of business, or operation of
the Company;
(x) termination of any employee except for cause in the Ordinary Course of
Business;
(y) adoption, modification or termination of any: (i) employment, severance,
retention or other agreement with any current or former employee, officer, manager, independent
contractor or consultant, (ii) Benefit Plan or (iii) collective bargaining or other agreement with a
Union, in each case whether written or oral;
(z) loan by the Company to (or forgiveness of any loan by the Company to) any of
its members or current or former managers, officers and employees;
(aa) entry into a new line of business or abandonment or discontinuance of existing
lines of business;
(bb) adoption of any plan of merger, consolidation, reorganization, liquidation or
dissolution or filing of a petition in bankruptcy under any provisions of federal or state
bankruptcy Law or consent to the filing of any bankruptcy petition against it under any similar
Law;
(cc) purchase, lease or other acquisition of the right to own, use or lease any property
or assets for an amount in excess of fifty thousand dollars ($50,000), individually (in the case of a
lease, per annum) or one hundred thousand dollars ($100,000) in the aggregate (in the case of a
lease, for the entire term of the lease, not including any option term), except for purchases of
inventory or supplies in the Ordinary Course of Business;
(dd) acquisition by merger or consolidation with, or by purchase of a substantial
portion of the assets, stock or other equity of, or by any other manner, any business or any Person
or any division thereof;
(ee) action by the Company to (i) make, change or rescind any material Tax election,
(ii) amend any material Tax Return, (iii) take any position on any Tax Return that is inconsistent
with past practices of the Company with respect thereto, or (iv) other than in the Ordinary Course
of Business, take any action, omit to take any action or enter into any transaction that would have
the effect of materially increasing the Tax liability or materially reducing any Tax asset of the
Company in respect of any Post-Closing Tax Period; or
(ff) entry into any Contract to do any of the foregoing, or otherwise take any action
or omission that would result in any of the foregoing.
Section 3.08 Material Contracts.
(a) Section 3.08(a) of the Disclosure Schedule lists each of the following Contracts
of the Company (such Contracts, together with all Company IP Agreements set forth in Section
3.11(b) of the Disclosure Schedule, being “Material Contracts”):
(i) each Contract of the Company involving aggregate consideration in
excess of fifty thousand dollars ($50,000) and which, in each case, cannot be cancelled
by the Company without penalty or without more than ninety (90) days’ notice;
WEST\275532193.26 27
(ii) all Contracts that require the Company to purchase its total requirements
of any product or service from a third party or that contain an unconditional Company
obligation to take delivery of goods;
(iii) all Contracts (other than purchase orders issued in the Ordinary Course
of Business) for the acquisition of tissue or materials for use with CellRight Products or
products manufactured or processed using the CellRight Processing Technology,
provided that the Contracts for materials (other than tissue, which shall have no dollar
threshold) require aggregate payments by the Company in any Company fiscal year in
excess of $25,000;
(iv) all Contracts with distributors for the distribution of CellRight Products
or products manufactured or processed using the CellRight Processing Technology;
(v) all Contracts that provide for the indemnification by the Company of any
Person or the assumption of any Tax, environmental or other Liability of any Person;
(vi) all Contracts that relate to the acquisition or disposition by the Company
of any business or a material amount of equity or assets of any other Person (whether by
merger, sale of stock or other equity interests, sale of assets or otherwise) where the
Company still has ongoing obligations;
(vii) all broker, distributor, dealer, manufacturer’s representative, franchise,
agency, sales promotion, market research, marketing consulting and advertising Contracts
to which the Company is a party;
(viii) all Contracts for employment or consulting services, including sales
representative agreements and independent contractor agreements, to which the Company
is a party, other than offer letters and unwritten Contracts for at-will employment;
(ix) except for Contracts relating to trade payables and accrued expenses
arising in the Ordinary Course of Business, all Contracts relating to Indebtedness
(including, without limitation, guarantees) of the Company;
(x) all Contracts with any Governmental Authority to which the Company is
a party (“Government Contracts”);
(xi) all Contracts that limit or purport to limit the ability of the Company or,
to the Company’s Knowledge, any employee or consultant of the Company to compete in
any line of business or with any Person or in any geographic area or during any period of
time;
(xii) any Contracts to which the Company is a party that provide for any joint
venture, partnership or similar arrangement by the Company;
(xiii) all Contracts between or among the Company on the one hand and
Sellers or any Affiliate of Sellers (other than the Company) on the other hand;
(xiv) all collective bargaining agreements or Contracts with any Union to
which the Company is a party; and
WEST\275532193.26 28
(xv) any other Contract that is material to the Company and not previously
disclosed pursuant to this Section 3.08(a).
Notwithstanding the foregoing, “Material Contracts” does not include (and
Section 3.08(a) of the Disclosure Schedules need not list) any Contract that has expired or been
terminated and under which no party thereto has any obligations or surviving liabilities, fixed or
contingent, as of the date of this Agreement.
(b) Each Material Contract is a valid and binding agreement of the Company in
accordance with its terms, except as such enforceability may be limited by the Enforceability
Limitations, and is in full force and effect. Neither the Company nor, to the Company’s
Knowledge, any other party thereto is in breach of or default under (or is alleged to be in breach
of or default under) in any material respect, or has provided or received any written notice of any
intention to terminate, any Material Contract. To the Company’s Knowledge, no event or
circumstance has occurred that, with notice or lapse of time or both, would constitute an event of
default under any Material Contract or result in a termination thereof or would cause or permit the
acceleration or other changes of any right or obligation or the loss of any benefit thereunder. A
complete and correct copy of each Material Contract (including all modifications, amendments,
and supplements thereto and waivers thereunder as of the date of this Agreement) have been
made available to Buyer.
Section 3.09 Title to Assets; Real Property.
(a) The Company has (i) good and indefeasible fee simple title to all owned Real
Property, (ii) a valid leasehold interest in all leased Real Property, and (iii) good and valid title to
all personal property and other assets reflected on the Balance Sheet or acquired after the Balance
Sheet Date, other than properties and assets sold or otherwise disposed of in the Ordinary Course
of Business since the Balance Sheet Date. All such properties and assets (including leasehold
interests) are free and clear of Encumbrances except for the following (collectively referred to as
“Permitted Encumbrances”):
(i) Encumbrances set forth in Section 3.09(a) of the Disclosure Schedule;
(ii) Encumbrances for Taxes not yet due and payable or which are being
contested in good faith and for which adequate reserves have been established in the
Financial Statements in accordance with GAAP;
(iii) mechanics, carriers’, workmen’s, repairmen’s or other like
Encumbrances arising or incurred in the Ordinary Course of Business or pursuant to
applicable Law;
(iv) easements, rights of way, zoning ordinances, building codes, and other
similar non-monetary Encumbrances affecting the Real Property which (A) do not
materially interfere with the present use of such Real Property in the conduct of the
Company’s business, (B) are set forth on the owner policy of title insurance previously
obtained by the Company, or (C) are otherwise set forth on a commitment for title
insurance issued to, or obtained by, Buyer;
(v) Encumbrances consisting of pledges or deposits required in the Ordinary
Course of Business in connection with workers’ compensation, unemployment insurance
and other social security legislation or to secure liability to insurance carriers;
WEST\275532193.26 29
(vi) Encumbrances securing capital lease obligations, which capital lease
obligations are recorded on the Balance Sheet in accordance with GAAP;
(vii) any interest or title of a lessor or sublessor, as lessor or sublessor, under
any lease and any precautionary uniform commercial code financing statements filed
under any lease;
(viii) Encumbrances of public record or other imperfections in title which are
not material in character, amount or extent and which do not individually or in the
aggregate materially detract from the value or materially interfere with or prohibit the
present use of the assets or operations of the business (as currently conducted) subject
thereto or affected thereby;
(ix) as of the date of this Agreement but not as of the Closing, all
Encumbrances for Indebtedness; and
(x) other than with respect to owned Real Property, liens arising under
original purchase price conditional sales contracts and equipment leases with third parties
entered into in the Ordinary Course of Business.
(b) Section 3.09(b) of the Disclosure Schedule lists (i) the street address of each
parcel of Real Property and the parcel identification number of each owned parcel of Real
Property; (ii) if such property is leased or subleased by the Company, the landlord under the
lease, the rental amount currently being paid, and the expiration of the term of such lease or
sublease for each leased or subleased property; and (iii) the current use of such property. With
respect to owned Real Property, the Company shall exercise good faith and commercially
reasonable efforts to cooperate with Buyer’s investigation of the condition and suitability of the
Real Property for Buyer’s purposes including, without limitation, delivery to Buyer of true,
complete and correct copies of the deeds and other instruments (as recorded) by which the
Company acquired such Real Property, and copies of all title insurance policies and surveys in the
possession of Sellers or the Company and relating to the Real Property. With respect to Real
Property leased by the Company, the Company has delivered or made available to Buyer true,
complete and correct copies of any leases, including amendments, and/or any other occupancy
agreements affecting the Real Property. Except as set forth on the Disclosure Schedule, the
Company is not a sublessor or grantor under any sublease or other instrument granting to any
other Person any right to the possession, lease, occupancy, or enjoyment of any leased Real
Property. The Company has not received any written notice that the use and operation of the Real
Property in the conduct of the Company’s business violates in any material respect any Law,
covenant, condition, restriction, easement, license, permit, or agreement. There are no Actions
pending, nor to the Company’s Knowledge, threatened against the Real Property or any portion
thereof or interest therein in the nature or in lieu of condemnation or eminent domain
proceedings. The Company has not granted to any Person any options, rights of first refusal or
other purchase rights with respect to the Real Property. Except as set forth on the Disclosure
Schedule, to the Company’s Knowledge, there are no pending appeals or proceedings for the
adjustment of the assessed value of all or any portion of the Real Property.
Section 3.10 Condition and Sufficiency of Assets. Except as set forth in Section 3.10 of the
Disclosure Schedule, the buildings, plants and structures that comprise the Real Property and
improvements thereon are, to the Company’s Knowledge, structurally sound with no patent defects, and
the furniture, fixtures, machinery, equipment, vehicles and other material items of tangible personal
property of the Company are in good operating condition and repair, ordinary wear and tear excepted, and
WEST\275532193.26 30
are adequate for the uses to which they are being put, and none of such furniture, fixtures, machinery,
equipment, vehicles and other material items of tangible personal property of the Company is, and none
of such buildings, plants, structures are, to the Company’s Knowledge, in need of maintenance or repairs
except for ordinary, routine maintenance and repairs. The buildings, plants, structures, furniture, fixtures,
machinery, equipment, vehicles and other material items of tangible personal property currently owned or
leased by the Company, together with all other properties and assets of the Company, are operating under
valid certificates of occupancy and/or licenses, and are sufficient for the continued conduct of the
Company’s business after the Closing in substantially the same manner as conducted prior to the Closing
and constitute all of the material rights, property and assets used in the conduct the business of the
Company as currently conducted.
Section 3.11 Intellectual Property.
(a) Section 3.11(a) of the Disclosure Schedule lists all Company IP Registrations and
the headings of the Company’s standard operating procedures. For the avoidance of doubt,
Section 3.11(a) of the Disclosure Schedule shall not set forth the Company’s standard operating
procedures themselves.
(b) Section 3.11(b) of the Disclosure Schedule lists all Company IP Agreements,
excluding any commercially-available, off-the-shelf software that is licensed by the Company
pursuant to “shrink wrap” licenses, the total annual fees associated with which are less than
$25,000. The Company has provided Buyer with true and complete copies of all such Company
IP Agreements, including all modifications, amendments, and supplements thereto and waivers
thereunder. Each Company IP Agreement is valid and binding on the Company in accordance
with its terms, except as such enforceability may be limited by the Enforceability Limitations, and
is in full force and effect. Neither the Company nor, to the Company’s Knowledge, any other
party thereto is in breach of or default under (or is alleged to be in breach of or default under), or
has provided or received any written notice of breach or default of or any intention to terminate,
any Company IP Agreement.
(c) Except as set forth in Section 3.11(c) of the Disclosure Schedule, the Company is
the sole and exclusive legal and beneficial, and with respect to the Company IP Registrations,
record, owner of all right, title and interest in and to the Company Intellectual Property, and has
the valid right to use all other Company Intellectual Property used in or necessary for the conduct
of the Company’s business or operations as currently conducted, in each case, free and clear of
Encumbrances other than Permitted Encumbrances.
(d) The Company has entered into binding, written agreements with every current
and former employee of the Company (and each consultant and independent contractor of the
Company that provided services to the Company with respect to the Company Intellectual
Property) whereby such employees, consultants or independent contractors assign to the
Company any ownership interest and right they may have in the Intellectual Property developed
in connection with the services provided on behalf of the Company or using confidential
information of the Company or Company Intellectual Property.
(e) The Company Intellectual Property constitutes all Intellectual Property used in
connection with the Company’s business as currently conducted, including the development,
manufacture, commercialization or exploitation of the CellRight Products and all products
manufactured or processed using the CellRight Processing Technology.
WEST\275532193.26 31
(f) The consummation of the transactions contemplated hereunder will not result in
the loss or impairment of or payment of any additional amounts with respect to, nor require the
consent of any other Person in respect of, the Company’s right to own, use or hold for use any
Intellectual Property as owned, use or held for use in the conduct of the Company’s business as
currently conducted.
(g) The Company’s rights in the Company Intellectual Property are valid, subsisting,
and enforceable. The Company has taken commercially reasonable steps to maintain the
Company Intellectual Property and to protect and preserve the confidentiality of all Trade Secrets
included in the Company Intellectual Property, including requiring all Persons having access
thereto to execute written non-disclosure agreements. All Company IP Registrations: (A) have
been duly filed or registered (as applicable) with the applicable Governmental Authority and
properly maintained, including the timely submission of all necessary filings and payment of fees
in accordance with the legal and administrative requirements in the applicable jurisdictions;
(B) have not lapsed or expired or been cancelled or abandoned; and (C) to the Company’s
Knowledge, are valid and in force and, with respect to all applications, are pending and in good
standing. To the Company’s Knowledge, the Company has the sole and exclusive right to bring
actions for infringement, misappropriation, dilution, violation or unauthorized use of the
Company Intellectual Property.
(h) The conduct of the Company’s business as currently and formerly conducted, and
the products, processes and services of the Company, to the Company’s Knowledge, (i) have not
infringed, misappropriated, diluted or otherwise violated and (ii) do not infringe, dilute,
misappropriate or otherwise violate the Intellectual Property or other rights of any Person. The
Company has not received any written claim or notice alleging any such infringement, violation
or misappropriation or received any written offer from a third party to take a license to any
Company Intellectual Property (to the extent enforceable) of any third party in connection with
the Company’s business, CellRight Products, or the CellRight Processing Technology. There is
no pending, or the Company’s Knowledge, overtly threatened claim, interference or opposition of
any third party challenging the ownership or scope of any Company Intellectual Property.
(i) To the Company’s Knowledge, no Person has infringed, misappropriated, diluted
or otherwise violated, or is currently infringing, misappropriating, diluting or otherwise violating,
any Company Intellectual Property.
(j) The Company has taken commercially reasonable measures to maintain in
confidence all Information comprising a part of the Company Intellectual Property. The
Company operates and enforces commercially reasonable procedures designed to ensure the
recording and maintenance of all Company Intellectual Property. The Company has taken
commercially reasonable measures to prevent the unauthorized disclosure or use of the
Information included in the Company Intellectual Property. To the Company’s Knowledge, there
has been no unauthorized disclosure or use of the Information included in the Company
Intellectual Property.
(k) The Company restricts access to Trade Secrets to a limited number of Persons
that are necessary to conduct the Company business as currently conducted and all such Persons
having access thereto have executed binding written non-disclosure and confidentiality
agreements. The disclosure of such Trade Secrets to each Person is limited in scope to the
information necessary for such Person to conduct the services required and directed by Company.
Other than those individuals set forth on Section 3.11(k) of the Disclosure Schedules, the
Company has not disclosed the Trade Secrets for the CellRight Processing Technology to any
WEST\275532193.26 32
Person. Section 3.11(k) of the Disclosure Schedules sets forth, by unique identifier number and
name, the identification of all CellRight Processing Technology that has been maintained by the
Company as a Trade Secret. The Company’s Trade Secrets are fully documented in all material
respects in a Company standard operating procedure (each a “Trade Secret SOP”) that is
maintained and stored by the Company with restricted access by only those individuals listed on
Section 3.11(k) of the Disclosure Schedules. Each Trade Secret SOP: (i) is, and has been,
maintained and updated to reflect in all material respects the current processing that is performed
by the Company as of the date hereof, (ii) provides sufficient detail for a person trained on the
CellRight Processing Technologies to be able to perform such process, without the need for
additional assistance, set forth in the Trade Secret SOP to manufacture the product covered by
such Trade Secret SOP as such product is currently sold by the Company, and (iii) has not been
disclosed to any third party other than the individuals listed on Section 3.11(k) of the Disclosure
Schedules.
(l) There are no Actions (including any oppositions, interferences or re-
examinations) settled, pending or, to the Company’s Knowledge, threatened (including in the
form of offers to obtain a license): (i) alleging any infringement, misappropriation, dilution or
violation of the Intellectual Property of any Person by the Company; (ii) challenging the validity,
enforceability, registrability, or ownership of any Company Intellectual Property or the
Company’s rights with respect to any Company Intellectual Property; or (iii) by the Company or
any other Person alleging any infringement, misappropriation, dilution or violation by any Person
of the Company Intellectual Property. The Company is not subject to any outstanding or
prospective Governmental Order (including any motion or petition therefor) that does or would
restrict or impair the use of any Company Intellectual Property as currently used by the Company.
Section 3.12 Inventory. All inventory of the Company included in the Current Assets of the
Company, whether or not reflected on the Balance Sheet, will, as of the Closing Date, consist of a quality
and quantity usable and salable in the Ordinary Course of Business, except for obsolete, excess, damaged,
defective or slow-moving items which are or will be written off by the Company in the Ordinary Course
of Business prior to the Closing Date. All such inventory is owned by the Company free and clear of all
Encumbrances other than Permitted Encumbrances, and no such inventory is held on a consignment basis.
All such inventory (a) complies in all material respects with all applicable specifications and all
applicable Law, including all regulatory requirements and Environmental Laws, (b) has been
manufactured, produced, packaged, labeled, stored and loaded for shipment in accordance in all material
respects with all applicable Laws, specifications of the Company and GTP, and (c) is free of any material
defect or deficiency, in each case as such material or product is supplied to the Company in the Ordinary
Course of Business. For the purposes of this Agreement, “GTP” means the good tissue practices required
by the FDA under 21 CFR 1271, Subpart D, and applicable guidance documents, as amended from time
to time. The quantities of each item of such inventory (whether raw materials, work-in-process or
finished goods) are not excessive, but are reasonable in the present circumstances of the Company. For
the avoidance of doubt, the Company’s quarantine donors are not considered inventory of the Company
for purposes of this Agreement.
Section 3.13 Accounts Receivable. The accounts receivable of the Company included in the
Current Assets of the Company, whether or not reflected on the Balance Sheet, will (a) have arisen from
bona fide transactions entered into by the Company involving the sale of goods or the rendering of
services in the Ordinary Course of Business; (b) constitute only valid, undisputed claims of the Company
not subject to claims of set-off or other defenses or counterclaims other than normal cash discounts
accrued in the Ordinary Course of Business; and (c) subject to a reserve for uncollectable accounts
applied in the calculation of the amount of Current Assets of the Company and the Closing Working
Capital will, to the Company’s Knowledge, be collected within ninety (90) days after billing.
WEST\275532193.26 33
Section 3.14 Customers, Suppliers and Distributors.
(a) Section 3.14(a) of the Disclosure Schedule sets forth (i) (x) each customer who
has paid aggregate consideration to the Company for goods or services rendered in an amount
greater than or equal to fifty thousand dollars ($50,000) for each of the two (2) most recently
completed Company fiscal years and (y) each distributor for CellRight Products (collectively, the
“Material Customers”); and (ii) the amount of consideration paid by each Material Customer to
the Company during such periods. Except as set forth in Section 3.14(a) of the Disclosure
Schedule, since January 1, 2015, the Company has not received any written notice that any
Material Customer, and to the Company’s Knowledge, no facts or circumstances exist to the
effect that any such Material Customer, has or will cease, or materially decrease the rate of,
purchasing goods and services from the Company.
(b) Section 3.14(b) of the Disclosure Schedule sets forth (i) (x) each supplier to
whom the Company has paid consideration for goods or services rendered in an amount greater
than or equal to fifty thousand dollars ($50,000) for each of the two (2) most recently completed
Company fiscal years (collectively, the “Material Suppliers”) and (y) each supplier that
Company has obtained the supply of any biological materials; and (ii) the amount of purchases by
the Company from each Material Supplier during such periods. Except as set forth in Section
3.14(b) of the Disclosure Schedule, since January 1, 2015, the Company has not received any
written notice that any Material Supplier, and to the Company’s Knowledge, no facts or
circumstances exist to the effect that any such Material Supplier, has or will cease, or materially
decrease the rate of, supplying goods and services to the Company.
Section 3.15 Insurance. Section 3.15 of the Disclosure Schedule sets forth a true and
complete list of all current policies or binders of fire, liability, product liability, umbrella liability, real and
personal property, workers’ compensation, vehicular, directors’ and officers’ liability, fiduciary liability
and other casualty and property insurance maintained by the Company and relating to the assets, business,
operations, employees, officers and managers of the Company (collectively, the “Insurance Policies”)
and true and complete copies of such Insurance Policies have been made available to Buyer. Such
Insurance Policies are in full force and effect and shall remain in full force and effect following the
consummation of the transactions contemplated by this Agreement. The Company has not received any
written notice of cancellation of, premium increase with respect to, or alteration of coverage under, any of
such Insurance Policies. All premiums due on such Insurance Policies have either been paid or, if due
and payable prior to Closing, will be paid prior to Closing in accordance with the payment terms of each
Insurance Policy. Other than the Company’s product liability insurance and workers’ compensation
insurance, the Company’s insurance policies do not provide for any retrospective premium adjustment or
other experience based liability on the part of the Company. All such Insurance Policies (a) are valid and
binding in accordance with their terms; (b) are provided by carriers who the Company believes are
financially solvent; and (c) have not been subject to any lapse in coverage. Except as set forth on Section
3.15 of the Disclosure Schedule, there are no claims related to the business of the Company pending
under any such Insurance Policies as to which coverage has been questioned, denied or disputed or in
respect of which there is an outstanding reservation of rights. The Company is not in default under, or
has otherwise failed to comply with, in any material respect, any provision contained in any such
Insurance Policy. The Insurance Policies are of the type and in the amounts customarily carried by
Persons (of similar size to the Company) conducting a business similar to the Company and are sufficient
for compliance with all applicable Laws and Contracts to which the Company is a party or by which it is
bound.
WEST\275532193.26 34
Section 3.16 Legal Proceedings; Governmental Orders.
(a) Except as set forth in Section 3.16(a) of the Disclosure Schedule, there are no
Actions pending or, to the Company’s Knowledge, threatened (a) against or by the Company
affecting any of its properties or assets; or (b) against or by the Company that challenge or seek to
prevent, enjoin or otherwise delay the consummation of the transactions contemplated by this
Agreement. To the Company’s Knowledge, there are no investigations or audits pending against
the Company.
(b) Except as set forth in Section 3.16(b) of the Disclosure Schedule, there are no
outstanding Governmental Orders in effect and no unsatisfied judgments, penalties or awards in
respect of any Action against the Company or any of its properties or assets. The Company is in
compliance with the terms of each Governmental Order set forth in Section 3.16(b) of the
Disclosure Schedule.
Section 3.17 Product Liability; Warranty. No product liability, recall or warranty (whether
based in contract or tort and whether relating to personal injury, including death, property damage or
economic loss) are pending or have been settled, terminated or received by the Company in the three (3)
years prior to the Closing Date and, to the Company’s Knowledge, no such claims have been overtly
threatened against the Company, in each case relating to, or arising from, the sale or use of the CellRight
Products or any products manufactured using the CellRight Processing Technology. There is no
judgment, order or decree outstanding against the Company relating to product liability claims with
respect to the CellRight Products or any products manufactured or processed using the CellRight
Processing Technology. Except as set forth in Schedule 3.17 of the Disclosure Schedules, the Company
has not made any warranties with respect to the CellRight Products or any products manufactured or
processed using the CellRight Processing Technology.
Section 3.18 Regulatory Matters.
(a) All CellRight Products and all products manufactured or processed using the
CellRight Processing Technology have been researched, developed, tested, manufactured,
handled, labeled, packaged, supplied, promoted, co-promoted, distributed, marketed,
commercialized, stored (including the maintenance and storage of all tissues, donor tissues and
donor record files) and sold by or on behalf of the Company, as applicable, in compliance in all
material respects with all Health Laws. For purposes of this Agreement, (i) the term “Health
Laws” means applicable Laws and guidelines relating to the research, development, testing,
manufacture, handling, production, preparation, propagation, compounding, conversion, pricing,
labeling, packaging, marketing, promotion, sale or distribution of CellRight Products and
products manufactured or processed using the CellRight Processing Technology, including the
federal Food, Drug and Cosmetic Act (21 U.S.C. § 321 et seq.), the federal False Claims Act (31
U.S.C. § 3729 et seq.) (“False Claims Act”), the federal Anti-Kickback Statute (42 U.S.C.
§ 1320a-7b) (the “Anti-Kickback Statute”), the Health Insurance Portability and Accountability
Act of 1996, as amended by the Health Information Technology for Economic and Clinical
Health Act, and its implementing regulations, standards and security standards of 45 C.F.R. Parts
160 and 164 to protect the privacy and security of certain individually identifiable protected
health information (collectively, “HIPAA”), Civil Monetary Penalty Law (42 U.S.C. § 1320a-7a)
and exclusion authorities, the applicable requirements of Medicare, Medicaid and other
Governmental Authority healthcare programs, including the Veterans Health Administration and
U.S. Department of Defense healthcare and contracting programs, and the analogous Laws of any
federal, state, local, or foreign jurisdiction applicable to the Company, and (ii) the term “Health
WEST\275532193.26 35
Authorities” means the Governmental Authorities which administer Health Laws, including the
FDA, and all foreign counterparts applicable to the Company.
(b) The Company has made available to Buyer as of the date of this Agreement
complete and correct copies of all documentation (other than routine correspondence) that the
Company submitted to the FDA with respect to the CellRight Products and all products
manufactured or processed using the CellRight Processing Technology and all reports and notices
from the FDA and U.S. Customs and Border Protection, and all foreign counterparts sent to the
Company.
(c) The Company has not received written notice that it is, or has been, subject to
any investigation related to the CellRight Products, the CellRight Processing Technology or the
Company, and, to the Company’s Knowledge, no such investigation has been overtly threatened,
in each case by (i) the FDA, (ii) the Department of Health and Human Services Office of
Inspector General or Department of Justice pursuant to the Anti-Kickback Statute or the False
Claims Act, or (iii) state attorneys general pursuant to state false claim or fraud laws.
(d) The Company does not submit any claims to any commercial insurance plan or
any health care program administered or funded, in whole or in part, by the government of the
United States of America, including Medicare, Medicaid and TRICARE programs (described in
Title XVIII of the SSA, Title XIX of the SSA, and 10 U.S.C. Chapter 55, respectively), or any
other Governmental Authority, for reimbursement of any healthcare services provided by
Company.
(e) The Company has complied in all material respects with all applicable security
and privacy standards under (i) HIPAA, (ii) state Laws governing the confidentiality, privacy,
security and protection of individually identifiable personal information, and (iii) other applicable
privacy Laws, in each case as related to the CellRight Products and any products manufactured or
processed using the CellRight Processing Technology.
(f) The Company has not received any written notice of, nor does the Company
believe, based solely on any oral discussion between any Key Employee and any Governmental
Authority that there is any basis for, any investigations, adverse third party allegations or actions,
claims, proceedings, demands, complaints, hearings, demand letters, warning letters, or untitled
letters against the Company for failure to comply with any Health Law, including any pending or,
to the Company’s Knowledge, overtly threatened action against the Company or any of its
officers or employees (in their capacity as such), in any court or by or before any Governmental
Authority, with respect to the CellRight Products or any products manufactured or processed
using the CellRight Processing Technology. Except as set forth on Section 3.18(f) of the
Disclosure Schedule, the Company has not received any written notice that any Health Authority
has recommended, initiated, or threatened to initiate, any action to place on clinical hold,
suspend, withdraw approval for, or terminate any Investigational New Drug application or any
comparable foreign regulatory application sponsored by the Company, in each case only as
related to the CellRight Products or any products manufactured or processed using the CellRight
Processing Technology.
(g) Neither the Company, any Seller, nor, to the Company’s Knowledge, any officer,
employee, agent or contractor of the Company has made an untrue statement of material fact or
fraudulent statement of material fact to any Health Authority, failed to disclose a material fact
required to be disclosed to any Health Authority or any other Governmental Authority, or
committed an act, made a statement, or failed to make a statement, including with respect to any
WEST\275532193.26 36
scientific data or information, that, at the time such disclosure was made or failure to disclose
occurred, would reasonably be expected to provide a basis for the Health Authority or any other
Governmental Authority to invoke the FDA Application Integrity Policy respecting “Fraud,
Untrue Statements of Material Facts, Bribery and Illegal Gratuities,” set forth in FDA’s
Compliance Policy Guide Sec. 120.100, in each case as related to the CellRight Products or any
products manufactured or processed using the CellRight Processing Technology. Neither the
Company, any Seller, nor, to the Company’s Knowledge, any officer of the Company has been
debarred or convicted of any crime or engaged in any conduct for which debarment is mandated
by 21 U.S.C. § 335a(a) or authorized by 21 U.S.C. § 335a(b). Neither the Company, any Seller,
nor, to the Company’s Knowledge, any officer of the Company has been excluded or convicted of
any crime or engaged in any conduct for which such Person could be excluded from participating
in the Federal health care programs under Section 1128 of the Social Security Act of 1935, as
amended.
(h) Neither the Company nor, to the Company’s Knowledge, any of its
manufacturers of the CellRight Products or products manufactured or processed with the
CellRight Processing Technology have received any Form 483 observations, warning letters,
notice of violation letters, untitled letters or other written communications from a Governmental
Authority regarding violations or potential violations of Laws related to the CellRight Products or
any products manufactured or processed using the CellRight Processing Technology that would
reasonably be expected to adversely affect the manufacture, distribution, or the marketing of the
CellRight Products or any product manufactured or processed using the CellRight Processing
Technology. No CellRight Product or any product manufactured or processed with the CellRight
Processing Technology has been recalled, suspended, or discontinued by the Company, nor has
the Company received any written notice from any Health Authority that it has commenced, or
threatened to initiate, any action to withdraw approval, place sales or marketing restrictions on or
request the recall of any CellRight Product or any product manufactured or processed with the
CellRight Processing Technology, or written notice that it has commenced or threatened to
initiate any action to enjoin or place restrictions on the products or distribution of the CellRight
Products or any product manufactured or processed using the CellRight Processing Technology.
Section 3.19 Compliance with NOTA. To the Company’s Knowledge, the Company has not
acquired, received or otherwise used in connection with any CellRight Product or product manufactured
or processed using the CellRight Processing Technology any tissue or materials for valuable
consideration or otherwise in violation of 42 U.S.C. § 274e (National Organ Transplant Act).
Section 3.20 Anti-Corruption Laws. Neither the Company, its Affiliates, officers or
directors, nor, to the Company’s Knowledge, the Company’s distributors, representatives or agents, have
made, directly or indirectly, any offer, payment, promise to pay, loan, or gift of anything of value to a
Government Official, to an immediate relative of a Government Official, or to any other person while
knowing or having reasons to suspect that any part of such offer, payment, loan or gift will be given or
promised to a Government Official, for the purpose of obtaining or retaining business on behalf of or for
the benefit of Company, or where the offer, payment, loan or gift of which would (i) violate any Law; (ii)
be contrary to or in violation of the principles set forth in the United Nations Convention Against
Corruption that entered into force on December 14, 2005; (iii) violate Foreign Corrupt Practices Act (15
USC §78dd-1, et seq.) (“FCPA”) or the UK Bribery Act; or (iv) cause any of the parties or any of their
parent or affiliated companies (or any of their officers, directors, employees or agents) to be in violation
of the FCPA. No ownership interest in the Company Group, other than an immaterial one, is or has been
directly or indirectly held or controlled by a Government Official or any immediate relative of a
Government Official. To the Company’s Knowledge, no member of the Distributor Group is or has been
a Government Official or an immediate relative of a Government Official, and no ownership interest in
WEST\275532193.26 37
any member of Distributor Group, other than an immaterial one, is or has been directly or indirectly held
or controlled by a Government Official or any immediate relative of a Government Official. As used in
this Section 3.20: “Government Official” means: any official, employee, agent, advisor or consultant of
a non-U.S. government or any federal, regional or local department, agency, state-owned enterprise or
corporation or any other instrumentality thereof; any official or employee or agent of a public
international organization; or any official or employee or agent of a political party or candidate for
political office. “Company Group” means collectively, the Company and its Affiliates, officers, directors
and employees. “Distributor Group” means collectively, all distributors used by the Company to
distribute CellRight Product or product manufactured or processed using the CellRight Processing
Technology and their affiliates and authorized local agent(s), all suppliers, co-venturers, subcontractors of
the Company, and the officers, directors, employees, agents, assigns, representatives, managers,
consultants, invitees, insurers and subrogees of all of the foregoing.
Section 3.21 Customer Inventory. Since January 1, 2016, the Company has not (a)
intentionally induced or encouraged or attempted to induce or encourage any customers (including
wholesalers and distributors) to purchase or maintain inventory of the CellRight Products in quantities in
excess of their current needs, (b) shipped CellRight Products to customers substantially in excess of
historic levels or otherwise, through special payment incentives or otherwise, or (c) changed any practice
which would reasonably be expected to result in decreased orders from customers, as compared to the
normal historical orders from such customers. To the Company’s Knowledge, there exists no build-up of
any customer’s inventory level beyond such customer’s normal historical inventory level.
Section 3.22 Compliance With Laws; Permits.
(a) Except as set forth in Section 3.22(a) of the Disclosure Schedule, the Company
has since January 1, 2014, complied, and is now complying, in all material respects with all Laws
applicable to it or its business, employees, independent contractors, properties or assets.
(b) All Permits required for the Company to conduct its business have been obtained
by it and are valid and in full force and effect. All fees and charges with respect to such Permits
as of the date hereof have been paid in full. Section 3.22(b) of the Disclosure Schedule lists all
Permits issued to the Company as of the date hereof, including the name or a description of the
Permits and their respective dates of issuance and expiration. To the Company’s Knowledge, no
event has occurred that, with or without notice or lapse of time or both, would reasonably be
expected to result in the revocation, suspension, lapse, or limitation of any Permit set forth in
Section 3.22(b) of the Disclosure Schedule.
Section 3.23 Environmental Matters.
(a) The Company is currently and since January 1, 2012, has been in compliance in
all material respects with all Environmental Laws and has not received from any Person any: (i)
Environmental Notice or Environmental Claim; or (ii) written request for information pursuant to
Environmental Law, which, in each case, either remains pending or unresolved, or is the source
of ongoing obligations or requirements as of the Closing Date.
(b) The Company has obtained and is in material compliance with all Environmental
Permits (each of which is disclosed in Section 3.23(b) of the Disclosure Schedule) necessary for
the ownership, lease, operation or use of the business or assets of the Company and all such
Environmental Permits are in full force and effect and shall be maintained in full force and effect
by the Company through the Closing Date in accordance with Environmental Law. The
WEST\275532193.26 38
consummation of the transactions contemplated by this Agreement will not result in the loss of
any Environmental Permit.
(c) No real property currently or formerly owned, operated, or leased by the
Company is listed on, or has been proposed for listing on, the National Priorities List (or
CERCLIS) under CERCLA, or any similar state list.
(d) There has been no Release of any Hazardous Materials by the Company in
contravention of Environmental Law with respect to the business or assets of the Company or any
real property currently or formerly operated or leased by the Company, and neither the Company
nor Sellers have received an Environmental Notice that any real property currently or formerly
owned, operated or leased in connection with the business of the Company (including soils,
groundwater, surface water, buildings and other structure located on any such real property) has
been contaminated with any Hazardous Material which could reasonably be expected to result in
an Environmental Claim against, or a violation of Environmental Law or term of any
Environmental Permit by, Sellers or the Company.
(e) Except as otherwise disclosed in any Phase I environmental site assessment
delivered to, or obtained by or on behalf of, Buyer prior to Closing, Section 3.23(e) of the
Disclosure Schedule contains a complete and accurate list of all active or abandoned aboveground
or underground storage tanks used or operated by the Company.
(f) Section 3.23(f) of the Disclosure Schedule contains a complete and accurate list
of all off-site Hazardous Materials treatment, storage, or disposal facilities or locations used by
the Company as to which the Company may retain liability.
(g) The Company has not retained or assumed, by contract or operation of Law, any
liabilities or obligations of third parties under Environmental Law.
(h) The Company has provided or otherwise made available to Buyer and listed in
Section 3.23(h) of the Disclosure Schedule all environmental reports, studies, audits, records,
sampling data, site assessments, risk assessments, economic models and other similar documents
with respect to any currently or formerly owned, operated or leased real property which are in the
possession or control of the Sellers or the Company and relate to compliance with Environmental
Laws, Environmental Claims or an Environmental Notice or the Release of Hazardous Materials.
The Company has provided or otherwise made available to Buyer any and all material documents
concerning planned or anticipated capital expenditures required to reduce, offset, limit or
otherwise control pollution and/or emissions, manage waste or otherwise ensure compliance with
current or future Environmental Laws (including, without limitation, costs of remediation,
pollution control equipment and operational changes).
Section 3.24 Employee Benefit Matters.
(a) Section 3.24(a) of the Disclosure Schedule contains a true and complete list of
each pension, benefit, retirement, life, retiree life, compensation, employment, consulting,
advisor, profit-sharing, deferred compensation, incentive, bonus, performance award, phantom
equity or other equity, stock option, stock purchase, profit sharing, change in control, retention,
severance, vacation, paid time off, welfare, health, retiree medical, disability insurance,
dependent care, fringe-benefit and other similar agreement, plan, policy, program or arrangement
(and any amendments thereto), in each case whether or not reduced to writing and whether
funded or unfunded, including each “employee benefit plan” within the meaning of Section 3(3)
WEST\275532193.26 39
of ERISA, whether or not tax-qualified and whether or not subject to ERISA, which is or has
been maintained, sponsored, contributed to, or required to be contributed to by the Company for
the benefit of any current or former employee, officer, manager, director, retiree, independent
contractor or consultant of the Company or any spouse or dependent of such individual, or under
which the Company or any of its ERISA Affiliates has or may have any Liability, or with respect
to which Buyer or any of its Affiliates would reasonably be expected to have any Liability,
contingent or otherwise (as listed on Section 3.24(a) of the Disclosure Schedule, each, a “Benefit
Plan”). The Company has separately identified in Section 3.24(a) of the Disclosure Schedule (i)
each Benefit Plan that contains a change in control provision and (ii) each Benefit Plan that is
maintained, sponsored, contributed to, or required to be contributed to by the Company primarily
for the benefit of employees outside of the United States (a “Non-U.S. Benefit Plan”).
(b) With respect to each Benefit Plan, the Company has made available to Buyer
accurate, current and complete copies of each of the following: (i) where the Benefit Plan has
been reduced to writing, the plan document together with all amendments; (ii) where the Benefit
Plan has not been reduced to writing, a written summary of all material plan terms; (iii) where
applicable, any trust agreements or other funding arrangements, custodial agreements, insurance
policies and contracts, administration agreements and similar agreements, and investment
management or investment advisory agreements, now in effect or required in the future as a result
of the transactions contemplated by this Agreement; (iv) any summary plan descriptions and
summaries of material modifications relating to any Benefit Plan; (v) in the case of any Benefit
Plan that is intended to be qualified under Section 401(a) of the Code, the most recent
determination, opinion or advisory letter from the Internal Revenue Service; (vi) in the case of
any Benefit Plan for which a Form 5500 is required to be filed, the two most recently filed Form
5500, with schedules and financial statements attached (if applicable); (vii) actuarial reports
received for any Benefit Plans with respect to the two most recently completed plan years; (viii)
the most recent nondiscrimination tests performed under the Code; and (ix) material notices,
letters or other correspondence received since January 1, 2015 from the Internal Revenue Service,
Department of Labor, Pension Benefit Guaranty Corporation or other Governmental Authority
relating to the Benefit Plan.
(c) Except as set forth in Section 3.24(c) of the Disclosure Schedule, each Benefit
Plan and related trust (other than any multiemployer plan within the meaning of Section 3(37) of
ERISA (each a “Multiemployer Plan”)) has been established, administered and maintained in all
material respects in accordance with its terms and in compliance in all material respects with all
applicable Laws. Each Benefit Plan that is intended to be qualified under Section 401(a) of the
Code (a “Qualified Benefit Plan”) has received a favorable and current determination or opinion
letter from the Internal Revenue Service, or with respect to a prototype plan, can rely on an
opinion letter from the Internal Revenue Service to the prototype plan sponsor, to the effect that
such Qualified Benefit Plan is so qualified and that the plan and the trust related thereto are
exempt from federal income taxes under Sections 401(a) and 501(a), respectively, of the Code
and to the Company’s Knowledge, nothing has occurred that could reasonably be expected to
adversely affect the qualified status of any Qualified Benefit Plan. To the Company’s
Knowledge, nothing has occurred with respect to any Benefit Plan that has subjected or could
reasonably be expected to subject the Company or any of its ERISA Affiliates or, with respect to
any period on or after the Closing Date, Buyer or any of its Affiliates, to a penalty under Section
502 of ERISA or to tax or penalty under Section 4975 of the Code. Except as set forth in Section
3.24(c) of the Disclosure Schedule, all benefits, contributions and premiums relating to each
Benefit Plan have been timely paid in accordance with the terms of such Benefit Plan and all
applicable Laws, and all benefits accrued under any unfunded Benefit Plan have been paid,
WEST\275532193.26 40
accrued or otherwise adequately reserved to the extent required by, and in accordance with,
GAAP.
(d) Neither the Company nor any of its ERISA Affiliates has (i) incurred or
reasonably expects to incur, either directly or indirectly, any material liability under Title I or
Title IV of ERISA or related provisions of the Code or similar local Law relating to employee
benefit plans; (ii) failed to timely pay premiums to the Pension Benefit Guaranty Corporation; or
(iii) engaged in any transaction which would give rise to liability under Section 4069 or Section
4212(c) of ERISA.
(e) With respect to each Benefit Plan (i) within the last six (6) years no such plan is
or has been a Multiemployer Plan or a “multiple employer plan” within the meaning of Section
413(c) of the Code or a “multiple employer welfare arrangement” (as defined in Section 3(40) of
ERISA); (ii) no Action has been initiated by the Pension Benefit Guaranty Corporation to
terminate any such plan or to appoint a trustee for any such plan; (iii) no such plan is subject to
the minimum funding standards of Section 412 of the Code or Title IV of ERISA, and none of the
assets of the Company or any ERISA Affiliate is, or could reasonably be expected to become, the
subject of any lien arising under Section 302 of ERISA or Section 412(a) of the Code/except as
set forth in Section 3.25(e) of the Disclosure Schedule, no such plan is subject to the minimum
funding standards of Section 412 of the Code or Title IV of ERISA, and no plan listed in Section
3.25(e) of the Disclosure Schedule has failed to satisfy the minimum funding standards of Section
302 of ERISA or Section 412 of the Code; and (iv) no “reportable event,” as defined in Section
4043 of ERISA, has occurred with respect to any such plan.
(f) Except as set forth in Section 3.24(f) of the Disclosure Schedule (i) each Benefit
Plan can be amended, terminated, or otherwise discontinued after the Closing in accordance with
its terms, without material Liabilities to Buyer, the Company or any of their Affiliates other than
ordinary administrative expenses typically incurred in a termination event and (ii) the Company
has no commitment or obligation and has not made any representations to any employee, officer,
manager, independent contractor, or consultant, whether or not legally binding, to adopt, amend,
modify, or terminate any Benefit Plan or any collective bargaining agreement, in connection with
the consummation of the transactions contemplated by this Agreement or otherwise.
(g) Except as set forth in Section 3.24(g) of the Disclosure Schedule and other than
as required under Section 601 et. seq. of ERISA or other applicable Law, no Benefit Plan
provides post-termination or retiree welfare benefits to any individual for any reason, and neither
the Company nor any of its ERISA Affiliates has any Liability to provide post-termination or
retiree welfare benefits to any individual or ever represented, promised or contracted to any
individual that such individual would be provided with post-termination or retiree welfare
benefits.
(h) Except as set forth in Section 3.24(h) of the Disclosure Schedule, there is no
pending or, to the Company’s Knowledge, threatened Action relating to a Benefit Plan (other than
routine claims for benefits), and to the Company’s Knowledge no Benefit Plan has within the
three (3) years prior to the date hereof been the subject of an examination or audit by a
Governmental Authority or the subject of an application or filing under or is a participant in, an
amnesty, voluntary compliance, self-correction or similar program sponsored by any
Governmental Authority.
(i) There has been no amendment to, announcement by the Company or any of its
Affiliates relating to, or change in employee participation or coverage under, any Benefit Plan or
WEST\275532193.26 41
collective bargaining agreement that would increase the annual expense of maintaining such plan
above the level of the expense incurred for the most recently completed fiscal year with respect to
any manager, officer, employee, independent contractor or consultant, as applicable. Neither the
Company, nor any of its Affiliates have any commitment or obligation or have made any
representations to any manager, officer, employee, independent contractor, or consultant, whether
or not legally binding, to adopt, amend, modify, or terminate any Benefit Plan or any collective
bargaining agreement.
(j) Each Benefit Plan that is subject to Section 409A of the Code has been
administered in all material respects in compliance with its terms and the operational and
documentary requirements of Section 409A of the Code and all applicable regulatory guidance
(including notices, rulings, and proposed and final regulations) thereunder. The Company does
not have any obligation to gross up, indemnify, or otherwise reimburse any individual for any
excise taxes, interest, or penalties incurred pursuant to Section 409A of the Code.
(k) Each individual who is classified by the Company as an independent contractor,
consultant, or advisor has been properly classified for purposes of participation and benefit
accrual under each Benefit Plan.
(l) Except as set forth in Section 3.24(l) of the Disclosure Schedule, neither the
execution of this Agreement nor any of the transactions contemplated by this Agreement will
(either alone or in conjunction with the occurrence of any additional or subsequent events): (i)
entitle any current or former manager, officer, employee, independent contractor or consultant of
the Company to severance pay or any other payment; (ii) accelerate the time of payment, funding
or vesting, or increase the amount of compensation due to any such individual; (iii) limit or
restrict the right of the Company to merge, amend or terminate any Benefit Plan; (iv) increase the
amount payable under or result in any other material obligation pursuant to any Benefit Plan; (v)
result in “excess parachute payments” within the meaning of Section 280G(b) of the Code; or (vi)
require a “gross-up” or other payment to any “disqualified individual” within the meaning of
Section 280G(c) of the Code.
Section 3.25 Employment Matters.
(a) Section 3.25(a) of the Disclosure Schedule contains a list of all persons who are
employees, independent contractors or consultants of the Company as of the date hereof,
including any employee who is on a leave of absence of any nature, paid or unpaid, authorized or
unauthorized, and sets forth for each such individual the following: (i) name; (ii) title or position
(including whether full or part time); (iii) current annual base compensation rate; (iv)
commission, bonus or other incentive-based compensation; (v) location; and (vi) a description of
the fringe benefits provided to each such individual as of the date hereof. Except as set forth in
Section 3.25(a) of the Disclosure Schedule, as of the date hereof, all compensation, including
wages, commissions and bonuses, payable to all employees, independent contractors or
consultants of the Company for services performed on or prior to the date hereof have been paid
in full (or accrued in full on the Company’s books and records) and there are no outstanding
agreements, understandings or commitments of the Company with respect to any compensation,
commissions or bonuses.
(b) The Company is in compliance with all Laws respecting employment, including
wages and hours of work, meal and rest break laws, expense reimbursement laws, discrimination,
harassment, retaliation, disability, civil rights, immigration, pay equity, terms and conditions of
employment, worker classification (including the proper classification of workers as exempt vs.
WEST\275532193.26 42
nonexempt and workers as independent contractors or consultants), the Fair Labor Standards Act
and its state law equivalents, Title VII and its state law equivalents, all laws governing leaves of
absence including the Family Medical Rights Acts and its state law equivalents, and occupational
health and safety, except for such violations which have not had, and would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect. The Company has
materially complied with all recordkeeping laws including but not limited to all accountings
related to wages, sick pay, vacation accrual, and time records.
(c) The Company has withheld all amounts required by Law or by agreement to be
withheld from the wages, salaries, and other payments to employees; and is not liable for any
arrears of wages, compensation, Taxes, penalties or other sums for failure to comply with any of
the foregoing (including commissions, bonuses, overtime, vacation pay, paid time off or other
compensation). The Company has paid in full to all employees, independent contractors and
consultants all wages, salaries, commissions, bonuses, benefits and other compensation due to or
on behalf of such employees, independent contractors and consultants. The Company is not
liable for any payment to any trust or other fund or to any Governmental Authority, with respect
to unemployment compensation benefits, social security or other benefits or obligations for
employees (other than routine payments to be made in the normal course of business and
consistently with past practice). There are no Actions pending or, to the Company’s Knowledge,
threatened, nor to the Company’s Knowledge are there any pending or threatened (in writing)
investigations or audits against Company by any of its employees, former employees or
contractors, or any Governmental Authority.
(d) Except as set forth in Section 3.25(b) of the Disclosure Schedule, the Company is
not, and has not been for the past five (5) years, a party to, bound by, or negotiating any collective
bargaining agreement or other Contract with a union, works council or labor organization
(collectively, “Union”), and there is not, and has not been for the past five (5) years, any Union
representing or purporting to represent any employee of the Company, and, to the Company’s
Knowledge, no Union or group of employees is seeking or has sought to organize employees for
the purpose of collective bargaining. Except as set forth in Section 3.25(b) of the Disclosure
Schedule, there has never been, nor, to the Company’s Knowledge, has there been any threat of,
any strike, slowdown, work stoppage, lockout, concerted refusal to work overtime or other
similar labor disruption or dispute affecting the Company or any of its employees. To the
Company’s Knowledge, the Company is not engaged in any unfair labor practice and no unfair
labor practice complaint, grievance or arbitration proceeding is pending or threatened against the
Company. The Company has no duty to bargain with any Union.
(e) All employees of the Company classified as exempt under the Fair Labor
Standards Act and state and local wage and hour laws are properly classified in all material
respects. Except as set forth in Section 3.25(e) of the Disclosure Schedule, there are no Actions
against the Company pending, or to the Company’s Knowledge, threatened to be brought or filed,
by or with any Governmental Authority or arbitrator in connection with the employment of any
current or former applicant, employee, consultant, or independent contractor of the Company,
including, without limitation, any claim relating to unfair labor practices, employment
discrimination, harassment, retaliation, equal pay, wage and hours or any other employment
related matter arising under applicable Laws.
(f) The Company is in compliance in all material respects with the WARN ACT, or
any similar state or local law. Since January 1, 2015, (i) the Company has not effectuated a
“plant closing” (as defined in the WARN Act) affecting any site of employment or one or more
facilities or operating units within any site of employment or facility of its business; (ii) there has
WEST\275532193.26 43
not occurred a “mass layoff” (as defined in the WARN Act) affecting any site of employment or
facility of the Company; and (iii) the Company has not been affected by any transaction or
engaged in layoffs or employment terminations sufficient in number to trigger application of any
similar state, local or foreign law or regulation. The Company has not caused any of its
employees to suffer an “employment loss” (as defined in the WARN Act) during the 90 day
period prior to the date hereof.
(g) To the Company’s Knowledge, no employee or consultant of the Company is in
material violation of: (i) any term of any employment or consulting Contract of the Company or
(ii) any restrictive covenant relating to the right of any such employee or consultant to be
employed by or to render services to the Company or to use trade secrets or proprietary
information of others. To the Company’s Knowledge, the employment of any employee or
engagement of any consultant by the Company does not subject it to any Liability to any third
party. Except as set forth in Section 3.25(e) of the Disclosure Schedule, there are no material
disciplinary actions contemplated or pending against any of the Company’s current employees or
individuals performing work for or on behalf of the Company.
(h) With respect to each Government Contract, the Company is and has been in
compliance in all material respects with Executive Order No. 11246 of 1965 (“E.O. 11246”),
Section 503 of the Rehabilitation Act of 1973 (“Section 503”) and the Vietnam Era Veterans’
Readjustment Assistance Act of 1974 (“VEVRAA”), including all implementing regulations. The
Company maintains and complies in all material respects with affirmative action plans in
compliance with E.O. 11246, Section 503, and VEVRAA, including all implementing
regulations. The Company is not, and has not been since January 1, 2014, the subject of any
enforcement action or, to the Company’s Knowledge, any audit or investigation, by any
Governmental Authority in connection with any Government Contract or related compliance with
E.O. 11246, Section 503, and VEVRAA. The Company has not been debarred, suspended, or
otherwise made ineligible from doing business with the United States Government or any
government contractor.
(i) Except as set forth in Schedule 3.25(i) of the Disclosure Schedules, no employee
of the Company has given written notice to the Company that he or she intends to terminate, nor
to the Company’s Knowledge do any of the Key Employees intend to terminate his or her
employment with the Company.
(j) None of the execution and delivery of this Agreement, the consummation of this
Agreement or any other transaction contemplated hereby or any termination of employment or
service or any other event in connection therewith or subsequent thereto will, individually or
together or with the occurrence of some other event, (i) result in any payment (including
severance, unemployment compensation, golden parachute, bonus or otherwise) becoming due to
any employee of the Company other than accrued and unpaid salary or wages and accrued but
unused paid time off, (ii) materially increase or otherwise enhance any benefits otherwise payable
by the Company to any Company employee, (iii) result in the acceleration of the time of payment
or vesting of any such benefits, except as required under Section 411(d)(3) of the Internal
Revenue Code, (iv) materially increase the amount of compensation due to any Company
employee, or (v) result in the forgiveness in whole or in part of any outstanding loans made by
the Company to any Company employee.
Section 3.26 Taxes. Except as set forth in Section 3.26 of the Disclosure Schedule:
WEST\275532193.26 44
(a) All income and other material Tax Returns required to be filed on or before the
Closing Date by the Company have been, or will be, timely filed. Such Tax Returns are, or will
be, true, complete and correct in all material respects. All material Taxes due and owing by the
Company (whether or not shown on any Tax Return) have been, or will be, timely paid. There
are no Encumbrances for Taxes (other than for Taxes not yet due and payable) upon the assets of
the Company.
(b) The Company has withheld and timely paid all material Taxes required to have
been withheld and paid in connection with amounts paid or owing to any employee, independent
contractor, creditor, customer, member or other party, and complied in all material respects with
all information reporting and backup withholding provisions of applicable Law.
(c) No claim has been made in writing by any taxing authority in any jurisdiction
where the Company does not file Tax Returns that it is, or may be, subject to Tax by that
jurisdiction.
(d) No extensions or waivers of statutes of limitations have been given or requested
with respect to any Taxes of the Company (other than by reason of filing an automatic extension
of time to file a Tax Return).
(e) The amount of the Company’s Liability for unpaid Taxes for all periods ending
on or before the Balance Sheet Date does not, in the aggregate, exceed the amount of accruals for
Taxes (excluding reserves for deferred Taxes) reflected on the Financial Statements. The amount
of the Company’s Liability for unpaid Taxes for all periods following the end of the recent period
covered by the Financial Statements shall not, in the aggregate, exceed the amount of accruals for
Taxes (excluding reserves for deferred Taxes) as adjusted for the passage of time in accordance
with the past custom and practice of the Company.
(f) The Company is currently not, and never was, a party to any Action, audit,
examination or any other proceeding by any taxing authority. There are no pending or to the
Company’s Knowledge threatened Actions, audits, examinations or any other proceedings by any
taxing authority. All deficiencies asserted, or assessments made, against the Company as a result
of any examinations by any taxing authority have been fully paid.
(g) The Company has made available to Buyer copies of all federal, state, and
material local and foreign income Tax Returns, examination reports, and statements of
deficiencies assessed against, or agreed to by, the Company for all Tax periods ending after
December 31, 2012.
(h) The Company is not a party to, or bound by, any Tax indemnity, Tax-sharing, or
Tax allocation agreement, other than any agreement entered into in the Ordinary Course of
Business the primary purpose of which does not relate to Taxes.
(i) No private letter rulings, technical advice memoranda or similar agreement or
rulings have been requested, entered into, or issued by any taxing authority with respect to the
Company.
(j) The Company has not been a member of an affiliated, combined, consolidated, or
unitary Tax group for Tax purposes. The Company has no liability for Taxes of any Person
(other than the Company) under Treasury Regulations Section 1.1502-6 (or any corresponding
provision of state, local or foreign Law), as transferee or successor, by contract or otherwise
WEST\275532193.26 45
(other than any Contract entered into in the Ordinary Course of Business the primary purpose of
which does not relate to Taxes).
(k) The Company has, at all times since the date of formation, been treated as a
partnership or as a disregarded entity for U.S. federal income tax purposes.
(l) The Company will not be required to include any material item of income in, or
exclude any material item or deduction from, taxable income for any taxable period or portion
thereof ending after the Closing Date as a result of:
(i) any change in a method of accounting under Section 481 of the Code (or
any comparable provision of state, local or foreign Tax Laws), or use of an improper
method of accounting, for a taxable period ending on or prior to the Closing Date;
(ii) an installment sale or open transaction occurring on or prior to the
Closing Date;
(iii) a prepaid amount received on or before the Closing Date;
(iv) any closing agreement under Section 7121 of the Code, or similar
provision of state, local or foreign Law; or
(v) any election under Section 108(i) of the Code.
(m) The Company is not, and has not been, a party to, or a promoter of, a “reportable
transaction” within the meaning of Section 6707A(c)(1) of the Code and Treasury Regulations
Section 1.6011-4(b).
(n) Section 3.26(n) of the Disclosure Schedule sets forth all foreign jurisdictions in
which the Company is subject to Tax, is engaged in business or has a permanent establishment.
The Company has not entered into a gain recognition agreement pursuant to Treasury Regulations
Section 1.367(a)-8. The Company has not transferred an intangible, the transfer of which would
be subject to the rules of Section 367(d) of the Code.
Section 3.27 Books and Records.
(a) The Company has made available to Buyer true, correct and complete copies of
the certificate of formation and the Company Operating Agreement, and any other organization or
governing documents of the Company (collectively with the Company Operating Agreement, the
“Company Organizational Documents”). All such Company Organizational Documents are in
full force and effect and the Company is not in violation of any provisions therein.
(b) The minute books and resolutions of the Company made available to Buyer
contain true, correct and complete records of all meetings and accurately reflect in all material
respects all actions of the members and the manager (including any committees thereof) of the
Company as of the date of this Agreement. The membership interest certificate books, if any, and
membership interest transfer ledgers, if any, of the Company made available to Buyer are true,
correct and complete as of the date of this Agreement.
(c) The Company has maintained substantially complete and accurate records (in the
form of technical notebooks and/or electronic files) of all Regulatory Documentation and all such
WEST\275532193.26 46
development conducted by or on behalf of it and all findings and other Information resulting from
such work sufficient for the storage, maintenance, transfer, processing, development,
manufacture, commercialization and exploitation of the CellRight Products and CellRight’s
Processing Technology. Such records, including any electronic files where such all findings and
other Information may also be contained, shall reflect all work done and results achieved in the
development of the CellRight Products and CellRight’s Processing Technology in sufficient
detail further development, manufacture, commercialization and for regulatory purposes and
submission to any Governmental Authority or for the procurement of Permits.
Section 3.28 Brokers. Neither the Company nor any Seller has any liability or obligation to
pay any fees, commissions or expenses to any broker, finder or agent with respect to the transactions
contemplated by this Agreement.
EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES OF THE COMPANY
EXPRESSLY SET FORTH IN THIS ARTICLE III AND THE REPRESENTATIONS AND
WARRANTIES OF SELLERS EXPRESSLY SET FORTH IN ARTICLE IV, NEITHER THE
COMPANY NOR ANY SELLER MAKES ANY REPRESENTATIONS OR WARRANTIES TO
BUYER OF ANY KIND OR NATURE, EXPRESS OR IMPLIED, INCLUDING WITH RESPECT TO
ANY OF THE COMPANY OR THE CONDITION (INCLUDING THE ENVIRONMENTAL
CONDITION), VALUE OR QUALITY OF THE COMPANY OR ITS BUSINESS, PROPERTIES AND
ASSETS, AND ALL SUCH OTHER REPRESENTATIONS AND WARRANTIES ARE HEREBY
EXPRESSLY DISCLAIMED. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING,
EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES OF THE COMPANY EXPRESSLY
SET FORTH IN THIS ARTICLE III AND THE REPRESENTATIONS AND WARRANTIES OF
SELLERS EXPRESSLY SET FORTH IN ARTICLE IV, THE COMPANY AND SELLERS HEREBY
SPECIFICALLY DISCLAIM ANY REPRESENTATION OR WARRANTY OF
MERCHANTABILITY, USAGE, SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE
WITH RESPECT TO THE COMPANY’S BUSINESS OR THE PROPERTIES AND ASSETS OF THE
COMPANY, OR ANY PART THEREOF.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Except as set forth in the correspondingly numbered Section of the Disclosure Schedule, each
Seller, severally and not jointly, represents and warrants to Buyer that the statements contained in this
Article IV are true and correct as to such Seller as of the date hereof:
Section 4.01 Legal Capacity / Power and Authority.
(a) Legal Capacity of a Seller That Is a Natural Person. If such Seller is a natural
person, such Seller has full legal capacity to (i) execute and deliver this Agreement and each
Transaction Document to which he or she is or will be a party, (ii) perform his or her obligations
under this Agreement and each such Transaction Document and (iii) consummate the transactions
contemplated by this Agreement and each such Transaction Document.
(b) Power and Authority of a Seller That Is an Entity. If such Seller is an entity, (i)
such Seller is duly organized, validly existing and in good standing under the Laws of the
jurisdiction of its organization, (ii) such Seller has full corporate, partnership or limited liability
company, as applicable, power and authority to (A) execute and deliver this Agreement and each
Transaction Document to which it is or will be a party, (B) carry out its obligations under this
Agreement and each such Transaction Document and (C) consummate the transactions
WEST\275532193.26 47
contemplated by this Agreement and each such Transaction Document, (iii) the performance by
such Seller of its obligations under this this Agreement and each Transaction Document to which
it is or will be a party, and the consummation by such Seller of the transactions contemplated by
this Agreement and each such Transaction Document, have been duly authorized by all requisite
organizational action, and (iv) the individual executing this Agreement and each such Transaction
Document on behalf of such Seller has full power and authority to so execute and deliver such
instruments.
Section 4.02 Execution and Delivery. This Agreement has been duly executed and delivered
by or on behalf of such Seller and (assuming due authorization, execution and delivery by the other
parties thereto) this Agreement constitutes a legal, valid, and binding obligation of such Seller,
enforceable against such Seller in accordance with its terms, except as such enforceability may be limited
by the Enforceability Limitation. When each other Transaction Document to which such Seller is or will
be a party has been duly executed and delivered by such Seller (assuming due authorization, execution
and delivery by each other party thereto), such Transaction Document will constitute the legal and
binding obligations of such Seller enforceable against such Seller in accordance with its terms, except as
such enforceability may be limited by the Enforceability Limitation.
Section 4.03 Title to Membership Interests. Such Seller is the record owner of, and has
good and valid title to, the Membership Interests set forth adjacent to such Seller’s name on the
Spreadsheet, free and clear of all Encumbrances (other than the restrictions set forth in the Company
Operating Agreement (including any restrictions on use, voting, transfer, receipt of income or exercise of
any other attributes of ownership set forth in the Company Operating Agreement) or imposed by federal
and state securities laws).
Section 4.04 No Conflicts; Consents. The execution, delivery and performance by such
Seller of this Agreement and the other Transaction Documents to which it is a party, and the
consummation of the transactions contemplated hereby and thereby, do not and will not: (a) conflict with
or result in a violation or breach of, or default under, any provision of the Organizational Documents of
such Seller; (b) conflict with or result in a violation or breach of any provision of any Law or
Governmental Order applicable to such Seller; or (c) except as set forth in Section 4.04 of the Disclosure
Schedule, require the consent of, notice to or other action by any Person under, conflict with, result in a
violation or breach of, constitute a default or an event that, with or without notice or lapse of time or both,
would constitute a default under, result in the acceleration of or create in any party the right to accelerate,
terminate, modify or cancel any Contract to which such Seller is a party or by which such Seller is bound
or to which any of its respective properties and assets are subject. No consent, approval, Permit,
Governmental Order or declaration from, or filing with, or notice to, any Governmental Authority is
required by or with respect to such Seller in connection with the execution and delivery of this Agreement
and the other Transaction Documents to which it is a party and the consummation of the transactions
contemplated hereby and thereby.
Section 4.05 Legal Proceedings. Except as set forth on Section 4.05 of the Disclosure
Schedule, there are no Actions pending or, to such Seller’s actual knowledge, threatened against or by
such Seller, that challenge or seek to prevent, enjoin or otherwise delay the transactions contemplated by
this Agreement.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER AND GUARANTOR
Except as set forth in the correspondingly numbered Section of the Disclosure Schedule, Buyer
represents and warrants to Sellers that the statements contained in this Article V are true and correct as of
the date hereof.
Section 5.01 Organization and Authority of Buyer. Buyer is a corporation organized,
validly existing and in good standing under the Laws of Delaware. Guarantor is a limited company duly
organized, validly existing and in good standing under the Laws of England and Wales. Each of Buyer
and Guarantor has full organizational power and authority to enter into this Agreement and the other
Transaction Documents to which Buyer or Guarantor is a party, to carry out its respective obligations
hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The
execution and delivery by Buyer and Guarantor of this Agreement and any other Transaction Documents
to which Buyer or Guarantor is a party, the performance by Buyer and Guarantor of its respective
obligations hereunder and thereunder and the consummation by Buyer and Guarantor of the transactions
contemplated hereby and thereby have been duly authorized by all requisite corporate and organizational
action on the part of Buyer and Guarantor. This Agreement has been duly executed and delivered by
Buyer and Guarantor, and (assuming due authorization, execution, and delivery by the Company and
Sellers) this Agreement constitutes a legal, valid, and binding obligation of Buyer and Guarantor
enforceable against Buyer and Guarantor in accordance with its terms, except as such enforceability may
be limited by the Enforceability Limitations. When each other Transaction Document to which Buyer or
Guarantor is or will be a party has been duly executed and delivered by Buyer and Guarantor (assuming
due authorization, execution and delivery by each other party thereto), such Transaction Document will
constitute a legal and binding obligation of Buyer or Guarantor, as applicable, enforceable against Buyer
or Guarantor, as applicable, in accordance with their respective terms, except as such enforceability may
be limited by the Enforceability Limitations.
Section 5.02 No Conflicts; Consents. The execution, delivery and performance by Buyer and
Guarantor of this Agreement and the other Transaction Documents to which Buyer or Guarantor is a
party, and the consummation of the transactions contemplated hereby and thereby, do not and will not:
(a) conflict with or result in a violation or breach of, or default under, any provision of the Organizational
Documents of Buyer or Guarantor; (b) conflict with or result in a violation or breach of any provision of
any Law or Governmental Order applicable to Buyer or Guarantor; or (c) require the consent, notice or
other action by any Person under, conflict with, result in a violation or breach of, constitute a default or an
event that, with or without notice or lapse of time or both, would constitute a default under, result in the
acceleration of or create in any party the right to accelerate, terminate, modify or cancel any Contract to
which Buyer or Guarantor is a party or by which Buyer or Guarantor is bound or to which any of their
respective properties and assets are subject, except, in the case of clauses (b) and (c), for any such
conflicts, defaults or violations and any failure to give, make or obtain any notices, declarations, filings,
consents or approvals, that could not, individually or in the aggregate, reasonably be expected to (x)
prevent or materially delay the Closing or (y) have a material adverse effect on the financial condition or
operations of Buyer or Guarantor. No consent, approval, Permit, Governmental Order, declaration or
filing with, or notice to, any Governmental Authority is required by or with respect to Buyer or Guarantor
in connection with the execution and delivery of this Agreement or the other Transaction Documents and
the consummation of the transactions contemplated hereby and thereby.
Section 5.03 Brokers. Other than Jefferies International Limited and WG Partners LLP,
neither Buyer nor its Affiliates have any Liability or obligation to pay any fees, commissions or expenses
to any broker, finder or agent with respect to the transactions contemplated by this Agreement. Buyer or
its Affiliates (other than the Company) will be solely liable for any fees, commissions, expenses or other
WEST\275532193.26 49
amounts owed to Jefferies International Limited and WG Partners LLP as a result of the transactions
contemplated by this Agreement.
Section 5.04 Legal Proceedings. There are no Actions pending or, to Buyer’s or Guarantor’s
knowledge, threatened against or by Buyer or Guarantor or any their respective Affiliates that challenge
or seek to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement.
Section 5.05 Investment Representation. Buyer is acquiring the Membership Interests for its
own account with the present intention of holding such securities for investment purposes and not with a
view to, or for sale in connection with, any distribution of such securities in violation of any federal or
state securities Laws. Buyer is an “accredited investor” as defined in Regulation D promulgated by the
Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Securities
Act”). Buyer acknowledges that it is informed as to the risks of the transactions contemplated hereby and
of ownership of the Membership Interests. Buyer acknowledges that the Membership Interests have not
been registered under the Securities Act or any state or foreign securities Laws and that the Membership
Interests may not be sold, transferred, offered for sale, assigned, pledged, hypothecated or otherwise
disposed of unless such transfer, sale, assignment, pledge, hypothecation or other disposition is pursuant
to the terms of an effective registration statement under the Securities Act and the Membership Interests
are registered under any applicable state or foreign securities laws or sold pursuant to an exemption from
registration under the Securities Act and any applicable state or foreign securities Laws.
Section 5.06 Solvency. Assuming (w) that the representations and warranties of the Company
contained in this Agreement are true and correct in all material respects as of immediately prior to the
Closing (without regard to any knowledge of the Company, materiality or Material Adverse Effect
qualifiers therein), (x) compliance by the Company with its covenants, agreements and other obligations
under this Agreement, (y) that the projections regarding the Company were prepared in good faith and
based on reasonable assumptions when made and (z) the statements set forth in clauses (a) and (b) below
are true with respect to the Company as of immediately prior to the Closing, immediately after giving
effect to the transactions contemplated by this Agreement, Buyer and its subsidiaries (including the
Company), taken as a whole, (a) will be able to pay their respective debts as they become due, (b) shall
own property having a fair saleable value greater than the amounts required to pay their respective debts
(including a reasonable estimate of the amount of all contingent liabilities) and (c) will have adequate
capital to carry on their respective businesses. No transfer of property is being made and no obligation is
being incurred in connection with the transactions contemplated by this Agreement with the intent to
hinder, delay or defraud either present or future creditors of Buyer or the Company. Guarantor has or will
have sufficient cash or cash equivalents on hand or otherwise immediately available to fulfill its
obligations under this Agreement and the other Transaction Agreements when due.
Section 5.07 Financing. Buyer has delivered to the Company a true and complete copy of the
executed placing agreement, dated as of July 20, 2017, between Tissue Regenix Group plc and Jefferies
International Limited (the “Placing Agreement”), pursuant to which, upon the terms and conditions set
forth therein, Jefferies International Limited has conditionally agreed to use reasonable endeavors to
procure placees to subscribe for up to 400,000,000 new ordinary shares of 0.5 pence each in the capital of
Tissue Regenix Group plc (less the number of ordinary shares of 0.5 pence each in the capital of Tissue
Regenix Group plc (if any) subscribed by certain directors of Tissue Regenix Group plc at 10 pence per
share in connection with the fundraise for the acquisition contemplated by this Agreement) (“Placing
Shares”) at 10 pence per Placing Share (the “Financing”). The Placing Agreement has not been
amended or modified prior to the date of this Agreement, and the conditional obligation of Jefferies
International Limited to use reasonable endeavors to procure placees to subscribe for the Placing Shares
at 10 pence per Placing Share set forth in the Placing Agreement has not been amended or rescinded in
any respect. The Placing Agreement is in full force and effect and constitutes the legal, valid and binding
WEST\275532193.26 50
obligation of Tissue Regenix Group plc, except as such enforceability may be limited by the
Enforceability Limitations. There are no conditions precedent to the obligation of Jefferies International
Limited under the Placing Agreement to use reasonable endeavors to procure placees to subscribe for the
Placing Shares at 10 pence per Placing Share, other than as expressly set forth in the Placing Agreement.
Subject to and conditional upon the placing of the Placing Shares at 10 pence per Placing Share in
accordance with the terms of the Placing Agreement, the aggregate proceeds to be disbursed pursuant to
the Placing Agreement, together with cash and cash equivalents available to Buyer, will, in the aggregate,
be sufficient for Buyer to consummate the transactions contemplated by this Agreement (including to pay
all amounts required to be paid by or on behalf of Buyer as contemplated by this Agreement and to pay all
estimated related fees and expenses to be paid by Buyer). As of the date of this Agreement, no event has
occurred which would result in any breach or violation of or constitute a default (or an event which with
notice or lapse of time or both would become a default) by Tissue Regenix Group plc under the Placing
Agreement which could reasonably prejudice Tissue Regenix Group plc’s ability to complete the
Financing, and Buyer does not have any reason to believe that any of the conditions to the Financing will
not be satisfied or that the Financing will not be available to Buyer on the Closing Date. Buyer (or its
Affiliate) has fully paid, or is paying, substantially contemporaneously with the execution and delivery of
this Agreement, any commitment fees or other fees required to be paid on or prior to the date of this
Agreement pursuant to the Placing Agreement.
Section 5.08 No Other Representations. Except for the representations and warranties
contained in Article III and Article IV, Buyer has not relied on any representation made by or on behalf of
the Company or the Sellers. Buyer is an informed and sophisticated Person, and has engaged expert
advisors experienced in the evaluation and acquisition of companies such as the Company as
contemplated hereunder. Buyer acknowledges and agrees that it has conducted its own independent
review and analysis of (and, based thereon, has formed an independent judgment concerning) the
business, assets, condition, operations and prospects of the Company, and Buyer has been furnished with
or given full access to such information about the Company and its business and operations as it has
requested. In entering into this Agreement, Buyer has relied solely upon its own investigation and
analysis and the representations and warranties of Company and Sellers expressly set forth in this
Agreement, and Buyer acknowledges that, other than as set forth in this Agreement, neither Sellers nor
the Company nor any of their respective managers, officers, employees, Affiliates, stockholders,
members, owners, agents, advisors or representatives makes or has made (and the Company and Sellers
specifically disclaim), and Buyer has not relied upon, any representation or warranty, either express or
implied, (a) as to the accuracy or completeness of any of the information provided or made available to
Buyer or its agents, advisors, representatives, lenders or Affiliates prior to the execution of this
Agreement and (b) with respect to any projections, forecasts, estimates, plans or budgets of future
revenues, expenses or expenditures, future results of operations (or any component thereof), future cash
flows (or any component thereof) or future financial condition (or any component thereof) of the
Company heretofore or hereafter delivered to or made available to Buyer or its agents, advisors,
representatives, lenders or Affiliates. Buyer understands and agrees that it is acquiring the Company in
the condition it is in at the Closing based upon Buyer’s own inspection, examination and determination of
all matters related thereto, and without reliance upon any express or implied representations or warranties
of any nature, whether in writing, orally or otherwise, made by or on behalf of or imputed to any of the
Sellers or the Company, except for the representations and warranties which are expressly set forth in
Article III and Article IV hereof. Buyer acknowledges and agrees that the representations and warranties
set forth in this Agreement (as qualified by the Schedules) supersede, replace and nullify in every respect
the data set forth in any other document, material or statement, whether written or oral, made available to
Buyer.
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ARTICLE VI
COVENANTS
Section 6.01 Conduct of Business Prior to the Closing. From the date hereof until the
Closing, except as otherwise provided in this Agreement or consented to in writing by Buyer (which
consent shall not be unreasonably withheld or delayed), the Company shall (x) conduct the business of the
Company in the Ordinary Course of Business; and (y) use commercially reasonable efforts to maintain
and preserve intact the current organization, business and franchise of the Company and to preserve the
rights, franchises, goodwill and relationships of its employees, customers, lenders, suppliers, regulators
and others having business relationships with the Company. Without limiting the foregoing, from the
date hereof until the Closing Date, the Company shall:
(a) preserve and maintain all of its Permits;
(b) pay its debts, Taxes and other obligations when due;
(c) maintain the properties and assets owned, operated or used by the Company in
the same condition as they were on the date of this Agreement, subject to ordinary wear and tear;
(d) continue in full force and effect without modification all Insurance Policies,
except as required by applicable Law;
(e) defend and protect its properties and assets from infringement or usurpation in
accordance with past practice;
(f) perform all of its obligations under all Material Contracts relating to or affecting
its properties, assets or business;
(g) maintain its books and records in accordance with past practice;
(h) other than in the Ordinary Course of Business, not incur any Liabilities that
would be required to be set forth on a balance sheet as a Liability in accordance with GAAP;
(i) not transfer, assign, sell or dispose of any assets except in the Ordinary Course of
Business; and
(j) comply in all material respects with all applicable Laws.
Notwithstanding the foregoing, Buyer agrees and acknowledges that the Company shall repay all
outstanding Indebtedness at or prior to the Closing.
Notwithstanding the foregoing, nothing contained in this Agreement shall give Buyer, directly or
indirectly, the right to control or direct the operations of the Company prior to the Closing. Prior to the
Closing, the Company shall exercise, consistent with the terms and conditions of this Agreement,
complete control and supervision over its operations.
Section 6.02 Access to Information. From the date hereof until the Closing or the earlier
termination of this Agreement in accordance with its terms, the Company shall (a) afford Buyer and its
Representatives reasonable access, upon reasonable notice, during normal business hours and in a manner
that does not unreasonably interfere with the conduct of the Company’s business to inspect all of the Real
Property, properties, assets, premises, books and records, Contracts and other documents and data related
WEST\275532193.26 52
to the Company; (b) furnish Buyer and its Representatives with such financial, operating and other data
and information related to the Company as Buyer or any of its Representatives may reasonably request;
and (c) instruct the Representatives of the Company to cooperate with Buyer in its due diligence
investigation of the Company. Without limiting the foregoing, the Company shall permit Buyer and its
Representatives to (i) conduct intellectual property due diligence related to Company’s business,
including its Trade Secret protections in place for its processing technologies; provided that Buyer and its
Representatives will have no right to access, review or perform any due diligence on the Company’s
Trade Secrets, the CellRight Processing Technology, the blueprint of the Company’s manufacturing
facility, or the Company’s standard operating procedures, and (ii) conduct a Phase 1 environmental site
assessment of the Real Property, including the collecting and analysis of samples of indoor or outdoor air,
surface water, groundwater or surface or subsurface land on, at, in, under or from the Real Property. Any
investigation pursuant to this Section 6.02 shall be conducted in such manner as not to interfere
unreasonably with the conduct of the business of the Company. No investigation by Buyer or other
information received by Buyer shall operate as a waiver or otherwise affect any representation, warranty,
or agreement given or made by Company or Sellers in this Agreement. Buyer shall repair or restore the
Real Property to the condition in which it existed immediately prior to any such inspection of the Real
Property.
Section 6.03 No Solicitation of Other Bids.
(a) Sellers shall not, and shall not authorize or permit any of their Affiliates
(including the Company) or any of its or their Representatives to, directly or indirectly, (i)
encourage, solicit, initiate, facilitate or continue inquiries regarding an Acquisition Proposal; (ii)
enter into discussions or negotiations with, or provide any information to, any Person concerning
a possible Acquisition Proposal; or (iii) enter into any agreements or other instruments (whether
or not binding) regarding an Acquisition Proposal. Sellers shall immediately cease and cause to
be terminated, and shall cause their Affiliates (including the Company) and all of its and their
Representatives to immediately cease and cause to be terminated, all existing discussions or
negotiations with any Persons conducted heretofore with respect to, or that could lead to, an
Acquisition Proposal. For purposes hereof, “Acquisition Proposal” shall mean any inquiry,
proposal or offer from any Person (other than Buyer or any of its Affiliates) concerning (i) a
merger, consolidation, liquidation, recapitalization or other business combination transaction
involving the Company; (ii) the issuance or acquisition of membership interests in the Company;
or (iii) the sale, lease, exchange or other disposition of any significant portion of the Company’s
properties or assets.
(b) In addition to the other obligations under this Section 6.03, Sellers shall promptly
(and in any event within three (3) Business Days after receipt thereof by any such Seller or their
Representatives) advise Buyer orally and in writing of any Acquisition Proposal and any request
for information with respect to any Acquisition Proposal, or any inquiry with respect to or which
could reasonably be expected to result in an Acquisition Proposal and the material terms and
conditions of such request, Acquisition Proposal or inquiry, but the Sellers shall have no
obligation to advise Buyer of the identity of the Person making the same.
(c) Sellers agree that the rights and remedies for noncompliance with this Section
6.03 shall include having such provision specifically enforced by any court having equity
jurisdiction, it being acknowledged and agreed that any such breach or threatened breach shall
cause irreparable injury to Buyer and that monetary damages would not provide an adequate
remedy to Buyer.
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Section 6.04 Notice of Certain Events.
(a) From the date hereof until the Closing, the Company shall promptly notify Buyer
in writing of:
(i) any fact, circumstance, event or action the existence, occurrence or
taking of which (A) has had, or could reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect, (B) has resulted in, or could reasonably be
expected to result in, any representation or warranty made by Sellers hereunder not being
true and correct or (C) has resulted in, or could reasonably be expected to result in, the
failure of any of the conditions set forth in Section 8.02 to be satisfied;
(ii) any notice or other communication from any Person alleging that the
consent of such Person is or may be required in connection with the transactions
contemplated by this Agreement;
(iii) any notice or other communication from any Governmental Authority in
connection with the transactions contemplated by this Agreement; and
(iv) any Actions commenced or, to the Company’s Knowledge, threatened
against, relating to or involving or otherwise affecting the Company or Sellers that, if
pending on the date of this Agreement, would have been required to have been disclosed
pursuant to Section 3.16 or Section 4.05, respectively, or that relates to the consummation
of the transactions contemplated by this Agreement.
(b) From the date hereof until the Closing, Buyer shall promptly notify Seller
Representative in writing of:
(i) any event, occurrence, development or change in facts or circumstances
that has resulted in, or would reasonably be expected to result in, the failure of any of the
conditions set forth in Section 8.03 to be satisfied;
(ii) any notice or other communication from any Person alleging that the
consent of such Person is or may be required in connection with the transactions
contemplated by this Agreement;
(iii) any notice or other communication from any Governmental Authority in
connection with the transactions contemplated by this Agreement; and
(iv) any Actions commenced or threatened in writing against Buyer that
relates to the consummation of the transactions contemplated by this Agreement.
(c) A party’s notification pursuant to this Section 6.04 shall not operate as a waiver
or otherwise affect any representation, warranty or agreement given or made by Buyer, the
Company or Sellers in this Agreement (including Section 9.02 and Section 10.01(b)) and shall not
be deemed to amend or supplement the Disclosure Schedule delivered by Seller Representative or
Buyer.
Section 6.05 Confidentiality. From and after the Closing, Sellers shall, and shall use
reasonable best efforts to cause their Affiliates and Representatives to, hold in confidence any and all
Information of the Company, whether written or oral, except to the extent such Information (a) is or
WEST\275532193.26 54
becomes generally available to the public through no fault of Sellers, any of their Affiliates or their
respective Representatives; or (b) is lawfully acquired by Sellers, any of their Affiliates or their respective
Representatives from and after the Closing from sources which are not prohibited from disclosing such
information by a legal, contractual or fiduciary obligation. If Sellers or any of their Affiliates or their
respective Representatives are compelled to disclose any Information of the Company by judicial or
administrative process or by other requirements of Law, (i) such Person shall, unless prohibited by
applicable Law, promptly notify Buyer in writing of such request for disclosure so that Buyer may, at its
expense, seek an appropriate protective order and (ii) such Person shall disclose only that portion of such
Information which such Person is advised by their counsel in writing is legally required to be disclosed.
Section 6.06 Non-competition; Non-solicitation.
(a) During the Hernandez Restricted Period, Jesus Hernandez, shall not, and during
the S&M Restricted Period, Robin Sullivan and Dean Mueller shall not, and shall use reasonable
efforts to cause their Affiliates to not, (i) engage in the Restricted Business in the Territory; (ii)
have an interest in any Person that engages directly or indirectly in the Restricted Business in the
Territory in any capacity, including as a partner, shareholder, member, owner, employee,
principal, agent, trustee, advisor, or consultant; or (iii) intentionally interfere in any material
respect with the business relationships (whether formed prior to or after the date of this
Agreement) between the Company and customers or suppliers of the Company, except in each
case, in the good faith performance of the Restricted Persons’ duties and responsibilities to the
Company. Notwithstanding the foregoing, the Restricted Persons may own, directly or indirectly,
solely as an investment, securities of any Person traded on any national securities exchange if the
Restricted Persons are not a controlling Person of, or a member of a group which controls, such
Person and does not, directly or indirectly, own 2% or more of any class of securities of such
Person.
(b) During the Hernandez Restricted Period, Jesus Hernandez shall not and during
the S&M Restricted Period, Robin Sullivan and Dean Mueller shall not, directly or indirectly,
hire or solicit any employee of the Company or encourage any such employee to leave such
employment or hire any such employee who has left such employment, except (i) in good faith
performance of the Restricted Persons’ duties and responsibilities to the Company and (ii)
pursuant to a general solicitation which is not directed specifically to any such employees;
provided, that nothing in this Section 6.06(b) shall prevent the Restricted Persons from hiring (A)
any employee whose employment has been terminated by the Company or Buyer or (B) after one
hundred eighty (180) days from the date of termination of employment, any employee whose
employment has been terminated by the employee.
(c) During the Restricted Period, the Restricted Persons shall not, and shall not
permit any of their Affiliates to, directly or indirectly, solicit or entice, or attempt to solicit or
entice, any clients or customers of the Company or potential clients or customers of the Company
for purposes of diverting their business or services from the Company, except in the good faith
performance of the Restricted Persons’ duties and responsibilities to the Company.
(d) The Restricted Persons acknowledge that a breach or threatened breach of this
Section 6.06 would give rise to irreparable harm to Buyer, for which monetary damages would
not be an adequate remedy, and hereby agrees that in the event of a breach or a threatened breach
by the Restricted Persons of any such obligations, Buyer shall, in addition to any and all other
rights and remedies that may be available to it in respect of such breach, be entitled to seek
equitable relief, including a temporary restraining order, an injunction, specific performance and
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any other relief that may be available from a court of competent jurisdiction (without any
requirement to post bond).
(e) The Restricted Persons acknowledge and agree that the restrictions contained in
this Section 6.06 are reasonable and necessary to protect the legitimate interests of Buyer,
including in client relationships, good will, trade secrets of the Company’s CellRight Products
and constitute a material inducement to Buyer to enter into this Agreement and consummate the
transactions contemplated by this Agreement. In the event that any covenant contained in this
Section 6.06 should ever be adjudicated to exceed the time, geographic, product or service, or
other limitations permitted by applicable Law in any jurisdiction, then any court is expressly
empowered to reform such covenant, and such covenant shall be deemed reformed, in such
jurisdiction to the maximum time, (but in no event more than the Hernandez Restricted Period or
the S&M Restricted Period, as applicable), geographic, product or service, or other limitations
permitted by applicable Law. The Restricted Persons acknowledge and agree that the covenants
contained in this Section 6.06 and each provision in this Section 6.06 are severable and distinct
covenants and provisions. The invalidity or unenforceability of any such covenant or provision
as written shall not invalidate or render unenforceable the remaining covenants or provisions
hereof, and any such invalidity or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such covenant or provision in any other jurisdiction.
Section 6.07 Governmental Approvals and Consents.
(a) Buyer and the Company shall, as promptly as possible, (i) make or cause to be
made, all filings and submissions required under any Law applicable to such party or any of its
Affiliates and (ii) use commercially reasonable efforts to obtain, or cause to be obtained, all
consents, authorizations, orders and approvals from all Governmental Authorities that may be or
become necessary for the performance of the parties’ obligations pursuant to this Agreement and
the other Transaction Documents. Buyer and Company shall cooperate fully with the other party
and its Affiliates in promptly seeking to obtain all such consents, authorizations, orders, and
approvals. The parties hereto shall not willfully take any action that will have the effect of
delaying, impairing, or impeding the receipt of any required consents, authorizations, orders, and
approvals.
(b) Buyer and Company shall use commercially reasonable efforts to give all notices
to, and obtain all consents from, all third parties that are described in Section 3.04, Section 4.04
and Section 5.02 of the Disclosure Schedule.
(c) Without limiting the generality of Buyer’s and the Company’s undertakings
pursuant to subsections (a) and (b) above, each of Buyer and the Company shall use all
commercially reasonable efforts to:
(i) respond to any inquiries by any Governmental Authority regarding
antitrust or other matters with respect to the transactions contemplated by this Agreement
or any Transaction Document;
(ii) avoid the imposition of any Governmental Order or the taking of any
action that would restrain, alter or enjoin the transactions contemplated by this
Agreement or any Transaction Document; and
(iii) in the event any Governmental Order adversely affecting the ability of
the parties to consummate the transactions contemplated by this Agreement or any
WEST\275532193.26 56
Transaction Document has been issued, to have such Governmental Order vacated or
lifted.
(d) If any consent, approval, or authorization necessary to preserve any right or
benefit under any Contract to which the Company is a party is not obtained prior to the Closing,
Seller Representative shall, subsequent to the Closing and at Buyer’s sole expense, cooperate
with Buyer and the Company in attempting to obtain such consent, approval, or authorization as
promptly thereafter as practicable.
(e) All analyses, appearances, meetings, discussions, presentations, memoranda,
briefs, filings, arguments, and proposals made by or on behalf of either party before any
Governmental Authority or the staff or regulators of any Governmental Authority, in connection
with the transactions contemplated hereunder (but, for the avoidance of doubt, not including any
interactions between Sellers or the Company with Governmental Authorities in the Ordinary
Course of Business, any disclosure which is not permitted by Law or any disclosure containing
confidential information) shall be disclosed to the other party hereunder in advance of any filing,
submission or attendance, it being the intent that the parties will consult and cooperate with one
another, and consider in good faith the views of one another, in connection with any such
analyses, appearances, meetings, discussions, presentations, memoranda, briefs, filings,
arguments, and proposals. Each party shall give notice to the other party with respect to any
meeting, discussion, appearance, or contact with any Governmental Authority or the staff or
regulators of any Governmental Authority, with such notice being sufficient to provide the other
party with the opportunity to attend and participate in such meeting, discussion, appearance, or
contact.
(f) Notwithstanding the foregoing, nothing in this Section 6.07 shall require, or be
construed to require, Buyer or any of its Affiliates to agree to (i) sell, hold, divest, discontinue or
limit, before or after the Closing Date, any assets, businesses or interests of Buyer, the Company
or any of their respective Affiliates; (ii) any conditions relating to, or changes or restrictions in,
the operations of any such assets, businesses or interests which, in either case, could reasonably
be expected to result in a Material Adverse Effect or materially and adversely impact the
economic or business benefits to Buyer of the transactions contemplated by this Agreement; or
(iii) any material modification or waiver of the terms and conditions of this Agreement.
Section 6.08 Books and Records.
(a) In order to facilitate the resolution of any claims made against or incurred by the
Company prior to the Closing, or for any other reasonable purpose, for a period of seven (7) years
after the Closing, Buyer shall:
(i) retain the books and records (including personnel files) of the Company
relating to periods prior to the Closing in a manner reasonably consistent with the prior
practices of the Company; and
(ii) upon reasonable notice, afford the Seller Representative and his
Representatives reasonable access (including the right to make, at the Seller
Representative’s expense, photocopies), during normal business hours, to such books and
records;
provided, however, that any books and records related to Tax matters shall be
retained pursuant to the periods set forth in Article VII.
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Section 6.09 Closing Conditions. From the date hereof until the Closing, each party hereto
shall use commercially reasonable efforts to take such actions as are necessary to expeditiously satisfy the
closing conditions set forth in Article VIII hereof.
Section 6.10 Indemnification of Officers and Directors.
(a) From the Closing until the sixth (6th) anniversary of the Closing Date (or with
respect to any claim outstanding on the sixth anniversary of the Closing Date, until the resolution
of such claim), all rights to indemnification and advancement of expenses by the Company
existing in favor of those Persons who were prior to, or who are as of, the Closing Date,
managers, directors or officers of the Company (the “D&O Indemnified Persons”) for their acts
and omissions occurring prior to the Closing, as provided in the Company Organizational
Documents shall survive the transactions contemplated by this Agreement and shall be observed
by Buyer and its Affiliates (including the Company) to the fullest extent provided in the
Company Organizational Documents under the applicable Law, and any claim made requesting
indemnification pursuant to such indemnification rights shall continue to be subject to this
Section 6.10 until disposition of such claim. In furtherance of the foregoing, Buyer will not, and
will not permit the Company to, amend, repeal or modify any provision in the Company
Organizational Documents, or in any agreement between the Company and any D&O
Indemnified Person relating to the exculpation, indemnification or advancement of expenses of
any current or former officers or directors of the Company (unless expressly required by
applicable Law), it being the intent of the parties that the D&O Indemnified Persons will continue
to be entitled to all rights to exculpation, indemnification and advancement of expenses to the full
extent of the applicable Law and the Company Organizational Documents.
(b) The Company has obtained, at its sole cost and expense, a prepaid “tail” policy
with coverage for no less than six (6) years following the Closing Date (the “Tail Policy”) with
respect to the existing policy of directors’ and officers’ liability insurance maintained by the
Company as of the Closing for the benefit of the D&O Indemnified Persons with respect to their
acts and omissions occurring prior to the Closing. The Company shall, and Buyer shall cause the
Company to maintain the Tail Policy and not take any action to amend, modify or terminate the
Tail Policy during the term thereof.
(c) The provisions of this Section 6.10 shall survive the consummation of the
transactions contemplated hereby and are intended to be for the benefit of, and will be
enforceable by, each of the D&O Indemnified Persons and their successors, assigns and heirs.
The obligations under this Section 6.10 shall not be terminated or modified in such a manner as to
adversely affect any D&O Indemnified Person to whom this Section 6.10 applies without the
consent of such D&O Indemnified Person (it being expressly agreed that the D&O Indemnified
Persons to whom this Section 6.10 applies shall be third party beneficiaries of this Section 6.10
and shall be entitled to enforce the covenants contained herein).
Section 6.11 Public Announcements. Unless otherwise required by applicable Law (based
upon the reasonable advice of counsel), no party to this Agreement shall make any public announcements
(other than Press Announcements (as defined in the Placing Agreement) and any other announcements
required under the terms of the Placing Agreement) in respect of this Agreement or the transactions
contemplated hereby or otherwise communicate with any news media without the prior written consent of
Buyer and Seller Representative (which consent shall not be unreasonably withheld or delayed), and
Buyer and Seller Representative shall cooperate as to the timing and contents of any such announcement.
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Section 6.12 Further Assurances. Following the Closing, each of the parties hereto shall,
and shall cause their respective Affiliates to, execute and deliver such additional documents, instruments,
conveyances and assurances and take such further actions as may be reasonably required to carry out the
provisions hereof and give effect to the transactions contemplated by this Agreement.
Section 6.13 Employee Matters.
(a) Except with respect to the Key Employees (whose terms of employment are
addressed in their respective employment agreements), for at least one (1) year following the
Closing Date, Buyer shall provide or cause to be provided to all employees of the Company (i) a
salary or wage level and bonus opportunity at least equal to the salary or wage level and bonus
opportunity to which they were entitled immediately prior to the Closing Date and (ii) benefits,
perquisites, and other terms and conditions of employment that are at least equivalent to the
benefits, perquisites, and other terms and conditions of employment that they were entitled to
receive immediately prior to the Closing Date. Notwithstanding the foregoing, following the
Closing Date, Buyer shall provide or cause to be provided to each employee of the Company, as
of the Closing Date, with compensation and benefits at least as favorable as the compensation and
benefits provided to similarly situated employees of Buyer and its Affiliates.
(b) With respect to each employee benefit plan, policy, or practice, including,
without limitation, severance, vacation, and paid time-off plans, policies, or practices, sponsored
or maintained by Buyer or its Affiliates, Buyer shall grant or cause to be granted to all employees
of the Company, credit for all service with the Company prior to the Closing Date for all purposes
(including, without limitation, eligibility to participate, vesting credit, eligibility to commence
benefits, benefit accrual, and severance), subject to offsets for previously accrued benefits and to
avoid the duplication of benefits. Notwithstanding the immediately preceding sentence, neither
Buyer nor any of its Affiliates shall be required to provide credit for such service for level of
benefit or benefit accrual purposes under any defined benefit pension plan (however, for the
avoidance of doubt, Buyer and its Affiliates shall be required to provide credit for such service
for purposes of the level of benefit accruals under any defined contribution profit-sharing or
matching plan).
(c) Following the Closing Date, Buyer shall provide or cause to be provided that any
costs or expenses incurred by employees of the Company (and their dependents and beneficiaries)
up to and including the Closing Date shall be taken into account for purposes of satisfying
applicable deductible, co-payment, coinsurance, maximum out-of-pocket provisions and like
adjustments or limitations on coverage under any such welfare benefit plans.
(d) Nothing in this Section 6.13 is intended to or shall (i) be treated as an amendment
to, or be construed as amending, any Benefit Plan or other benefit plan, program or agreement
sponsored, maintained or contributed to by Buyer or any of its Affiliates, (ii) prevent Buyer or its
Affiliates from terminating any Benefit Plan or any other benefit plan in accordance with its
terms, (iii) prevent Buyer or its Affiliates, after the Closing Date, from terminating the
employment of any employee of the Company, or (iv) confer any rights or remedies (including
third-party beneficiary rights) on any current or former director, employee, consultant or
independent contractor of the Company.
Section 6.14 Financing.
(a) Buyer and its Affiliates shall not permit any amendment or modification to be
made to, or any waiver of any provision or remedy under, or replace, the Placing Agreement, if
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such amendment, modification, waiver or replacement (i) reduces the aggregate amount of the
Financing or (ii) imposes new or additional conditions or otherwise expands, amends or modifies
any of the conditions to the receipt of the Financing in a manner that would reasonably be
expected to (A) materially delay or prevent the Closing Date or (B) materially delay, prevent or
otherwise make materially less likely to occur the funding of the Financing (or satisfaction of the
conditions to obtaining the Financing), and Buyer shall use commercially reasonable efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper
or advisable to arrange and obtain the Financing on the terms described in the Placing Agreement.
Buyer shall give the Company and Seller Representative prompt (in no event more than three (3)
Business Days) written notice: (1) of any breach or default (or any event or circumstance that,
with or without notice, lapse of time or both, would reasonably be expected to give rise to any
breach or default) by any party to the Placing Agreement or any other definitive document related
to the Financing of which Buyer obtains actual knowledge; (2) of the receipt of any written notice
or other written communication from any Person with respect to any actual or potential breach,
default, termination or repudiation by any party to the Placing Agreement or any other definitive
document related to the Financing; and (3) if for any reason Buyer believes in good faith that it
will not be able to obtain all or any portion of the Financing on substantially the terms
contemplated by the Placing Agreement or any other definitive documents related to the
Financing. As soon as reasonably practicable after the date the Seller Representative delivers to
Buyer a written request, but in any event within five (5) Business Days thereof, Buyer shall
provide any information reasonably requested by the Company relating to any circumstance
referred to in clause (1), (2) or (3) of the immediately preceding sentence.
(b) If any portion of the Financing becomes unavailable on the terms and conditions
contemplated in the Placing Agreement, Buyer shall promptly notify the Seller Representative
and shall use commercially reasonable efforts to arrange to obtain alternative financing from
alternative sources on terms and conditions no less favorable in the aggregate to Buyer (in the
reasonable judgment of Buyer) and in an amount sufficient to consummate the transactions
contemplated hereby promptly following the occurrence of such event. Buyer shall promptly
deliver to the Company true and complete copies of all agreements pursuant to which any such
alternative source shall have committed to provide Buyer with any portion of the Financing.
(c) Buyer shall take (or cause to be taken) all commercially reasonable actions, and
do (or cause to be done) all commercially reasonable things, necessary, proper or advisable to
obtain the Financing contemplated by the Placing Agreement.
Section 6.15 Retransfer of Membership Interests. In the event Buyer fails for any reason or
no reason to deliver any portion of the Closing Cash Consideration to Sellers pursuant to
Section 2.03(c)(i), any portion of the Escrow Amount to the Escrow Agent pursuant to Section 2.03(c)(ii),
any portion of the payment to the Non-Milestone Sellers pursuant to Section 2.03(c)(iii), or any portion of
the Seller Representative Expense Fund to the bank account designated by the Seller Presentative
pursuant to Section 2.03(c)(iv) by 4:00 p.m. (Eastern Daylight Time), on the first calendar day
immediately following the Closing Date, Buyer agrees and covenants to transfer, assign and deliver all of
the Membership Interests back to Sellers in the amounts that each Seller originally transferred to Buyer.
Buyer acknowledges that a breach or threatened breach of this Section 6.15 would give rise to irreparable
harm to Sellers, for which monetary damages would not be an adequate remedy, and hereby agrees that in
the event of a breach or a threatened breach by Buyer of any such obligations, Sellers shall, in addition to
any and all other rights and remedies that may be available to them in respect of such breach, be entitled
to seek equitable relief, including a temporary restraining order, an injunction, specific performance and
any other relief that may be available from a court of competent jurisdiction (without any requirement to
post bond).
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ARTICLE VII
TAX MATTERS
Section 7.01 Tax Covenants.
(a) Without the prior written consent of Buyer (such consent not to be unreasonably
withheld, conditioned, or delayed), between the date hereof and the Closing Date, neither the
Sellers nor the Company shall, to the extent it may affect or relate to the Company, (i) make,
change or rescind any Tax election (ii) amend any Tax Return, (iii) take any position on any Tax
Return that is inconsistent with past practices of the Company with respect thereto, or (iv) other
than in the Ordinary Course of Business, take any action, omit to take any action or enter into any
transaction that would have the effect of materially increasing the Tax liability or materially
reducing any Tax asset of the Company in respect of any Post-Closing Tax Period.
(b) Except as required by applicable Law, none of Buyer or any of its Affiliates shall
(or after the Closing, shall cause or permit the Company to) file, amend, refile or otherwise
modify (or grant an extension of any statute of limitations or request an assessment or
reassessment from a Governmental Authority with respect to) any Tax Return relating in whole or
in part to the Company (i) with respect to any Tax Period ending on or before the Closing Date,
or (ii) with respect to any Straddle Period without obtaining the prior written consent of Seller
Representative, which consent shall not be unreasonably withheld, conditioned or delayed. For
the avoidance of doubt, Buyer may not amend or refile any Pass-Through Tax Return.
(c) All transfer, documentary, sales, use, stamp, registration, value added and other
such Taxes and fees (including any penalties and interest) incurred in connection with this
Agreement and the other Transaction Documents (including any real property transfer Tax and
any other similar Tax) shall be borne equally by Sellers on the one hand, and Buyer on the other
hand, and timely paid when due. The party responsible under applicable Law shall, at its own
expense, timely file any Tax Return or other document with respect to such Taxes or fees (and the
other party shall cooperate with respect thereto as necessary).
(d) The Seller Representative shall prepare, or cause to be prepared, all Pass-
Through Tax Returns. The Sellers will timely pay all Taxes with respect to the Pass-Through
Tax Returns directly to the applicable taxing authority. Buyer shall cause to be timely filed all
Pass-Through Tax Returns to the extent such Tax Returns are due after the Closing Date.
(e) Other than the Pass-Through Tax Returns, Buyer shall prepare, or cause to be
timely prepared, in a manner consistent with past practice and applicable Law, all Tax Returns of
the Company, which include a Pre-Closing tax Period, including any Straddle Period, and due
after the Closing Date. With respect to any such Tax Return, prepared by Buyer pursuant to this
Section 7.01(e) and which could reasonably be expected to affect the Tax Liabilities of the Sellers
(including any indemnification obligations with respect to Taxes pursuant to Section 7.03), Buyer
shall provide copies of each such Tax Return to Sellers for their review and comment at least
twenty (20) days prior to the due date of filing any such Tax Returns and Buyer will make, or
cause to be made, such revisions to such Tax Return as reasonably requested by the Seller
Representative. Buyer and the Seller Representative shall attempt in good faith to resolve any
disagreement regarding such Tax Returns prior to the due date for filing such Tax Returns. In the
event that Buyer and the Seller Representative are unable to resolve any disagreement regarding
such Tax Returns within ten (10) days after the Seller Representative has delivered its comments,
the Seller Representative and Buyer shall refer such dispute to the Independent Accountant for
final determination, the costs of which shall be borne equally by Sellers on the one hand, and
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Buyer on the other hand. Buyer and Sellers agree to file any such Tax Return for any Pre-Closing
Tax Period or to amend any such Tax Return that was required to be filed during the period the
Independent Accountant was making its determination consistent with the Independent
Accountant’s determinations.
Section 7.02 Termination of Existing Tax Sharing Agreements. Any and all existing Tax
sharing agreements (whether written or not) binding upon the Company shall be terminated as of the
Closing Date. After such date the Company shall have no further rights or liabilities thereunder.
Section 7.03 Tax Indemnification. Except to the extent treated as a liability in the calculation
of Closing Working Capital, Sellers shall indemnify each Buyer Indemnitee and hold them harmless from
and against (a) any Loss attributable to any breach of or inaccuracy in any representation or warranty
made in Section 3.26; (b) any Loss attributable to any breach or violation of, or failure to fully perform,
any covenant, agreement, undertaking or obligation in this Article VII; (c) all Taxes of the Company or
relating to the business of the Company for all Pre-Closing Tax Periods; (d) all Taxes of any member of
an affiliated, consolidated, combined or unitary group of which the Company (or any predecessor of the
Company) is or was a member on or prior to the Closing Date by reason of a liability under Treasury
Regulation Section 1.1502-6 or any comparable provisions of foreign, state or local Law; and (e) any and
all Taxes of any person imposed on the Company arising under the principles of transferee or successor
liability or by contract, relating to an event or transaction occurring before the Closing Date.
Section 7.04 Straddle Period. In the case of Taxes that are payable with respect to a taxable
period that begins before and ends after the Closing Date (each such period, a “Straddle Period”), the
portion of any such Taxes that are treated as Pre-Closing Taxes for purposes of this Agreement shall be:
(a) in the case of Taxes (i) based upon, or related to, income, receipts, profits, wages,
capital or net worth, (ii) imposed in connection with the sale, transfer or assignment of property,
or (iii) required to be withheld, deemed equal to the amount which would be payable if the
taxable year ended on the Closing Date; and
(b) in the case of other Taxes, deemed to be the amount of such Taxes for the entire
period multiplied by a fraction the numerator of which is the number of days in the period ending
on the Closing Date and the denominator of which is the number of days in the entire period.
Section 7.05 Contests.
(a) Buyer agrees to give prompt written notice to Seller Representative of the receipt
of any written notice by the Company, Buyer or any of Buyer’s Affiliates which involves the
assertion of any claim, or the commencement of any Action, in respect of which an indemnity
may be sought by any Buyer Indemnitee pursuant to this Article VII (a “Tax Claim”); provided,
that failure to comply with this provision shall not affect a Buyer Indemnitee’s right to
indemnification hereunder except to the extent the defense of the Claim is prejudiced thereby.
(b) Within fifteen (15) Business Days after receipt by Seller Representative of a
notice respecting a Tax Claim, the Seller Representative may elect, so long as Sellers have an
obligation to indemnify Buyer Indemnitees hereunder with respect to such Tax Claim, by written
notice to Buyer, to contest the Tax Claim in the name of the Company. If Seller Representative
so elects, Sellers shall be solely responsible for the defense of the item or items at issue to the
extent it relates to a Pre-Closing Tax Period, except that (a) the Seller Representative will keep
Buyer informed with respect to the commencement, status and nature of any such proceeding, and
will reasonably cooperate with Buyer and consult with Buyer regarding the conduct of or
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positions taken in any such proceedings in the event the settlement would create a Tax liability on
part of Buyer, and (b) Sellers will not enter into any settlement or otherwise compromise any
such proceeding without the prior written consent of Buyer (such consent not to be unreasonably
withheld, conditioned or delayed) if such settlement would have the effect of materially
increasing the Tax liability or materially reducing any Tax asset of the Company in respect of any
Post-Closing Tax Period. Buyer will cause the Company to reasonably cooperate, in the contest
of such Tax Claim by making relevant documents and employees available to Sellers and/or
Seller Representative, and to execute such documents (including powers of attorney) as may be
reasonably necessary to allow Sellers and/or Seller Representative to conduct the defense.
(c) With respect to any other Tax Claim, including a Tax Claim related to a Straddle
Period and a Tax Claim that the Seller does not elect to control, Buyer shall have sole
responsibility for the defense of the item or items at issue provided (a) Sellers will have the right
(but not the duty) to participate in the defense of such proceeding and to employ counsel, at their
own expense, separate from counsel employed by Buyer, (b) Buyer will keep Sellers informed
with respect to the commencement, status and nature of any such proceeding, and will reasonably
cooperate with Sellers and consult with them regarding the conduct of or positions taken in any
such proceeding, and (c) Buyer will not enter into any settlement or otherwise compromise any
such proceeding without the prior written consent of the Seller Representative if Sellers would be
obligated to pay or indemnify with respect to a Tax under this Agreement, which consent will not
be unreasonably withheld, conditioned or delayed.
Section 7.06 Cooperation and Exchange of Information. Seller Representative and Buyer
shall provide each other with such cooperation and information as either of them reasonably may request
of the other in filing any Tax Return pursuant to this Article VII or in connection with any audit or other
proceeding in respect of Taxes of the Company. Such cooperation and information shall include
providing copies of relevant Tax Returns or portions thereof, together with accompanying schedules,
related work papers and documents relating to rulings or other determinations by tax authorities. Each of
Seller Representative and Buyer shall retain all Tax Returns, schedules and work papers, records and
other documents in its possession relating to Tax matters of the Company for any taxable period
beginning before the Closing Date until the expiration of the statute of limitations of the taxable periods
to which such Tax Returns and other documents relate, without regard to extensions except to the extent
notified by the other party in writing of such extensions for the respective Tax periods. Prior to
transferring, destroying or discarding any Tax Returns, schedules and work papers, records and other
documents in its possession relating to Tax matters of the Company for any taxable period beginning
before the Closing Date, Seller Representative or Buyer (as the case may be) shall provide the other party
with reasonable written notice and offer the other party the opportunity to take custody of such materials.
Section 7.07 Tax Treatment of Indemnification Payments. Any indemnification payments
pursuant to this Article VII shall be treated as an adjustment to the Purchase Price by the parties for Tax
purposes, unless otherwise required by Law.
Section 7.08 Survival. Notwithstanding anything in this Agreement to the contrary, the
provisions of Section 3.26 and this Article VII shall survive for the full period of all applicable statutes of
limitations (giving effect to any waiver, mitigation or extension thereof) plus 30 days.
Section 7.09 Overlap. To the extent that any obligation or responsibility pursuant to Article
IX may overlap with an obligation or responsibility pursuant to this Article VII, the provisions of this
Article VII shall govern.
Section 7.10 Intended Tax Treatment, Purchase Price Allocation.
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(a) The parties acknowledge and agree that, for U.S. federal and applicable state
income Tax purposes, pursuant to Internal Revenue Service Revenue Ruling 99-6 (and
corresponding applicable state and local Law), the purchase by Buyer of the Membership
Interests will be treated as a deemed liquidation of the Company and a deemed distribution of the
Company’s assets to the Sellers followed by a deemed purchase by Buyer of all the Company’s
assets. In accordance with Revenue Ruling 99-6, the Sellers shall be treated as having sold
partnership interests in accordance with Section 741 of the Code. Each party shall report the
transaction consistently with such treatment on their respective Returns for U.S. federal, state and
local income Tax purposes.
(b) Buyer and Sellers shall allocate the Purchase Price and liabilities assumed (and
other relevant items) among the assets of the Company in a manner consistent with Section 1060
of the Code and Treasury Regulations thereunder (and any similar provision of state, local or
foreign law, as appropriate) as set forth in Section 7.10 of the Disclosure Schedule (as the same
may be amended to account for any adjustments to the Purchase Price hereunder), and all Tax
Returns and reports filed by Sellers Representative and Buyer shall be prepared consistently with
such allocation. None of the parties shall, nor shall they permit their respective Affiliates to, take
any position inconsistent with the allocation in Section 7.10 of the Disclosure Schedule, except to
the extent required pursuant to a “determination” within the meaning of Section 1313(a) of the
Code (and any similar provision of state, local, or foreign Law). In the event that the Purchase
Price allocation reflected in Section 7.10 of the Disclosure Schedule is disputed by any
Governmental Authority, the Party receiving notice of the dispute shall promptly notify the other
Parties in writing, and the Parties agree to use their respective reasonable efforts to defend the
Purchase Price allocation in any audit or similar Tax proceeding.
Section 7.11 Refunds and Credits.
(a) Any amended Tax Return relating to a Pre-Closing Tax Period and any refund
claims relating to a Pre-Closing Tax Period shall be prepared by the Seller Representative and
Buyer will cause the Company to file any such amended Tax Returns or refund claims to the
extent reasonably requested by the Seller Representative, and any costs associated therewith shall
be borne by Sellers.
(b) Any refunds or credits of Taxes of the Company for any Pre-Closing Tax Period
shall be for the benefit of Sellers except (i) to the extent any such refund or credit is treated as an
asset in the calculation of Closing Working Capital, or (ii) to the extent such Tax refund is a
refund of Taxes which were paid by Buyer rather than by the Sellers or the Company on or prior
to the Closing Date or by the Sellers after the Closing Date. For the avoidance of doubt, for
purposes of clause (ii) of this Section 7.11(b), any Taxes treated as a liability in the calculation of
Closing Working Capital shall be treated as paid by the Sellers or the Company on or prior to the
Closing Date. To the extent any such Tax refund is subsequently disallowed or required to be
returned to the applicable tax authority, the Sellers agree to promptly repay the amount of such
Tax refund, together with any applicable interest, penalties or other additional amounts imposed
by such tax authority, to Buyer.
(c) Buyer shall promptly pay over (or cause the Company to pay over) to Sellers all
refunds or credits of Taxes received by Buyer or its affiliates to which Sellers are entitled under
this Section 7.11 (including interest with respect thereto but net of any Taxes and reasonable costs
incurred to obtain such refunds or credits), and Sellers shall promptly pay or cause to be paid over
to Buyer (or the Company) all refunds to which Buyer (or the Company) is entitled under this
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Section 7.11 (in each case, including interest with respect thereto from the date of receipt of such
funds).
ARTICLE VIII
CONDITIONS TO CLOSING
Section 8.01 Conditions to Obligations of All Parties. The obligations of each party to
consummate the transactions contemplated by this Agreement shall be subject to the fulfillment, at or
prior to the Closing, of each of the following conditions:
(a) No Governmental Authority shall have enacted, issued, promulgated, enforced or
entered any Governmental Order which is in effect and has the effect of making the transactions
contemplated by this Agreement illegal or prohibiting consummation of such transactions or
causing any of the transactions contemplated hereunder to be rescinded following completion
thereof.
(b) The Company and each applicable Seller shall have received all consents,
authorizations, orders and approvals from the Governmental Authorities referred to in Section
3.04 and Section 4.04 in form and substance reasonably satisfactory to Buyer, Seller
Representative and such Seller, and no such consent, authorization, order and approval shall have
been revoked.
(c) No Action shall be pending or threatened in writing against Buyer, any Seller, or
the Company, which would (i) prevent the Closing, (ii) have the effect of making the transactions
contemplated by this Agreement illegal, (iii) restrain or prohibit the consummation of any
transaction contemplated herein, or (iv) cause any of such transactions to be rescinded following
the Closing.
Section 8.02 Conditions to Obligations of Buyer. The obligations of Buyer to consummate
the transactions contemplated by this Agreement shall be subject to the fulfillment or Buyer’s waiver, at
or prior to the Closing, of each of the following conditions:
(a) Other than the Fundamental Representations, the representations and warranties
of the Company and Sellers contained in this Agreement (without giving effect to any
qualifications regarding materiality or Material Adverse Effect other than with respect to the
representations and warranties contained in Section 3.05 (third sentence), Section 3.07, Section
3.10, Section 3.12 (clause (c) of third sentence), Section 3.14, Section 3.18(g), Section 3.23(h),
Section 3.24(b), Section 3.25(g) (last sentence), Section 3.26(a) (first sentence), Section 3.26(g),
Section 3.26(l), the definition of “Permitted Encumbrances” and the use of materiality thresholds
to define “Material Contracts,” as to which this parenthetical shall not apply) shall be true and
correct in all respects on and as of the date hereof and on and as of the Closing Date with the
same effect as though made at and as of such date (except those representations and warranties
that address matters only as of a specified date, the accuracy of which shall be determined only as
of that specified date), except to the extent that the failure of such representations and warranties
to be so true and correct has not had and would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect. The Fundamental Representations shall be true
and correct in all respects on and as of the date hereof and on and as of the Closing Date with the
same effect as though made at and as of such date (except those representations and warranties
that address matters only as of a specified date, the accuracy of which shall be determined only as
of that specified date).
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(b) The Company and Sellers shall have duly performed and complied in all material
respects with all agreements, covenants and conditions required by this Agreement that were to
be performed or complied with by the Company and Sellers prior to or on the Closing Date.
(c) From the date of this Agreement, there shall not have occurred any Material
Adverse Effect, nor shall any event or events have occurred that, individually or in the aggregate,
with or without the lapse of time, could reasonably be expected to result in a Material Adverse
Effect.
(d) Each Seller shall have duly executed and delivered the Assignment Agreement to
Buyer.
(e) Each Seller shall have duly executed and delivered the other Transactions
Documents to which such Seller is or will be a party to Buyer.
(f) Buyer shall have received a certificate, dated the Closing Date and signed by an
authorized officer of the Company, that each of the conditions set forth in Section 8.02(a) and
Section 8.02(b) have been satisfied.
(g) The Company shall have delivered to Buyer a good standing certificate for the
Company from the Secretary of State of Delaware.
(h) The Company shall have duly executed and delivered to Buyer the FIRPTA
Certificate.
(i) The Company and each Seller shall have delivered to Buyer such other
documents or instruments as Buyer reasonably requests and are reasonably necessary to
consummate the transactions contemplated by this Agreement.
(j) The shareholders of Tissue Regenix Group plc shall have passed any required
resolutions in connection with this Agreement and the transactions contemplated hereby and the
Financing.
(k) The Placing Agreement shall not have been terminated and shall have become
unconditional in all respects.
(l) Seller Representative shall have delivered to Buyer the Spreadsheet.
(m) Seller Representative shall have delivered to Buyer the pay-off documents and all
instruments and documents necessary to release any and all liens securing Indebtedness of the
Company, including any necessary UCC termination statements, in each case, in form and
substance reasonably satisfactory to Buyer.
(n) The Key Employees shall have remained continuously employed by the
Company through the Closing, and no action shall have been taken by any of the Key Employees
to rescind any employment agreement or non-competition, non-solicitation and non-disclosure
agreement.
Section 8.03 Conditions to Obligations of Sellers. The obligation of Sellers to consummate
the transactions contemplated by this Agreement shall be subject to the fulfillment or Sellers’ waiver, at
or prior to the Closing, of each of the following conditions:
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(a) The representations and warranties of Buyer contained in this Agreement shall be
true and correct in all respects (in the case of any representation or warranty qualified by
materiality or Material Adverse Effect) or in all material respects (in the case of any
representation or warranty not qualified by materiality or Material Adverse Effect) as of the date
hereof and as of the Closing Date with the same effect as though made at and as of such date
(except those representations and warranties that address matters only as of a specified date,
which representations and warranties shall be true and correct in all respects, or true and correct
in all material respects, as applicable, as though made at and as of such date)
(b) Buyer shall have duly performed and complied in all material respects with all
agreements, covenants and conditions required by this Agreement that were to be performed or
complied by Buyer prior to or on the Closing Date (other than the obligations set forth at Section
2.03(c) which shall be performed on the Closing Date); provided, that, with respect to
agreements, covenants and conditions that are qualified by materiality, Buyer shall have
performed such agreements, covenants and conditions, as so qualified, in all respects.
(c) The other Transaction Documents shall have been executed and delivered by
Buyer and Guarantor, as applicable, and true and complete copies thereof shall have been
delivered to Sellers.
(d) Sellers shall have received a certificate, dated as of the Closing Date and signed
by a duly authorized officer of Buyer, that each of the conditions set forth in Section 8.03(a) and
Section 8.03(b) have been satisfied.
(e) Sellers shall have received a certificate of a duly authorized officer of Buyer
certifying that attached thereto are true and complete copies of all resolutions adopted by Buyer’s
board of directors, board of managers or similar governing body authorizing the execution,
delivery and performance of this Agreement and the other Transaction Documents to which
Buyer is or will be a party and the consummation of the transactions contemplated hereby and
thereby, and that all such resolutions are in full force and effect and are all the resolutions adopted
in connection with the transactions contemplated hereby and thereby.
(f) Buyer shall have delivered to Sellers a good standing certificate for Buyer from
the Secretary of State of the State of Delaware.
(g) Buyer shall have delivered to Sellers such other documents or instruments as
Seller Representative reasonably requests and are reasonably necessary to consummate the
transactions contemplated by this Agreement.
ARTICLE IX
INDEMNIFICATION
Section 9.01 Survival. The representations and warranties contained herein (other than the
representations and warranties contained in Section 3.26 (Taxes) which are subject to Article VII) shall
survive the Closing and shall remain in full force and effect until the date that is eighteen (18) months
after the Closing Date; except that the representations and warranties in (i) Section 3.01 (Organization,
Authority and Qualification of the Company), Section 3.02 (Capitalization), Section 3.28 (Brokers),
Section 4.01 (Legal Capacity / Power and Authority), Section 4.03 (Title to Membership Interests), and
Section 5.03 (Brokers) (collectively, the “Fundamental Representations”) shall survive indefinitely, (ii)
Section 3.23 (Environmental Matters) shall survive for a period of five (5) years after the Closing, and
(iii) Section 3.24 (Employee Benefits) shall survive for the full period of all applicable statutes of
WEST\275532193.26 67
limitations (giving effect to any waiver, mitigation or extension thereof) plus 60 days. All covenants and
agreements of the parties contained in this Agreement shall survive the Closing and continue in full force
and effect thereafter for so long as such covenants and agreements remain executory in nature.
Notwithstanding the foregoing, any claims asserted in good faith with reasonable specificity (to the extent
known at such time) and in writing by notice from the non-breaching party to the breaching party prior to
the expiration date of the applicable survival period shall not thereafter be barred by the expiration of the
relevant representation or warranty and such claims shall survive until finally resolved.
Section 9.02 Indemnification By Sellers. Subject to the other terms and conditions of this
Article IX, following the Closing, Sellers shall, severally in accordance with their respective Pro Rata
Share, (except as otherwise provided in Section 9.04(e)) and not jointly, indemnify and defend Buyer and
its Affiliates (including the Company) and their respective Representatives (collectively, the “Buyer
Indemnitees”) against, and shall hold each of them harmless from and against, and shall pay and
reimburse each of them for, any and all Losses (other than Losses included in Current Liabilities and
taken into account in the calculation of Closing Working Capital) incurred or sustained by, or imposed
upon, Buyer Indemnitees based upon, arising out of, with respect to or by reason of:
(a) any inaccuracy in or breach of any of the representations or warranties of the
Company or Sellers contained in this Agreement or in any certificate or instrument delivered by
or on behalf of Sellers at Closing pursuant to Section 8.02 (other than in respect of the
representations or warranties of the Company contained in Section 3.26 (Taxes), it being
understood that the sole remedy for any such inaccuracy in or breach thereof shall be pursuant to
Article VII) as of the date such representation or warranty was made or as if such representation
or warranty was made on and as of the Closing Date (except for representations and warranties
that expressly relate to a specified date, the inaccuracy in or breach of which will be determined
with reference to only such specified date); or
(b) any breach or non-fulfillment of any covenant, agreement or obligation to be
performed by Sellers or the Company pursuant to this Agreement (other than any breach or
violation of, or failure to fully perform, any covenant, agreement or obligation in Article VII, it
being understood that the sole remedy for any such breach, violation or failure shall be pursuant
to Article VII).
Section 9.03 Indemnification By Buyer. Subject to the other terms and conditions of this
Article IX, Buyer shall indemnify and defend each Seller, its Affiliates and their respective
Representatives (collectively, the “Seller Indemnitees”) against, and shall hold each of them harmless
from and against, and shall pay and reimburse each of them for, any and all Losses incurred or sustained
by, or imposed upon, the Seller Indemnitees based upon, arising out of, with respect to or by reason of:
(a) any inaccuracy in or breach of any of the representations or warranties of Buyer
or Guarantor contained in this Agreement or in any certificate or instrument delivered by or on
behalf of Buyer or Guarantor pursuant to Section 8.03 as of the date such representation or
warranty was made or as if such representation or warranty was made on and as of the Closing
Date (except for representations and warranties that expressly relate to a specified date, the
inaccuracy in or breach of which will be determined with reference to only such specified date);
or
(b) any breach or non-fulfillment of any covenant, agreement or obligation to be
performed by Buyer or Guarantor or, after the Closing the Company, pursuant to this Agreement
(other than any breach or violation of, or failure to fully perform, any covenant, agreement or
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obligation in Article VII, it being understood that the sole remedy for any such breach, violation
or failure shall be pursuant to Article VII).
Section 9.04 Certain Limitations. The indemnification provided for in Section 9.02 and
Section 9.03 shall be subject to the following limitations:
(a) Sellers shall not be liable to Buyer Indemnitees for indemnification under Section
9.02(a) until the aggregate amount of all Losses in respect of indemnification under Section
9.02(a) exceeds one hundred twenty-five thousand dollars ($125,000) (the “Basket”), at which
time Sellers shall be required to pay or be liable to Buyer Indemnitees for all such Losses from
the first dollar. The aggregate amount of all Losses for which Sellers shall be liable to Buyer
Indemnitees for indemnification under Section 9.02(a) shall not exceed two million five hundred
thousand dollars ($2,500,000) (the “Cap”).
(b) Buyer shall not be liable to the Seller Indemnitees for indemnification under
Section 9.03(a) until the aggregate amount of all Losses in respect of indemnification under
Section 9.03(a) exceeds the Basket, at which time Buyer shall be required to pay or be liable to
the Seller Indemnitees for all such Losses from the first dollar. The aggregate amount of all
Losses for which Buyer shall be liable to the Seller Indemnitees for indemnification under
Section 9.03(a) shall not exceed the Cap.
(c) Notwithstanding the foregoing, the limitations set forth in Section 9.04(a) and
Section 9.04(b) shall not apply to Losses based upon, arising out of, with respect to or by reason
of any inaccuracy in or breach of any of the Fundamental Representations.
(d) For the sole purpose of determining Losses (and not for determining whether any
inaccuracy in or breach of any representation or warranty has occurred), the representations and
warranties of the Company, Sellers, Buyer and Guarantor (other than with respect to the
representations and warranties contained in Section 3.05 (third sentence), Section 3.07, Section
3.10, Section 3.12 (clause (c) of third sentence), Section 3.14, Section 3.18(g), Section 3.23(h),
Section 3.24(b), Section 3.25(g) (last sentence), Section 3.26(a) (first sentence), Section 3.26(g),
Section 3.26(l), the definition of “Permitted Encumbrances” and the use of materiality thresholds
to define “Material Contracts,” as to which this Section 9.04(d) shall not apply) shall not be
deemed qualified by any references to materiality or to Material Adverse Effect or other similar
qualification contained in such representation or warranty.
(e) Notwithstanding anything contained in this Agreement to the contrary, (i) each
Seller shall have sole and exclusive liability for indemnification of Buyer Indemnitees (subject to
the other limitations set forth in this Article IX) with regard to any breach of such Seller’s
representations and warranties set forth in Article IV or any breach by such Seller of its
covenants, agreements or obligations set forth in this Agreement and (ii) the aggregate amount of
all Losses for which each Seller shall be liable pursuant to Section 9.02 shall not exceed the
amount received by such Seller pursuant to this Agreement.
(f) Each Indemnified Party shall take all commercially reasonable steps to mitigate
its respective Losses upon and after becoming aware of any event or condition that has given rise
to any Losses that are indemnifiable pursuant to this Agreement (without regard to the
applicability of the Basket).
(g) The amount of Losses for which an Indemnified Party may make an
indemnification claim pursuant to this Agreement shall be reduced by any amounts recovered by
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the Indemnified Party under insurance policies with respect to such Losses. Each Indemnified
Party must use commercially reasonable efforts to obtain recovery under such insurance policies,
and the reasonable out-of-pocket expenses of such Indemnified Party, if any, incurred in
obtaining such recovery shall offset the reduction of the amount of Losses required by the
foregoing sentence. The Indemnifying Party shall be subrogated to all rights of the Indemnified
Party in respect of any Loss borne by the Indemnifying Party (to the extent not prohibited by
applicable Law or the terms of any insurance policy), but only to the extent of the amount of the
Loss paid by the Indemnifying Party. To the extent that any payment received by an Indemnified
Party for Losses covered under any insurance policy was not previously taken into account to
reduce the amount of such indemnifiable Losses paid to the Indemnified Party by the
Indemnifying Party, the Indemnified Party shall remit such amounts so recovered to the
Indemnifying Party within fifteen (15) days of receipt (after deducting therefrom the full amount
of the expenses incurred by the Indemnified Party in procuring such recovery). If the
Indemnifying Party has properly assumed the defense of a Third Party Claim pursuant to this
Agreement, and the costs of such defense as borne by the Indemnifying Party are recovered by
the Indemnified Party from an insurer, the Indemnified Party shall remit such amounts (without
deducting the amount of any deductibles paid by the Indemnified Party) to the Indemnifying
Party; provided the Indemnified Party has not previously reimbursed the Indemnifying Party for
such defense costs. Notwithstanding any provision in this Section 9.04(g) to the contrary, the
rights of the Indemnifying Party to any insurance proceeds under this Section 9.04(g) shall be
secondary to the Indemnified Party’s rights to collect insurance proceeds under its insurance
policies.
(h) The amount of Losses for which an Indemnified Party may make an
indemnification claim pursuant to this Agreement shall be determined net of any net Tax benefit
actually realized by the Indemnified Party arising from the recognition of the Loss through the
reduction of Taxes payable in the year such Loss is incurred, rather than through the creation of
any loss carryforward or suspended loss, which Tax benefit shall be determined after first taking
into account all other items of income, gain, loss, deduction or credit of the Indemnified Party.
Each Indemnified Party must use commercially reasonable efforts to realize such Tax benefits.
(i) Notwithstanding anything to the contrary in this Agreement, no Indemnifying
Party shall be liable to or otherwise responsible to any Indemnified Party or other Person for
exemplary, punitive, consequential or other special damages (including, loss of revenue, income
or profits, and in particular, no “multiple of EBITDA” or similar valuation methodology shall be
used in calculating the amount of any Losses) for any matter indemnifiable hereunder or
otherwise arising out of or relating to this Agreement and the transactions contemplated hereby,
except to the extent that such damages are required to be paid by an Indemnified Party to a third
party (which shall not include any Affiliate of an Indemnified Party).
Section 9.05 Indemnification Procedures. The party making a claim under this Article IX is
referred to as the “Indemnified Party,” and the party against whom such claims are asserted
under this Article IX is referred to as the “Indemnifying Party.”
(a) Third Party Claims. If any Indemnified Party receives notice of the assertion or
commencement of any Action made or brought by any Person who is not a party to this
Agreement or an Affiliate of a party to this Agreement or a Representative of the foregoing (a
“Third Party Claim”) against such Indemnified Party with respect to which the Indemnifying
Party is obligated to provide indemnification under this Agreement, the Indemnified Party shall
give the Indemnifying Party prompt written notice thereof, but in any event not later than twenty-
one (21) calendar days after receipt of such notice of such Third Party Claim. The failure to give
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such prompt written notice shall not, however, relieve the Indemnifying Party of its
indemnification obligations, except as provided in Section 9.01 or otherwise to the extent that the
Indemnifying Party forfeits rights or defenses by reason of such failure or is otherwise prejudiced
by reason of such failure. Such notice by the Indemnified Party shall describe the Third Party
Claim in reasonable detail, shall include copies of all material written evidence relating thereto
and shall indicate the estimated amount, if reasonably practicable, of the Loss that has been or
may be sustained by the Indemnified Party. The Indemnifying Party shall have the right to
participate in, or by giving prompt written notice to the Indemnified Party, to assume the defense
of any Third Party Claim at the Indemnifying Party’s expense and by the Indemnifying Party’s
own counsel, and the Indemnified Party shall cooperate in good faith in such defense; provided,
that if the Indemnifying Party is a Seller, such Indemnifying Party shall not have the right to
defend or direct the defense of any such Third Party Claim that (x) is asserted directly by or on
behalf of a Person that is a supplier or customer of the Company, or (y) seeks an injunction or
other equitable relief against Buyer or the Company as the Indemnified Party. In the event that
the Indemnifying Party assumes the defense of any Third Party Claim, subject to Section 9.05(b),
it shall have the right to take such action as it deems necessary or reasonable to avoid, dispute,
defend, appeal, or make counterclaims pertaining to any such Third Party Claim in the name and
on behalf of the Indemnified Party. The Indemnified Party shall have the right to participate in
the defense of any Third Party Claim with counsel selected by it subject to the Indemnifying
Party’s right to control the defense thereof. The fees and disbursements of such counsel to the
Indemnified Party shall be at the expense of the Indemnified Party, provided, that if in the
reasonable opinion of counsel to the Indemnified Party, (i) there are material legal defenses
available to an Indemnified Party that are different from or additional to those available to the
Indemnifying Party; or (ii) there exists a conflict of interest between the Indemnifying Party and
the Indemnified Party that cannot be waived, the Indemnifying Party shall be liable for the
reasonable fees and expenses of counsel to the Indemnified Party in each jurisdiction for which
the Indemnified Party reasonably determines counsel is required. If the Indemnifying Party elects
not to compromise or defend such Third Party Claim, fails to promptly notify the Indemnified
Party in writing of its election to defend as provided in this Agreement, or fails to diligently
prosecute the defense of such Third Party Claim, the Indemnified Party may, subject to Section
9.05(b), pay, compromise, defend such Third Party Claim and seek indemnification for any and
all Losses based upon, arising from or relating to such Third Party Claim, subject to the
limitations set forth in Section 9.04. Seller Representative and Buyer shall cooperate with each
other in all reasonable respects in connection with the defense of any Third Party Claim,
including making available records (subject to the provisions of Section 6.05 with respect to
records provided by Buyer, and subject to Buyer providing comparable written assurances of
confidential treatment, with respect to records provided by any Seller) relating to such Third
Party Claim and furnishing, without expense (other than reimbursement of actual out-of-pocket
expenses) to the defending party, management employees of the non-defending party as may be
reasonably necessary for the preparation of the defense of such Third Party Claim.
(b) Settlement of Third Party Claims. Notwithstanding any other provision of this
Agreement, the Indemnifying Party shall not enter into settlement of any Third Party Claim
without the prior written consent of the Indemnified Party, except as provided in this Section
9.05(b). If a firm offer is made to settle a Third Party Claim without leading to liability or the
creation of a financial or other obligation on the part of the Indemnified Party and provides, in
customary form, for the unconditional release of each Indemnified Party from all liabilities and
obligations in connection with such Third Party Claim and the Indemnifying Party desires to
accept and agree to such offer, the Indemnifying Party shall give written notice to that effect to
the Indemnified Party (the “Settlement Notice”). If, within twenty-one (21) days after the
Indemnified Party’s receipt of a Settlement Notice, the Indemnified Party provides written notice
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to the Indemnifying Party that it does not consent to the proposed settlement offer and that the
Indemnified Party will assume the defense of the Third Party Claim (a “Settlement Rejection
Notice”), then (i) the Indemnifying Party shall have no further obligation to prosecute the defense
of such Third Party Claim, (ii) the Indemnified Party shall have the full responsibility for the
defense or settlement of such Third Party Claim, and (iii) the maximum liability of the
Indemnifying Party as to such Third Party Claim shall not exceed the amount of such settlement
offer. If the Indemnified Party fails to provide the Settlement Rejection Notice to the
Indemnifying Party within ten (10) days after the Indemnified Party’s receipt of the Settlement
Notice, then the Indemnifying Party may settle the Third Party Claim upon the terms set forth in
such firm offer to settle such Third Party Claim. If the Indemnified Party has assumed the
defense of a Third Party Claim pursuant to Section 9.05(a), it shall not agree to any settlement of
such Third Party Claim without the prior written consent of the Indemnifying Party (which
consent shall not be unreasonably withheld or delayed).
(c) Direct Claims. If any Indemnified Party becomes aware that it is entitled to
make a claim for indemnification under Section 7.03, Section 9.02 or Section 9.03, other than in
respect of a Third Party Claim or a Tax Claim (a “Direct Claim”), without regard to the
applicability of the Basket, such Indemnified Party shall give the Indemnifying Party prompt
written notice thereof, but in any event not later than fifteen (15) days after the Indemnified Party
becomes aware of such Direct Claim. The failure to give such prompt written notice shall not,
however, relieve the Indemnifying Party of its indemnification obligations, except as provided in
Section 9.01 or otherwise to the extent that the Indemnifying Party forfeits rights or defenses by
reason of such failure or is otherwise prejudiced by reason of such failure. Such notice by the
Indemnified Party shall describe the Direct Claim in reasonable detail, shall include copies of all
material written documentation relating thereto and shall indicate the estimated amount, if
reasonably practicable, of the Loss that has been or may be sustained by the Indemnified Party.
The Indemnified Party shall allow the Indemnifying Party and its professional advisors to
investigate the matter or circumstance alleged to give rise to the Direct Claim, and whether and to
what extent any Losses may have been sustained by the Indemnified Party in respect of the Direct
Claim and the Indemnified Party shall assist the Indemnifying Party’s investigation by giving
such information and assistance (including access to the Company’s premises and personnel and
the right to examine and copy any accounts, documents or records) as the Indemnifying Party or
any of its professional advisors may reasonably request.
(d) Tax Claims. Notwithstanding any other provision of this Agreement, the control
of the defense and settlement of any Tax Claim (including, but not limited to, any such claim in
respect of a breach of the representations and warranties in Section 3.26 hereof or any breach or
violation of or failure to fully perform any covenant, agreement, undertaking or obligation in
Article VII) shall be governed exclusively by Article VII and Section 9.05(e) hereof.
(e) Loss Certificate. If an Indemnified Party desires to make a claim pursuant to
Section 7.03, Section 9.02 or Section 9.03 for reimbursement of an indemnifiable Loss that has
been suffered by such Indemnified Party (whether in respect of a Direct Claim or resulting from
the defense, settlement or resolution of a Third Party Claim or a Tax Claim) or desires that an
indemnifiable Loss be charged against the Basket of the applicable Indemnifying Party, the
Indemnified Party must prepare and deliver (by certified mail) to the Indemnifying Party a written
certification that the Indemnified Party has paid or sustained Losses subject to indemnification by
the Indemnifying Party pursuant to Section 7.03, Section 9.02 or Section 9.03, as applicable (a
“Loss Certificate”). A Loss Certificate shall (i) describe in reasonable detail the basis for
indemnification (citing the relevant provision(s) of this Agreement on which such claim is based),
(ii) state the amount of Losses paid or sustained by the Indemnified Party in connection with the
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matter and provide reasonable detail regarding the calculation thereof and (iii) state the amount of
such Losses for which indemnification is sought (after giving effect to the limitations set forth in
this Agreement). A Loss Certificate may be combined with a notice of a Direct Claim pursuant to
Section 9.05(c) provided that the required contents of a Loss Certificate are included therein. If
the Indemnifying Party does not respond to a Loss Certificate within thirty (30) days after its
receipt thereof, the Indemnifying Party shall be deemed to have rejected the claim(s) made
therein, in which case the Indemnified Party shall be free to pursue such remedies as may be
available to the Indemnified Party on the terms and subject to the provisions of this Agreement.
(f) Source of Recovery Against Sellers. Except for Losses attributable to fraud, the
amount of any Losses required to be reimbursed by Sellers (except as otherwise provided in
Section 9.04(e)) to any of Buyer Indemnitees pursuant to Section 7.03 or Section 9.02, after
giving effect to all applicable limitations set forth in this Agreement, as such amount is
determined by mutual written agreement of Buyer and Seller Representative or a final, non-
appealable order of a court of competent jurisdiction (an “Indemnity Payment Obligation”), shall
be paid as follows: (i) first, with respect to any such Losses required to be reimbursed by the
Milestone Sellers, from the Escrow Amount (to the extent of the Escrow Amount, if any, then
remaining in the Escrow Fund), in accordance with the Escrow Agreement, and Buyer and Seller
Representative shall promptly cause such amount to be delivered to the applicable Buyer
Indemnitee under the terms of the Escrow Agreement (provided that if the Indemnity Payment
Obligation is in respect of any breach of a Milestone Seller’s representations and warranties set
forth in Article IV or any breach by such Milestone Seller of its covenants, agreements or
obligations set forth in this Agreement, then recovery from the Escrow Fund shall be limited to
such Milestone Seller’s Pro Rata Percentage of the Escrow Fund); (ii) second, with respect to any
such Losses required to be reimbursed by the Milestone Sellers, to the extent that the Indemnity
Payment Obligation is not satisfied by the preceding clause (i), by offset against any amount of
the Milestone Consideration, if any, that is then payable or is expected to become payable to the
Milestone Sellers, severally and not jointly in accordance with each Milestone Seller’s respective
Pro Rata Percentage (except as otherwise provided in Section 9.04(e)), and (iii) third, to the
extent that the Indemnity Payment Obligation is not satisfied by the preceding clause (i) and
clause (ii), by recovery directly from Sellers, severally and not jointly in accordance with each
Seller’s respective Pro Rata Share (except as otherwise provided in Section 9.04(e)). For
avoidance of doubt, with respect to any such Losses required to be reimbursed by the Non-
Milestone Sellers, such Losses must be recovered directly from the Non-Milestone Sellers,
severally and not jointly (except as otherwise provided in Section 9.04(e)), and may not be settled
from the Escrow Amount or by offsetting any Milestone Consideration.
Nothing set forth in this Section 9.05(f) shall be deemed to expand or limit the scope of
any of Sellers’ obligations to any Buyer Indemnitee with respect to the amount of Losses payable
by Sellers.
Notwithstanding anything to the contrary in this Agreement, Losses required to be
reimbursed by Sellers to any of Buyer Indemnitees pursuant to Section 7.03 or Section 9.02 that
are attributable to fraud shall be paid directly by the Seller(s) that committed such fraud.
(g) Source of Recovery Against Buyer. The amount of any Losses required to be
reimbursed by Buyer to any of the Seller Indemnitees pursuant to Section 7.03 or Section 9.03,
after giving effect to all applicable limitations set forth in this Agreement, as such amount is
determined by mutual written agreement of Buyer and Seller Representative or a final, non-
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appealable order of a court of competent jurisdiction, shall be paid directly by Buyer to such
Seller Indemnitee.
Section 9.06 Tax Treatment of Indemnification Payments. All indemnification payments
made under this Agreement shall be treated by the parties as an adjustment to the Purchase Price for Tax
purposes, unless otherwise required by Law.
Section 9.07 Effect of Investigation. The representations, warranties and covenants of the
Indemnifying Party, and the Indemnified Party’s right to indemnification with respect thereto, shall not be
affected or deemed waived by reason of any investigation made by or on behalf of the Indemnified Party
(including by any of its Representatives) or by reason of the fact that the Indemnified Party or any of its
Representatives knew or should have known that any such representation or warranty is, was or might be
inaccurate or by reason of the Indemnified Party’s waiver of any condition set forth in Section 8.02 or
Section 8.03, as the case may be.
Section 9.08 Exclusive Remedies. Subject to Section 6.06 and Section 11.12, the parties
acknowledge and agree that, from and after the Closing, their sole and exclusive remedy with respect to
any and all claims (other than claims arising from fraud, criminal activity or willful misconduct on the
part of a party hereto in connection with the transactions contemplated by this Agreement) for any breach
of any representation, warranty, covenant, agreement or obligation set forth herein or otherwise relating to
the subject matter of this Agreement, shall be to seek indemnification in accordance with, and subject to
the limitations and qualifications set forth in, Article VII and this Article IX. In furtherance of the
foregoing, each party hereby waives, to the fullest extent permitted under Law, any and all rights, claims
and causes of action for any breach of any representation, warranty, covenant, agreement or obligation set
forth herein or otherwise relating to the subject matter of this Agreement it may have against the other
parties hereto and their Affiliates and each of their respective Representatives arising under or based upon
any Law, except pursuant to the indemnification provisions set forth in Article VII and this Article IX.
Nothing in this Section 9.07 shall limit any Person’s right to seek and obtain any equitable relief to which
any Person shall be entitled or to seek any remedy on account of any party’s fraudulent, criminal or
intentional misconduct.
ARTICLE X
TERMINATION
Section 10.01 Termination. This Agreement may be terminated at any time prior to the
Closing:
(a) by the mutual written consent of Seller Representative and Buyer;
(b) by Buyer by written notice to Seller Representative if:
(i) Buyer is not then in material breach of any provision of this Agreement
and there has been a breach, inaccuracy in or failure to perform any representation,
warranty, covenant or agreement made by the Company or a Seller pursuant to this
Agreement that would give rise to the failure of any of the conditions specified in Article
VIII to be satisfied and such breach, inaccuracy or failure has not been cured by the
Company or such Seller(s) within twenty (20) days of Seller Representative’s receipt of
written notice of such breach from Buyer; or
(ii) any of the conditions set forth in Section 8.01 or Section 8.02 (other than
a condition to be satisfied by action to be taken at the Closing) shall not have been, or if it
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becomes apparent that any of such conditions will not be, fulfilled by August 20, 2017,
unless such failure shall be due to the failure of Buyer to perform or comply with any of
the covenants, agreements or conditions hereof to be performed or complied with by it
prior to the Closing;
(c) by Seller Representative (on behalf of Sellers) by written notice to Buyer if:
(i) Sellers are not then in material breach of any provision of this Agreement
and there has been a breach, inaccuracy in or failure to perform any representation,
warranty, covenant or agreement made by Buyer or Guarantor pursuant to this
Agreement that would give rise to the failure of any of the conditions specified in Article
VIII to be satisfied and such breach, inaccuracy or failure has not been cured by Buyer or
Guarantor within twenty (20) days of Buyer’s receipt of written notice of such breach
from Seller Representative; or
(ii) any of the conditions set forth in Section 8.01 or Section 8.03 (other than
a condition to be satisfied by action to be taken at the Closing) shall not have been, or if it
becomes apparent that any of such conditions will not be, fulfilled by August 20, 2017,
unless such failure shall be due to the failure of the Company or Sellers to perform or
comply with any of the covenants, agreements or conditions hereof to be performed or
complied with by them prior to the Closing; or
(d) by Buyer or Sellers in the event that (i) there shall be any Law that makes
consummation of the transactions contemplated by this Agreement illegal or otherwise prohibited
or (ii) any Governmental Authority shall have issued a Governmental Order restraining or
enjoining the transactions contemplated by this Agreement, and such Governmental Order shall
have become final and non-appealable.
Section 10.02 Effect of Termination. In the event of the termination of this Agreement in
accordance with this Article, this Agreement shall forthwith become void and there shall be no liability on
the part of any party hereto except:
(a) That the provisions set forth in this Article X, the last sentence of Section 6.02,
Section 6.11, Article XI hereof, and the definitions in Article I to the extent utilized in such other
provisions, shall remain in full force and effect and survive any termination of this Agreement;
(b) that such termination shall not relieve any party hereto from liability for any
willful breach of any provision hereof prior to such termination or for any breach of any provision
surviving such termination; and
(c) the Mutual Confidentiality Agreement, by and among the Company, Tissue
Regenix Group plc and TRx Wound Care Ltd dated July 13, 2014, shall remain in full force and
effect and survive any termination of this Agreement.
ARTICLE XI
MISCELLANEOUS
Section 11.01 Appointment and Authority of the Seller Representative.
(a) Each Seller hereby constitutes and irrevocably appoints, effective from and after
the date hereof, Jesus Hernandez as such Seller’s agent and attorney-in-fact to act as the Seller
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Representative under this Agreement and the Transaction Documents in accordance with the
terms of this Section 11.01 and the Transaction Documents. In the event of the resignation, death
or incapacity of the Seller Representative, a successor Seller Representative shall thereafter be
appointed by an instrument in writing signed by such successor Seller Representative and by
those Sellers who, immediately prior to the Closing Date, held a majority of the Class A Units of
the Company, and such appointment shall become effective as to any such successor Seller
Representative when a copy of such instrument shall have been delivered to Buyer.
(b) The Seller Representative is hereby authorized and empowered to act for, and on
behalf of, any or all of the Sellers to:
(i) calculate the Estimated Closing Working Capital, prepare the Estimated
Closing Working Capital Statement, calculate Closing Cash Consideration, review and
verify the Reconciled Closing Working Capital and Reconciled Working Capital
Statement, resolve any disputes with Buyer pursuant to Section 2.04 with respect thereto,
and authorized the payment of the Sellers’ share, if any, of the Independent Accountant’s
fees and expenses pursuant to Section 2.04;
(ii) review and verify the Milestone Certificate, resolve any disputes with
Buyer pursuant to Section 2.07 with respect thereto, and authorized the payment of the
Milestone Sellers’ share, if any, of the Independent Accountant’s fees and expenses
pursuant to Section 2.07;
(iii) prepare and submit to Buyer the Spreadsheet;
(iv) pursue, defend and settle any indemnification claims, whether made by
or against the Sellers, pursuant to Article IX, and to do all other things and to take all
other actions after the Closing that the Seller Representative may consider necessary or
appropriate to resolve any such indemnification claims;
(v) authorize the Escrow Agent to release all or any portion of the Escrow
Amount to Buyer Indemnitees in satisfaction of indemnification claims made by such
Buyer Indemnitees;
(vi) establish a bank account in the name of the Seller Representative (as
representative of the Sellers), at such bank as may be designated by the Seller
Representative, and to receive and disburse from such account any payments of Purchase
Price to which the Milestone Sellers and Non-Milestone Sellers may be entitled pursuant
to this Agreement, including, in each case as applicable, (i) the Closing Cash
Consideration, (ii) any post-Closing adjustment to the Closing Cash Consideration and
Purchase Price pursuant to Section 2.04 and (iii) any release of Escrow Amount (or any
portion thereof) pursuant to the Escrow Agreement;
(vii) resolve any other dispute with Buyer over any aspect of this Agreement,
including demanding and/or participating in arbitration proceedings with respect to such
disputes and complying with any Governmental Orders issued in connection therewith;
(viii) to accept and acknowledge on behalf of the Sellers service of any and all
legal process that may lawfully be served upon such Sellers in any action, suit or
proceeding under or relating to this Agreement in any action brought in any court and to
commence any action in any such court, or take any other action that the Seller
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Representative determines to be appropriate, to enforce the rights of the Sellers under this
Agreement and the Transaction Documents
(ix) give and receive notices and communications that are required to be
given, or that may be given, pursuant to this Agreement;
(x) negotiate, agree to and enter into any agreement (including settlements
and releases), on behalf of the Sellers, to effectuate any of the foregoing, which
agreements shall have the effect of binding such Sellers as if such Sellers had personally
entered into such agreements;
(xi) to terminate, amend, waive any provision of, or abandon, this Agreement
or any of the Transaction Documents;
(xii) to retain auditors, attorneys, arbitrators, accountants and any other
Persons as the Seller Representative shall deem necessary in connection with the
performance of his duties under this Agreement or the Transaction Documents;
(xiii) to take such further actions as are authorized in this Agreement or the
Transaction Documents; and
(xiv) in general, do all other things and take all other actions under or related
to this Agreement and the Transaction Documents that the Seller Representative may
consider necessary or appropriate in the judgment of the Seller Representative to
accomplish the foregoing or for the accomplishment of any other action required by the
terms of this Agreement (including actions related to Taxes and Tax matters provided for
in Article VII) and the Transaction Documents and to otherwise effectuate the
transactions contemplated by this Agreement and the Transaction Documents.
(c) Buyer shall be entitled to rely on such appointment and to treat the Seller
Representative as the duly appointed attorney-in-fact of each Seller. Each Seller shall cooperate
with the Seller Representative and any accountants, attorneys or other agents whom it may retain
to assist in carrying out its duties hereunder. Each Seller, by execution of this Agreement, and
without any further action, confirms such appointment and authority. Notices given to the Seller
Representative in accordance with the provisions of this Agreement shall constitute notice to the
Sellers for all purposes under this Agreement.
(d) The appointment of the Seller Representative is an agency coupled with an
interest and is irrevocable and any action taken by the Seller Representative pursuant to the
authority granted in this Section 11.01 shall be effective and absolutely binding on each Seller,
notwithstanding any contrary action of or direction from such Seller, except for actions or
omissions of the Seller Representative constituting willful misconduct or gross negligence. The
Seller Representative undertakes to perform only such duties as are set forth in this Agreement
and no implied covenants or obligations shall be read into this Agreement against the Seller
Representative. The death or incapacity, or dissolution or other termination of existence, of any
Seller, shall not terminate the authority and agency of the Seller Representative. Buyer, the
Company, their respective Affiliates, and each of its and their Affiliates’ respective
Representatives shall be entitled to rely upon, and shall have no liability of any kind to, the
Sellers with respect to any such reliance on the actions, decisions and determinations of the Seller
Representative, and such indemnified parties shall be entitled to assume in all cases that all
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actions, decisions and determinations of the Seller Representative are fully authorized by all of
the Sellers.
(e) Each Seller hereby releases the Seller Representative from, and each Seller
agrees to indemnify the Seller Representative against, any Loss, damage, Tax, liability and
expense that may be incurred or paid with respect to any action taken or not taken by the Seller
Representative in his capacity as such (including the expenses referred to in this Section 11.01,
including the legal costs and expenses of defending the Seller Representative against any claim or
liability in connection with the performance of his duties, except for the liability of the Seller
Representative to a Seller for Loss which such Seller may suffer from the willful misconduct or
gross negligence of the Seller Representative in carrying out his duties hereunder or under the
Transaction Documents. The Seller Representative shall not be liable to any Seller or to any
other Person, with respect to any action taken or omitted to be taken by the Seller Representative
in his role as Seller Representative under or in connection with this Agreement, unless such
action or omission results from or arises out of willful misconduct or gross negligence on the part
of the Seller Representative, and the Seller Representative shall not be liable to any Seller in the
event that, in the exercise of his reasonable judgment, the Seller Representative believes there
will not be adequate resources available to cover potential costs and expenses to contest a claim
made by Buyer against the Sellers.
(f) The Seller Representative shall receive no compensation for service as such but
shall receive reimbursement from, and be indemnified by, the Sellers, pro rata in accordance with
each such Seller’s Pro Rata Share, for any and all expenses, charges and liabilities, including, but
not limited to, Seller Representative expenses, incurred by the Seller Representative in the
performance or discharge of his duties pursuant to this Section 11.01. The Seller Representative
shall be entitled to withdraw cash amounts held in the account containing the Seller
Representative Expense Fund in reimbursement for out-of-pocket fees and expenses and
indemnifications (including legal, accounting and other advisors’ fees and expenses, if
applicable) incurred by the Seller Representative in performing under this Agreement and the
Escrow Agreement. In the event that the Seller Representative Expense Fund is insufficient to
cover the fees and expenses and indemnifications incurred by the Seller Representative in
performing under this Agreement or the Escrow Agreement, and any Seller’s Pro Rata Share of
such expenses are not paid or reimbursed by such Seller prior to any distribution of the Escrow
Amount, the Seller Representative shall be entitled to either (i) deduct and retain such expense
amount from, pay such amount directly to his third party service providers from, or set up a
successor account pursuant to this Section 11.01 from any distribution of the Escrow Amount, as
the case may be, to such Milestone Seller and (ii) recovery directly from such Non-Milestone
Seller or Non-Milestone Seller, as applicable.
Section 11.02 Expenses. Except as otherwise expressly provided herein, all costs and
expenses, including, without limitation, fees and disbursements of counsel, financial advisors and
accountants, incurred in connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such costs and expenses, whether or not the Closing shall have occurred.
Section 11.03 Notices. All notices, requests, consents, claims, demands, waivers and other
communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered
by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally
recognized overnight courier (receipt requested); (c) on the date sent by email of a PDF document (with
confirmation of transmission) if sent during normal business hours of the recipient, and on the next
Business Day if sent after normal business hours of the recipient or (d) on the third day after the date
mailed, by certified or registered mail, return receipt requested, postage prepaid; provided that,
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notwithstanding any other provision in this Section 11.03 to the contrary, any Loss Certificate must be
delivered by, and shall be deemed given, when delivered by certified mail. All such communications
must be sent to the respective parties at the following addresses (or at such other address for a party as
shall be specified in a notice given in accordance with this Section 11.03):
If to Company or Sellers Representative: Jesus Hernandez
Email:
with a copy to: Norton Rose Fulbright US LLP
300 Convent Street, Suite 2100
San Antonio, Texas 78205-3792
Email: [email protected]
Attention: Daryl L. Lansdale, Jr.
If to Buyer or Guarantor: Tissue Regenix Holdings Inc.
Unit 1 & 2 Astley Way, Astley Lane Industrial Estate
Swillington, Leeds LS26 8XT
Email:
Attention: Antony Odell, Chief Executive Officer
with a copy to: DLA Piper LLP (US)
4365 Executive Drive, Suite 1100
San Diego, CA 92121
E-mail: [email protected]
Attention: Matt Leivo
and to: DLA Piper UK LLP
3 Noble Street
London, EC2V 7EE, United Kingdom
E-mail: [email protected]
Attention: Tom Heylen
Section 11.04 Interpretation. For purposes of this Agreement, (a) the words “include,”
“includes” and “including” shall be deemed to be followed by the words “without limitation”; (b) the
word “or” is not exclusive; and (c) the words “herein,” “hereof,” “hereby,” “hereto” and “hereunder” refer
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to this Agreement as a whole. Unless the context otherwise requires, references herein: (x) to Articles,
Sections, Disclosure Schedule and Exhibits mean the Articles and Sections of, and Disclosure Schedule
and Exhibits attached to, this Agreement; (y) to an agreement, instrument or other document means such
agreement, instrument or other document as amended, supplemented and modified from time to time to
the extent permitted by the provisions thereof and (z) to a statute means such statute as amended from
time to time and includes any successor legislation thereto and any regulations promulgated thereunder.
Each defined term used in this Agreement has a comparable meaning when used in its plural or singular
form. Each gender-specific term used herein has a comparable meaning whether used in a masculine,
feminine or gender-neutral form. If any time period for giving notice or taking action hereunder expires
on a day that is not a Business Day, the time period shall automatically be extended to the Business Day
immediately following such day. This Agreement shall be construed without regard to any presumption
or rule requiring construction or interpretation against the party drafting an instrument or causing any
instrument to be drafted. The Disclosure Schedule and Exhibits referred to herein shall be construed with,
and as an integral part of, this Agreement to the same extent as if they were set forth verbatim herein.
Section 11.05 Headings. The headings in this Agreement are for reference only and shall not
affect the interpretation of this Agreement.
Section 11.06 Severability. If any term or provision of this Agreement is invalid, illegal, or
unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other
term or provision of this Agreement or invalidate or render unenforceable such term or provision in any
other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or
unenforceable, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in a mutually acceptable manner in order that the
transactions contemplated hereby be consummated as originally contemplated to the greatest extent
possible.
Section 11.07 Entire Agreement. This Agreement (including the exhibits and schedules
hereto) and the other Transaction Documents constitute the sole and entire agreement of the parties to this
Agreement with respect to the subject matter contained herein and therein, and supersede all prior and
contemporaneous understandings and agreements, both written and oral, with respect to such subject
matter.
Section 11.08 Successors and Assigns. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and permitted assigns. No party may
assign or delegate any of its rights or obligations hereunder, in whole or in part, without the prior written
consent of each other party, which consent shall not be unreasonably withheld or delayed; provided,
however, that prior to the Closing Date, Buyer may, without the prior written consent of Sellers, assign all
or any portion of its rights under this Agreement to one or more of its direct or indirect wholly owned
subsidiaries. No assignment shall relieve the assigning party of any of its obligations hereunder,
including any obligations being assigned. An assignment of obligations under this Agreement shall be
conditioned upon the execution by the assignee of a written instrument expressly assuming the assigned
obligations and the delivery of such instrument to each other party to this Agreement. Any assignment or
purported assignment that is not permitted by this Section 11.08 shall be null and void.
Section 11.09 No Third-party Beneficiaries. Except as provided in Section 6.10, Section 7.03
and Article IX, this Agreement is for the sole benefit of the parties hereto and their respective successors
and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other
Person any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement.
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Section 11.10 Amendment and Modification; Waiver. This Agreement may only be
amended, modified, or supplemented by an agreement in writing signed by all of the parties hereto. No
waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing
and signed by the party so waiving. No waiver by any party shall operate or be construed as a waiver in
respect of any failure, breach or default not expressly identified by such written waiver, whether of a
similar or different character, and whether occurring before or after that waiver. No failure to exercise, or
delay in exercising, any right, remedy, power or privilege arising from this Agreement shall operate or be
construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power, or
privilege hereunder preclude any other or further exercise thereof or the exercise of any other right,
remedy, power, or privilege.
Section 11.11 Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.
(a) This Agreement shall be governed by and construed in accordance with the
internal laws of the State of Delaware without giving effect to any choice or conflict of law
provision or rule (whether of the State of Delaware or any other jurisdiction).
(b) ANY LEGAL SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
BASED UPON THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY SHALL BE INSTITUTED IN
THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA SITTING IN THE
STATE OF DELAWARE OR THE COURTS OF THE STATE OF DELAWARE, AND EACH
PARTY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF SUCH
COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING. SERVICE OF PROCESS,
SUMMONS, NOTICE OR OTHER DOCUMENT BY MAIL TO SUCH PARTY’S ADDRESS
SET FORTH HEREIN SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY SUIT,
ACTION OR OTHER PROCEEDING BROUGHT IN ANY SUCH COURT. THE PARTIES
IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY OBJECTION TO THE LAYING
OF VENUE OF ANY SUIT, ACTION OR ANY PROCEEDING IN SUCH COURTS AND
IRREVOCABLY WAIVE AND AGREE NOT TO PLEAD OR CLAIM IN ANY SUCH
COURT THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH
COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT OR THE OTHER
TRANSACTION DOCUMENTS IS LIKELY TO INVOLVE COMPLICATED AND
DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS
AGREEMENT, THE OTHER TRANSACTION DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY. EACH PARTY TO THIS AGREEMENT
CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER
PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT
OF A LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF
THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D)
SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION
11.11(C).
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(d) Notwithstanding any of the foregoing, any and all disputes relating (x) solely to
the calculation of Closing Working Capital shall be exclusively resolved in accordance with the
provisions of Section 2.04, (y) solely to calculation of any Milestone Payment shall be
exclusively resolved in accordance with the provisions of Section 2.07 and (z) Tax Returns shall
be exclusively resolved in accordance with the provisions of Article VII.
Section 11.12 Specific Performance. The parties agree that irreparable damage would occur if
any provision of this Agreement were not performed in accordance with the terms hereof and that the
parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy to
which they are entitled at law or in equity.
Section 11.13 Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original, but all of which together shall be deemed to be one and the same agreement.
A signed copy of this Agreement delivered by facsimile, email or other means of electronic transmission
shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.
Section 11.14 Disclosure Schedules. Certain information set forth in the Disclosure Schedules
is included solely for informational purposes and may not be required to be disclosed pursuant to this
Agreement. The disclosure of any information shall not be deemed to constitute an acknowledgment that
such information is required to be disclosed in connection with the representations and warranties made
by the Company, Sellers, Buyer or Guarantor, as applicable, in this Agreement or that such information is
material, nor shall such information be deemed to establish a standard of materiality, nor shall it be
deemed an admission of any liability of, or concession as to any defense available to, Buyer, the
Company or the Sellers, as applicable. Unless this Agreement specifically provides otherwise, neither the
specification of any item or matter in any representation or warranty contained in this Agreement nor the
inclusion of any specific item in any of the Disclosure Schedules is intended to imply that such item or
matter, or other items or matters, are or are not in the Ordinary Course of Business, and no party may use
the fact of the setting forth or the inclusion of any such item or matter in any dispute or controversy
between the parties as to whether any obligation, item or matter not described herein or included in any of
the Disclosure Schedules is or is not in the Ordinary Course of Business for purposes of this Agreement.
The section number headings in the Disclosure Schedules correspond to the section numbers in this
Agreement and any information disclosed in any section of the Disclosure Schedules shall be deemed to
be disclosed and incorporated into any other section of the Disclosure Schedules where the relevance of
such disclosure is readily apparent on the face of the disclosure.
Section 11.15 Waiver of Conflicts; Privilege.
(a) Each of the parties hereto acknowledges and agrees that NRF has acted as
counsel to the Company in connection with the negotiation of this Agreement and the transactions
contemplated hereby.
(b) Buyer hereby consents and agrees to, and agrees to cause the Company to
consent and agree to, NRF representing the Seller Representative or any of the Sellers
(collectively, the “Seller Parties”) after the Closing, including with respect to disputes in which
the interests of the Seller Parties may be directly adverse to Buyer and its Affiliates (including the
Company), and even though NRF may have represented the Company in a matter substantially
related to any such dispute, or may be handling ongoing matters for the Company. Buyer further
consents and agrees to, and agrees to cause the Company to consent and agree to, the
communication by NRF to the Seller Parties in connection with any such representation of any
fact known to NRF prior to the Closing Date arising by reason of NRF’s prior representation of
the Company. In connection with the foregoing, Buyer hereby irrevocably waives and agrees not
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to assert, and agrees to cause the Company to irrevocably waive and not to assert, any conflict of
interest arising from or in connection with (i) NRF’s prior representation of the Company and/or
(ii) NRF’s representation of the Seller Parties after the Closing.
(c) Buyer further agrees, on behalf of itself and, after the Closing, on behalf of the
Company, that all communications in any form or format whatsoever between or among NRF, on
the one hand, and the Company or any of its respective members, managers, directors, officers
employees or other Representatives, on the other hand, that relate in any way to the negotiation,
documentation and consummation of the transactions contemplated by this Agreement or any
dispute arising under this Agreement (collectively, the “Privileged Communications”) shall not
pass to or be claimed by Buyer or the Company. Prior to the Closing, the Company and Seller
Parties may delete or remove all documents, emails and other non-email electronic documents
concerning the negotiation or drafting of this Agreement, or any other agreement previously
contemplated by the Company or Seller Parties, which, if consummated, would have resulted in a
transaction substantially similar to the ones contemplated by this Agreement, which are protected
by the attorney-client or work product privileges. It is acknowledged and agreed to by the parties
that a failure by the Company or Seller Parties to, prior to Closing, remove materials identified in
the foregoing sentence is inadvertent and, in such event, Buyer agrees that it will not, and after
Closing that it will cause the Company and their respective directors, officers, employees or other
Representatives not to, intentionally use or attempt to use any means to access, retrieve, restore,
recreate, unarchive or otherwise gain access to or view any such materials for any purpose.
(d) Notwithstanding the foregoing, in the event that a dispute arises after Closing
Buyer or the Company, on the one hand, and a third party other than the Seller Parties, on the
other hand, Buyer or the Company may assert the attorney-client privilege to prevent the
disclosure of the Privileged Communications to such third party; provided, however, that none of
Buyer or the Company may waive such privilege without the prior written consent of the Seller
Representative. In the event that after Closing Buyer or the Company is legally required by
governmental order or otherwise to access or obtain a copy of all or a portion of the Privileged
Communications, Buyer shall immediately (and, in any event, within five (5) Business Days)
notify the Seller Representative in writing (including by making specific reference to this
Section) so that the Seller Representative can seek a protective order and Buyer agrees to use all
commercially reasonable efforts to assist therewith.
(e) To the extent that files or other materials maintained by NRF constitute property
of its client(s), including the Company, after Closing NRF shall have no duty to reveal or disclose
any such files or other materials or any Privileged Communications by reason of any attorney-
client relationship between NRF, on the one hand, and the Company, on the other hand.
ARTICLE XII
GUARANTEE
Section 12.01 Obligations of the Guarantor.
(a) Guarantor hereby agrees to pay to Sellers all amounts payable by Buyer under
this Agreement that Buyer does not pay Sellers when due (the “Guaranty”). The Guaranty is an
absolute, continuing, irrevocable and unconditional guaranty of payment and performance, shall
not be subject to any counterclaim, setoff, deduction, diminution, abatement, recoupment,
suspension, deferment, reduction or defense (other than full and strict compliance by Buyer of its
obligations under this Agreement) based upon any claim that Buyer may have against Sellers or
any other Person, and shall remain in full force and effect without regard to, and shall not be
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released, discharged or in any way affected by, any circumstances or conditions whatsoever
(whether or not any Sellers or Buyer shall have any knowledge or notice thereof), including:
(i) any amendment, modification, addition, deletion, extension, increase,
supplement or renewal to or of or other change in this Agreement or any of the other
Transaction Documents, or any instrument or agreement applicable to any of the Parties
to such agreements;
(ii) any failure, omission or delay on the part of Seller Representative, any
Seller or Buyer to conform to or comply with any term of any instrument or agreement
referred to in clause (i) above;
(iii) any waiver, consent, extension, indulgence, compromise, release or other
action or inaction under or in respect of any instrument, agreement, guarantee or right of
offset referred to in clause (i) above or any Liability of any Seller, Seller Representative
or Buyer, or any exercise or nonexercise by Buyer of any right, remedy, power or
privilege under or in respect of any such instrument, agreement, guarantee, right of offset
or any such obligation or liability;
(iv) any limitation on the Liabilities of Buyer or any other Person under this
Agreement, or any discharge, termination, cancellation, frustration, irregularity, invalidity
or unenforceability, in whole or in part, of any of the foregoing, or any other agreement,
instrument or guarantee referred to in clause (i) above or any term or provision of any
thereof;
(v) any failure, omission or delay on the part of any Seller or Seller
Representative (A) to enforce, assert or exercise any right, power or remedy conferred on
it by the provisions of this Agreement or otherwise inuring to any Seller or Seller
Representative under this Agreement, or (B) to make demand first upon any other
guarantor or any other person liable for the payment or performance of any Seller’s or
Seller Representative’s obligations under the Agreement;
(vi) the voluntary or involuntary liquidation, dissolution, sale of all or
substantially all assets, marshalling of assets or liabilities, receivership, conservatorship,
assignment for the benefit of creditors, insolvency, bankruptcy, reorganization,
arrangement, composition or other proceedings under Laws for the protection of debtors
affecting Buyer or any assets of Buyer, or any discharge from liability or rejection of
burdensome Contracts or obligations in the course of or resulting from any such
proceedings;
(vii) the release, by operation of Law or otherwise, of Buyer from any
obligation under this Agreement;
(viii) the invalidity, deficiency, illegality or unenforceability of this
Agreement, in whole or in part, or of any of the provisions thereof, or any defense or
excuse for failure to perform on account of force majeure, act of God, casualty,
impossibility, impracticability, or other defense or excuse whatsoever;
(ix) any change in ownership of any equity interests of Buyer;
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(x) any merger or consolidation of Buyer into or with any other corporation
or any sale, lease or transfer of any of the assets of Buyer to any other Person; or
(xi) without limiting the foregoing, any fact or event (whether or not similar
to any of the foregoing) which in the absence of this provision would or might constitute
or afford a legal or equitable discharge or release of or defense to a guarantor or surety.
The Buyer shall remain liable hereunder until the payment and performance in full of the
obligations under the Agreement. This guarantee shall be a guarantee of payment and not
of collection.
(b) If Buyer shall default in the due and punctual payment or performance of any of
its obligations under this Agreement, Seller Representative shall provide written notice of such
default to Guarantor and provide Buyer ten (10) days from the date of notice in which to cure
such default. In the event Buyer does not cure such default within the ten (10) day notice period,
then Guarantor shall immediately take all actions necessary to cause Guarantor to pay or perform
Buyer’s obligations under this Agreement at its sole cost and expense and Sellers shall be
immediately entitled to pursue all remedies against Guarantor for the full and timely payment and
performance then owed by Buyer pursuant to this Agreement. Notwithstanding the foregoing, in
the event of the insolvency of, the business failure of, the appointment of a custodian, trustee,
liquidator, or receiver for any of the property of, or an assignment for the benefit of creditors by,
or the filing of a petition under any bankruptcy, insolvency, or debtor’s relief law, or for any
adjustment of indebtedness, composition, or extension by or against Buyer, then Sellers shall be
immediately entitled to pursue all remedies against the Guarantor for the full and timely payment
and performance then owed by the Buyer pursuant to this Agreement without any notice to Buyer
or the pursuit of any remedies against Buyer or any other Person.
(c) The liabilities and obligations of Guarantor under this Article XII shall not be
conditioned or contingent upon the pursuit of any remedies against Buyer or any other Person.
To the extent permitted by Law, Guarantor hereby waives any right, whether legal or equitable,
statutory or non-statutory, to require Sellers to proceed or take any action against, or pursue any
remedy with respect to, Buyer or any other Person before Sellers may enforce rights against
Guarantor hereunder, provided that the foregoing shall not be deemed a waiver of any actions,
claims or defenses available to Buyer.
(d) Sellers, Seller Representative and Buyer may exercise any and all rights granted
to any of them under this Agreement without affecting the validity or enforceability of the
Guaranty and the obligations and liabilities of the Guarantor hereunder will not be affected,
impaired or released by any extension, waiver or amendment of this Agreement or any other
action which would release the Guarantor (other than performance).
(e) Guarantor recognizes that Sellers are relying upon the Guaranty and the
undertakings of Guarantor hereunder in entering into this Agreement, and further recognizes that
the execution and delivery of the Guaranty is a material inducement to Sellers in entering into this
Agreement.
[Signature Page Follows.]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the
date first written above by their respective officers thereunto duly authorized.
SELLER:
VISE LION, LTD. I
[Signature Page to Membership Interest Purchase Agreement]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the
date first written above by their respective officers thereunto duly authorized.
SELLER:
HUGOCELLR, LTD.
lSignature Page to Membership Interest Purchase Agreement]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above.
SELLER:
ROBIN SULLIVAN
Bya_~ Name: Robin Sullivan
The undersigned spouse of Robin Sullivan hereunto subscribes her name in evidence of her agreement and consent to the sale, transfer and delivery to Buyer of the Membership Interests held or beneficially owned by Colleen Harris (including any community property or other spousal interest in such Membership Interests) pursuant to the foregoing Membership Interest Purchase Agreement and to all of the other terms and provisions of such Membership Interest Purchase Agreement.
Colleen Harris
[Signature Page to Membership Interest Purchase Agreement]
WEST\275532193.26
EXHIBIT A
SCHEDULE OF SELLERS
SELLERS
Jesus Hernandez
Cellright Holdings, LLC
Vise Lion, Ltd.
Hugocellr, Ltd.
Jack Kelly
Irene Graham
Robin Sullivan
Dean Mueller