EXHIBIT 10.9
EXECUTION COPY
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STOCK PURCHASE AGREEMENT
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Between
COBE LABORATORIES, INC.
and
AASTROM BIOSCIENCES, INC.
Dated as of October 22, 1993
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Section i Page
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TABLE OF CONTENTS
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Section Page
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ARTICLE I
DEFINITIONS
1.01 Definitions................................................. 1
ARTICLE II
PURCHASE AND SALE OF SHARES;
CLOSING
2.01 Authorization, Purchase and Sale of Shares.................. 12
2.02 Closing..................................................... 12
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.01 Organization, Authority and Qualification of the Company;
No Subsidiaries............................................. 13
3.02 Restated Articles of Incorporation and By-Laws ............. 14
3.03 Capitalization.............................................. 14
3.04 Authority................................................... 15
3.05 No Conflict................................................. 15
3.06 Common Stock; Preferred Stock............................... 15
3.07 Compliance with Laws........................................ 16
3.08 Governmental Consents and Approvals......................... 16
3.09 Financial Information....................................... 16
3.10 Absence of Certain Changes, Events and Conditions;
Conduct in the Ordinary Course.............................. 17
3.11 Employee Benefit Plans...................................... 18
3.12 Leased Real Property........................................ 19
3.13 Intellectual Property....................................... 20
3.14 Environmental Matters....................................... 23
3.15 Litigation.................................................. 23
3.16 Agreements.................................................. 23
3.17 Certain Interests........................................... 24
3.18 Licenses and Permits........................................ 24
Section ii Page
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3.19 Private Offering............................................ 25
3.20 Brokers..................................................... 25
3.21 General Solicitation........................................ 25
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
THE PURCHASER
4.01 Organization of the Purchaser............................... 25
4.02 Authority................................................... 25
4.03 No Conflict................................................. 26
4.04 Securities Act.............................................. 26
4.05 Governmental Consents and Approvals......................... 27
4.06 Brokers..................................................... 27
ARTICLE V
ADDITIONAL AGREEMENTS
5.01 Access to Information; Confidentiality...................... 27
5.02 Registration Rights......................................... 28
5.03 Purchaser's Option.......................................... 28
5.04 Purchaser's Preemptive Rights............................... 29
5.05 Company Put Option.......................................... 31
5.06 Standstill Agreement........................................ 33
5.07 Purchaser's Right of First Negotiation...................... 33
5.08 Legend...................................................... 34
5.09 Board Observer; Board Representation........................ 35
5.10 Regulatory Approvals........................................ 36
5.11 Reservation of Shares....................................... 36
5.12 Voting Rights; Rights Plan.................................. 37
5.13 Survival of Representations and Warranties.................. 38
5.14 Company's Right of First Negotiation........................ 38
ARTICLE VI
TERM, TERMINATION, AMENDMENT AND WAIVER
6.01 Term........................................................ 38
6.02 Amendment................................................... 38
6.03 Waiver...................................................... 38
Section iii Page
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ARTICLE VII
GENERAL PROVISIONS
7.01 Notices..................................................... 39
7.02 Entire Agreement; Assignment................................ 40
7.03 Parties in Interest......................................... 40
7.04 Governing Law............................................... 40
7.05 Headings.................................................... 40
7.06 Severability................................................ 40
7.07 Counterparts................................................ 41
7.08 Specific Performance........................................ 41
7.09 Waiver of Trial by Jury..................................... 42
EXHIBIT 2.02(b)(ii) Form of Opinion of Pepper, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
EXHIBIT 2.02(b)(iv) Restated Articles of Incorporation
EXHIBIT 2.02(b)(vii) Stockholders' Agreement
EXHIBIT 2.02(b)(viii) Form of Distribution Agreement
EXHIBIT 5.02 Registration Rights
DISCLOSURE SCHEDULE
STOCK PURCHASE AGREEMENT dated as of October __, 1993 between
AASTROM BIOSCIENCES, INC., a Michigan corporation (the "Company"), and COBE
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LABORATORIES, INC., a Colorado corporation (the "Purchaser").
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W I T N E S S E T H:
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WHEREAS, the Company desires to authorize, issue, and sell to the
Purchaser, and the Purchaser desires to purchase from the Company, the Shares
(as hereinafter defined).
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements hereinafter set forth, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
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SECTION 1.01. Definitions. As used in this Agreement, the following terms
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shall have the following meanings:
"Action" means any claim, action, suit, arbitration, inquiry, proceeding or
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investigation by or before any federal, state or local or any foreign
government, governmental, regulatory or administrative authority, agency or
commission or any court, tribunal or judicial or arbitral body.
"Affiliate" means, with respect to any specified Person, any other Person
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that directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified Person.
"Agreement" or "this Agreement" means this Stock Purchase Agreement dated
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as of October , 1993 between the Company and the Purchaser (including the
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Exhibits hereto and the Disclosure Schedule) and all amendments made in
accordance with the provisions of Section 6.02.
"Applicable Percentage" has the meaning specified in Section 5.04(d).
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"Applicable Preemptive Price" means (a) if the Issuance is or was a Public
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Offering, the quotient of (i) the aggregate price to the public of the New
Voting Securities sold by the Company in such Public Offering, less underwriting
discounts and commissions , divided by (ii) the number of New Voting Securities
sold by the Company in such Public Offering; (b) if the Issuance is or was a
Private Placement, the Private Placement Price paid to the Company by Persons
other than the Purchaser in such Private Placement; (c) if the Issuance is or
was a Non-Cash Transaction and the New Voting Securities to be issued are
publicly traded prior to such Issuance, the Market Price on the date of the
Post-Determination Subscription Notice; (d) if the Issuance is or was a Non-Cash
Transaction not described in (c) above in which
a monetary value of the New Voting Securities is established, such value; and
(e) otherwise, the greater of (i) the Compounded Private Placement Price or
(ii) $8 per share of Common Stock. For purposes of calculating the Applicable
Preemptive Price, the price of shares of Non-Coupon Preferred Stock shall be
calculated based upon the number of shares of Common Stock into which such
shares of Non-Coupon Preferred Stock are convertible at the time of such
calculation.
"Articles" means the Restated Articles of Incorporation attached as Exhibit
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2.02(b)(iv) hereto establishing and designating the Preferred Stock.
"Board" means the Board of Directors of the Company.
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"Business Combination" has the meaning specified in Section 5.07.
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"Business Combination Notice" has the meaning specified in Section 5.07.
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"Business Day" means any day that is not a Saturday, a Sunday or other day
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on which banks are required or authorized by law to be closed in Denver,
Colorado or Ann Arbor, Michigan.
"By-Laws" means the Restated By-Laws of the Company, as amended through the
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date hereof.
"Chapter 7B" means Chapter 7B (known as the "Stacey, Bennett and ▇▇▇▇▇▇▇
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Shareholder Equity Act") of the MBCA.
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"Closing" means the completion of the transactions specified herein
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relating to the purchase and sale of the Shares as contemplated by Section 2.02
hereof.
"Code" means the Internal Revenue Code of 1986, as amended, together with
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the rules and regulations promulgated thereunder.
"Common Stock" means the common shares of the Company, no par value.
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"Company" has the meaning specified in the recitals to this Agreement.
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"Company Benefit Plans" has the meaning specified in Section 3.11(a).
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"Company Option" has the meaning specified in Section 5.05(a).
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"Company's Accountants" means Coopers & ▇▇▇▇▇▇▇, independent accountants of
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the Company.
"Compounded Private Placement Price" means the Private Placement Price for
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the last Private Placement preceding the date on which the Compounded Private
Placement Price is calculated, plus interest on such Private Placement Price
compounded annually at a rate of 15
percent from the date of the closing of such preceding Private Placement to the
date of calculation.
"Confidential Information" means all confidential or secret data, reports,
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interpretations, forecasts, records, marketing, sales and other commercial data
or reports, trade secrets information, know-how, methods, procedures, designs,
technology, inventions, ideas, specifications, plans, patent applications and
related correspondence, or other information that the parties hereto provide to
each other in connection with the transactions contemplated by this Agreement,
together with analyses, compilations, studies or other documents, whether
prepared by their respective agents or attorneys, which contain or otherwise
reflect such information; provided, however, that the following will not
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constitute Confidential Information for purposes of this Agreement:
(a) information which was in one of such parties' possession prior to its
receipt from the other of such parties;
(b) information which is obtained by one of such parties from a third
person who, insofar as is known to such party, is not prohibited from
transmitting the information to such party by a contractual, legal or
fiduciary obligation to the other of such parties; and
(c) information which is or becomes publicly available through no fault of
either of such parties.
"Control" (including the terms "controlled by" and "under common
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control with"), with respect to the relationship between or among two or more
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Persons, means the possession, directly or indirectly or as trustee or executor,
of the power to direct or cause the direction of the affairs or management of a
Person, whether through the ownership of voting securities, as trustee or
executor, by contract or otherwise, including, without limitation, the
ownership, directly or indirectly, of securities having the power to elect a
majority of the board of directors or similar body governing the affairs of such
Person.
"Conversion Determination Date" has the meaning specified in Section
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5.04(a).
"Disclosure Schedule" means the Disclosure Schedule attached hereto,
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dated as of the date hereof, delivered and forming a part of this Agreement.
"Distribution Agreement" means the Distribution Agreement, dated as of
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the date hereof, between the Company and an Affiliate of the Purchaser,
substantially in the form of Exhibit 2.02(b)(viii) hereto, as it may be amended
from time to time in accordance with its terms.
"Encumbrance" means any security interest, pledge, mortgage, lien,
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charge, encumbrance, adverse claim, preferential arrangement or restriction of
any kind, including, without limitation, any restriction on the use, voting,
transfer, receipt of income or other exercise of any attributes of ownership.
"Environmental Laws" means any federal, state, local or foreign law,
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regulation, agency interpretation, policy, order, decree, judgment, or judicial
opinion relating to (A) the manufacture, transport, use, treatment, storage,
recycling, disposal, release or threatened release of Hazardous Substances or
(B) relating to the preservation, restoration, or protection of natural
resources or health.
"Environmental Permits" means any permit, license, approval,
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identification number or other authorization involving Hazardous Substances or
required under any Environmental Law.
"Equity Securities" means shares of Common Stock and any other
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securities convertible into, or exchangeable for, shares of Common Stock or
giving the holder the right to acquire shares of Common Stock.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
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amended, together with the rules and regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not
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incorporated) that is part of the same controlled group as, or under common
control with, the Company within the meaning of Section 414(b)(c)(m) or (o) of
the Code.
"Exchange Act" means the Securities and Exchange Act of 1934, as
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amended, together with the rules and regulations promulgated thereunder.
"Exclusivity Period" has the meaning specified in Section 5.07.
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"Financial Statements" has the meaning specified in Section 3.09.
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"Fully Diluted Outstanding Common Stock" means all of the outstanding
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Common Stock, all shares of Common Stock that can be acquired by any Person upon
conversion of the Shares and all shares of Common Stock that can be acquired
upon conversion or exchange of any other convertible or exchangeable securities
of the Company or pursuant to outstanding options, warrants or other securities
or arrangements having a conversion, exchange or exercise price that is less
than or equal to the Option Price and excluding the shares of Common Stock
subject to the Option and any shares of Common Stock held in the treasury of the
Company.
"GAAP" means U.S. generally accepted accounting principles and
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practices in effect from time to time applied consistently throughout the
periods involved.
"Hazardous Substances" means any matter containing substances which
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are: (A) listed, classified or regulated pursuant to any Environmental Law,
including, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, 42 U.S.C. (S) 9601 et seq.; the
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Resource Conservation and Recovery Act, 42 U.S.C. (S) 6901 et seq.; the Federal
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Water Pollution Control Act, 33 U.S.C. (S) 1251 et seq.; the Toxic Substances
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Control Act, 15 U.S.C. (S) 2601 et seq.; and the Clean Air Act, 42 U.S.C.
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(S) 7401 et seq.; each as
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amended; (B) any petroleum products or by-products, asbestos-containing
material, polychlorinated biphenyls, radioactive materials or radon gas; or
(C) any other matter to which exposure is prohibited, limited or regulated by
any government authority or Environmental Law.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
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1976, as amended, and the rules and regulations promulgated thereunder.
"Initial Public Offering" means the initial offering to the public by
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the Company of shares of Common Stock registered under the Securities Act.
"Intellectual Property" means (a) inventions, whether or not
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patentable, whether or not reduced to practice, and whether or not yet made the
subject of a pending patent application or applications, (b) ideas and
conceptions of potentially patentable subject matter, including, without
limitation, any patent disclosures, whether or not reduced to practice and
whether or not yet made the subject of a pending patent application or
applications, (c) national (including the United States) and multinational
statutory invention registrations, patents, patent registrations and patent
applications (including all reissues, divisions, continuations, continuations-
in-part, extensions and reexaminations) and all rights therein provided by
international treaties or conventions and all improvements to the inventions
disclosed in each such registration, patent or application, (d) trademarks,
service marks, trade dress, logos, trade names and corporate names, whether or
not registered, including all common law rights, and registrations and
applications for registration thereof, including, but not limited to, all marks
registered in the United States Patent and Trademark Office, the Trademark
Offices of the States and Territories of the United States of America, and the
Trademark Offices of other nations throughout the world, and all rights therein
provided by international treaties or conventions, (e) copyrights (registered or
otherwise) and registrations and applications for registration thereof, and all
rights therein provided by international treaties or conventions, (f) computer
software, including, without limitation, source code, operating systems and
specifications, data, data bases, files, documentation and other materials
related thereto, data and documentation, (g) trade secrets and confidential,
technical and business information (including ideas, formulas, compositions,
inventions, and conceptions of inventions whether patentable or unpatentable and
whether or not reduced to practice), (h) whether or not confidential, technology
(including know-how and show-how), manufacturing and production processes and
techniques, research and development information, drawings, specifications,
designs, plans, proposals, technical data, copyrightable works, financial,
marketing and business data, pricing and cost information, business and
marketing plans and customer and supplier lists and information, (i) copies and
tangible embodiments of all the foregoing, in whatever form or medium, (j) all
rights to obtain and rights to apply for patents, and to register trademarks and
copyrights, and (k) all rights to ▇▇▇ or recover and retain damages and costs
and attorneys' fees for present and past infringement of any of the foregoing.
"Interim Financial Statements" has the meaning specified in Section
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3.09.
"IRS" means the United States Internal Revenue Service.
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"Issuance" means a Post-Conversion Issuance or a Pre-Conversion
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Issuance.
"Leased Real Property" means the real property leased by the Company,
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together with, to the extent leased by the Company, all buildings and other
structures, facilities or improvements presently or hereafter located thereon,
all fixtures, systems, equipment and items of personal property of the Company
attached or appurtenant thereto and all easements, licenses, rights and
appurtenances relating to the foregoing.
"Liabilities" means any and all debts, liabilities and obligations,
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whether accrued or fixed, absolute or contingent, mature or unmatured or
determined or determinable, including, without limitation, those arising under
any law, rule, regulation, or order by a governmental authority and those
arising under any contract, agreement, commitment or undertaking.
"Licensed Intellectual Property" means all Intellectual Property
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licensed or sublicensed to the Company from a third party.
"Market Price" of a security means the average of the daily closing
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prices of such security for the 30 consecutive trading days immediately
preceding the day as of which "Market Price" is being determined. The closing
price for each day shall be the last sale price regular way or, in case no such
sale takes place on such day, the average of the closing bid and asked prices
regular way, in either case on the New York Stock Exchange, or, if such
securities are not listed or admitted to trading on the New York Stock Exchange,
on the principal national securities exchange on which such securities are
listed or admitted to trading, or if such securities are not so listed or
admitted to trading but are listed in NASDAQ'S National Market System, the
closing price of such security regular way as reported by the National Market
System, or if the securities are not so listed or admitted to trading, the last
reported bid price as furnished by the National Association of Securities
Dealers, Inc. through NASDAQ or through a similar organization if NASDAQ is no
longer reporting such information.
"Material Adverse Effect" means any circumstance, change, event,
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transaction, loss, failure, effect on the business of the Company or other
occurrence that is, or could be, materially adverse to the business, operations,
properties (including intangible properties), condition (financial or
otherwise), assets, Liabilities, results of operations or prospects of the
Company.
"MBCA" means the Michigan Business Corporation Act, effective
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January 1, 1973, as amended.
"New Voting Securities" means any shares of Common Stock (or other
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securities representing the common equity of the Company), any securities that
are convertible into or exchangeable for or otherwise give the holder the right
to acquire shares of Common Stock (or such other securities) or other Voting
Securities that are issued by the Company after the date hereof, other than
shares of Common Stock issued upon conversion of the Shares and Permitted
Employee Stock.
"Non-Cash Transaction" means any Issuance other than a Public Offering
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or a
Private Placement.
"Non-Coupon Preferred Stock" means the Shares and any other preferred
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stock of the Company that carries no fixed dividend and is convertible by the
holder into shares of Common Stock.
"Observation Period" has the meaning specified in Section 5.09(a).
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"Option" has the meaning specified in Section 5.03(a).
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"Option Closing" has the meaning specified in Section 5.03(c).
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"Option Closing Date" has the meaning specified in Section 5.03(c).
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"Option Notice Date" has the meaning specified in Section 5.03(c).
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"Option Period" has the meaning specified in Section 5.03(b).
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"Option Price" means a price per Option Share equal to 120% of the
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Market Price on the Option Notice Date.
"Option Shares" means the number of newly issued shares of Common
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Stock which, immediately following the issuance thereof, will be equal to 30
percent of the Fully Diluted Outstanding Common Stock, and "Option Share" means
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one of the Option Shares.
"Out of the Money Price" means a conversion, exchange or exercise
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price that is equal to or greater than the Option Price.
"Out of the Money Option Stock" means any Common Stock issued or to be
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issued by the Company upon conversion or exchange of any convertible or
exchangeable securities of the Company or pursuant to the exercise of any
outstanding options, warrants or other securities having an Out of the Money
Option Price.
"Owned Intellectual Property" means all Intellectual Property, other
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than the Licensed Intellectual Property, in and to which the Company holds, or
has a right to hold, any right, title and interest.
"Permitted Encumbrances" means such of the following as to which no
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enforcement, collection, execution, levy or foreclosure proceeding shall have
been commenced: (a) liens for taxes, assessments and governmental charges or
levies not yet due and payable; (b) Encumbrances imposed by law, such as
materialmen's, mechanics', carriers', workmen's and repairmen's liens and other
similar liens arising in the ordinary course of business; and (c) pledges or
deposits to secure obligations under workers' compensation laws or similar
legislation or to secure public or statutory obligations.
"Permitted Employee Stock" means (a) shares of Common Stock or options
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to
purchase Common Stock issued to employees of the Company after the Initial
Public Offering, (b) all shares issuable to employees or consultants of the
Company pursuant to options issued by the Company prior to the date hereof,
(c) all options and shares issuable pursuant to the Stock Option Plans, up to
the sum of (i) the aggregate number of shares authorized in the Stock Option
Plans as of the date hereof and (ii) up to an additional 300,000 shares of
Common Stock issuable pursuant to options granted after the date hereof, and (d)
an additional number of shares of Common Stock (or options therefor) equal to
not more than 25% of the additional shares (of Common Stock or of Non-Coupon
Preferred Stock) issued by the Company from and after the date hereof (including
the Shares) until one day prior to the date of the Initial Public Offering.
"Person" means an individual, corporation, partnership, association,
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trust, joint venture, unincorporated organization, other entity or group (as
defined in Section 13(d)(3) of the Exchange Act).
"Post-Determination Issuance" has the meaning specified in Section
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5.04(a).
"Post-Determination Issuance Notice" has the meaning specified in
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Section 5.04(a).
"Post-Determination Preemptive Right" has the meaning specified in
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Section 5.04(b).
"Post-Determination Subscription Notice" has the meaning specified in
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Section 5.04(a).
"Post-Option Issuance" has the meaning specified in Section 5.03(g).
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"Post-Option Issuance Notice" has the meaning specified in Section
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5.03(g).
"Post-Option Purchase Right" has the meaning specified in Section
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5.03(g).
"Pre-Determination Issuance" has the meaning specified in Section
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5.04(d).
"Pre-Determination Preemptive Rights" has the meaning specified in
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Section 5.04(d).
"Preferred Stock" means the shares of Series C convertible preferred
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stock of the Company to be issued pursuant to this Agreement.
"Private Placement" means an Issuance for cash other than a Public
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Offering.
"Private Placement Price" means the quotient of (i) the aggregate
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price paid to the Company in a Private Placement less the sales agency and
placement fees of such Private Placement borne by the Company, divided by
(ii) the number of securities sold by the Company in such Private Placement. For
purposes of calculating the Private Placement Price, the price of shares of Non-
Coupon Preferred Stock shall be calculated based upon the number of shares
of Common Stock into which such shares of Non-Coupon Preferred Stock are
convertible at the time of such calculation.
"Public Offering" means a public offering of New Voting Securities
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registered on a registration statement under the Securities Act.
"Purchase Price" has the meaning specified in Section 2.01.
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"Purchaser" has the meaning specified in the recitals to this
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Agreement.
"Purchaser Designees" has the meaning specified in Section 5.09(b).
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"Purchaser Observer" has the meaning specified in Section 5.09(a).
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"Put Notice" has the meaning specified in Section 5.05(b).
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"Qualifying IPO" has the meaning specified in Section 5.05(a).
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"Qualifying Private Placement" has the meaning specified in Section
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5.05(a).
"Registration Rights" means the registration rights of the Purchaser
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as set forth in Exhibit 5.02 hereto.
"Reserve Amount" has the meaning specified in Section 5.11.
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"Restated Articles of Incorporation" means the Restated Articles of
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Incorporation of the Company, as amended through the date hereof.
"Securities Act" means the Securities Act of 1933, as amended,
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together with the rules and regulations promulgated thereunder.
"Series A Preferred Stock" means the Series A preferred stock of the
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Company.
"Series B Preferred Stock" means the Series B preferred stock of the
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Company.
"Shares" has the meaning specified in Section 2.01.
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"Stock Option Plans" means the Company's 1992 Stock Option Plan, the
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1989 Stock Option Plan and the Ancillary Stock Option Plan.
"Subsidiaries" means any and all corporations, partnerships, joint
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ventures, associations and other entities controlled by the Company directly or
indirectly through one or more intermediaries.
"Total Voting Power" means the combined voting power of all the Voting
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Securities.
"Voting Securities" means any shares of any class of capital stock of
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the Company entitled to vote generally in the election of directors.
ARTICLE II
PURCHASE AND SALE OF SHARES; CLOSING
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SECTION 2.01. Authorization, Purchase and Sale of Shares. Upon the
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terms set forth herein, at the Closing, the Company shall authorize, issue and
sell to the Purchaser, and the Purchaser shall purchase from the Company, 10,000
shares of Preferred Stock (the "Shares") for a purchase price of $10,000,000
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(the "Purchase Price"). The Company hereby acknowledges receipt of $1,000,000
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received from the Purchaser by the Company prior to the date hereof, which
$1,000,000 shall be a credit against the Purchase Price.
SECTION 2.02. Closing. (a) The Closing of the purchase and sale
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shall take place simultaneously with the execution of this Agreement at the
offices of the Company in Ann Arbor, Michigan.
(b) At the Closing, the Company shall deliver or cause to be
delivered to the Purchaser: (i) stock certificates evidencing the Shares
registered in the name of the Purchaser; (ii) a legal opinion from Pepper,
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, Michigan, legal counsel to the Company substantially in the
form of Exhibit 2.02(b)(ii) hereto; (iii) a receipt for the Purchase Price;
(iv) a copy of the Restated Articles of Incorporation certified by the
Corporations and Securities Bureau of the Department of Commerce of the State of
Michigan and a copy of the By-Laws certified by the Secretary of the Company;
(v) a certificate from the Corporations and Securities Bureau of the Department
of Commerce, certifying as to the good standing of the Company under the laws of
such state; (vi) evidence reasonably satisfactory to the Purchaser of the
adoption by the Board of the Company of actions duly approving this Agreement,
the Distribution Agreement and the transactions contemplated hereby and thereby;
(vii) agreements executed by H & Q Life Science Technology Fund I, H & Q London
Ventures, Brentwood Associates V, L.P., Wind Point II, L.P. and State Treasurer
of State of Michigan, as custodian for certain pension funds, which shareholders
of the Company hold in excess of 80% of the Voting Securities of the Company, in
the form of Exhibit 2.02(b)(vii) hereto agreeing (A) to vote shares held by such
shareholder against any proposal to amend the By-Laws or the Restated Articles
of Incorporation so as to make Chapter 7B of the MBCA applicable to acquisitions
of shares of Common Stock or Voting Securities and (B) to vote in favor of the
Purchaser Designees as directors; and (viii) a copy of the Distribution
Agreement, duly executed by the Company.
(c) At the Closing, the Purchaser shall deliver to the Company:
(i) the Purchase Price, by wire transfer, to an account or accounts designated
by the Company at least five Business Days prior to the Closing Date; (ii) a
receipt for the Shares; and (iii) a copy of the Distribution Agreement duly
executed by the Purchaser.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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The Company represents and warrants to the Purchaser that:
SECTION 3.01. Organization, Authority and Qualification of the
------------------------------------------------
Company; No Subsidiaries. The Company is a corporation duly organized, validly
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existing and in good standing under the laws of the State of Michigan and has
all necessary power and authority to own, operate or lease the properties and
assets now owned, operated or leased by it and to carry on the business of the
Company as it has been and is currently conducted. The Company is duly licensed
or qualified to do business and is in good standing in Michigan which is the
only jurisdiction in which the properties owned or leased by it or the operation
of its business makes such licensing or qualification necessary or desirable.
The Company has no Subsidiaries.
SECTION 3.02. Restated Articles of Incorporation and By-Laws. The
----------------------------------------------
Company has heretofore furnished to the Purchaser a complete and correct copy of
the Restated Articles of Incorporation and the By-Laws, each as amended to date,
each of which is in full force and effect. The Company is not in violation of
any of the provisions of the Restated Articles of Incorporation or By-Laws.
SECTION 3.03. Capitalization. (a) The authorized capital stock of
--------------
the Company consists of (x) 5,540,000 shares of Preferred Stock, consisting of
2,500,000 issued and outstanding shares of Series A Preferred Stock, 3,030,000
issued and outstanding shares of Series B Preferred Stock and the Shares, none
of which is issued, outstanding or reserved for issuance, except pursuant to
this Agreement, and (y) 15,000,000 shares of Common Stock, of which
(i) 1,736,219 shares of Common Stock are issued and outstanding, all of which
are validly issued, fully paid and nonassessable (except as noted in Section
3.03(a) of the Disclosure Schedule), (ii) 5,530,000 shares of Common Stock are
reserved for issuance upon conversion of the Series A and Series B Preferred
Stock, (iii) no shares of Common Stock are held in the treasury of the Company
and (iv) an aggregate of 1,573,940 shares of Common Stock are reserved for
issuance pursuant to the Company's Stock Option Plans. None of the issued and
outstanding shares of Common Stock was issued in violation of any preemptive
rights.
(b) Except as set forth in Section 3.03(b) of the Disclosure
Schedule, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character to which the Company or, to the
knowledge of the Company, any of its stockholders is a party or obligating the
Company or any of its stockholders to issue or to sell any shares of capital
stock of, or other equity interests in, the Company. There are no outstanding
contractual obligations of the Company to repurchase, redeem or otherwise
acquire any of the capital stock of the Company or to provide funds to or make
any investment (in the form of a loan, capital contribution or otherwise) in any
other Person.
(c) Except as set forth in Section 3.03(c) of the Disclosure
Schedule, the Company is not party to any agreement granting registration rights
to any Person with respect to any equity or debt securities of the Company.
SECTION 3.04. Authority. The Company has all necessary corporate
---------
power and authority to execute and deliver this Agreement and the Distribution
Agreement and to perform its obligations and to consummate the transactions
contemplated hereunder and thereunder. The execution, delivery and performance
of this Agreement and the Distribution Agreement by the Company have been duly
and validly authorized by all necessary corporate action and no other corporate
proceedings on the part of the Company are necessary to authorize this Agreement
or the Distribution Agreement or to consummate the transactions contemplated by
this Agreement or the Distribution Agreement. This Agreement and the
Distribution Agreement have been duly and validly executed and delivered by the
Company and, assuming the due authorization, execution and delivery hereof by
the Purchaser and payment for the Shares as contemplated by this Agreement,
constitute the legal, valid and binding obligation of the Company enforceable
against the Company in accordance with their terms.
SECTION 3.05. No Conflict. The execution and delivery of this
-----------
Agreement and the Distribution Agreement by the Company do not, and the
performance of this Agreement and the Distribution Agreement by the Company will
not, (i) conflict with or violate the Restated Articles of Incorporation or By-
Laws, (ii) conflict with or violate any law, rule, regulation, order, judgment
or decree applicable to the Company or by which its properties are bound or
affected, or (iii) result in any breach of or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of an Encumbrance on any of the
properties or assets of the Company pursuant to any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, insurance policy or
other instrument or obligation to which the Company is a party, or by which the
Company or its properties are bound or affected.
SECTION 3.06. Common Stock; Preferred Stock. All Shares and all
-----------------------------
shares of Common Stock subject to issuance as contemplated by this Agreement
(including, without limitation, the Common Stock issuable upon conversion of the
Shares and pursuant to Article V of this Agreement), upon such issuance against
payment therefor in accordance herewith or upon conversion of the Shares, as the
case may be, shall (i) be duly authorized, validly issued, fully paid and
nonassessable and (ii) be free and clear of all Encumbrances of any kind
whatsoever (including, without limitation, any preemptive rights of any other
stockholder of the Company). Upon issuance in accordance with the Articles and
herewith, all such shares of Common Stock shall have accorded to them full
voting rights. Upon issuance in accordance herewith, the Shares will have the
rights, including, without limitation, the voting rights, set forth in the
Articles.
SECTION 3.07. Compliance with Laws. Except as set forth in Schedule
--------------------
3.07 of the Disclosure Schedule and as would not have a Material Adverse Effect,
to the best knowledge of the Company, the Company is not in conflict with, or
violation of, any law, rule, regulation, order, judgment or decree applicable to
the Company or by which the Company or any of its properties are bound or
affected.
SECTION 3.08. Governmental Consents and Approvals. The execution,
-----------------------------------
delivery and performance of this Agreement by the Company do not and will not
require any consent,
approval, authorization or other order of, action by, filing with or
notification to any governmental or regulatory authority, domestic or foreign,
except (a) as described in Section 3.08 of the Disclosure Schedule and (b) to
the extent applicable, upon issuance of shares of Common Stock pursuant to
Article V of this Agreement and upon a conversion of the Shares as provided for
in the Articles, the notification requirements of the HSR Act.
SECTION 3.09. Financial Information. True and complete copies of (i)
---------------------
the audited balance sheets of the Company for each of the fiscal years ended as
of June 30, 1992 and June 30, 1993, and the related audited statements of income
and cash flows of the Company, together with all related notes thereto,
accompanied by the reports thereon of the Company's Accountants (collectively,
the "Financial Statements") and (ii) the unaudited balance sheet of the Company
--------------------
as of August 31, 1993, and the related unaudited statements of income and cash
flow, together with all related notes thereto (collectively referred to herein
as the "Interim Financial Statements"), are set forth in Section 3.09 of the
----------------------------
Disclosure Schedule. The Financial Statements and the Interim Financial
Statements (i) were prepared in accordance with the books of account and other
financial records of the Company, (ii) present fairly the financial condition,
results of operations and cash flows of the Company as of the dates thereof or
for the periods covered thereby, (iii) have been prepared in accordance with
U.S. GAAP applied on a basis consistent with the past practices of the Company
and (iv) include all adjustments (consisting only of normal recurring accruals)
that are necessary for a fair presentation of the financial condition of the
Company, the results of the operations and cash flows of the Company as of the
dates thereof or for the periods covered thereby; provided, however, that the
-----------------
Interim Financial Statements are subject to normal year-end adjustments, none of
which are expected to be material in amount, and to the inclusion of footnotes
with respect to the matters covered by the footnotes in the Financial
Statements.
SECTION 3.10. Absence of Certain Changes, Events and Conditions;
--------------------------------------------------
Conduct in the Ordinary Course. (a) Since June 30, 1993, except as disclosed
------------------------------
in Schedule 3.10(a) of the Disclosure Schedule, there has not been any change
having a Material Adverse Effect. Except as disclosed in Schedule 3.10(a) of
the Disclosure Schedule, there are no conditions known to the Company existing,
with respect to the research, markets, proposed development and marketing plans,
products, facilities, existing and prospective technologies, capabilities or
personnel of the Company that reasonably would be expected to have a Material
Adverse Effect.
(b) Since June 30, 1993, the Company has been operated only in the
ordinary course. As amplification and not limitation of the foregoing, except
as disclosed in Schedule 3.10(b) of the Disclosure Schedule, the Company has
not, since June 30, 1993:
(i) permitted or allowed any of the assets or properties (whether
tangible or intangible) of the Company to be subjected to any Encumbrance,
other than Permitted Encumbrances;
(ii) made any loan to, guaranteed any indebtedness of or otherwise
incurred any indebtedness on behalf of any Person;
(iii) failed to pay any creditor any amount owed to such creditor when
due;
(iv) redeemed any of the capital stock or declared, made or paid any
dividends or distributions (whether in cash, securities or other property)
to the holders of capital stock of the Company;
(v) made any material changes in the customary methods of operations
of the Company;
(vi) merged with, entered into a consolidation with or acquired an
interest in, any Person or acquired a substantial portion of the assets or
business of any Person or any division or line of business thereof, or
otherwise acquired any material assets other than in the ordinary course of
business consistent with past practice;
(vii) made any capital expenditure or commitment for any capital
expenditure in excess of $200,000 individually or $750,000 in the
aggregate;
(viii)issued or sold any capital stock, notes, bonds or other
securities, or any option, warrant or other right to acquire the same, of,
or any other interest in, the Company;
(ix) entered into any agreement, arrangement or transaction with any
of its directors, officers, employees or shareholders (or with any
relative, beneficiary, spouse or Affiliate of such Person);
(x) made any change in any method of accounting or accounting
practice or policy used by the Company, other than such changes required by
U.S. GAAP;
(xi) disclosed any secret or confidential Intellectual Property
(except by way of issuance of a patent) or permitted to lapse or go
abandoned any Intellectual Property (or any registration or grant thereof
or any application relating thereto) to which, or under which, the Company
has any right, title, interest or license; or
(xii) agreed, whether in writing or otherwise, to take any of the
actions specified in this Section 3.09 or granted any options to purchase,
rights of first refusal, rights of first offer or any other similar rights
or commitments with respect to any of the actions specified in this Section
3.10, except as expressly contemplated by this Agreement.
SECTION 3.11. Employee Benefit Plans. (a) With respect to each
----------------------
employee benefit plan, program, arrangement and contract (including, without
limitation, any "employee benefit plan", as defined in Section 3(3) of ERISA),
---------------------
maintained or contributed to by the Company or any of its ERISA Affiliates or
with respect to which the Company or any of its ERISA Affiliates could incur
liability under Section 4069, 4201 or 4212(c) of ERISA (the "Company Benefit
----------------
Plans"), the Company has made available to the Purchaser a true and correct copy
------
of (i) the most recent annual report (Form 5500) filed with the IRS, (ii) such
Company Benefit Plan, (iii) each trust agreement relating to such Company
Benefit Plan, (iv) the most recent summary plan description for each Company
Benefit Plan for which a summary plan description is required and (v) the most
recent determination letter issued by the IRS with respect to any Company
Benefit Plan
qualified under Section 401(a) of the Code.
(b) Except as set forth in Section 3.11(b) to the Disclosure
Schedule, none of the Company Benefit Plans promises or provides retiree medical
or life insurance benefits to any person. Each Company Benefit Plan intended to
be qualified under Section 401(a) of the Code has received a favorable
determination letter from the IRS to the effect that it is so qualified and
nothing has occurred since the date of such letter to affect the qualified
status of such plan. Except for the Stock Option Plans, none of the Company
Benefit Plans in effect on the date hereof would result, separately or in the
aggregate, in the payment of any material "excess parachute payment" within the
------------------------
meaning of Section 280G of the Code. Each Company Benefit Plan has been
operated in all material respects in accordance with its terms and the
requirements of applicable Law. Except as set forth in Section 3.11(b) to the
Disclosure Schedule, none of the Company Benefit Plans is subject to Title IV of
ERISA, and neither the Company nor any of its ERISA Affiliates has incurred, or
reasonably expects to incur, any direct or indirect liability under or by
operation of Title IV or ERISA.
(c) With respect to the Company Benefit Plans, other than claims for
benefits, no event has occurred and, to the knowledge of the Company, there
exists no condition or set of circumstances, in connection with which the
Company or any of its ERISA Affiliates could be subject to any liability under
the terms of such Company Benefit Plans, ERISA, the Code or any other applicable
Law, which would, individually or in the aggregate, have a Material Adverse
Effect.
SECTION 3.12. Leased Real Property. (a) The Company owns no real
--------------------
property.
(b) Section 3.12(b) of the Disclosure Schedule contains a list of all
of the Leased Real Property. Except as described in such Section of the
Disclosure Schedule, (i) there is no material violation of any law, rule or
regulation by the Company or known to the Company relating to any of the Leased
Real Property, (ii) the Company is in peaceful and undisturbed possession of the
Leased Real Property, and so long as the lease remains in effect, there are no
contractual or legal restrictions that preclude or restrict the ability to use
the premises for the purposes for which they are currently being used and (iii)
the Company has not leased or subleased any parcel or any portion of any parcel
of Leased Real Property to any other Person, nor has the Company assigned its
interest under any lease or sublease listed in Section 3.12(b) of the Disclosure
Schedule to any third party.
(c) The Company has, or has caused to be, delivered to the Purchaser
true and complete copies of all leases and subleases listed in Section 3.12(b)
of the Disclosure Schedule. Each of such leases and subleases is in full force
and effect and constitutes a legal, valid and binding obligation of the
respective parties thereto, and except as set forth on Schedule 3.12(c) of the
Disclosure Schedule, the Company is not in default or breach of (with or without
the giving of notice or the passage of time) any such leases or subleases. To
the knowledge of the Company, no third party is in material breach of any of
such leases or subleases.
SECTION 3.13. Intellectual Property. (a) Except as set forth in
---------------------
Schedule 3.13
of the Disclosure Schedule: (i) all the Owned Intellectual Property is owned by
the Company, free and clear of any Encumbrance and (ii) no Actions have been
made or asserted or are pending (nor, to the best knowledge of the Company after
due inquiry, has any such Action been threatened) against the Company either
(A) based upon or challenging or seeking to deny or restrict the use by the
Company of any of the Owned Intellectual Property or (B) alleging that any
services provided, or products manufactured or sold by the Company are being
provided, manufactured or sold in violation of any patents or trademarks, or any
other rights of any Person. To the best knowledge of the Company after due
inquiry, no Person is using any patents, copyrights, trademarks, service marks,
trade names, trade secrets or similar property that are confusingly similar to
the Owned Intellectual Property or that infringe upon the Owned Intellectual
Property or upon the rights of the Company therein. Except as disclosed in
Section 3.12 of the Disclosure Schedule, the Company has not granted any license
or other right to any other Person with respect to the Owned Intellectual
Property. The consummation of the transactions contemplated by this Agreement
will not result in the termination or impairment of any of the Owned
Intellectual Property.
(b) Except as set forth on Section 3.13(b) of the Disclosure
Schedule, each license and sublicense with respect to the Licensed Intellectual
Property:
(i) is valid and binding and in full force and effect and represents
the entire agreement between the respective licensor and licensee with
respect to the subject matter of such license or sublicense;
(ii) except as otherwise set forth in Section 3.13(b)(ii) of the
Disclosure Schedule, will not cease to be valid and binding and in full
force and effect on terms identical to those currently in effect as a
result of the consummation of any of the transactions contemplated by this
Agreement, nor will the consummation of the transactions contemplated by
this Agreement constitute a breach or default under such license or
sublicense or otherwise give the licensor or sublicensor a right to
terminate such license or sublicense;
(iii) no Actions have been made or asserted or are pending (nor, to
the best knowledge of the Company after due inquiry, has any such Action
been threatened) against the Company either (A) based upon or challenging
or seeking to deny or restrict the use by the Company of any of the
Licensed Intellectual Property or (B) alleging that any Licensed
Intellectual Property is being licensed, sublicensed or used in violation
of any patents or trademarks, or any other rights of any Person; and
(iv) to the knowledge of the Company, no Person is using any patents,
copyrights, trademarks, service marks, trade names, trade secrets or
similar property that are confusingly similar to the Licensed Intellectual
Property or that infringe upon the Licensed Intellectual Property or upon
the rights of the Company therein.
(c) Except as otherwise disclosed in Section 3.13(c) of the
Disclosure Schedule, with respect to each such license or sublicense of Licensed
Intellectual Property: (i) the Company has not received any notice of
termination or cancellation under such license or
sublicense and no licensor or sublicensor has any right of termination or
cancellation under such license or sublicense except in connection with the
default of the Company thereunder, (ii) the Company has not received any notice
of a breach or default under such license or sublicense, which breach or default
has not been cured and (iii) the Company has not granted to any other Person any
rights, adverse or otherwise, under such license or sublicense.
(d) Neither the Company nor (to the knowledge of the Company) any
other party to such license or sublicense of Licensed Intellectual Property is
in breach or default in any material respect, and, to the best knowledge of the
Company after due inquiry, no event has occurred that, with notice or lapse of
time would constitute such a breach or default or permit termination,
modification or acceleration under such license or sublicense.
(e) Except as set forth in Section 3.13(e) of the Disclosure
Schedule, the Company is not aware of any reason that would prevent any pending
applications to register trademarks, service marks or copyrights or any pending
patent applications from being granted.
(f) The Company has taken all reasonable security measures to protect
the secrecy, confidentiality and value of all Intellectual Property required to
conduct its business. Each founder, officer, director and employee of the
Company has executed a Proprietary Information and Inventions Agreement in the
Company's standard form, each such agreement is in full force and effect as of
the date hereof and to the best of the Company's knowledge, none of the
Company's current or former officers, employees or consultants is or will be in
violation thereof. The Company does not believe it is or will be necessary to
utilize any inventions of any of its employees or consultants (or people it
currently intends to hire) made prior to their employment by or consultancy to
the Company, other than inventions which have been licensed to the Company.
(g) Section 3.13(g) of the Disclosure Schedule sets forth a complete
list of all patent applications in which the Company has an interest. The
Company believes that the inventions described in such applications are
patentable, that the claims made therein should issue in all material respects
and that the patents, if issued, would cover all techniques currently known to
the Company to grow human stem cells in culture.
(h) Except as disclosed in Section 3.13(h) of the Disclosure
Schedule, no consultant to or employee of the Company has granted any license or
other right to any Person other than the Company with respect to the Owned
Intellectual Property. The Company is not aware that any of its employees or
consultants is obligated under any contract (including licenses, covenants or
commitments of any nature) or any order of any court or administrative agency,
that would interfere with the use of such employee's or consultant's best
efforts to promote the interests of the Company or that would conflict with the
Company's business as proposed to be conducted.
SECTION 3.14. Environmental Matters. Except as would not have a
---------------------
Material Adverse Effect, the Company, to the best of its knowledge, (a) is not
violating and has not in the past violated any Environmental Law or Permit,
(b) is not exposed to any claims of liability for any off-site disposal or
contamination, (c) has not received notice of any claim or threatened
claim relating to any Environmental Permit, Environmental Law or otherwise
relating to any Hazardous Substance and (d) is not aware of any circumstance
likely to result in claims, liability, investigation, monitoring or remediation
costs or restrictions on the ownership, use, or transfer of any Real Property or
Environmental Permit pursuant to any Environmental Law. With respect to its
period of ownership or use of any property, there has not been any
contamination, release or threat of release at any currently or formerly owned,
leased or used real property that would have a Material Adverse Effect.
SECTION 3.15. Litigation. There is no pending or, to the knowledge
----------
of the Company, threatened litigation, arbitration or governmental investigation
or legal, administrative or regulatory proceeding against the Company or to
which any of its properties is or would be subject that (a) if adversely
determined, would have a Material Adverse Effect or (b) relates to this
Agreement or the Distribution Agreement or the transactions contemplated hereby
and thereby. Except as set forth in Schedule 3.15 of the Disclosure Schedule,
there are no material citations, fines or penalties heretofore asserted against
the Company under any federal, state or local law that remain unpaid or that
otherwise bind the assets of the Company.
SECTION 3.16. Agreements. Section 3.16 of the Disclosure Schedule
----------
lists each agreement, contract (other than leases of Leased Real Property),
license commitment or instrument (including any and all amendments thereto) to
which the Company is a party, involving aggregate annual payments of at least
$200,000 or which is material, individually or in the aggregate, to the
business, operations or financial condition of the Company, each of which is in
full force and effect and constitutes a legal, valid and binding obligation of
the respective parties thereto, and except as set forth on Schedule 3.16 of the
Disclosure Schedule, the Company is not in default or breach of (with or without
the giving of notice or the passage of time) any such agreement or instrument.
To the knowledge of the Company, no third party is in material breach of any
such agreements. The Company has caused to be delivered to the Purchaser true
and complete copies of all such agreements, including all amendments thereto.
SECTION 3.17. Certain Interests. (a) Except as disclosed in Section
-----------------
3.17(a) of the Disclosure Schedule, no officer or director of the Company and no
relative or spouse (or relative of such spouse) who resides with, or is a
dependent of, any such officer or director:
(i) has any direct or indirect financial interest in any competitor,
supplier or customer of the Company, provided, however, that the ownership
-------- -------
of securities representing no more than one percent of the outstanding
voting power of any competitor, supplier or customer, and which are listed
on any national securities exchange or traded actively in the national
over-the-counter market, shall not be deemed to be a "financial interest"
so long as the Person owning such securities has no other connection or
relationship with such competitor, supplier or customer;
(ii) owns, directly or indirectly, in whole or in part, or has any
other interest in any tangible or intangible property which the Company
uses or has used in the conduct of the Business or otherwise;
(iii) has outstanding any indebtedness to the Company; or
(iv) has any contract or agreement with the Company.
(b) Except as disclosed in Section 3.17(b) of the Disclosure
Schedule, the Company has no Liability or any other obligation of any nature
whatsoever to any officer, director or shareholder of the Company or to any
relative or spouse (or relative of such spouse) who resides with, or is a
dependent of, any such officer, director or shareholder.
SECTION 3.18. Licenses and Permits. Except as would not have a
--------------------
Material Adverse Effect, the Company, to the best of its knowledge, has all
governmental licenses, permits and other governmental authorizations and
approvals required for the conduct of its businesses as now conducted, and all
such licenses, permits, authorizations and approvals will remain in full force
and effect immediately following the consummation of the transactions hereunder.
SECTION 3.19. Private Offering. No form of general solicitation or
----------------
general advertising (including, without limitation, advertisements, articles,
notices or other communications published in any newspaper, magazine or other
medium or broadcast over television or radio, or any seminar or meeting whose
attendees have been invited by any general solicitation or general advertising)
was used by the Company or any other Person acting on behalf of the Company in
respect of the Shares or in connection with the offer and sale of the Shares.
SECTION 3.20. Brokers. No broker, finder or investment banker, other
-------
than ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ (whose fees shall be paid by the Company), is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions hereunder based upon arrangements made by or on behalf of the
Company. All arrangements between the Company and ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ with
respect to such fees have been disclosed to the Purchaser.
SECTION 3.21. General Solicitation. The Company has not made any
--------------------
general advertising or general solicitation with respect to the purchase of the
Shares, the Option or any shares of Common Stock into which the Shares may be
converted or for which the Option may be exercised, or any other securities of
the Company that may be purchased pursuant hereto.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
-----------------------------------------------
The Purchaser represents and warrants to the Company that:
SECTION 4.01. Organization of the Purchaser. The Purchaser is a
-----------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of Colorado.
SECTION 4.02. Authority. The Purchaser has all necessary corporate
---------
power and authority to execute and deliver this Agreement and the Distribution
Agreement and to perform its obligations and to consummate the transactions
contemplated hereunder and thereunder. The execution, delivery and performance
of this Agreement and the Distribution Agreement by the Purchaser have been duly
and validly authorized by all necessary corporate action of the Purchaser and no
other corporate proceedings on the part of the Purchaser are necessary to
authorize this Agreement or the Distribution Agreement or to consummate the
transactions contemplated by this Agreement or the Distribution Agreement. This
Agreement and the Distribution Agreement have been duly and validly executed and
delivered by the Purchaser and, assuming the due authorization, execution and
delivery hereof by the Company, constitute the legal, valid and binding
obligation of the Purchaser enforceable against the Purchaser in accordance with
their terms.
SECTION 4.03. No Conflict. The execution and delivery of this
-----------
Agreement and the Distribution Agreement by the Purchaser do not, and the
performance of this Agreement and the Distribution Agreement by the Purchaser
will not, (i) conflict with or violate the articles of incorporation or by-laws
of the Purchaser, (ii) conflict with or violate any law, rule, regulation,
order, judgment or decree applicable to the Purchaser or by which it or its
properties are bound or affected or (iii) result in any breach of or constitute
a default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of an Encumbrance on
any of the properties or assets of the Purchaser pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which the Purchaser is a party or by which the
Purchaser or any of its properties is bound or affected.
SECTION 4.04. Securities Act. The Purchaser is an "accredited
--------------
investor", as that term is defined in Regulation D promulgated under the
Securities Act. The Purchaser received no general advertising or general
solicitation with respect to the purchase of the Shares, the Option or any
shares of Common Stock into which the Shares may be converted for which the
Option may be exercised, or any other securities of the Company that may be
purchased pursuant hereto. The Purchaser is acquiring the Shares and the
Option, and all shares of Common Stock into which the Shares may be converted,
solely for its own account, as principal, for investment purposes only and not
with a view to, or for, resale or distribution thereof. The Purchaser has no
present intention, agreement or arrangement to resell, assign, transfer or
otherwise dispose of all or any part of the Shares, the Option or any shares of
Common Stock into which the Shares may be converted. The Purchaser understands
that in reliance upon the foregoing representation and warranty, the offer and
sale of the Shares and the Option are not registered under the Securities Act or
any state securities law. The Purchaser will not sell, assign, transfer or
otherwise dispose of the Shares, the Option or the shares of Common Stock into
which the Shares may be converted or for which the Option may be exercised
except pursuant to a registration under the Securities Act and applicable state
securities laws or an exemption therefrom.
SECTION 4.05. Governmental Consents and Approvals. The execution,
-----------------------------------
delivery
and performance of this Agreement by the Purchaser do not and will not require
any consent, approval, authorization or other order of, action by, filing with
or notification to any governmental or regulatory authority, domestic or
foreign, except (a) as described in Section 4.05 of the Disclosure Schedule and
(b) to the extent applicable, upon issuance of shares of Common Stock pursuant
to Article V of this Agreement and upon a conversion of the Shares as provided
for in the Articles, the notification requirements of the HSR Act.
SECTION 4.06. Brokers. No broker, finder or investment banker, other
-------
than ▇▇▇▇▇▇ Brothers Inc. (whose fees shall be paid by the Purchaser), is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions hereunder, based upon arrangements made by or on behalf of
the Purchaser.
ARTICLE V
ADDITIONAL AGREEMENTS
---------------------
SECTION 5.01. Access to Information; Confidentiality. The Company
--------------------------------------
shall, and shall cause its officers, directors, employees, auditors and other
agents to, provide to the Purchaser such financial, operating and other data and
information with respect to the business and properties of the Company as the
Purchaser shall reasonably request to monitor the investment made pursuant
hereto and to exercise its rights hereunder. The Purchaser and the Company
agree to keep secret and not to disclose to any third party any Confidential
Information of the other that may from time to time be received from the other
party; provided, however, that the Purchaser may disclose such information to
-------- -------
its Affiliates which agree to be bound by the provisions of this Section 5.01.
The Confidential Information exchanged between the parties pursuant to this
Agreement shall not be used by the receiving party for any purpose other than
for purposes of carrying out covenants or other obligations contained in this
Agreement.
SECTION 5.02. Registration Rights. The Company hereby grants to the
-------------------
Purchaser the registration rights set forth in Exhibit 5.02.
SECTION 5.03. Purchaser's Option. (a) The Company hereby grants to
------------------
the Purchaser an irrevocable option (the "Option") to purchase all, but not less
------
than all, of the Option Shares at the Option Price in accordance with this
Section 5.03.
(b) The Purchaser may exercise the Option at any time during the
three-year period commencing on the closing date of the Initial Public Offering
(the "Option Period"). Upon the expiration of the Option Period, the right to
-------------
exercise the Option under this Section 5.03 shall expire and be of no further
force and effect. Notwithstanding any such expiration, the Purchaser shall be
entitled to acquire the Option Shares with respect to which it has exercised the
Option in accordance with the terms hereof during the Option Period.
(c) If the Purchaser wishes to exercise the Option, it shall deliver
to the Company a written notice; the date such notice is delivered to the
Company by the Purchaser being the "Option Notice Date") specifying (i) the
------------------
Purchaser's intention to acquire the Option Shares and
(ii) a place and date not earlier than five business days nor later than fifteen
business days (the "Option Closing Date") from the Option Notice Date for the
-------------------
closing of such acquisition (the "Option Closing"). The Purchaser shall also
--------------
deliver to the Company at the Option Closing an opinion of counsel (it being
agreed that Shearman & Sterling shall be deemed satisfactory) in form and
substance reasonably satisfactory to the Company and its counsel or other
evidence reasonably satisfactory to the Company and its counsel that the
acquisition of the Option Shares by the Purchaser complies with the Securities
Act and with any applicable state securities laws.
(d) On the Option Closing Date, the Purchaser shall pay to the
Company, in immediately available funds by wire transfer to a bank account
designated in writing by the Company, an amount equal to the Option Price
multiplied by the number of Option Shares.
(e) At the Option Closing, simultaneously with the delivery of the
consideration specified in paragraph (d) of this Section 5.03, the Company shall
deliver to the Purchaser a certificate or certificates representing the Option
Shares registered in the name of the Purchaser.
(f) The Option may be transferred to any Affiliate of the Purchaser
but is not otherwise transferable without the prior written consent of the
Company.
(g) (i) In the event that, at any time following the exercise of the
Option, the Company issues (a "Post-Option Issuance") any Out of the Money
--------------------
Option Stock, it shall deliver written notice of such intention (the "Post-
----
Option Issuance Notice") to the Purchaser within 30 days after the date of such
----------------------
Post-Option Issuance. The Post-Option Issuance Notice shall set forth the
number of shares of Common Stock issued and the applicable Out of the Money
Option Price.
(ii) In connection with each Post-Option Issuance, the Purchaser shall
have the right (the "Post-Option Purchase Right") to purchase from the Company
--------------------------
at the Option Price the number of shares of Common Stock equal to 30 percent of
the aggregate of the total number of shares of Out of the Money Option Stock
issued in such Post-Option Issuance plus the number of shares of Common Stock to
be issued to the Purchaser upon exercise of the Post-Option Purchase Right.
(iii) In the event that the Purchaser wishes to exercise its Post-
Option Purchase Right, it shall deliver to the Company, within thirty days after
the date of the Post-Option Issuance a written notice in which the Purchaser
agrees to purchase at the Option Price the number of shares of Common Stock
which the Purchaser is entitled to purchase upon exercise of the Post-Option
Purchase Right.
SECTION 5.04. Purchaser's Preemptive Rights. (a) In the event that
-----------------------------
the Company proposes to issue (a "Post-Determination Issuance") any New Voting
---------------------------
Securities, and such issuance will occur at any time following the date when the
conversion price for the Shares has been determined in accordance with the
Restated Articles of Incorporation (the "Conversion Determination Date"), it
-----------------------------
shall deliver written notice of such intention (the "Post-Determination Issuance
---------------------------
Notice") to the Purchaser not less than 30 days prior to (i) the date of initial
------
filing of a registration statement, in the case of a Public Offering or (ii) the
expected date of issuance,
in the case of any other Post-Determination Issuance. The Post-Determination
Issuance Notice shall set forth in reasonable detail the terms of such Post-
Determination Issuance, including, without limitation, (A) a description, and
the number, of New Voting Securities proposed to be issued, (B) in the case of a
Public Offering, the estimated price to the public, underwriting discount and
commissions, expenses and underwriters of the Public Offering, (C) in the case
of a Private Placement, the sales price, to the extent then known by the
Company, and the identity of the proposed purchasers, and (D) in the case of a
Non-Cash Transaction, a description of such transaction, including, without
limitation, the consideration and the parties thereto. If information concerning
the identity of proposed purchasers in a Private Placement becomes known to the
Company subsequent to the delivery of the Post-Determination Issuance Notice,
the Company shall, promptly after gaining such knowledge, deliver such
information to the Purchaser in writing.
(b) In connection with each Post-Determination Issuance, the
Purchaser shall have the right (the "Post-Determination Preemptive Right") to
-----------------------------------
purchase from the Company at the Applicable Preemptive Price simultaneously
with, and otherwise upon the terms and subject to the conditions of, the Post-
Determination Issuance up to the number of shares of Common Stock or other
Voting Securities, as the case may be, necessary to permit the Purchaser to
maintain the percentage of the outstanding Common Stock owned by the Purchaser
and the percentage of Total Voting Power the Purchaser had, in each case,
immediately prior to such Post-Determination Issuance (including, for purposes
of calculating such percentage, all shares of Common Stock or other Voting
Securities that the Purchaser has the right to acquire upon exercise of options
or warrants, conversion or exchange of other securities or otherwise, if the
Option has not yet been exercised, excluding the shares of Common Stock subject
to the Option).
(c) In the event that the Purchaser wishes to exercise its Post-
Determination Preemptive Right, it shall deliver to the Company, not later than
ten days prior to the proposed date of the initial filing of the registration
statement, in the case of a Public Offering, and the proposed date of issuance,
in any other case, a written notice (a "Post-Determination Subscription Notice")
--------------------------------------
in which the Purchaser specifies the number of New Voting Securities which the
Purchaser elects to purchase and in which the Purchaser agrees to purchase such
specified number of New Voting Securities at the Applicable Preemptive Price
subject to the same conditions as the Post-Determination Issuance.
(d) In the event that the Company issues (such issuance being a "Pre-
---
Determination Issuance") any New Voting Securities during the period beginning
----------------------
on the date hereof and ending on and including the Conversion Determination
Date, then the Purchaser shall have the option (the "Pre-Determination
-----------------
Preemptive Rights) to purchase from the Company at the Applicable Preemptive
-----------------
Price for each such Pre-Determination Issuance up to the number of New Voting
Securities issued in each such Pre-Determination Issuance equal to the
Applicable Percentage. The "Applicable Percentage" means the greater of (i) the
---------------------
percentage of outstanding Common Stock (including any other securities
representing common equity) and (ii) the percentage of Total Voting Power, in
either case that would have been held by the Purchaser if the Shares had been
converted into shares of Common Stock immediately
prior to such Pre-Determination Issuance at the conversion price of the Shares
on the Conversion Determination Date (including, for purposes of calculating
such percentage, all shares of Common Stock or other Voting Securities that the
Purchaser has the right to acquire upon exercise of options or warrants,
conversion or exchange of other securities or otherwise, but if the Option has
not yet been exercised, excluding the shares of Common Stock subject to the
Option).
(e) In the event that the Purchaser wishes to exercise the Pre-
Determination Preemptive Right, it shall deliver to the Company, at any time
during the period commencing on the Conversion Determination Date and ending
thirty days thereafter, a written notice in which the Purchaser specifies the
number of New Voting Securities which the Purchaser elects to purchase and in
which the Purchaser agrees to purchase such specified number of New Voting
Securities at the Applicable Preemptive Prices. The closing of the purchase of
New Voting Securities upon the Purchaser's exercise of the Pre-Determination
Preemptive Right shall take place within five days of the receipt of the written
notice referred to in the immediately preceding sentence.
SECTION 5.05. Company Put Option. (a) The Company may, at its
------------------
option, require the Purchaser to purchase (the "Company Option") in accordance
--------------
with the terms of this Section 5.05, Equity Securities in conjunction with
either (i) the Initial Public Offering if the aggregate proceeds to the Company
therefrom, net of underwriting discounts, commissions and other expenses, are
not less than $17.5 million in cash (including the purchase price payable by the
Purchaser pursuant to this Section 5.05) (a "Qualifying IPO") or (ii) any
--------------
Private Placement of Equity Securities in which the proceeds to the Company, net
of expenses, are not less than $10 million in cash (including the purchase price
payable by the Purchaser pursuant to this Section 5.05) (a "Qualifying Private
------------------
Placement").
---------
(b) In the event that the Company wishes to exercise the Company
Option, it shall deliver written notice of such exercise (the "Put Notice") to
----------
the Purchaser not less than 30 days prior to (i) the closing date of a
Qualifying Private Placement or (ii) the date of the filing with the Securities
and Exchange Commission of a registration statement for the Qualifying IPO.
Upon delivery of the Put Notice, the Purchaser shall be obligated to purchase
from the Company, upon the same terms and subject to the same conditions as the
underwriters in the case of a Qualifying IPO, and the other purchasers of Equity
Securities in the case of a Qualifying Private Placement, the number of Equity
Securities equal to not more than 25 percent of (x) the Equity Securities
purchased by the underwriters (excluding Equity Securities purchased by such
underwriters pursuant to any over-allotment option) in the case of a Qualifying
IPO or (y) the Equity Securities purchased by other purchasers in the case of a
Qualifying Private Placement.
(c) Notwithstanding any other provision of this Section 5.05 to the
contrary, (i) the Purchaser shall not be required to purchase Equity Securities
having an aggregate purchase price of more than $5 million pursuant to the
Company Option; (ii) the Purchaser shall not be required to purchase pursuant to
the Company Option any Equity Securities being offered in conjunction with any
securities other than Equity Securities; (iii) the Purchaser shall not be
required to purchase Equity Securities if such purchase is prohibited by law, if
any regulatory
approval required to effect any purchase of Equity Securities upon exercise of
the Company Option cannot be obtained or during any waiting period under the HSR
Act or during any other period in which regulatory approvals are sought by the
parties hereto pursuant to Section 5.10, but such purchase shall take place as
promptly as practicable after any requisite waiting period has passed and any
required notification period has expired or been terminated, or such approval
has been obtained; and (iv) the Purchaser shall not be required to purchase
Equity Securities pursuant to the Company Option if the Company (A) becomes
insolvent, (B) a bankruptcy petition is filed with respect to the Company or any
of its Subsidiaries, (C) is adjudicated as a bankrupt pursuant to an involuntary
petition in bankruptcy, (D) suffers appointment of a temporary or permanent
receiver, trustee or custodian for its business or for all or part of its
assets, where such appointment is not discharged within thirty days, (E) makes
an assignment for the benefit of creditors, (F) is admitted to the benefits of
any procedure for the settlement or postponement of debts, (G) becomes a party
to dissolution proceedings or (H) takes any corporate action with respect to any
of the foregoing.
(d) If the Company exercises the Company Option with respect to any
Qualifying IPO or Qualifying Private Placement, the Purchaser shall have the
right to purchase from the Company in connection with such Qualifying IPO or
Qualifying Private Placement, in lieu of any rights granted to the Purchaser
pursuant to Section 5.04, up to a number of Equity Securities equal to the
greater of (i) forty percent of the Equity Securities sold in such Qualifying
IPO or Qualifying Private Placement or (ii) the number of Equity Securities, if
any, that the Purchaser would have had a right to acquire in accordance with
Section 5.04, notwithstanding the Purchaser's right granted in this Section
5.05(d).
(e) In the event that the Purchaser wishes to exercise the right
granted in Section 5.05(d), it shall deliver to the Company, not later than ten
days prior to (i) the proposed date of the initial filing of the registration
statement, in the case of a Qualifying IPO, or (ii) the closing date, in the
case of a Qualifying Private Placement, a written notice in which the Purchaser
specifies the number of New Voting Securities which the Purchaser elects to
purchase and in which the Purchaser agrees to purchase such specified number of
New Voting Securities upon the same terms and subject to the same conditions as
the underwriters in the case of a Qualifying IPO, and the other purchasers of
Equity Securities in the case of a Qualifying Private Placement. Such right must
be exercised by the Purchaser in accordance with the procedures set forth in
Section 5.04.
SECTION 5.06. Standstill Agreement. Until the earlier of (a) October
--------------------
__, 1998 or (b) the Purchaser's exercise of the Option in accordance with
Section 5.03, the Purchaser shall not, without the prior approval of the Board,
acquire, agree to acquire, or make any proposal to acquire, directly or
indirectly any securities of the Company, except for the acquisition of shares
of Common Stock upon conversion of the Shares and in accordance with Article V
of this Agreement.
SECTION 5.07. Purchaser's Right of First Negotiation. If the Company
--------------------------------------
receives any proposal concerning, or otherwise wishes to pursue, a merger,
consolidation or other transaction in which all or a majority of the Company's
equity securities or Voting Securities,
all or substantially all of the Company's assets, or any material portion of the
assets used by the Company in performing its obligations under the Distribution
Agreement would be acquired outside of the ordinary course of business of the
Company by any Person (a "Business Combination"), the Company shall deliver
----------------------
written notice (a "Business Combination Notice") of such proposal or intention
---------------------------
to the Purchaser, in the case of a proposal, setting forth the terms of the
proposal in reasonable detail. Upon receipt of a Business Combination Notice,
the Purchaser shall have the exclusive right to negotiate with the Company
concerning a Business Combination, which right shall expire (such period being
the "Exclusivity Period") upon the earliest to occur of (a) the thirtieth day
------------------
following the commencement of the Exclusivity Period if the Purchaser shall have
failed to commence good faith negotiations with the Company with respect to a
Business Combination during such thirty day period, (b) either the Purchaser or
the Company shall, following such thirty-day period, notify the other that it
has reasonably determined that continued negotiations are unlikely to result in
a Business Combination and (c) on the 120th day following the date of the
Business Combination Notice if the Purchaser and the Company fail to enter into
a definitive agreement to effect a Business Combination within such 120 day
period. During the Exclusivity Period, the Company shall not engage in any
discussions, negotiations, arrangements or understandings with, or provide any
non-public or confidential information to, any Person other than the Purchaser
with respect to a Business Combination. The Company and the Purchaser agree that
all communications between the parties during the Exclusivity Period will be
kept strictly confidential and the contents of those communications will not be
disclosed to any other person except as, and to the extent, required by
applicable law. For one year following the Exclusivity Period, the Company may
only enter into a Business Combination with a Person other than the Purchaser if
the terms of the Business Combination with such other Person, taken as a whole,
are more favorable to the Company and its stockholders than the most favorable
terms of a Business Combination proposed to the Company by the Purchaser during
the Exclusivity Period.
SECTION 5.08. Legend. The Purchaser agrees that all certificates
------
representing the Shares and the shares of Common Stock to be issued upon
conversion of the Shares or pursuant to this Article V shall bear the following
legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR SECURITIES LAWS OF ANY
STATE AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREUNDER."
The Purchaser agrees to comply with the foregoing transfer restriction legend;
and the Purchaser acknowledges that a transfer restriction will be maintained by
the Company's stock transfer agent. The legend set forth in this Section 5.08
shall be removed by delivery of substitute certificate(s) without such legend if
the Purchaser shall have delivered to the Company an opinion of counsel (it
being agreed that Shearman & Sterling shall be deemed satisfactory) in form and
substance reasonably satisfactory to the Company and its counsel, to the effect
that such legend is not required for purposes of compliance with the Securities
Act.
SECTION 5.09. Board Observer; Board Representation. (a) During the
------------------------------------
period (such period being the "Observation Period") commencing on the
------------------
Purchaser's acquisition of any Equity Securities pursuant to Section 5.05 and
ending on the earlier to occur of (i) the Purchaser's exercise of the Option and
(ii) the Purchaser's sale of any of such Equity Securities acquired pursuant to
Section 5.05, the Purchaser shall be entitled to have present at all meetings of
the Board one Person designated by the Purchaser and reasonably acceptable to
the Company (the "Purchaser Observer"). During the Observation Period, the
------------------
Company (i) shall deliver notice of all meetings of the Board to the Purchaser
Observer simultaneously with, and in the same form as, notice to the directors
of the Company and (ii) shall deliver to the Purchaser copies of all written
materials furnished to the Board simultaneously with the delivery of such
written materials to the Board.
(b) From and after the Purchaser's exercise of the Option, (i) the
Purchaser shall have the right to designate a percentage of directors of the
Company (such persons being the "Purchaser Designees") equal to the percentage
-------------------
of outstanding shares of Common Stock, on a fully diluted basis, owned by the
Purchaser, rounded down to the next whole number, and (ii) at least one
Purchaser Designee shall be a member of each Committee of the Board as long as
the Purchaser owns at least 25% of the outstanding shares of Common Stock;
provided, however, that if at any time following such exercise of the Option,
-------- -------
but only for so long as the Purchaser continues to own a majority of the
outstanding shares of Common Stock, the Purchaser owns a majority of the
outstanding shares of Common Stock, the Purchaser Designees shall constitute a
majority of the directors of the Company and a majority of the members of each
Committee of the Board. The Company agrees to take all action permitted by the
MBCA necessary to cause the Purchaser Designees to become members of the Board.
If the Board is divided into more than one class, the Purchaser Designees shall
be distributed as equally as possible among such classes.
(c) The Board shall recommend to the stockholders of the Company for
election the Purchaser Designees who are nominated by the Company to serve as
members of the Board, and the Company shall use its reasonable best efforts to
solicit proxies from stockholders to vote in favor of such Purchaser Designees.
In the event that a vacancy is created on the Board at any time by the death,
disability, retirement, resignation or removal (with or without cause) of a
Purchaser Designee, the Purchaser shall cause such Purchaser Designee to be
elected to the Board to fill such vacancy.
SECTION 5.10. Regulatory Approvals. If the Purchaser's acquisition
--------------------
of any of the shares of Common Stock or Voting Securities subject to issuance
pursuant to this Agreement (including, without limitation, the Common Stock or
Voting Securities issuable upon conversion of the Preferred Stock or pursuant to
Article V of this Agreement), requires approval of, or prior notification to,
any regulatory authority pursuant to the HSR Act or otherwise, the Purchaser
shall promptly file the required application for approval or notice and shall
expeditiously process such notice or application, as the case may be, and the
Company shall use all reasonable efforts to cooperate with the Purchaser in the
filing of any such notice or application and the obtaining of any such approval.
If the closing of the acquisition of shares of Common Stock or Voting Securities
pursuant to this Article V cannot be consummated by reason of any applicable
judgment, decree, order, law or regulation, such Closing shall take
place as promptly as practicable after the date on which such restriction has
expired or been terminated; without limiting the foregoing, if prior approval
of, notification to or filing with, any regulatory authority is required
pursuant to the HSR Act or otherwise, such closing shall take place as promptly
as practicable after any requisite waiting period has passed and any required
notification period has expired or been terminated, or such approval has been
obtained.
SECTION 5.11. Reservation of Shares. The Company shall at all times
---------------------
reserve and keep available, free from preemptive rights (other than those of the
Purchaser), out of its authorized and unissued Common Stock and Voting
Securities the number of shares of Common Stock and Voting Securities subject to
issuance upon conversion of the Shares
(the "Reserve Amount"). The Company shall not take any corporate action which
--------------
would require an adjustment in the number of shares of Common Stock and Voting
Securities, unless either (i) immediately after such corporate action is taken
and the transactions contemplated thereby are consummated, the number of
authorized and unissued shares of Common Stock would equal or exceed the Reserve
Amount, or (ii) concurrently with the taking of such corporate action, the
Company shall take such corporate action as may be necessary to increase its
authorized and unissued shares of Common Stock to such number as shall equal or
exceed the Reserve Amount. The Company shall from time to time as necessary to
fulfill the commitments made in this Article V authorize and make available,
free from preemptive rights (other than those of the Purchaser), the number of
shares of Common Stock and Voting Securities subject to issuance pursuant to
this Article V.
SECTION 5.12. Voting Rights; Rights Plan. (a) The Company shall not
--------------------------
take any action to amend the By-Laws or Restated Articles of Incorporation so as
to make Chapter 7B of the MBCA, or any successor thereto, applicable to any
acquisition of shares of Common Stock or other Voting Securities by the
Purchaser. In the event that the Restated Articles are amended so as to make
Chapter 7B of the MBCA, or any successor thereto, applicable to any acquisition
of shares of Common Stock or other Voting Securities by the Purchaser, the
Company shall take such actions as shall be necessary and permitted by the MBCA
so that (a) the shares of Common Stock or other Voting Securities that the
Purchaser is entitled to acquire upon conversion of the Shares or pursuant to
Article V hereof will, upon such issuance, and (b) the Shares will, in
accordance with their terms, be duly accorded full voting rights. The Company
shall use its best efforts, including the solicitation of votes by proxy, to
obtain such votes of shareholders of the Company as shall be necessary to accord
the Purchaser with such full voting rights.
(b) The Company shall not adopt a shareholder rights plan, enter into
any agreement, arrangement or understanding or grant any warrants, options,
rights or any other privileges which, upon acquisition by the Purchaser of
shares of Common Stock or other Voting Securities upon conversion of the Shares
or pursuant to Article V hereof, would result in the Purchaser, in its capacity
as a holder of such securities, being subject to different rights and
obligations as all other holders of Common Stock or Voting Securities, as a
result of such acquisition.
SECTION 5.13. Survival of Representations and Warranties. The
------------------------------------------
representations and warranties of the Company in Article III and the Purchaser
in Article IV shall survive the
Closing until October , 1996.
---
SECTION 5.14. Company's Right of First Negotiation. If the Purchaser
------------------------------------
elects to pursue a sale of all of the Company's Equity Securities and Voting
Securities acquired pursuant to this Agreement ( a "Purchaser's Equity Sale"),
-----------------------
the Purchaser shall deliver written notice (a "Purchaser's Equity Sale Notice")
------------------------------
of such intention to the Company. Upon receipt of a Purchaser's Equity Sale
Notice, the Company shall have the exclusive right to negotiate with the
Purchaser concerning a Purchaser's Equity Sale, which right shall expire upon
the thirtieth day following the receipt of such notice. The Company and the
Purchaser agree that all communications between the parties during such period
will be kept strictly confidential and the contents of those communications will
not be disclosed to any other person except as, and to the extent, required by
applicable law.
ARTICLE VI
TERM, TERMINATION, AMENDMENT AND WAIVER
---------------------------------------
SECTION 6.01. Term. Unless otherwise terminated by a written
----
instrument executed by each of the Company and the Purchaser, this Agreement
shall be in full force and effect until the expiration or termination of the
Distribution Agreement in accordance with the terms thereof, whereupon the
rights and obligations of the parties under this Agreement shall terminate.
SECTION 6.02. Amendment. This Agreement may not be amended or
---------
modified except by an instrument in writing signed by each of the parties
hereto.
SECTION 6.03. Waiver. Either party hereto may (a) waive any
------
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (b) waive compliance with any of the
agreements contained herein. Any such extension or waiver shall be valid if set
forth in an instrument in writing signed by the party to be bound thereby. The
failure of either party to assert any of its rights hereunder shall not
constitute a waiver of any such rights.
ARTICLE VII
GENERAL PROVISIONS
------------------
SECTION 7.01. Notices. All notices, requests, claims, demands and
-------
other communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given upon receipt) by delivery in person, by cable,
telecopy, telegram or telex or by registered or certified mail (postage prepaid,
return receipt requested) to the respective parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
(a) if to the Purchaser:
Cobe Laboratories, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Shearman & Sterling
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Company:
Aastrom Biosciences, Inc.
▇.▇. ▇▇▇ ▇▇▇ - (Mail)
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dominos Farms, Lobby L - (Direct Delivery)
Attention: R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Ph.D.
President and Chief Executive Officer
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇, ▇▇▇▇, ▇▇▇▇ & ▇▇▇▇
▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇. ▇▇▇▇ ▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 7.02. Entire Agreement; Assignment. This Agreement
----------------------------
constitutes the entire agreement between the parties with respect to the subject
matter hereof and supersedes all prior agreements and undertakings, both written
and oral, between the parties with respect to the subject matter hereof. This
Agreement shall not be assigned by operation of law or otherwise, other than by
the Purchaser to its Affiliates (in which event the Purchaser shall continue to
remain fully liable under this Agreement), without the express written consent
of the Purchaser and the Company (which consent may be granted or withheld in
the sole discretion of the Company or the Purchaser). Any assignment to an
Affiliate of the Purchaser shall not become effective until such Affiliate has
agreed to be bound by the terms of this Agreement.
SECTION 7.03. Parties in Interest. This Agreement shall be binding
-------------------
upon and inure solely to the benefit of each party hereto and in Exhibit 5.02,
and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
Person any rights, benefits or remedies of any nature whatsoever under or by
reason of this Agreement.
SECTION 7.04. Governing Law. This Agreement shall be governed by,
-------------
and construed in accordance with, the laws of the State of New York applicable
to contracts executed in and to be performed entirely within that state.
SECTION 7.05. Headings. The descriptive headings contained in this
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Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
SECTION 7.06. Severability. If any term or other provision of this
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Agreement is invalid, illegal or incapable of being enforced by any law, rule,
regulation or public policy, all other terms and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term
or other provision is invalid, illegal or incapable of being enforced, 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 an
acceptable manner in order that the transactions contemplated hereby are
consummated as originally contemplated to the greatest extent possible.
SECTION 7.07. Counterparts. This Agreement may be executed in one or
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more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
SECTION 7.08. Specific Performance. The parties hereto agree that
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irreparable damage would occur in the event any of the provisions of this
Agreement were not to be 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 at law or equity.
SECTION 7.09. WAIVER OF TRIAL BY JURY. THE PURCHASER AND THE COMPANY
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HEREBY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR
COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) RELATED TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
IN WITNESS WHEREOF, the Purchaser and the Company have each caused
this Agreement to be executed by its duly authorized officer as of the date
first written above.
COBE LABORATORIES, INC.
By: /s/ MATS ▇▇▇▇▇▇▇▇▇
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Name: Mats ▇▇▇▇▇▇▇▇▇
Title: President
AASTROM BIOSCIENCES, INC.
By: /s/ R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Name: R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: President and
Chief Executive Officer
AMENDMENT TO STOCK PURCHASE AGREEMENT
This Amendment is entered into as of October 29, 1996 by and between
Cobe Laboratories, Inc., a Colorado corporation (the "Purchaser") and Aastrom
Biosciences, Inc., a Michigan corporation (the "Company") with respect to that
certain Stock Purchase Agreement between the Purchaser and the Company, dated as
of October 22, 1993 (the "Stock Purchase Agreement").
1. Pursuant to Section 5.04 of the Stock Purchase Agreement,
the Purchaser has certain preemptive rights to purchase additional capital stock
of the Company. Pursuant to Section 5.05 of the Stock Purchase Agreement, the
Company has a "put option" to require the Purchaser to purchase certain
additional capital stock in the Company.
2. As specified in the definition set forth in the Stock
Purchase Agreement, the "Applicable Preemptive Price" for the Purchaser to pay
for purchasing the Company's capital stock in a public offering of stock by the
Company is the public offering price, less underwriting discounts and
commissions (e.g., a 7% underwriter's discount).
3. If the Company exercises its "put option" as specified in
Section 5.05 of the Stock Purchase Agreement, the price per share payable by the
Purchaser is the public offering price per share, less underwriting discounts
and commissions (e.g., a 7% underwriter's discount).
4. The Purchaser and the Company hereby amend the Stock
Purchase Agreement, and particularly the sections referenced above, so as to
provide for the Purchaser to pay the same purchase price per share as is paid by
a public purchaser in the public stock offering, if and when the Purchaser
purchases capital stock of the Company pursuant to Section 5.04 and/or 5.05
pursuant to a public stock offering, without the Purchaser being entitled to a
price discount for the underwriter's discounts or commissions. This foregoing
amendment applies only to capital stock purchased by the Purchaser from the
Company at the time of the Company's initial public offering of stock.
5. The Purchaser is agreeing to the foregoing modifications to
the stock purchase price in consideration and recognition of the terms in that
certain Stock Purchase Agreement (for Series F Preferred stock) between the
Purchaser and the Company, and other good and valuable consideration, receipt of
which is hereby acknowledged by the Purchaser.
6. Terms defined in the Stock Purchase Agreement shall have the
same meaning in this Amendment.
7. Excepting only as otherwise set forth above, all other terms
and provisions of the Stock Purchase Agreement shall remain in full force and
effect.
IN WITNESS WHEREOF, the Company and the Purchaser each have caused
this Amendment to be executed by its duly authorized officer as of date first
written above.
COBE LABORATORIES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
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AASTROM BIOSCIENCES, INC.
By: /s/ R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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