-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, N9a9QVRgs7FeDdHFbab9Gjf62Ko0HIitNy3MXmma0j6hjb4C1xH8rEu63qDWqDXo 4xcqLKy4qlEqftq12Ulyjw== 0000947871-99-000468.txt : 19991021 0000947871-99-000468.hdr.sgml : 19991021 ACCESSION NUMBER: 0000947871-99-000468 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19991020 GROUP MEMBERS: COBE LABORATORIES INC GROUP MEMBERS: GAMBRO AB SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: HEMASURE INC CENTRAL INDEX KEY: 0000919745 STANDARD INDUSTRIAL CLASSIFICATION: SURGICAL & MEDICAL INSTRUMENTS & APPARATUS [3841] IRS NUMBER: 043216862 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-48323 FILM NUMBER: 99731049 BUSINESS ADDRESS: STREET 1: 140 LOCKE DR CITY: MARLBOROUGH STATE: MA ZIP: 01752 BUSINESS PHONE: 5084856850 MAIL ADDRESS: STREET 1: 140 LOCKE DR CITY: MARLOBOROUGH STATE: MA ZIP: 01752 FORMER COMPANY: FORMER CONFORMED NAME: HEMEASURE INC DATE OF NAME CHANGE: 19940303 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: COBE LABORATORIES INC CENTRAL INDEX KEY: 0000021310 STANDARD INDUSTRIAL CLASSIFICATION: SURGICAL & MEDICAL INSTRUMENTS & APPARATUS [3841] IRS NUMBER: 952403584 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 1185 OAK ST CITY: LAKEWOOD STATE: CO ZIP: 80215 BUSINESS PHONE: 8005252623 SC 13D 1 SCHEDULE 13D UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 HemaSure, Inc. ------------------------------------------------------- (Name of Issuer) Common Stock, $.01 par value -------------------------------------------- (Title of Class of Securities) 423504109 ----------------------------------------------------- (CUSIP Number) Edward C. Wood Peter D. Lyons, Esq. COBE BCT, Inc. Shearman & Sterling 1201 Oak Street 599 Lexington Avenue Lakewood, Colorado 80215-4498 New York, NY 10022 Telephone: 800-525-2623 Telephone: 212-848-4000 ------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) May 3, 1999 ---------------------------------------------------------------------- (Date of Event which requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of ss. 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box |_|. Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See ss. 240.13d-7(b) for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. 1 of 9 The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). CUSIP No. 423504109 - -------------------------------------------------------------------------------- 1. Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person COBE Laboratories, Inc. 95-2403584 - -------------------------------------------------------------------------------- 2. Check the Appropriate Box if a Member of a Group (a) |_| (b) |_| - -------------------------------------------------------------------------------- 3. SEC Use Only - -------------------------------------------------------------------------------- 4. Source of Funds (See Instructions) WC - -------------------------------------------------------------------------------- 5. Check if Disclosure of Legal Proceedings is Required Pursuant to Item 2(d) or 2(e). |_| - -------------------------------------------------------------------------------- 6. Citizenship or Place of Organization Colorado - -------------------------------------------------------------------------------- 7. Sole Voting Power 0 --------------------------------------------- Number of Shares 8. Beneficially Shared Voting Power Owned By 4,998,355 Each --------------------------------------------- 9. Reporting Person Sole Dispositive Power With 0 --------------------------------------------- 10. Shared Dispositive Power 4,998,355 - -------------------------------------------------------------------------------- 11. Aggregate Amount Beneficially Owned by Each Reporting Person 4,998,355 - -------------------------------------------------------------------------------- 12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) |_| - -------------------------------------------------------------------------------- 13. Percent of Class Represented by Amount in Row (11) 33% - -------------------------------------------------------------------------------- 14. Type of Reporting Person (See Instructions) CO - -------------------------------------------------------------------------------- Page 2 of 9 CUSIP No. 423504109 - -------------------------------------------------------------------------------- 1. Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person Gambro AB - -------------------------------------------------------------------------------- 2. Check the Appropriate Box if a Member of a Group (a) |_| (b) |_| - -------------------------------------------------------------------------------- 3. SEC Use Only - -------------------------------------------------------------------------------- 4. Source of Funds (See Instructions) AF - -------------------------------------------------------------------------------- 5. Check if Disclosure of Legal Proceedings is Required Pursuant to Item 2(d) or 2(e). |_| - -------------------------------------------------------------------------------- 6. Citizenship or Place of Organization Sweden - -------------------------------------------------------------------------------- 7. Sole Voting Power 0 Number of Shares --------------------------------------------- 8. Beneficially Shared Voting Power Owned By 4,998,355 Each --------------------------------------------- 9. Reporting Person Sole Dispositive Power With 0 --------------------------------------------- 10. Shared Dispositive Power 4,998,355 - -------------------------------------------------------------------------------- 11. Aggregate Amount Beneficially Owned by Each Reporting Person 4,998,355 - -------------------------------------------------------------------------------- 12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) |_| - -------------------------------------------------------------------------------- 13. Percent of Class Represented by Amount in Row (11) 33% - -------------------------------------------------------------------------------- 14. Type of Reporting Person (See Instructions) CO - -------------------------------------------------------------------------------- 3 of 9 Item 1. Security and Issuer The class of equity securities to which this joint statement on Schedule 13D relates is the common stock, $.01 par value (the "Common Stock"), of HemaSure, Inc., a Delaware corporation, with its principal executive offices at 140 Locke Drive, Marlborough, MA 01752 (the "Issuer"). Item 2. Identity and Background The persons listed in numbers 1 and 2 below are the persons filing this joint statement. 1. a. Gambro AB ("Gambro AB") is a corporation organized under the laws of Sweden. b. Gambro AB is a global medical technology company engaged principally in the design, development, production, distribution, sale and service of medical and therapeutic systems and products in the areas of renal care and blood component technology. The address of its principal executive office is P.O. Box 10101 Magistratsvagen 16, S-220 10 Lund, Sweden. c. During the last five years, Gambro AB has not been convicted in any criminal proceeding. d. During the last five years, Gambro AB has not been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding is or was subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. Information regarding the directors and executive officers of Gambro AB is set forth on Schedule I attached hereto, which Schedule is incorporated herein by reference. Except as set forth on Schedule I, all of the directors and executive officers of Gambro AB are citizens of Sweden. During the last five years, to the best of the knowledge of Gambro AB, no person named on Schedule I has been (a) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (b) a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding is or was subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. 4 of 9 2. a. COBE Laboratories, Inc. ("COBE") is a Colorado corporation. b. COBE and its subsidiaries design, develop, manufacture, distribute, sell and service medical and therapeutic systems for three medical market segments: nephrology, apheresis and blood banking. COBE is a wholly owned subsidiary of Gambro AB. COBE's principal executive offices are located at 1185 Oak Street, Lakewood, Colorado 80215. c. During the last five years, COBE has not been convicted in any criminal proceeding. d. During the last five years, COBE has not been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding is or was subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. Information regarding the directors and executive officers of COBE is set forth on Schedule II attached hereto, which Schedule is incorporated herein by reference. Except as set forth on Schedule II, all of the directors and executive officers of COBE are citizens of the United States. During the last five years, to the best of the knowledge of COBE, no person named on Schedule II has been (a) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (b) a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding is or was subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. Item 3. Source and Amount of Funds or Other Consideration On May 3, 1999, COBE and the Issuer entered into a Stock Subscription Agreement (the "Stock Subscription Agreement") pursuant to which COBE acquired 4,500,000 shares of Common Stock from the Issuer at a price of $2.00 per share. In addition, the Issuer granted to COBE an option (the "Option") to purchase $3,000,000 of Common Stock, exercisable on or after August 3, 1999 through May 2, 2000, at a price per share of Common Stock to be based upon the average closing price of the Common Stock as quoted on the OTC bulletin board during the 30 trading days immediately prior to the exercise date. On October 5, 1999, COBE irrevocably exercised the Option and acquired an additional 498,355 shares of Common Stock ("Option Shares") on October 19, 1999. The acquisition of such shares of Common Stock pursuant to the Stock Subscription Agreement was not conditioned upon any financing arrangements. COBE utilized internally generated funds to finance the foregoing acquisitions. 5 of 9 Item 4. Purpose of Transaction COBE has acquired 4,500,000 shares of Common Stock pursuant to the Stock Subscription Agreement, and further entered into a Stockholder's Agreement, dated May 3, 1999 (the "Stockholder's Agreement"), between the Issuer and COBE for the purpose of making an investment in the Issuer and not with a present intention of acquiring control of the Issuer's business. The Stock Subscription Agreement and Stockholder's Agreement are more fully described in Item 6 hereto. COBE acquired an additional 498,355 shares of common stock (3% of the aggregate number of outstanding shares of Common Stock) through the exercise of the Option on October 19, 1999. Pursuant to the Stock Subscription Agreement and the Stockholder's Agreement, the board of directors of the Issuer has resolved to expand its board from five to seven directors and to elect two designees of COBE to the board of directors of the Issuer, to serve until the next annual meeting of the stockholders of the Issuer. Pursuant to the Stock Subscription Agreement, the Issuer agreed to amend its Articles of Incorporation to increase the number of authorized shares of Common Stock from 20,000,000 shares to 35,000,000 shares. Such amendment was effective on September 24, 1999. Item 5. Interest in Securities of the Issuer 1. Gambro AB (a)-(b)Following the acquisition of shares of Common Stock pursuant to the Stock Subscription Agreement and giving effect to the Option Shares acquired on October 19, 1999, Gambro AB is the beneficial owner of 4,998,355 shares of Common Stock, representing 33% of the shared voting power of the outstanding shares of Common Stock. The calculation of the foregoing percentage is based on the number of shares of Common Stock disclosed in the Issuer's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1999 as outstanding as of August 6, 1999 (and as adjusted to reflect issuance of the Option Shares). (c) Except as described herein, there have been no transactions by Gambro AB in securities of the Issuer during the past sixty days. (d) No one other than Gambro AB or COBE is known to have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the shares of Common Stock purchased by COBE. (e) Not applicable. 6 of 9 2. COBE Laboratories, Inc. (a)-(b)Following the acquisition of shares of Common Stock pursuant to the Stock Subscription Agreement and giving effect to the Option Shares acquired on October 19, 1999, COBE is the beneficial owner of 4,998,355 shares of Common Stock, representing 33% of the shared voting power of the outstanding shares of Common Stock. The calculation of the foregoing percentage is based on the number of shares of Common Stock disclosed in the Issuer's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1999 as outstanding as of August 6, 1999 (and as adjusted to reflect the issuance of Option Shares). (c) Except as described herein, there have been no transactions by COBE in securities of the Issuer during the past sixty days. (d) No one other than Gambro AB or COBE is known to have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the shares of Common Stock purchased by COBE. (e) Not applicable. Item 6. Contracts, Arrangements, Understanding of Relationships with Respect to Securities of the Issuer (a) The Stock Subscription Agreement Pursuant to the Stock Subscription Agreement, on May 3, 1999, COBE purchased 4,500,000 shares of Common Stock from the Issuer at a purchase price of $2.00 per share. In addition, the Issuer granted to COBE the Option. On October 5, 1999, COBE irrevocably exercised the Option and acquired an additional 498,355 shares of Common Stock on October 19, 1999. Pursuant to the Stock Subscription Agreement, the Issuer agreed to amend its Articles of Incorporation to increase the number of authorized shares of Common Stock from 20,000,000 shares to 35,000,000 shares. Such amendment was effective on September 24, 1999. The Stock Subscription Agreement is attached to this Schedule 13D as Exhibit 10.2. (b) The Stockholder's Agreement The Stockholder's Agreement provides that COBE will have representation on the Issuer's board of directors and its representative committees and contains, among other 7 of 9 things, various registration rights and anti-dilution and standstill provisions customary in such agreements. The Stockholder's Agreement is attached to this Schedule 13D as Exhibit 10.3. (c) Amended and Restated Exclusive Distribution Agreement In connection with the Stock Subscription Agreement, COBE entered into an Amended and Restated Exclusive Distribution Agreement with the Issuer. The amended distribution agreement expands the territory in which COBE will distribute the Issuer's products to make it worldwide, excluding sales to the American Red Cross. In addition, the agreement provides for joint efforts related to the defense of the Issuer's products against intellectual property claims made by third parties. As in the original agreement, there is a provision for the development of additional products to be incorporated by COBE into its automated blood component equipment. The Amended and Restated Exclusive Distribution Agreement is attached to this Schedule 13D as Exhibit 10.4. Item 7. Material to be Filed as Exhibits Exhibit 10.1 Joint Filing Agreement between Gambro AB and COBE pursuant to Rule 13d-1(k)(1)(iii) of the United States Securities Exchange Act of 1934 Exhibit 10.2 The Stock Subscription Agreement Exhibit 10.3 The Stockholder's Agreement Exhibit 10.4 Amended and Restated Exclusive Distribution Agreement All materials to be filed as exhibits to this Schedule 13D are attached hereto. [Remainder of this page intentionally left blank. Signatures commence on Page 9.] 8 of 9 After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: October 19, 1999 GAMBRO AB By: /s/ Ingmar Magnusson --------------------------------------------- Name: Ingmar Magnusson Title: General Counsel After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: October 19, 1999 COBE LABORATORIES, INC. By: /s/ Kevin M. Smith --------------------------------------------- Name: Kevin M. Smith Title: President 9 of 9 Schedule I Directors and Executive Officers of Gambro AB 1. Board of Directors Members Claes Dahback Chairman of Gambro AB SE-103 32 Stockholm Sweden Gosta Gahrton Professor Emeritus, Karolinska Institute Hallingsbacken 8 16767 Bromma Sweden Peter H. Grassmann President and Chief Executive Officer of Carl Zeiss DE-73446 Oberkochen Germany German Citizen Juha P. Kokko Professor of Medicine and Associate Dean for Clinical Research, Emory University 1364 Clifton Road, Emory University Hospital Atlanta, Georgia 30322, United States Mikael Lilius President and Chief Executive Officer of Gambro AB P.O. Box 7373 SE-103 91 Stockholm Sweden Finnish Citizen Hakan Mogren President and Chief Executive Officer of Astra AB SE-151 85 Sodertalje Sweden Sven Nyman Managing Director of Investor AB Arsenalsgatan 8C SE-103 32 Stockholm Sweden Bjorn Svedberg Chairman of Chalmers Institute of Technology, Chairman of the Royal Swedish Academy of Engineering Sciences P.O. Box 16066 SE-103 22 Stockholm Sweden Anitha Svensson-Grane Employee Representative, Federation of Salaried Employees to Industry and Services Gambro Lundia AB Box 10101 220 10 Lund Sweden Karl-Olof Tell Employee Representative, Swedish Confederation of Trade Unions Gambro Lundia AB Box 10101 220 10 Lund Sweden 2. Executive Officers Mikael Lilius President and Chief Executive Officer see Directors, above Soren Mellstig Executive Vice President and Head of Renal Care Products P.O. Box 7373 SE-103 91 Stockholm Sweden Mats Wahlstrom Executive Vice President and Head of Gambro Healthcare, Inc. 225 Union Blvd., Suite 600 Lakewood, CO 80228, United States Edward C. Wood President of COBE BCT, Inc. 1201 Oak Street Lakewood, Colorado 80215-4498, United States United States Citizen Lars Fahlen Senior Vice Presient, Corporate Human Resources P.O. Box 7373 SE-103 91 Stockholm Sweden Bengt Modeer Senior Vice President, Corporate Communications P.O. Box 7373 SE-103 91 Stockholm Sweden Leif Smeby Senior Vice President, Research and Development Box 10101 Magistratsvagen 22010 Lund Sweden Norwegian Citizen Schedule II Directors and Executive Officers of COBE Laboratories, Inc. 1. Board of Directors Mats Wahlstrom Chairman of the Board 225 Union Blvd., Suite 600 Lakewood, CO 80228 Swedish Citizen Kevin M. Smith President/Treasurer, COBE Laboratories, Inc. 225 Union Blvd., Suite 600 Lakewood, CO 80228 Edward C. Wood, Jr. Vice President, COBE Laboratories, Inc. 1201 Oak Street Lakewood, Colorado 80215-4498 Mikael Lilius President and Chief Executive Officer of Gambro AB P.O. Box 7373 SE-103 91 Stockholm Sweden Finnish Citizen Soren Mellstig Executive Vice President of Gambro AB P.O. Box 7373 SE-103 91 Stockholm Sweden Swedish Citizen 2. Executive Officers Kevin M. Smith President/Treasurer, COBE Laboratories, Inc. 225 Union Blvd., Suite 600 Lakewood, CO 80228 Ralph Z. Levy, Jr. Vice President/Secretary/Assistant Treasurer, COBE Laboratories, Inc. 5200 Maryland Way, Suite 300 Brentwood, TN 37027 Edward C. Wood, Jr. Vice President, COBE Laboratories, Inc. 1201 Oak Street Lakewood, CO 80215 Hans Ahlinder Vice President, COBE Laboratories, Inc. P.O. Box 7373 SE-103 91 Stockholm Sweden Swedish Citizen Nancy Walla Vice President, COBE Laboratories, Inc. 225 Union Blvd., Suite 600 Lakewood, CO 80228 Mary Nick Vice President, COBE Laboratories, Inc. 225 Union Blvd., Suite 600 Lakewood, CO 80228 David Doerr Assistant Treasurer, COBE Laboratories, Inc. 225 Union Blvd., Suite 600 Lakewood, CO 80228 Monty Price Assistant Treasurer, COBE Laboratories, Inc. 225 Union Blvd., Suite 600 Lakewood, CO 80228 Bruce Winsor Assistant Secretary, COBE Laboratories, Inc. 1201 Oak Street Lakewood, CO 80215 Edna O'Connor Assistant Secretary, COBE Laboratories, Inc. 1201 Oak Street Lakewood, CO 80215 Lynn N. Meyer Assistant Secretary, COBE Laboratories, Inc. 1201 Oak Street Lakewood, CO 80215 EX-10.1 2 JOINT FILING AGREEMENT EXHIBIT 10.1 JOINT FILING AGREEMENT The undersigned hereby agree that the Statement on Schedule 13D, dated October 20, 1999 ("Schedule 13D"), with respect to the Common Stock, $.01 par value, of HemaSure, Inc., a Delaware corporation, is, and any amendments thereto executed by each of us shall be, filed on behalf of each of us pursuant to and in accordance with the provisions of Rule 13d-1(k) under the United States Securities Exchange Act of 1934, as amended, and that this Agreement shall be included as an Exhibit to the Schedule 13D and each such amendment. Each of the undersigned agrees to be responsible for the timely filing of the Schedule 13D and any amendments thereto, and for the completeness and accuracy of the information concerning itself contained therein. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument. IN WITNESS WHEREOF, the undersigned have executed this Agreement as of October 19, 1999. GAMBRO AB By /s/ Ingmar Magnusson -------------------------------------- Name: Ingmar Magnusson Title: General Counsel COBE LABORATORIES, INC. By /s/ Kevin M. Smith -------------------------------------- Name: Kevin M. Smith Title: President EX-10.2 3 STOCK SUBSCRIPTION AGREEMENT ================================================================================ -------------------------------------- STOCK SUBSCRIPTION AGREEMENT -------------------------------------- By and Between HEMASURE INC. and COBE LABORATORIES, INC. Dated May 3, 1999 ================================================================================ TABLE OF CONTENTS Section Page ARTICLE I DEFINITIONS 1.01. Certain Defined Terms...................................................1 1.02. Other Definitions.......................................................4 1.03. Terms Generally.........................................................5 ARTICLE II SUBSCRIPTION AND SALE 2.01. Subscription and Sale of the Shares.....................................6 2.02. Firm Share Purchase Price...............................................6 2.03. First Closing...........................................................6 2.04. The Option; Option Purchase Price.......................................6 2.05. The Option Closing......................................................7 2.06. Closing Deliveries by the Company.......................................7 2.07. Closing Deliveries by the Purchaser.....................................8 2.08. Other First Closing Deliveries..........................................9 ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY 3.01. Organization, Authority and Qualification of the Company; Subsidiaries..........................................................9 3.02. Capital Stock of the Company; Ownership of the Shares..................10 3.03. No Conflict............................................................10 3.04. Governmental Consents and Approvals....................................11 3.05. SEC Filings; Financial Statements......................................11 3.06. No Undisclosed Liabilities.............................................11 3.07. Conduct of the Business................................................12 3.08. Litigation.............................................................12 3.09. Compliance with Laws...................................................12 3.10. Material Contracts.....................................................12 3.11. Intellectual Property..................................................13 3.12. Year 2000 Compliance...................................................14 3.13. Title to Properties; Absence of Encumbrances...........................14 3.14. Employee Benefit Matters; Labor Matters................................14 3.15. Brokers................................................................15 -i- Section Page 3.16. Limitations on Representations and Warranties..........................15 3.17. Disclosure Schedule....................................................16 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASER 4.01. Organization and Authority of the Purchaser............................16 4.02. No Conflict............................................................16 4.03. Governmental Consents and Approvals....................................17 4.04. Investment Purpose.....................................................17 4.05. Status of Shares; Limitations on Transfer and Other Restrictions.......17 4.06. Sophistication and Financial Condition of Purchaser....................17 4.07. Year 2000 Compliance...................................................17 ARTICLE V ADDITIONAL AGREEMENTS 5.01. Actions Regarding Market...............................................18 5.02. Confidentiality........................................................18 5.03. Public Announcements...................................................18 5.04. Capital Increase.......................................................18 5.05. Further Action.........................................................19 ARTICLE VI INDEMNIFICATION 6.01. Survival of Representations and Warranties.............................19 6.02. Indemnification........................................................19 6.03. Limits on Indemnification..............................................21 ARTICLE VII GENERAL PROVISIONS 7.01. Waiver.................................................................21 7.02. Expenses...............................................................22 7.03. Notices................................................................22 7.04. Headings...............................................................23 7.05. Severability...........................................................23 7.06. Entire Agreement.......................................................23 -ii- Section Page 7.07. Assignment.............................................................24 7.08. No Third Party Beneficiaries...........................................24 7.09. Amendment..............................................................24 7.10. Governing Law..........................................................24 7.11. Arbitration............................................................24 7.12. Counterparts...........................................................25 7.13. Specific Performance...................................................25 EXHIBITS 2.06(d) FORM OF OPINION OF THE COMPANY'S COUNSEL 2.07(c)(i) FORM OF OPINION OF INTERNAL COUNSEL OF THE PURCHASER 2.07(c)(ii) FORM OF OPINION OF THE PURCHASER'S OUTSIDE COUNSEL -iii- STOCK SUBSCRIPTION AGREEMENT, dated May 3, 1999, by and between HEMASURE INC., a Delaware corporation (the "Company"), and COBE LABORATORIES, INC., a Colorado corporation (the "Purchaser"). W I T N E S S E T H: WHEREAS, the Company wishes to issue and sell to the Purchaser, and the Purchaser wishes to purchase from the Company, up to $12,000,000 of common stock, par value $.01 per share, of the Company ("Common Stock"), upon the terms and subject to the conditions set forth herein. All shares of Common Stock which may be purchased pursuant to this Agreement are collectively referred to as the "Shares"; and WHEREAS, simultaneously with the execution of this Agreement, the parties hereto are executing the Stockholder's Agreement (as defined below) and the Distribution Agreement (as defined below); NOW, THEREFORE, in consideration of the premises and the mutual agreements and covenants hereinafter set forth, the Purchaser and the Company hereby agree as follows: ARTICLE I DEFINITIONS SECTION 1.01. Certain Defined Terms. As used in this Agreement, the following terms shall have the following meanings: "Action" means any claim, action, suit, arbitration, inquiry, proceeding or investigation by or before any Governmental Authority. "Affiliate" means, with respect to any specified Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such specified Person. "Agreement" or "this Agreement" means this Stock Subscription Agreement, dated May 3, 1999, by and between the Company and the Purchaser (including the Exhibits hereto and the Disclosure Schedule) and all amendments hereto made in accordance with the provisions of Section 7.09. "Alliance Agreements" means this Agreement, the Stockholder's Agreement and the Distribution Agreement. "Business" means the business of the development and manufacture of leukoreduction products. 2 "Business Day" means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by law to be closed in The City of New York. "Code" means the Internal Revenue Code of 1986, as amended through the date hereof. "Company Systems" shall mean all computer, hardware, software, systems and equipment (including embedded microcontrollers in noncomputer equipment) embedded within or required to operate the current products of the Company (i.e., currently distributed, currently supported or subject to valid agreements requiring the Company to provide support, maintenance, enhancement or bug fixes), and/or material to or necessary for the Company to carry on the Business as currently conducted. "control" (including the terms "controlled by" and "under common control with"), with respect to the relationship between or among two or more 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. "Disclosure Schedule" means the Disclosure Schedule delivered in connection with this Agreement, dated as of the date hereof, and incorporated herein by reference. "Distribution Agreement" means the Amended and Restated Distribution Agreement, dated the date hereof, between the Company and the Purchaser. "Encumbrance" means any security interest, pledge, mortgage, lien (including, without limitation, environmental and tax liens), 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, but excluding Permitted Encumbrances. "Governmental Authority" means any United States federal, state, local, supranational or any foreign government, governmental, regulatory or administrative authority, agency or commission or any court, tribunal, or judicial or arbitral body. "Governmental Order" means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority. "Intellectual Property" means (i) United States, international and foreign patents, patent applications and statutory invention registrations, (ii) trademarks, service marks, trade dress, logos, and other source identifiers, including registrations and applications for registration 3 thereof, (iii) copyrights, including registrations and applications for registration thereof, (iv) confidential and proprietary information, including trade secrets and know-how and (v) material computer software developed by or on behalf of the Company, or manufactured, distributed, sold, licensed or marketed by the Company. "Law" means any federal, state, local or foreign statute, law, ordinance, regulation, rule, code, order, other requirement or rule of law. "Leased Real Property" means the real property leased by the Company, as tenant, together with, to the extent leased by the Company, all buildings and other structures, facilities or improvements currently 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, whether accrued or fixed, absolute or contingent, matured or unmatured or determined or determinable, including, without limitation, those arising under any Law (including, without limitation, any Environmental Law), Action or Governmental Order and those arising under any contract, agreement, arrangement, commitment or undertaking. "Material Adverse Effect" means any circumstance, change in, or effect on the Business, the Company or any Subsidiary that, individually or in the aggregate with any other circumstances, changes in, or effects on, the Business, the Company or any Subsidiary is, or would be reasonably expected to be, materially adverse to the Business, financial condition or results of operations of the Company and the Subsidiaries, taken as a whole. "Permitted Encumbrances" means such of the following as to which no 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 which are not in excess of the amount accrued therefor on the Company Balance Sheet; (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 securing obligations that (i) are not overdue for a period of more than 30 days and (ii) are not in excess of $25,000 in the case of a single property or $100,000 in the aggregate at any time; (c) pledges or deposits to secure obligations under workers' compensation laws or similar legislation or to secure public or statutory obligations; and (d) minor survey exceptions, reciprocal easement agreements and other customary encumbrances on title to real property that (i) were not incurred in connection with any indebtedness, (ii) do not render title to the property encumbered thereby unmarketable and (iii) do not, individually or in the aggregate, materially adversely affect the value or use of such property for its current and anticipated purposes. 4 "Person" means any individual, partnership, firm, corporation, association, trust, unincorporated organization or other entity, as well as any syndicate or group that would be deemed to be a person under Section 13(d)(3) of the Exchange Act. "Purchase Price Bank Account" means a bank account in the United States to be designated by the Company in a written notice to the Purchaser at least five Business Days before each Closing. "Purchaser Systems" shall mean all computer, hardware, software, systems and equipment (including embedded microcontrollers in noncomputer equipment) embedded within or required to operate the current products of the Purchaser (i.e., currently distributed, currently supported or subject to valid agreements requiring the Purchaser to provide support, maintenance, enhancement or bug fixes), and/or material to or necessary for the Purchaser to carry on its business as currently conducted. "SEC" means the United States Securities and Exchange Commission. "Stockholder's Agreement" means the Stockholder's Agreement, dated the date hereof, by and between the Company and the Purchaser. "Subsidiaries" means HemaPharm Inc., a Delaware corporation, HemaSure A/S, a company organized under the laws of the Kingdom of Denmark, and HemaSure A/B, a company organized under the laws of the Kingdom of Sweden. "Vendors" means any and all vendors who are unaffiliated with the Company or the Purchaser, as the case may be, who supply raw materials, components, spare parts, supplies, goods, merchandise or services to the Company or the Purchaser, as the case may be. "Year 2000 Compliant" means that the Company Systems or Purchaser Systems, as the case may be, provide uninterrupted millennium functionality in that the Company Systems or Purchaser Systems, as the case may be, will record, store, process and present calendar dates falling on or after January 1, 2000, in the same manner and with the same functionality as the Company Systems or Purchaser Systems, as the case may be, record, store, process and present calendar dates falling on or before December 31, 1999. SECTION 1.02. Other Definitions. The meanings of the following terms can be found in the Sections of this Agreement indicated below: Term Section Capital Increase.....................................Section 2.04(b) Closing..............................................Section 2.05 Closing Date.........................................Section 2.05 5 COBE.................................................Section 3.01(a) Common Stock.........................................Recitals Company..............................................Preamble Company Balance Sheet................................Section 3.05(b) Company Benefit Plans................................Section 3.14 Company Loss.........................................Section 6.02(b) Company SEC Reports..................................Section 3.05(a) Confidentiality Agreement............................Section 5.02 ERISA................................................Section 3.14(a) Exchange Act.........................................Section 3.04 Exercise Date........................................Section 2.04(a) FDA..................................................Section 3.09(a) Firm Shares..........................................Section 2.01 First Closing........................................Section 2.03 First Closing Date...................................Section 2.03 First Purchase Price.................................Section 2.02 Indemnified Party....................................Section 6.02(c) Indemnifying Party...................................Section 6.02(c) IRS..................................................Section 3.14(d) Licensed Intellectual Property.......................Section 3.11(a) Loss.................................................Section 6.02(b) Material Contracts...................................Section 3.10(a) Multiemployer Plan...................................Section 3.14(b) Multiple Employer Plan...............................Section 3.14(b) Option...............................................Section 2.04(a) Option Closing.......................................Section 2.05 Option Closing Date..................................Section 2.05 Option Purchase Price................................Section 2.04(a) Option Shares........................................Section 2.04(a) Owned Intellectual Property..........................Section 3.11(a) Per Share Option Purchase Price......................Section 2.04(a) Preferred Stock......................................Section 3.02 Purchase Price.......................................Section 2.04(a) Purchaser............................................Preamble Purchaser Loss.......................................Section 6.02(a) Regulated Products...................................Section 3.09(a) Securities Act.......................................Section 3.05(a) Sepracor.............................................Section 2.08 Shares...............................................Recitals Third Party Claims...................................Section 6.02(c) SECTION 1.03. Terms Generally. References in this Agreement to articles, sections, paragraphs, clauses, schedules and exhibits are to articles, sections, paragraphs, clauses, 6 schedules and exhibits in or to this Agreement unless otherwise indicated. Whenever the context may require, any pronoun includes the corresponding masculine, feminine and neuter forms. Any term defined by reference to any agreement, instrument or document has the meaning assigned to it whether or not such agreement, instrument or document is in effect. The words "include", "includes" and "including" are deemed to be followed by the phrase "without limitation". Unless the context otherwise requires, any agreement, instrument or other document defined or referred to herein refers to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified from time to time. Unless the context otherwise requires, references herein to any Person include its successors and assigns. The words "shall" and "will" have the same meaning and effect. ARTICLE II SUBSCRIPTION AND SALE SECTION 2.01. Subscription and Sale of the Shares. On the date hereof, the Company shall sell to the Purchaser, and the Purchaser shall purchase from the Company, 4,500,000 shares of Common Stock (the "Firm Shares"). SECTION 2.02. Firm Share Purchase Price. The aggregate purchase price to be paid by the Purchaser to the Company for the Firm Shares is $9,000,000, payable at the First Closing (as defined below) by wire transfer in immediately available funds (the "First Purchase Price"). SECTION 2.03. First Closing. The subscription and purchase of the Firm Shares contemplated by this Agreement is taking place at a closing (the "First Closing") being held at the offices of Shearman & Sterling, 599 Lexington Avenue, New York, New York on the date hereof ("First Closing Date"). SECTION 2.04. The Option; Option Purchase Price. (a) Subject to Section 2.04(b) below, the Company hereby grants to the Purchaser the right and option (the "Option") to purchase, at the election of the Purchaser, $3,000,000 (the "Option Purchase Price") in aggregate value of Common Stock ("Option Shares") for a price per share equal to the Per Share Option Purchase Price. The Option may be exercised by the Purchaser on one occasion at any time during the period commencing 90 days after the First Closing and expiring on the first year anniversary date of the First Closing, and the Option must be exercised in its entirety, if at all. The "Per Share Option Purchase Price" shall be equal to the average closing price of each share of the Common Stock as quoted on the OTC bulletin board during the 30 trading days immediately prior to the date (the "Exercise Date") the Purchaser shall provide irrevocable written notice to the Company of its intent and agreement to exercise the Option, which notice shall include the Purchaser's calculation of the number of Option Shares the Purchaser elects to purchase and the Purchaser's calculation of the Per Share Option Purchase Price. The Option Purchase Price shall 7 be payable at the Option Closing (as defined below), if any, by wire transfer in immediately available funds. Each of the First Purchase Price and the Option Purchase Price is individually referred to as a "Purchase Price." For so long as the Option shall remain unexercised without the exercise period of the Option having expired, the Company shall reserve from time to time, as is reasonably practicable, such number of shares of its authorized but unissued Common Stock as shall enable the Company to issue Option Shares to the Purchaser. (b) Notwithstanding anything herein to the contrary, the Option shall not be deemed granted, nor may it be exercised, until such time as the stockholders of the Company duly approve an amendment to the certificate of incorporation of the Company increasing the number of authorized shares of Common Stock from 20,000,000 shares to 35,000,000 shares (the "Capital Increase"), and such amended certificate of incorporation is filed with the Secretary of State of Delaware. SECTION 2.05. The Option Closing. The purchase of the Option Shares pursuant to the Option shall take place at a closing (the "Option Closing" and each of the First Closing and the Option Closing is referred to individually as a "Closing") to be held at the offices of Shearman & Sterling, 599 Lexington Avenue, New York, New York at 10:00 A.M. New York time on the tenth Business Day after the Exercise Date or at such other place or at such other time or on such other date as the Company and the Purchaser may mutually agree upon in writing (the day on which the Option Closing takes place being the "Option Closing Date" and each of the First Closing Date and the Option Closing Date being referred to individually as a "Closing Date"). SECTION 2.06. Closing Deliveries by the Company. At each Closing, the Company shall deliver or cause to be delivered to the Purchaser: (a) a newly issued stock certificate, issued to the Purchaser and evidencing the Shares being purchased at such Closing; (b) a receipt for the applicable Purchase Price; (c) for the First Closing only, a true and complete copy, certified by the Secretary or an Assistant Secretary of the Company, of the resolutions duly and validly adopted by the board of directors of the Company evidencing (i) its authorization of the execution and delivery of the Alliance Agreements and the consummation of the transactions contemplated hereby and thereby, including the issuance of the Firm Shares and the Option Shares (upon exercise of the Option), (ii) the expansion of the board of directors of the Company from five to seven directors and the election of the individuals designated by the Purchaser in writing to the board of directors (which designees shall be to the reasonable satisfaction of the Company), each to serve until the next annual meeting of the Company's stockholders and (iii) the appointment of at least one of the Purchaser's designees to each committee of the board of directors; 8 (d) from Battle Fowler LLP, a legal opinion, addressed to the Purchaser and dated such Closing Date, substantially in the form of Exhibit 2.06(d) (except that with respect to the Option Closing Battle Fowler LLP will only be required to deliver the opinion in Paragraph 6 of Exhibit 2.06(b)); (e) for the First Closing only, a copy of (i) the certificate of incorporation, as amended, of the Company, certified by the Secretary of State of Delaware, as of a date not earlier than five Business Days prior to the applicable Closing Date and accompanied by a certificate of the Secretary or Assistant Secretary of the Company, dated as of the applicable Closing Date, stating that no amendments have been made to such certificate of incorporation since such date, and (ii) the by-laws of the Company, certified by the Secretary or Assistant Secretary of the Company; (f) for the First Closing only, good standing certificates for the Company from the Secretary of State of Delaware dated as of a date not earlier than five Business Days prior to such Closing Date; and (g) for the First Closing only, a certificate of the registrar and transfer agent of the Company, certifying the number of outstanding shares of Common Stock of the Company as of a date not more than two Business Days prior to such Closing Date. SECTION 2.07. Closing Deliveries by the Purchaser. At each Closing, the Purchaser shall deliver to the Company: (a) the applicable Purchase Price to the Purchase Price Bank Account; (b) a receipt acknowledging delivery of the stock certificate specified in Section 2.06(a); (c) for the First Closing only, a legal opinion addressed to the Company and dated such Closing Date from (i) internal counsel for the Purchaser, substantially in the form of Exhibit 2.07(c)(i) hereto, and (ii) Shearman & Sterling, as outside counsel to the Purchaser, substantially in the form of Exhibit 2.07(c)(ii) hereto; (d) for the First Closing only, a true and complete copy, certified by the Secretary or Assistant Secretary of the Purchaser, of the resolutions duly and validly adopted by the board of directors of the Purchaser evidencing its authorization of the execution and delivery of the Alliance Agreements and the consummation of the transactions contemplated hereby and thereby; (e) for the First Closing only, a copy of (i) the certificate of incorporation, as amended, of the Purchaser, certified by the Secretary of State of Colorado, as of a date not earlier than five Business Days prior to the applicable Closing Date and accompanied 9 by a certificate of the Secretary or Assistant Secretary of the Purchaser, dated as of the applicable Closing Date, stating that no amendments have been made to such certificate of incorporation since such date, and (ii) the by-laws of the Purchaser, certified by the Secretary or Assistant Secretary of the Purchaser; and (f) for the First Closing only, a good standing certificate for the Purchaser from the Secretary of State of Colorado as of a date not earlier than five Business Days prior to such Closing Date. SECTION 2.08. Other First Closing Deliveries. At the First Closing, the Company shall cause to be delivered to the Purchaser a side letter agreement from Sepracor, Inc., a Delaware company ("Sepracor"), addressed to the Company to the effect that Sepracor will vote its shares of Common Stock beneficially owned by it in favor of the Capital Increase. ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY As an inducement to the Purchaser to enter into this Agreement, the Company hereby represents and warrants to the Purchaser as follows: SECTION 3.01. Organization, Authority and Qualification of the Company; Subsidiaries. (a) The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and the Company has all necessary corporate power and authority to enter into each of this Agreement and the other Alliance Agreements, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The Company is duly qualified to do business and is in good standing in each jurisdiction in which the properties owned or leased by it or the operation of its Business makes such qualification necessary, except to the extent that the failure to be so qualified would not, individually or in the aggregate, have a Material Adverse Effect. The execution and delivery of this Agreement and the other Alliance Agreements by the Company, the performance by the Company of its obligations hereunder and thereunder and the consummation by the Company of the transactions contemplated hereby and thereby have been duly authorized by all requisite action on the part of the Company other than, with respect to the Capital Increase, the approval of the Capital Increase by the stockholders of the Company and the filing with the Secretary of State of Delaware of an amended certificate of incorporation of the Company relating to the Capital Increase. Each of the Alliance Agreements has been duly executed and delivered by the Company, and (assuming due authorization, execution and delivery by the Purchaser and COBE BCT, Inc. ("COBE"), as the case may be) each of the Alliance Agreements constitutes a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors' rights and general 10 principals of equity. The Company is not in violation of any of the provisions of its certificate of incorporation or by-laws. (b) The Subsidiaries are the only Persons in which the Company beneficially owns a 10% or greater equity interest (directly or indirectly), except as disclosed in Section 3.01(b) of the Disclosure Schedule, no Subsidiary has any material assets, Liabilities or business activities, and no Subsidiary, currently or at any time in the past, has owned or leased any real property. SECTION 3.02. Capital Stock of the Company; Ownership of the Shares. As of the date hereof and without giving effect to the consummation of the transactions contemplated hereby, the authorized capital stock of the Company consists of 20,000,000 shares of Common Stock and 1,000 shares of preferred stock, par value $.01 per share, of the Company ("Preferred Stock"). As of the date hereof, (a) (i) 10,421,071 shares of Common Stock are issued and outstanding, all of which are validly issued, fully paid and nonassessable, (ii) no shares of Common Stock are held in the treasury of the Company, and (iii) 6,788,028 shares of Common Stock are reserved for issuance pursuant to the exercise of any rights to purchase, or options, warrants or other securities convertible into or exchangeable for, Common Stock, including the Option (assuming a $2.00 Per Share Option Purchase Price), (b) no shares of Preferred Stock have been issued and are outstanding and (c) 219,860 shares of Common Stock are authorized for issuance pursuant to the Company Benefit Plans. None of the issued and outstanding shares of Common Stock was issued in violation of any preemptive rights. Except for the Company Benefit Plans and the warrants described above, there are no options, warrants, convertible securities or other rights, agreements, arrangements or commitments relating to the capital stock of the Company or obligating the Company to issue or sell any shares of capital stock of, or any other equity interest in, the Company. There are no outstanding contractual obligations of the Company to repurchase, redeem or otherwise acquire any shares of Common Stock or to provide funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in, any other Person. Upon consummation of the First Closing as contemplated hereby, including receipt by the Company of the First Purchase Price, the Firm Shares owned by Purchaser will be fully paid and nonassessable. Upon consummation of the Option Closing as contemplated hereby, including receipt by the Company of the Option Purchase Price, the Option Shares owned by the Purchaser will be fully paid and nonassessable. SECTION 3.03. No Conflict. The execution, delivery and performance of the Alliance Agreements by the Company do not and will not (a) violate, conflict with or result in the breach of any provision of the charter or by-laws of the Company, (b) conflict with or violate any Law or Governmental Order applicable to the Company or any of its assets, properties or businesses, including, without limitation, the Business, or (c) except as disclosed in Section 3.03 of the Disclosure Schedule, conflict with, result in any breach of, constitute a default (or event which with the giving of notice or lapse of time, or both, would become a default) under, require any consent under, or give to others any rights of termination, amendment, acceleration, suspension, revocation or cancellation of, or result in the creation of any Encumbrance on any of 11 the assets or properties of the Company pursuant to, any note, bond, mortgage or indenture, contract, agreement, lease, sublease, license, permit, franchise or other instrument, obligation or arrangement to which the Company is a party or by which any of its assets or properties is bound or affected, except, with respect to clauses (b) and (c), as would not, individually or in the aggregate, have a Material Adverse Effect. SECTION 3.04. Governmental Consents and Approvals. The execution, delivery and performance of the Alliance Agreements 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 Authority, except for the applicable requirements, if any, of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and except as disclosed in Section 3.04 of the Disclosure Schedule. SECTION 3.05. SEC Filings; Financial Statements. (a) Except as set forth in Section 3.10(a) of the Disclosure Schedule, the Company has filed all forms, reports and documents required to be filed by it with the SEC since January 1, 1998 (collectively, the "Company SEC Reports"). As of the respective dates on which they were filed, (i) the Company SEC Reports complied in all material respects with the requirements of the Securities Act of 1933, as amended (together with the rules and regulations promulgated thereunder, the "Securities Act"), and the Exchange Act, as the case may be, and (ii) none of the Company SEC Reports contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. (b) Each of the consolidated financial statements (including, in each case, any notes thereto) contained in the Company SEC Reports was prepared in accordance with generally accepted accounting principles applied on a consistent basis throughout the periods indicated (except as may be indicated in the notes thereto or, in the case of unaudited statements, as permitted by Form 10-Q and Regulation S-X of the SEC), and each presented fairly, in all material respects, the consolidated financial position, results of operations and cash flows of the Company as at the respective dates thereof and for the respective periods indicated therein, except as otherwise noted therein (subject, in the case of unaudited statements, to normal and recurring year-end adjustments that could not be reasonably expected to, individually or in the aggregate, have a Material Adverse Effect). The balance sheet of the Company contained in the Company SEC Reports as of December 31, 1998 is hereinafter referred to as the "Company Balance Sheet." (c) The Company has no current intention of filing with the SEC any amendments or modifications on Exchange Act Form 10K-A and is not currently obligated to file any report on Exchange Act Form 8-K (except as may be required with respect to the transactions contemplated hereby), pursuant to the Securities Act or the Exchange Act. SECTION 3.06. No Undisclosed Liabilities. There are no Liabilities of the Company which would be required to be reflected on a balance sheet, or the notes thereto, 12 prepared in accordance with generally accepted accounting principles, other than Liabilities (i) reflected or reserved against on the Company Balance Sheet, (ii) disclosed in Section 3.06 of the Disclosure Schedule or (iii) incurred since the date of the Company Balance Sheet in the ordinary course of the business, consistent with the past practices, of the Company and which are not reasonably likely, individually or in the aggregate, to have a Material Adverse Effect. SECTION 3.07. Conduct of the Business. Since December 31, 1998, except as contemplated by, or disclosed pursuant to, this Agreement or disclosed in any SEC Report filed after December 31, 1998, the Company has conducted the Business only in the ordinary course and in a manner consistent with past practices. SECTION 3.08. Litigation. Except as disclosed in Section 3.08 of the Disclosure Schedule or as disclosed in the SEC Reports filed prior to the date of this Agreement, there are no Actions by or against the Company or any Affiliate thereof (and relating to the Business or the Company), or affecting any of the assets of the Company, pending before any Governmental Authority or, to the knowledge of the Company threatened to be brought by or before any Governmental Authority. Except as disclosed in Section 3.08 of the Disclosure Schedule, neither the Company nor any of the assets of the Company is subject to any Governmental Order (nor, to the knowledge of the Company, are there any such Governmental Orders threatened to be imposed by any Governmental Authority) which has or has had, individually or in the aggregate, a Material Adverse Effect. SECTION 3.09. Compliance with Laws. Except as disclosed in Section 3.09 of the Disclosure Schedule, the Company is not in default or violation of any Law or Governmental Order (including, but not limited to, those of the Food and Drug Administration (the "FDA") or any nongovernmental self-regulatory agency and including environmental laws or regulations), except for such defaults or violations that would not, individually or in the aggregate, have a Material Adverse Effect. The Company has timely filed or otherwise provided all registrations, reports, data, and other information and applications with respect to its medical device, pharmaceutical, consumer, health care and other governmentally regulated products (the "Regulated Products") required to be filed with or otherwise provided to the FDA or any Governmental Authority with jurisdiction over the manufacture, use or sale of the Regulated Products, and all regulatory licenses or approvals in respect thereof are in full force and effect, except where the failure to file timely such registrations, reports, data, information and applications or the failure to have such licenses and approvals in full force and effect would not, individually or in the aggregate, have a Material Adverse Effect. SECTION 3.10. Material Contracts. (a) Except as set forth in Section 3.10(a) of the Disclosure Schedule, other than as filed as Exhibits to the SEC Reports, there are no contracts, agreements, leases, licenses or commitments to which the Company is a party that are material to the Company ("Material Contracts"). 13 (b) Except as disclosed in Section 3.10(b) of the Disclosure Schedule, each Material Contract is valid and binding on the Company and is in full force and effect. The Company is not in material breach of, or default under, any Material Contract. (c) Except as disclosed in Section 3.10(c) of the Disclosure Schedule, to the knowledge of the Company, no other party to any Material Contract is in breach thereof or default thereunder. SECTION 3.11. Intellectual Property. (a) Section 3.11(a) of the Disclosure Schedule sets forth a true and complete list of all (i) material patents and patent applications and other material Intellectual Property, in each case owned by the Company ("Owned Intellectual Property"), and (ii) licenses of Intellectual Property to the Company or by the Company to a third party, in each case that are material to the Business ("Licensed Intellectual Property"), other than (A) any end-user operating system obtained with the purchase or license of equipment and (B) any end-user application software, in each case, that is commonly available. (b) The Company is the exclusive owner of the entire and unencumbered right, title and interest in and to each item of Owned Intellectual Property. (c) The Owned Intellectual Property of the Company is subsisting and has not been adjudged invalid or unenforceable in whole or part. (d) Except as disclosed in Section 3.11(d) of the Disclosure Schedule, no claims have been asserted, or are pending or, to the knowledge of the Company, threatened against the Company (i) based upon or challenging or seeking to deny or restrict the use by the Company of any of the Owned Intellectual Property or Licensed Intellectual Property, (ii) alleging that any services provided by, processes used by or products manufactured or sold by the Company or that the use of Owned Intellectual Property or Licensed Intellectual Property in the ordinary course of business of the Company infringes upon or misappropriates any Intellectual Property right of any third party or (iii) alleging that any Intellectual Property licensed pursuant to the Licensed Intellectual Property infringes upon any Intellectual Property right of any third party or is being licensed or sublicensed in conflict with the terms of any license or other agreement. (e) Except as disclosed in Section 3.11(e) of the Disclosure Schedule, the Company has not granted any license or other right to any third party with respect to the Owned Intellectual Property or Licensed Intellectual Property, except to the customers of the Company pursuant to written license agreements entered into in the ordinary course of business. (f) To the knowledge of the Company (i) there has been no misappropriation of any material trade secrets or other material confidential Intellectual Property of the Company by any person, (ii) neither the Company nor any employee, independent contractor or agent of the Company has misappropriated any trade secrets or software of any other person in the course of such performance as an employee, independent contractor or agent, and (iii) no employee, 14 independent contractor or agent of the Company is in default or breach of any term of any employment agreement, nondisclosure agreement, assignment-of-invention agreement or similar agreement or contract relating in any way to the protection, ownership, development, use or transfer of Intellectual Property. SECTION 3.12. Year 2000 Compliance. The Company has (i) undertaken an assessment of those Company Systems that could be adversely affected by a failure to be Year 2000 Compliant and (ii) developed a plan and time line for rendering such Company Systems Year 2000 Compliant. The Company has made available for review to the Purchaser copies of all material documents related to such assessment and plan implementation efforts, including communications to and from customers and material Vendors and suppliers and all plans, time lines and cost estimates for rendering the Company Systems Year 2000 Compliant. Based on such review and assessment, all Company Systems are Year 2000 Compliant or will be Year 2000 Compliant as required to avoid having a Material Adverse Effect. SECTION 3.13. Title to Properties; Absence of Encumbrances. (a) Other than the leaseholds created under the Leased Real Property identified in Section 3.13(a) of the Disclosure Schedule, the Company has no ownership or leasehold interest in any real property. (b) The Company has good and valid title to, or, in the case of leased properties and assets, valid leasehold interests in, all of the tangible properties and assets, real, personal and mixed, used or held for use in, or which are necessary to conduct, the Business as currently conducted, free and clear of any Encumbrances except for Permitted Encumbrances. SECTION 3.14. Employee Benefit Matters; Labor Matters. (a) For purposes of this Agreement, "Company Benefit Plans" means (i) all employee benefit plans (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")) and all bonus, stock option, stock purchase, restricted stock, incentive, deferred compensation, retiree medical or life insurance, supplemental retirement, severance or other benefit plans, programs or arrangements, and all employment, termination, severance or other contracts or agreements, whether legally enforceable or not, to which the Company is a party, with respect to which the Company has any obligation or which are maintained, contributed to or sponsored by the Company for the benefit of any current or former employee, officer or director of the Company, (ii) each employee benefit plan for which the Company could incur liability under Section 4069 of ERISA in the event such plan has been or was to be terminated, (iii) any plan in respect of which the Company could incur liability under Section 4212(c) of ERISA and (iv) any contracts or arrangements between the Company or any of its Affiliates and any employee of the Company including, without limitation, any contracts or arrangements relating to a sale of the Company. (b) Except for the Company Benefit Plans listed in the Disclosure Schedule, none of the Company Benefit Plans provides for the payment of separation, severance, termination or similar-type benefits to any person or obligates the Company to pay separation, 15 severance, termination or similar-type benefits solely or partially as a result of any transaction contemplated by this Agreement and the other Alliance Agreements. (c) Each Company Benefit Plan is now and always has been operated in accordance with its terms and the requirements of all applicable Laws, including, without limitation, ERISA and the Code, except where such failure would not, individually or in the aggregate, have a Material Adverse Effect. The Company has performed all obligations required to be performed by it under, is not in any respect in default under or in violation of, and has no knowledge of any default or violation by any party to, any Company Benefit Plan, except where such failure to perform obligations, default or violation would not, individually or in the aggregate, have a Material Adverse Effect. No action, claim or proceeding is pending or, to the knowledge of the Company, threatened with respect to any Company Benefit Plan (other than claims for benefits in the ordinary course) and, to the knowledge of the Company, no fact or event exists that could give rise to any material action, claim or proceeding. (d) Each Company Benefit Plan that is intended to be qualified under Section 401(a) of the Code has received a favorable determination letter from the Internal Revenue Service ("IRS") and each trust established in connection with any Company Benefit Plan which is intended to be exempt from federal income taxation under Section 501(a) of the Code has received a determination letter from the IRS that it is so exempt. (e) The Company has not incurred any Liability under, arising out of or by operation of Title IV of ERISA (other than liability for premiums to the Pension Benefit Guaranty Corporation arising in the ordinary course), including, without limitation, any Liability in connection with (i) the termination or reorganization of any employee benefit plan subject to Title IV of ERISA or (ii) the withdrawal from any Multiemployer Plan or Multiple Employer Plan, and no fact or event exists which could give rise to any such Liability. SECTION 3.15. Brokers. No broker, finder or investment banker is entitled to any brokerage, finder's or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Company. SECTION 3.16. Limitations on Representations and Warranties. Except for the representations and warranties expressly contained in this Agreement and the other Alliance Agreements, neither the Company nor any other person or entity makes any representation or warranty to the Purchaser, express or implied, and the Company hereby disclaims any such representation or warranty, whether by the Company or any of its agents, brokers or representatives or any other person or entity, notwithstanding the delivery or disclosure to the Purchaser or any of its officers, directors, employees, agents or representatives or any other person or entity of any document or other information by the Company or any of its agents, brokers or representatives or any other person or entity. In addition, if, to the Purchaser's actual knowledge, any of the representations and warranties set forth in this Agreement are not true as 16 of any Closing, and the Purchaser elects nonetheless to close, the Purchase shall be deemed to have waived any claim for breach of such representation and warranty. SECTION 3.17. Disclosure Schedule. Any event, fact or circumstance described in any section of the Disclosure Schedule shall be deemed a disclosure for purposes of all other portions of the Disclosure Schedule, provided the relevance of the disclosure to such other portions can be reasonably discerned from the applicable section of the Disclosure Schedule. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASER As an inducement to the Company to enter into this Agreement, the Purchaser hereby represents and warrants to the Company as follows: SECTION 4.01. Organization and Authority of the Purchaser. The Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the State of Colorado. The Purchaser has all necessary corporate power and authority to enter into this Agreement and the other Alliance Agreements to which it is a party, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and the other Alliance Agreements by the Purchaser, the performance by the Purchaser of its obligations hereunder and thereunder and the consummation by the Purchaser of the transactions contemplated hereby and thereby have been duly authorized by all requisite action on the part of the Purchaser. This Agreement and the other Alliance Agreements have been duly executed and delivered by the Purchaser, and (assuming due authorization, execution and delivery by the Company) constitute legal, valid and binding obligations of the Purchaser enforceable against the Purchaser in accordance with their terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors' rights and general principals of equity. SECTION 4.02. No Conflict. Assuming the making and obtaining of all filings, notifications, consents, approvals, authorizations and other actions referred to in Section 4.03, except as may result from any facts or circumstances relating solely to the Company, the execution, delivery and performance of the Alliance Agreements by the Purchaser does not and will not (a) violate, conflict with or result in the breach of any provision of the certificate of incorporation or by-laws of the Purchaser, (b) conflict with or violate any Law or Governmental Order applicable to the Purchaser or (c) conflict with, or result in any breach of, constitute a default (or event which with the giving of notice or lapse or time, or both, would become a default) under, require any consent under, or give to others any rights of termination, amendment, acceleration, suspension, revocation, or cancellation of, or result in the creation of any Encumbrance on any of the assets or properties of the Purchaser pursuant to, any note, bond, mortgage or indenture, contract, agreement, lease, sublease, license, permit, franchise or other 17 instrument or arrangement to which the Purchaser is a party or by which any of such assets or properties are bound or affected which, with respect to clauses (b) and (c) above would have a material adverse effect on the ability of the Purchaser to consummate the transactions contemplated by the Alliance Agreements. SECTION 4.03. Governmental Consents and Approvals. The execution, delivery and performance of the Alliance Agreements 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 Authority. SECTION 4.04. Investment Purpose. The Purchaser is acquiring the Shares for its own account solely for the purpose of investment and not with a view to, or for offer or sale in connection with, any distribution thereof. SECTION 4.05. Status of Shares; Limitations on Transfer and Other Restrictions. The Purchaser understands that the Shares have not been and will not be registered under the Securities Act or under any state securities laws (other than in accordance with the Stockholder's Agreement) and are being offered and sold in reliance upon federal and state exemptions for transactions not involving any public offering and that the Shares have not been approved or disapproved by the SEC or by any other federal or state agency. The Purchaser further understands that such exemption depends in part upon, and such Shares are being sold in reliance on, the representations and warranties set forth in this Article IV. The Purchaser understands that (i) none of the Shares may be sold, transferred or assigned unless registered by the Company pursuant to the Securities Act and any applicable state securities laws, or unless an exemption therefrom is available, and, accordingly, it may not be possible for the Purchaser to liquidate its investment in the Shares, and it agrees not to sell, assign or otherwise transfer or dispose of any Shares unless such Shares have been so registered or an exemption from registration is available, and (ii) the Shares are subject to certain restrictions on transfer and voting, as set forth in the Stockholder's Agreement. SECTION 4.06. Sophistication and Financial Condition of Purchaser. The Purchaser represents and warrants to the Company that it is an "Accredited Investor" as defined in Regulation D under the Securities Act and that it considers itself to be an experienced and sophisticated investor and to have such knowledge and experience in financial and business matters as are necessary to evaluate the merits and risks of an investment in the Shares. The Purchaser also represents it has not been organized for the sole purpose of acquiring the Shares. The Purchaser has been furnished access to such information and documents as it has requested and has been afforded an opportunity to ask questions of and receive answers from representatives of the Company concerning the terms and conditions of this Agreement and the purchase of the Shares contemplated hereby. SECTION 4.07. Year 2000 Compliance. The Purchaser has (i) undertaken an assessment of those Purchaser Systems that could be adversely affected by a failure to be Year 18 2000 Compliant and (ii) developed a plan and time line for rendering such Purchaser Systems Year 2000 Compliant. The Purchaser has made available for review to the Company copies of all material documents related to such assessment and plan implementation efforts, including communications to and from customers and material Vendors and suppliers and all plans, time lines and cost estimates for rendering the Purchaser Systems Year 2000 Compliant. Based on such review and assessment, all Purchaser Systems are Year 2000 Compliant or will be Year 2000 Compliant as required to avoid having a material adverse effect on the Purchaser's ability to perform any of its obligations under the Alliance Agreements. ARTICLE V ADDITIONAL AGREEMENTS SECTION 5.01. Actions Regarding Market. Prior to the exercise of the Option, the Company shall not take any action outside the ordinary course of business which would reasonably be expected to cause or result in stabilization or to influence the price of any security of the Company in connection with the sale of the Shares, except as may be approved by the board of directors of the Company. SECTION 5.02. Confidentiality. Notwithstanding anything herein to the contrary, the Confidentiality Agreement dated November 12, 1997, as amended (the "Confidentiality Agreement"), between the Company and COBE shall remain in full force and effect in accordance with its terms. SECTION 5.03. Public Announcements. The initial press release relating to this Agreement shall be a joint press release the text of which has been agreed to by each of the Purchaser and the Company. Thereafter, unless otherwise required by applicable Law, each of the Purchaser and the Company shall use commercially reasonable efforts to consult with the other before issuing any press release or otherwise making any organized, pre-arranged or pre-scheduled public statements with respect to any of the Alliance Agreements or any of the other transactions hereby or thereby. SECTION 5.04. Capital Increase. The Company shall use its best efforts and take all actions permitted by Law to (a) call and hold an annual meeting of the stockholders of the Company as expeditiously as possible for the purpose of voting upon the Capital Increase; (b) cause the board of directors of the Company to recommend, and not withdraw its recommendation, to the stockholders to vote in favor of the Capital Increase; and (c) upon any approval by the stockholders of the Company of the Capital Increase, expeditiously file an amended certificate of incorporation of the Company relating to the Capital Increase with the Secretary of State of Delaware. 19 SECTION 5.05. Further Action. Each of the parties hereto shall use all reasonable efforts to take, or cause to be taken, all appropriate action, do or cause to be done all things necessary, proper or advisable under applicable Law, and execute and deliver such documents and other papers, as may be required to carry out the provisions of the Alliance Agreements and consummate and make effective the transactions contemplated by the Alliance Agreements. ARTICLE VI INDEMNIFICATION SECTION 6.01. Survival of Representations and Warranties. The representations and warranties of the respective parties contained in this Agreement and all statements contained in this Agreement and the Disclosure Schedule shall survive until May 15, 2000. If written notice of a claim has been given prior to the expiration of the applicable representations and warranties by either party, then the relevant representations and warranties of the other party shall survive as to such claim, until such claim has been finally resolved. SECTION 6.02. Indemnification. (a) The Purchaser, its Affiliates and its successors and assigns and the officers, directors, employees and agents of the Purchaser, its Affiliates and its successors and assigns shall be indemnified and held harmless by the Company for any and all Liabilities, losses, damages, claims, costs and expenses, interest, awards, judgments and penalties (including, without limitation, reasonable attorneys' fees and expenses) actually suffered or incurred by them (including, without limitation, any Action brought or otherwise initiated by any of them) (hereinafter a "Purchaser Loss"), arising out of or resulting from: (i) the breach of any representation or warranty made by the Company contained in this Agreement; or (ii) the breach of any covenant or agreement by the Company contained in this Agreement. To the extent that the Company's undertakings set forth in this Section 6.02(a) may be unenforceable, the Company shall contribute the maximum amount that it is permitted to contribute under applicable Law to the payment and satisfaction of all Purchaser Losses incurred by the Purchaser. (b) The Company, its Affiliates and its successors and assigns and the officers, directors, employees and agents of the Company, its Affiliates and its successors and assigns shall be indemnified and held harmless by the Purchaser for any and all Liabilities, losses, damages, claims, costs and expenses, interest, awards, judgments and penalties (including, without limitation, reasonable attorneys' fees and expenses) actually suffered or incurred by them 20 (including, without limitation, any Action brought or otherwise initiated by any of them) (hereinafter a "Company Loss"; and each of a Company Loss and Purchaser Loss is hereinafter referred to as a "Loss" with respect to such party), arising out of or resulting from: (i) the breach of any representation or warranty made by the Purchaser contained in this Agreement; or (ii) the breach of any covenant or agreement by the Purchaser contained in this Agreement. To the extent that the Purchaser's undertakings set forth in this Section 6.02(b) may be unenforceable, the Purchaser shall contribute the maximum amount that it is permitted to contribute under applicable Law to the payment and satisfaction of all Company Losses incurred by the Company. (c) Whenever a claim shall arise for indemnification under this Article VI, the party entitled to indemnification (the "Indemnified Party") shall give notice to the other party (the "Indemnifying Party") of any matter that the Indemnified Party has determined has given or could give rise to a right of indemnification under this Agreement promptly, but in no event later than 30 days, except with respect to any claim exceeding, or potential Loss reasonably likely to exceed, $250,000, in which cases such notice shall not be later than 10 days, stating the amount of the Loss, if known, and method of computation thereof, and containing a reference to the provisions of this Agreement in respect of which such right of indemnification is claimed or arises. The obligations and Liabilities of the Indemnifying Party under this Article VI with respect to Losses arising from claims of any third party which are subject to the indemnification provided for in this Article VI ("Third Party Claims") shall be governed by and contingent upon the following additional terms and conditions: if an Indemnified Party shall receive notice of any Third Party Claim, the Indemnified Party shall give the Indemnifying Party notice of such Third Party Claim following receipt by the Indemnified Party of such notice in the time frame provided above; provided, however, that the failure to provide such notice shall not release the Indemnifying Party from any of its obligations under this Article VI except to the extent the Indemnifying Party is materially prejudiced by such failure and shall not relieve the Indemnifying Party from any other obligation or Liability that it may have to any Indemnified Party otherwise than under this Article VI. If the Indemnifying Party acknowledges in writing its obligation to indemnify the Indemnified Party hereunder against any Losses that may result from such Third Party Claim, then the Indemnifying Party shall be entitled to assume and control the defense of such Third Party Claim at its expense and through counsel of its choice if it gives notice of its intention to do so to the Indemnified Party within ten days of the receipt of such notice from the Indemnified Party; provided, however, that if there exists or is reasonably likely to exist a conflict of interest that would make it inappropriate in the judgment of the Indemnified Party, in its reasonable discretion, for the same counsel to represent both the Indemnified Party and the Indemnifying Party, then the Indemnified Party shall be entitled to retain its own counsel at the expense of the Indemnifying Party. In the event the Indemnifying Party exercises the right to undertake any such defense 21 against any such Third Party Claim as provided above, the Indemnified Party shall cooperate with the Indemnifying Party in such defense and make available to the Indemnifying Party, at the Indemnifying Party's expense, all witnesses, pertinent records, materials and information in the Indemnified Party's possession or under the Indemnified Party's control relating thereto as is reasonably required by the Indemnifying Party. Similarly, in the event the Indemnified Party is, directly or indirectly, conducting the defense against any such Third Party Claim, the Indemnifying Party shall cooperate with the Indemnified Party in such defense and make available to the Indemnified Party, at the Indemnifying Party's expense, all such witnesses, records, materials and information in the Indemnifying Party's possession or under the Indemnifying Party's control relating thereto as is reasonably required by the Indemnified Party. No such Third Party Claim may be settled by the Indemnifying Party without the prior written consent of the Indemnified Party, which consent shall not be unreasonably withheld or delayed. SECTION 6.03. Limits on Indemnification. (a) Notwithstanding anything to the contrary contained in this Agreement, the maximum amount of indemnifiable Losses which may be recovered from the Company arising out of or resulting from the causes enumerated in Section 6.02(a) shall be (x) prior to the Option Closing, if any, $4,500,000 and (y) following the Option Closing, if any $6,000,000. Notwithstanding any provision of this Agreement, for the avoidance of doubt, the parties expressly acknowledge and agree that the indemnification provisions set forth in the Distribution Agreement are not affected in any way by this Agreement, including, without limitation, by any provision of this Article VI, and remain in full force and effect in accordance with the terms of the Distribution Agreement. (b) Notwithstanding anything herein to the contrary, in no event shall the Company or the Purchaser indemnify hereunder the other from and against any facts or circumstances relating to their respective performance of any of their respective obligations under the Distribution Agreement or otherwise in respect of matters, directly or indirectly, relating to the Distribution Agreement. (c) Notwithstanding anything to the contrary elsewhere in this Agreement, Losses shall not include, and no Indemnifying Party shall, in any event, be liable to any other party for, any consequential, punitive or special damages (including, but not limited to, damages for lost profits). ARTICLE VII GENERAL PROVISIONS SECTION 7.01. Waiver. The Company and the Purchaser may (a) extend the time for the performance of any of the obligations or other acts of the other party, (b) waive any inaccuracies in the representations and warranties of the other party contained herein or in any document delivered by the other party pursuant hereto or (c) waive compliance with any of the 22 agreements or conditions of the other party contained herein. Any such extension or waiver shall be valid only if set forth in an instrument in writing signed by the party to be bound thereby. Any waiver of any term or condition shall not be construed as a waiver of any subsequent breach or a subsequent waiver of the same term or condition, or a waiver of any other term or condition, of this Agreement. The failure of any party to assert any of its rights hereunder shall not constitute a waiver of any of such rights. SECTION 7.02. Expenses. Except as otherwise specified in this Agreement, all costs and expenses, including, without limitation, fees and disbursements of counsel, financial advisors and accountants, incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses. SECTION 7.03. Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by courier service, by cable, by telecopy, by telegram, by 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 in a notice given in accordance with this Section 7.03): (a) if to the Company: HemaSure Inc. 140 Locke Drive Marlborough, MA 01752 Fax: 508-485-6045 Attention: President and Chief Executive Officer with a copy to: Battle Fowler LLP Park Avenue Tower 75 East 55th Street New York, NY 10022-3205 Fax: 212-339-9150 Attention: Luke P. Iovine, III, Esq. 23 (b) if to the Purchaser: COBE Laboratories, Inc. 1201 Oak Street Lakewood, CO 80215-4498 Fax: 303-231-4151 Attention: Edward C. Wood with a copy to: Legal Department COBE Laboratories, Inc. 1201 Oak Street Lakewood, CO 80215 Telecopier: (303) 205-2519 and Shearman & Sterling 599 Lexington Avenue New York, NY 10022 Telecopy: 212-848-7179 Attention: Peter D. Lyons, Esq. and Kenneth A. Gerasimovich, Esq. SECTION 7.04. Headings. The descriptive headings contained in this Agreement are for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement. SECTION 7.05. Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any Law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect 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 7.06. Entire Agreement. This Agreement and the other Alliance Agreements constitute the entire agreement of the parties hereto with respect to the subject matter hereof and thereof and supersedes all prior agreements and undertakings, both written and 24 oral, between the Company and the Purchaser with respect to the subject matter hereof and thereof. SECTION 7.07. Assignment. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties; provided, however, neither party hereto shall assign or delegate any of the rights or obligations created under this Agreement without the prior written consent of the other party. SECTION 7.08. No Third Party Beneficiaries. Except for the provisions of Article VI relating to Indemnified Parties, this Agreement shall be binding upon and inure solely to the benefit of the parties hereto and their permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement. SECTION 7.09. Amendment. This Agreement may not be amended or modified except (a) by an instrument in writing signed by, or on behalf of, the Company and the Purchaser or (b) by a waiver in accordance with Section 7.01. SECTION 7.10. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, excluding (to the greatest extent permissible by law) any rule of law that would cause the application of the laws of any jurisdiction other than the State of New York, without regard to principles of conflict of law. SECTION 7.11. Arbitration. (a) If a dispute arises from or relates to this Agreement or the breach thereof, whether of law or fact, of any nature whatsoever, and such dispute cannot be settled through direct discussions between the parties, the parties agree to endeavor first to settle the dispute in an amicable manner by mediation administered by the American Arbitration Association under its Commercial Mediation Rules before resorting to litigation. Mediation shall take place in New York, New York. If the dispute cannot be resolved within 60 days of the initiation thereof by such party, any party may initiate arbitration in accordance with the provisions of Section 7.11(b) below. (b) All disputes arising under this Agreement that cannot be amicably resolved under Section 7.11(a) above, shall be settled by binding arbitration. Judgment upon the award rendered may be entered in any court in the New York, New York metropolitan area. Each party agrees to the following arbitration procedures: (i) Any party requesting arbitration shall serve a written demand for arbitration on another party. The demand shall set forth in reasonable detail a statement of the nature of the dispute, the amount involved and the remedies sought. No later than 20 calendar days after a demand for arbitration is served, the parties shall jointly select and appoint a retired judge of the Courts of the State of New York to act as the arbitrator. In the event that the parties do not agree on the selection of an arbitrator, the party seeking 25 arbitration shall apply to the United States District Court for the Southern District of New York for appointment of a retired judge to serve as arbitrator. (ii) No later than ten calendar days after appointment of an arbitrator, the parties shall jointly prepare and submit to the arbitrator a set of rules for the arbitration. In the event that the parties cannot agree on the rules for the arbitration, the arbitrator shall establish the rules. No later than ten calendar days after the arbitrator is appointed, such arbitrator shall arrange for a hearing to commence on a mutually convenient date. The hearing shall commence no later than 120 calendar days after the arbitrator is appointed and shall continue from day to day until completed. (iii) The arbitrator shall issue his or her award in writing no later than 20 calendar days after the conclusion of the hearing. The arbitration award shall be final and binding regardless of whether any party fails or refuses to participate in the arbitration. The arbitrator is empowered to hear and determine all disputes between the parties hereto concerning the subject matter of this Agreement, and the arbitrator may award money damages (but specifically not punitive damages), injunctive relief, rescission, restitution, costs, and attorneys' fees. The arbitrator shall not have the power to amend this Agreement in any respect. (iv) In the event that any party serves a proper demand for arbitration under this Agreement, all parties may pursue discovery in accordance with the Rules of Civil Procedure of the State of New York the provisions of which are incorporated herein by reference, with the following exceptions: (A) the parties hereto may conduct all discovery, including depositions for discovery purposes, without leave of the arbitrator; and (B) all discovery shall be completed no later than the commencement of the arbitration hearing or 120 calendar days after the date that a proper demand for arbitration is served, whichever occurs earlier, unless upon a showing of good cause the arbitrator extends or shortens that period. SECTION 7.12. Counterparts. This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. SECTION 7.13. Specific Performance. The parties hereto agree that irreparable damage would occur in the event any provision of this Agreement was not performed in accordance with the terms hereof and that the parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy at law or equity. 26 IN WITNESS WHEREOF, the Company and the Purchaser have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized. HEMASURE INC. By: /s/ John F. McGuire, III -------------------------------------- Name: John F. McGuire, III Title: President COBE LABORATORIES, INC. By: /s/ Edward C. Wood, Jr. -------------------------------------- Name: Edward C. Wood, Jr. Title: Vice President EX-10.3 4 STOCKHOLDER'S AGREEMENT ================================================================================ STOCKHOLDER'S AGREEMENT By and Between HEMASURE INC. and COBE LABORATORIES, INC. Dated May 3, 1999 ================================================================================ TABLE OF CONTENTS ARTICLE I DEFINITIONS SECTION 1.01. Definitions.....................................................1 ARTICLE II GOVERNANCE SECTION 2.01. Board Representation............................................3 SECTION 2.02. Resignations and Replacements...................................4 SECTION 2.03. Committees......................................................4 ARTICLE III VOTING OBLIGATIONS SECTION 3.01. Voting Obligations..............................................4 ARTICLE IV STANDSTILL AND TRANSFER PROVISIONS SECTION 4.01. Standstill Period...............................................5 SECTION 4.02. Transfer Restrictions...........................................5 SECTION 4.03. Acquisition of Additional Shares; Other Restrictions............6 SECTION 4.04. Company Rights of First Negotiation; Permitted Sales............7 SECTION 4.05. Stockholder Rights of First Notice..............................8 SECTION 4.06. Anti-Dilutive Rights............................................8 ARTICLE V REGISTRATION RIGHTS SECTION 5.01. Restrictive Legend.............................................10 SECTION 5.02. Notice of Proposed Transfer....................................10 SECTION 5.03. Required Registrations.........................................11 SECTION 5.04. Incidental Registration........................................13 SECTION 5.05. Shelf Registration.............................................13 i SECTION 5.06. Obligations of the Company.....................................14 SECTION 5.07. Furnish Information............................................17 SECTION 5.08. Expenses of Registration.......................................17 SECTION 5.09. Underwriting Requirements......................................17 SECTION 5.10. Indemnification................................................17 SECTION 5.11. Transfer of Registration Rights................................20 SECTION 5.12. Rule 144 Information...........................................20 SECTION 5.13. Limitations on Registration Rights.............................21 ARTICLE VI GENERAL PROVISIONS SECTION 6.01. Waiver.........................................................21 SECTION 6.02. Expenses.......................................................21 SECTION 6.03. Notices........................................................22 SECTION 6.04. Headings.......................................................23 SECTION 6.05. Severability...................................................23 SECTION 6.06. Entire Agreement...............................................23 SECTION 6.07. Assignment.....................................................23 SECTION 6.08. No Third Party Beneficiaries...................................24 SECTION 6.09. Amendment......................................................24 SECTION 6.10. Governing Law..................................................24 SECTION 6.11. Arbitration....................................................24 SECTION 6.12. Counterparts...................................................25 SECTION 6.13. Specific Performance...........................................25 ANNEX A - GENERAL FORM OF STANDSTILL AND VOTING AGREEMENT FOR PERMITTED TRANSFEREES ii STOCKHOLDER'S AGREEMENT STOCKHOLDER'S AGREEMENT, dated May 3, 1999 (this "Agreement"), by and between HEMASURE INC., a Delaware corporation (the "Company"), and COBE LABORATORIES, INC., a Colorado corporation ("COBE" or the "Stockholder"). WHEREAS, the Company and COBE have entered into the Stock Subscription Agreement, dated the date hereof (the "Stock Subscription Agreement"), pursuant to which the Company is issuing to the Stockholder, and the Stockholder is purchasing from the Company, common stock, par value $ .01 per share, of the Company ("Common Stock"), upon the terms set forth in the Stock Subscription Agreement; and WHEREAS, the Company and the Stockholder wish to enter into this Agreement to set forth their agreement as to the matters set forth herein with respect to, among other things, representation on the Company's Board of Directors (the "Board"), the sale of securities by the Company and the holding, acquisition and Transfer (as defined below) of the Common Stock by the Stockholder; NOW, THEREFORE, in consideration of these premises, the mutual agreements and covenants hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and the Stockholder hereby agree as follows: ARTICLE I DEFINITIONS SECTION 1.01. Definitions. (a) Unless otherwise defined in this Agreement, capitalized terms are used herein as defined in the Stock Subscription Agreement. (b) As used in this Agreement, the following terms shall have the following meanings: "Beneficially Own" has the meaning set forth in Rule 13d-3, as in effect on the date hereof, under the Exchange Act. "Director" means a member of the Board. "Fully Diluted Basis" means, in respect of the Common Stock, the method of calculating the number of shares of Common Stock issued and outstanding on an applicable measurement date, pursuant to which the number of shares of Common Stock issued and outstanding on any such date are aggregated with the number of shares of Common Stock issuable on such date upon exercise or conversion of any other security of the Company outstanding on such date (including employee stock options issued pursuant to Company Benefit Plans). "Register", "registered" and "registration" shall refer to a registration effected by preparing and filing a registration statement or similar document with the SEC in compliance with the Securities Act and the declaration or ordering of effectiveness by the SEC of such registration statement or document. "Registrable Stock" shall mean any Shares purchased by the Stockholder pursuant to the Stock Subscription Agreement or Section 4.06(a) of this Agreement. For purposes of this Agreement, any Registrable Stock shall cease to be Registrable Stock when (w) a registration statement covering such Registrable Stock has been declared effective and such Registrable Stock has been disposed of pursuant to such effective registration statement, (x) such Registrable Stock is sold by a Person in a transaction in which the rights under the provisions of Article V are not assigned, (y) such Registrable Stock may be sold pursuant to Rule 144(k) (or any similar provision then in force, but not Rule 144(A)) or in a single transaction pursuant to Rule 144(e) (or its successor) under the Securities Act without registration under the Securities Act or (z) such Registrable Stock is sold, transferred or otherwise disposed of in any manner to any Person or entity which, by virtue of this Agreement, is not entitled to the registration rights provided by this Agreement. "Stockholder Director" means a Director designated by the Stockholder pursuant to this Agreement. (c) The following terms have the meanings set forth in the Sections set forth below: Term Location - ---- -------- Agreement.......................................................Preamble Anti-Dilutive Rights............................................ss. 4.06(a) Board...........................................................Recitals COBE............................................................Preamble Common Stock....................................................Recitals Company.........................................................Preamble Departing Stockholder Director..................................ss. 2.02(a) Maintenance Shares..............................................ss. 4.06(a) Permitted Transferee............................................ss. 4.02(a) Proposed Transferee.............................................ss. 4.04(a)(ii) Shelf Registration..............................................ss. 5.05(a) 3 Term Location - ---- -------- Standstill Period...............................................ss. 4.01 Stock Subscription Agreement....................................Recitals Stockholder.....................................................Preamble Transfer........................................................ss. 4.02(a) (d) References in this Agreement to articles, sections, paragraphs, clauses, schedules and exhibits are to articles, sections, paragraphs, clauses, schedules and exhibits in or to this Agreement unless otherwise indicated. Whenever the context may require, any pronoun includes the corresponding masculine, feminine and neuter forms. Any term defined by reference to any agreement, instrument or document has the meaning assigned to it whether or not such agreement, instrument or document is in effect. The words "include", "includes" and "including" are deemed to be followed by the phrase "without limitation". Unless the context otherwise requires, any agreement, instrument or other document defined or referred to herein refers to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified from time to time. Unless the context otherwise requires, references herein to any Person include its successors and assigns. The words "shall" and "will" have the same meaning and effect. ARTICLE II GOVERNANCE SECTION 2.01. Board Representation. From and after the date hereof, (a) for as long as the Stockholder and any Permitted Transferees, in the aggregate, Beneficially Own any combination of Company securities consisting of, or convertible into, in the aggregate, at least 20% of the issued and outstanding shares of Common Stock, the parties hereto shall use best efforts and exercise all authority under applicable law to (i) cause the Board to consist of seven Directors and (ii) cause any slate of Directors presented to the stockholders of the Company for election to the Board to consist of such nominees that, if elected, would result in a Board that included two Stockholder Directors as designated by the Stockholder (which designees shall be subject to the reasonable satisfaction of the Company). (b) for as long as the Stockholder and any Permitted Transferees, in the aggregate, Beneficially Own any combination of Company securities consisting of, or convertible into, in the aggregate, at least 15% but less than 20% of the issued and outstanding shares of Common Stock, the parties hereto shall use best efforts and exercise all authority under applicable law to cause any slate of Directors presented to the 4 stockholders of the Company for election to the Board to consist of such nominee that, if elected, would result in a Board that included one Stockholder Director as designated by the Stockholder (which designee shall be subject to the reasonable satisfaction of the Company). (c) If the Stockholder and any Permitted Transferees, in the aggregate, Beneficially Own any combination of Company securities consisting of, or convertible into, in the aggregate, less than 15% of the issued and outstanding shares of Common Stock, the Company shall have no obligation pursuant to this Agreement to cause any slate of Directors presented to the stockholders of the Company for election to the Board to include any designee of the Stockholder. SECTION 2.02. Resignations and Replacements. (a) If a Stockholder Director ceases to serve as a Director for any reason (a "Departing Stockholder Director"), the Company shall take all action necessary to ensure that the vacancy created by such Departing Stockholder Director shall be filled by an individual designated by the Stockholder (which designee shall be to the reasonable satisfaction of the Company), which individual shall serve out the remaining term of the Departing Stockholder Director as a Stockholder Director. (b) In the event that at any time the Stockholder shall no longer be entitled to designate Directors pursuant to Section 2.01, then the Stockholder Directors shall be deemed to have resigned immediately upon the occurrence of such event and the Company and the Stockholder shall take all action promptly to effect the resignation or removal of such Directors. SECTION 2.03. Committees. For so long as there are two Stockholder Directors, the Company will take all actions necessary to cause the appointment of at least one Stockholder Director to serve on each committee of the Board. If there is only one Stockholder Director, the Company will not be obligated to take any such actions; provided that, if the Company forms an executive committee or a committee by any such other name that performs functions similar to those typically performed by an executive committee, the Company will take all actions necessary to cause the appointment of such Stockholder Director to serve on such committee. ARTICLE III VOTING OBLIGATIONS SECTION 3.01. Voting Obligations. The Stockholder and any Permitted Transferees agree to vote, and shall vote, at all times all of the Shares Beneficially Owned by them for the election of the entire slate of Board nominees established by the Board and submitted to the stockholders of the Company for approval if, and to the extent that, all of the Stockholder's 5 designated Stockholder Directors are included with such nominees; provided that if the Company is in breach of any of its material obligations under the Alliance Agreements as finally determined pursuant to the arbitration procedures set forth in the relevant Alliance Agreement, the Stockholder and any Permitted Transferees may refrain from voting any shares of Common Stock Beneficially Owned by them in favor of, but may not vote against, the election of the entire slate of Board nominees established by the Board; provided further that if such abstention would have the same effect as a vote against the matter or would act to make it impossible to obtain a quorum, the Stockholder and any Permitted Transferees shall vote (and shall be deemed to have voted) all shares of Common Stock Beneficially Owned by them in the same proportion of the votes cast by the other stockholders of the Company of the applicable class of Company securities. ARTICLE IV STANDSTILL AND TRANSFER PROVISIONS SECTION 4.01. Standstill Period. The "Standstill Period" shall mean any period beginning on or after the date hereof during which the Stockholder and any Permitted Transferees, in the aggregate, Beneficially Own any combination of Company securities consisting of, or convertible into, in the aggregate, 5% or more of the issued and outstanding shares of Common Stock. The Stockholder represents and warrants to the Company that the Stockholder, together with its "Affiliates" and "associates" (as such term is defined under Rule 12b-2 of the Exchange Act, or any successor thereto), Beneficially Own an aggregate, as of the date hereof, of 4,500,000 shares of Common Stock, and no other securities of the Company whatsoever other than the Option. SECTION 4.02. Transfer Restrictions. (a) For as long as both (i) the Standstill Period is in effect and (ii) the Distribution Agreement shall not have expired and shall not have been terminated in its entirety or with respect to the United States of America portion of the Territory (as defined in the Distribution Agreement), the Stockholder shall not, and shall cause any Permitted Transferees not to, directly or indirectly, sell, transfer, assign, pledge, hypothecate or otherwise dispose of ("Transfer") any shares of Common Stock except to any wholly owned subsidiary of the Stockholder that expressly assumes the Stockholder's obligations under this Agreement relating to such shares of Common Stock (a "Permitted Transferee"). (b) During any period when either of the conditions described in clause 4.02(a)(i) or (ii) are absent, the Stockholder or its Permitted Transferees shall be permitted to Transfer shares of Common Stock only in accordance with the provisions of Section 4.04. 6 (c) The Stockholder agrees that it will not, directly or indirectly, Transfer its interests in any Permitted Transferee unless prior thereto the shares of Common Stock held by such entity are transferred to the Stockholder or to one or more other Permitted Transferees. (d) Any attempted Transfer in violation of this Section 4.02 shall be null, void and of no force and effect. SECTION 4.03. Acquisition of Additional Shares; Other Restrictions. Subject to the provisions of Sections 4.05 and 4.06 and subject to the Stockholder's right to exercise the Option under the Stock Subscription Agreement, during a Standstill Period, except with the prior approval of the Board, the Stockholder shall not, directly or indirectly, and shall cause its Permitted Transferees not to, directly or indirectly: (a) acquire, offer to acquire, or agree to acquire beneficial ownership of any additional equity or debt securities of the Company; (b) make, or in any way participate in, directly or indirectly, any "solicitation" of "proxies" or become a "participant" in any "election contest" with respect to the Company, or execute any written consent in lieu of a meeting of stockholders of the Company; (c) initiate, propose or otherwise solicit stockholders for the approval of one or more stockholder proposals with respect to the Company or induce or attempt to induce any other Person to initiate any stockholder proposal; (d) seek nomination or election to the Board, serve on the Board if elected, seek to place a representative on the Board or seek the removal of any member of the Board (except with respect to the Stockholder's rights to designate Stockholder Directors); (e) subject to the Stockholder's rights to consult with the Stockholder Directors, call or seek to have called any meeting of the stockholders of the Company; (f) otherwise act, directly or indirectly, alone or in concert with others, to (i) subject to the Stockholder's rights to consult with the Stockholder Directors, seek to control the management of the Company or the Board or the policies or affairs of the Company, (ii) subject to the Stockholder's rights to consult with the Stockholder Directors, solicit, propose, seek to effect or negotiate with any other Person with respect to any form of business combination transaction with the Company or any Subsidiary thereof, or any restructuring, recapitalization or similar transaction with respect to the Company or any Subsidiary thereof, (iii) solicit, make or propose or encourage, or negotiate with any other Person with respect to, or announce an intention to make, any 7 tender offer or exchange offer for any debt or equity securities of the Company, (iv) disclose an intention, purpose, plan or proposal with respect to the Company or any debt or equity securities of the Company, or (v) subject to the Stockholder's rights to consult with the Stockholder Directors, assist, participate in, facilitate, encourage or solicit any effort or attempt by any Person to do or seek to do any of the foregoing; provided, however, that nothing in this Section 4.03(f) shall apply to discussions between or among officers, employees or agents of the Stockholder, the Permitted Transferees and the Stockholder Directors; (g) request the Company (or its Directors, officers, employees or agents), directly or indirectly, to amend or waive any material provisions set forth herein; or (h) encourage or render advice to or make any recommendation or proposal to any Person to engage in any of the actions covered hereby. Nothing contained in this Section 4.03 shall be deemed or construed to limit any Stockholder Director from casting any vote in his or her capacity as a member of the Board (or otherwise acting at the direction of the Board, in such capacity) or the exercise by the Stockholder or any Permitted Transferee of its voting rights with respect to any shares of Common Stock it Beneficially Owns. SECTION 4.04. Company Rights of First Negotiation; Permitted Sales. (a) During any period that the condition described in clause (ii) of Section 4.02(a) shall no longer exist but there shall be a Standstill Period, if the Stockholder or any Permitted Transferee shall desire to Transfer any shares of Common Stock owned by it other than to a Permitted Transferee, then the Company and the Stockholder shall negotiate in good faith in order to reach a mutually agreeable disposition of all shares of Common Stock owned by the Stockholder and any Permitted Transferees to one or more third parties or for the repurchase by the Company of all of such shares of Common Stock; provided that neither the Company nor the Stockholder (nor any Permitted Transferee) shall be obligated to effect any such disposition or repurchase, and neither party shall be obligated to so negotiate for a period in excess of six months. If after such six-month period the parties are unable to reach a definitive agreement with respect to a mutually agreeable disposition or repurchase of the Shares, then the Stockholder and any such Permitted Transferee may sell its shares of Common Stock as follows: (i) in unsolicited broker transactions as contemplated by Rule 144 under the Securities Act; (ii) in one or more private transactions to any third party ("Proposed Transferee"), but only if such Proposed Transferee executes and delivers to the Company the standstill, voting and transfer limitation agreement in the form of Annex A hereto; and 8 (iii) in a widely disbursed underwritten public offering of such shares of Common Stock pursuant to which no Person or entity acquires more than 5% of the number of shares of Common Stock issued and outstanding at the time of such offering. To the extent the Stockholder and any Permitted Transferees are permitted to Transfer any shares of Common Stock pursuant to this Section 4.04(a), the Company shall cause to be issued to the Stockholder and such Permitted Transferees, at their written request, new stock certificates representing such shares without a restrictive legend regarding this Agreement (and the old stock certificates shall be surrendered in order to receive the new stock certificates). Notwithstanding anything herein to the contrary, no shares of Common Stock may be sold, transferred, assigned or otherwise disposed of unless registered by the Company pursuant to the Securities Act and any applicable state laws, or unless an exemption therefrom is available. (b) During any period in which the conditions described in both clauses (i) and (ii) of Section 4.02(a) shall no longer exist, the Stockholder and any Permitted Transferees shall be permitted to freely Transfer any and all shares of Common Stock without restriction and the Company shall cause to be issued to the Stockholder and any Permitted Transferees, at their written request, new stock certificates representing shares of Common Stock without a restrictive legend regarding this Agreement (and the old stock certificates shall be surrendered in order to receive the new stock certificates). Notwithstanding anything herein to the contrary, no shares of Common Stock may be sold, transferred, assigned or otherwise disposed of unless registered by the Company pursuant to the Securities Act and any applicable state laws, or unless an exemption therefrom is available. SECTION 4.05. Stockholder Rights of First Notice. Following the Option Closing, if any, in the event the Company determines to issue and sell to a third party any Company securities (other than Company securities issued and sold by the Company in a widely disbursed public offering, Company securities issued pursuant to a registration statement on Securities Act Form S-4 or S-8, or its successors, or options issued pursuant to the Company Benefit Plans or similar plans), the Company shall deliver to the Stockholder not less than 30 days' prior written notice of its intention to do so. Following the delivery of such notice to the Stockholder, the Company shall negotiate with the Stockholder for such thirty-day period for the purpose of permitting the Stockholder to make, in its sole discretion, one or more proposals to the Company regarding the Stockholder's desire to acquire the Company securities. Following the expiration of such thirty-day period, the Company may effect the issuance and sale of the Company securities to any such third party, without limitation or further obligation to the Stockholder. Notwithstanding anything herein to the contrary, in no event shall the Company be obligated, for any reason, to issue and sell to the Stockholder any Company securities. SECTION 4.06. Anti-Dilutive Rights. (a) Except as provided in Section 4.06(c) below, the Company shall not issue, sell or Transfer, whether in private issuances or sales or in a registered public offering, any Common Stock or securities convertible into Common Stock to 9 any Person unless the Stockholder and any Permitted Transferees are offered in writing the right to purchase, at the same price and on the same terms proposed to be issued and sold, an amount of such Common Stock or other securities (the "Maintenance Shares") as is necessary for the Stockholder and any Permitted Transferees to maintain, individually, the level of their respective percentage Beneficial Ownership of Common Stock (on a Fully Diluted Basis) as it owned immediately prior to such issuance ("Anti-Dilutive Rights"). In the case of a public offering, the Company shall, as part of its offer, provide a copy of any preliminary prospectus and other information concerning the offering reasonably requested by the Stockholder or any Permitted Transferees. The Stockholder and any Permitted Transferee shall have the right, during the period specified in Section 4.06(b), to accept the offer for any or all of the Maintenance Shares offered to each of them. (b) If the Stockholder or any Permitted Transferee does not deliver to the Company written notice of acceptance of any offer made pursuant to Section 4.06(a) within 10 Business Days after the Stockholder's or any such Permitted Transferee's receipt of such offer, the Stockholder or such Permitted Transferee, as the case may be, shall be deemed to have waived its right to purchase all or any part of its Maintenance Shares as set forth in such offer, but the Stockholder or any such Permitted Transferee shall retain its rights under this Section 4.06 with respect to future offers; provided, however, that the applicable number of Maintenance Shares shall be reduced and recalculated immediately prior to any such future issuance. (c) The Anti-Dilutive Rights set forth in this Section 4.06 shall not apply to (i) the grant or exercise of options to purchase Common Stock to employees or Directors of the Company or any of its Subsidiaries or otherwise pursuant to a Company Benefit Plan or similar plan in existence on the date hereof or otherwise adopted by the Board hereafter (whether or not such options were issued prior to the date hereof, or are hereafter issued), (ii) the issuance of shares of Common Stock issuable upon exercise of any option, warrant, convertible security or other rights to purchase or subscribe for Common Stock which, in each case, had been issued by the Company prior to the date of this Agreement or (iii) securities issued pursuant to any stock split, stock dividend or other similar stock recapitalization. (d) A closing for the purchase of shares of Common Stock pursuant to this Section 4.06 shall occur on the later of (i) the date on which such public or private issuance occurs and (ii) such date as may be mutually agreed to by the Company and the Stockholder or the Permitted Transferee, as the case may be, and shall take place at the offices of the Company or at such other reasonable location as the Company may otherwise notify the Stockholder and/or a Permitted Transferee, as the case may be, at the time specified by the Company in such notice provided to the Stockholder or the Permitted Transferee, as the case may be, at least five days prior to such closing date. In connection with such closing, the Company and the Stockholder or Permitted Transferee, as the case may be, shall provide such closing certificates and other closing deliveries provided in the transaction giving rise to the rights specified in Section 4.06. 10 (e) Solely to the extent that the Stockholder suffers dilution as a result of the exercise of employee stock options, then, notwithstanding the provisions of Section 4.03, the Stockholder at any time thereafter may purchase shares of Common Stock from a third party or through one or more open market purchases for the purposes of maintaining its percentage level of Beneficial Ownership of Common Stock. The Company and the Stockholder shall use all commercially reasonable efforts to cooperate with each other so as to permit the Stockholder to exercise its rights under this Section 4.06(e) in an accurate, orderly and non-disruptive manner (provided that in no event shall any purchase be affected more than once in any fiscal quarter). ARTICLE V REGISTRATION RIGHTS SECTION 5.01. Restrictive Legend. Each certificate representing shares of Common Stock held by Stockholder shall, except as otherwise provided in this Article V, be stamped or otherwise imprinted with a legend substantially in the following form: THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE. THE SECURITY REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND CERTAIN RESTRICTIONS ON VOTING CONTAINED IN THE STOCKHOLDER'S AGREEMENT, DATED AS OF MAY 3, 1999, BY AND BETWEEN THE COMPANY AND COBE LABORATORIES, INC. A certificate shall not bear the Securities Act legend or the legend regarding this Agreement, as the case may be, if in the opinion of counsel satisfactory to the Company (it being agreed that Shearman & Sterling shall be satisfactory), the shares being sold thereby may be publicly sold without registration under the Securities Act or may be sold without being subject to the restrictions on sale specified in Article IV. SECTION 5.02. Notice of Proposed Transfer. Prior to any proposed Transfer of any shares of Registrable Stock (other than under the circumstances described in Section 5.03, 5.04 or 5.05), the Stockholder shall give written notice to the Company of its intention to effect such Transfer. Each such notice shall describe the manner of the proposed Transfer whereupon the Stockholder shall be entitled to Transfer such stock in accordance with the terms of its notice, except as may be precluded hereunder and subject in any event to the restrictions set forth in this 11 Agreement. Each certificate representing shares of Common Stock transferred as above provided shall bear the legends set forth in Section 5.01, except that such certificate (a) shall not bear the Securities Act legend if (i) such Transfer is in accordance with the provisions of Rule 144 of the Securities Act (or any other rule permitting public sale without registration under the Securities Act, but not Rule 144A of the Securities Act) or (ii) the opinion of counsel referred to above is to the further effect that the transferee and any subsequent transferee (other than an Affiliate of the Company) would be entitled to Transfer such securities in a public sale without registration under the Securities Act and (b) shall not bear the legend related to this Agreement if such Transfer is to a third party in accordance with the provisions of Article IV and such transferee is not subject to the restrictions on Transfer set forth in this Agreement. The restrictions provided for in this Section 5.02 shall not apply to securities that are not required to bear the legends prescribed by Section 5.01 in accordance with the provisions of Section 5.01. SECTION 5.03. Required Registrations. (a) Commencing at any time after September 15, 1999, for as long as the Stockholder holds five percent or more of the outstanding shares of Common Stock of the Company, the Stockholder may request in a written notice (which request shall state the number of Registrable Shares to be so registered, the intended method of distribution and a certification as to the market value of such shares, as described below), that the Company file a registration statement under the Securities Act (or a similar document pursuant to any other statute then in effect corresponding to the Securities Act) covering the registration of any or all Registrable Stock owned by the Stockholder and any Permitted Transferee, provided that either (i) such Registrable Stock has an aggregate offering price of at least $3,000,000 (based on the last reported sale price for the Common Stock on the Business Day preceding the date of such written request, as reported by the OTC Bulletin Board or any other exchange or market on which the Common Stock is then listed or included for quotation) or (ii) such Registrable Stock represents 100% of any combination of Company securities consisting of, or convertible into, shares of Common Stock Beneficially Owned by the Stockholder and its Permitted Transferees. Following receipt of any notice under this Section 5.03, the Company shall use its best efforts to cause to be registered under the Securities Act all Registrable Stock that the Stockholder requested be registered in accordance with the manner of disposition specified in such notice. (b) If the Stockholder intends to have the Registrable Stock distributed by means of an underwritten offering, the Stockholder and the Company shall enter into an underwriting agreement in customary form with the underwriter or underwriters which shall contain any customary provisions (including customary provisions with respect to indemnification by the Company of the underwriters) as the underwriters may reasonably request. Such underwriter or underwriters shall be selected by the Stockholder and shall be approved by the Company, which approval shall not be unreasonably withheld. 12 (c) Notwithstanding any provision of this Agreement to the contrary: (i) the Company shall not be required to effect a registration pursuant to this Section 5.03 during the period starting with the date which is 30 days prior to the date of the initial public filing by the Company of, and ending on a date 120 days following the effective date of, a registration statement pertaining to a public offering of securities for the account of the Company or on behalf of the selling stockholders under any other registration rights agreement which the Stockholder has been entitled to join pursuant to Section 5.04; provided that the Company shall actively employ in good faith all reasonable efforts to cause such registration statement to become effective as soon as possible; (ii) if (A) (i) the Company is in possession of material nonpublic information relating to the Company or any Subsidiary and (ii) the Company determines in good faith that public disclosure of such material nonpublic information would not be in the best interests of the Company and its stockholders, (B) (i) the Company has made a public announcement relating to an acquisition or business combination transaction that includes the Company and/or one or more of its Subsidiaries that is material to the Company and its Subsidiaries, taken as a whole and (ii) the Company determines in good-faith that (x) offers and sales of Registrable Stock pursuant to any registration statement prior to the consummation of such transaction (or such earlier date as the Company shall determine) is not in the best interests of the Company and its stockholders or (y) it would be impracticable at the time to obtain any financial statements relating to such acquisition or business combination transaction that would be required to be set forth in a registration statement or (C) the Company shall furnish to the Stockholder a certificate signed by the president of the Company stating that in the good faith opinion of the Board such registration would interfere with any material transaction or financing, confidential negotiations or business activities then being pursued by the Company or any of its Subsidiaries, then, in any such case, the Company's obligation to use all reasonable efforts to file a registration statement shall be deferred, or the effectiveness of any registration statement may be suspended, in each case for a period not to exceed 120 days; provided that the Company may not delay the filing or suspend the effectiveness of any registration statement under this Section 5.03(ii) on more than one occasion in any consecutive 12-month period; (iii) the Company shall not be required to effect a registration pursuant to this Section 5.03 if the Registrable Stock requested by the Stockholder to be registered pursuant to such registration are included in, and eligible for sale under, a Shelf Registration (as defined below); and (iv) the Company shall not be required to effect a registration pursuant to this Section 5.03 within six months after the effective date of any other registration statement registering shares to be sold by the Company. 13 (d) The Company shall not be obligated to effect and pay for more than two registrations pursuant to this Section 5.03 (both of which may be Shelf Registrations requested pursuant to Section 5.05); provided that a registration requested pursuant to this Section 5.03 shall not be deemed to have been effected for purposes of this Section 5.03(d) unless (i) it has been declared effective by the SEC, (ii) it has remained effective for the period set forth in Section 5.06(a) and (iii) the offering of Registrable Stock pursuant to such registration is not subject to any stop order, injunction or other order or requirement of the SEC (other than any such stop order, injunction, or other requirement of the SEC prompted by any act or omission of the Stockholder). SECTION 5.04. Incidental Registration. (a) Subject to Section 5.09, if at any time the Company determines that it shall file a registration statement under the Exchange Act for the registration of Common Stock (other than a registration statement on a Form S-4 or S-8 or an offering of securities solely to the Company's existing stockholders) on any form that would also permit the registration of the Registrable Stock and such filing is to be on its behalf or on behalf of selling holders of its securities for the general registration of Common Stock to be sold for cash, the Company shall each such time promptly give the Stockholder written notice of such determination setting forth the date on which the Company proposes to file such registration statement, which date shall be no earlier than 15 days from the date of such notice, and advising the Stockholder of its right to have Registrable Stock included in such registration. Upon the written request of the Stockholder received by the Company no later than 10 days after the date of the Company's notice (which request shall state the number of Registrable Shares to be so registered and the intended method of distribution), the Company shall, subject to Section 5.04(b) below, use all reasonable efforts to cause to be registered under the Securities Act all of the Registrable Stock that the Stockholder has so requested to be registered; provided that the Company shall have the right to postpone or withdraw any registration effected pursuant to this Section 5.04 without obligation or liability to the Stockholder. (b) If, in the opinion of the managing underwriter (or, in the case of a non-underwritten offering, in the good faith reasonable opinion of the Company), the total amount of such securities to be so registered, including such Registrable Stock, will exceed the maximum amount of the Company's securities which can be marketed (i) at a price reasonably related to the then current market value of such securities or (ii) without otherwise materially and adversely affecting the entire offering, then the Company shall be entitled to reduce the number of shares of Registrable Stock to be sold in such offering by the Stockholder and any other stockholder of the Company requesting to be included in the registration in proportion (as nearly as practicable) to the amount of shares of Common Stock requested to be included by the Stockholder and each other stockholder at the time of filing the registration statement. SECTION 5.05. Shelf Registration. (a) The Stockholder may use its two request registration rights granted pursuant to Section 5.03, subject to the limitations of Section 5.03(d), to request that the Company file a "shelf" registration statement pursuant to Rule 415 under the 14 Securities Act or any successor rule (the "Shelf Registration") with respect to the Registrable Stock. The Company shall (i) use all reasonable efforts to have the Shelf Registration filed within 30 days of such request and declared effective as soon as reasonably practicable following such request and (ii) subject to Section 5.03(c)(iii), use all reasonable efforts to keep the Shelf Registration continuously effective from the date such Shelf Registration is declared effective until at least the earlier of such time as (A) all such Registrable Stock has been sold thereunder or (B) the first anniversary of such effective date in order to permit the prospectus forming a part thereof to be usable by the Stockholder during such period. (b) Subject to Section 5.03(c)(iii), the Company shall supplement or amend the Shelf Registration (i) as required by the registration form utilized by the Company or by the instructions applicable to such registration form or by the Securities Act, (ii) to include in such Shelf Registration any additional securities that become Registrable Stock by operation of the definition thereof and (iii) following the written request of the Stockholder pursuant to Section 5.05(c), to cover offers and sales of all or a part of the Registrable Stock by means of an underwriting. The Company shall furnish to the Stockholder copies of any such supplement or amendment sufficiently in advance (but in no event less than five Business Days in advance) of its use or filing with the SEC to allow the Stockholder a meaningful opportunity to comment thereon. (c) The Stockholder may, at its election and upon written notice by the Stockholder to the Company, subject to the limitations set forth in Section 5.03(c)(iii), effect offers and sales under the Shelf Registration by means of one or more underwritten offerings, in which case the provisions of Section 5.03(b) shall apply to any such underwritten distribution of securities under the Shelf Registration and such underwriting shall, if sales of Registrable Stock pursuant thereto shall have closed, be regarded as the exercise of one of the registration rights contemplated by Section 5.03. SECTION 5.06. Obligations of the Company. Whenever required under Sections 5.03 and 5.05 to effect the registration of any Registrable Stock under the Securities Act, the Company shall: (a) in a reasonably timely manner, file with the SEC a registration statement with respect to such Registrable Stock, and use best efforts to cause such registration statement to become and remain effective for the period of the distribution contemplated thereby determined as provided hereafter; provided that the Company shall not be required to keep any Registration Statement (other than the Shelf Registration) effective more than 90 days; (b) as expeditiously as possible, prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to comply with the provisions of the Securities 15 Act with respect to the disposition of all Registrable Stock covered by such registration statement; (c) as expeditiously as possible, furnish to the Stockholder such reasonable numbers of copies of the registration statement and the prospectus included therein (including each preliminary prospectus and any amendments or supplements thereto) in conformity with the requirements of the Securities Act, any exhibits filed therewith and such other documents and information as they may reasonably request; (d) as expeditiously as possible, use best efforts to register or qualify the Registrable Stock covered by such registration statement under such other securities or "blue sky" laws of such states as shall be reasonably requested by the Stockholder for the distribution of the Registrable Stock covered by the registration statement; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business in or to file a general consent to service of process in any jurisdiction wherein it would not but for the requirements of this paragraph (except that the Company will use its best efforts to register or qualify Registrable Stock in such additional jurisdiction as the Stockholder may request subject to the foregoing proviso and at the Stockholder's own expense) be obligated to do so; and provided further that the Company shall not for any purpose be required to qualify such Registrable Stock in any jurisdiction in which the securities regulatory authority requires that the Stockholder submit any shares of Registrable Stock to the terms, provisions and restrictions of any escrow, lockup or similar agreement(s) for consent to sell Registrable Stock in such jurisdiction unless the Stockholder agrees to do so; (e) promptly notify the Stockholder, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances under which they were made, and at the request of the Stockholder promptly prepare and furnish to the Stockholder a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such securities, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances under which they were made. In the event the Company shall give such notice, the Company shall extend the period during which such Registration Statement shall be maintained effective as provided in Section 5.06(a) (or, in the case of the Shelf Registration, Section 5.05(a)) by the number of days during the period from and including the date of the giving of such notice to the date when the Company shall make available to the Stockholder such supplemented or amended prospectus; 16 (f) furnish, at the request of the Stockholder, if the method of distribution is by means of an underwriting, on the date that the shares of Registrable Stock are delivered to the underwriters for sale pursuant to such registration or, if such Registrable Stock is not being sold through underwriters, on the date that the registration statement with respect to such shares of Registrable Stock becomes effective, (1) a signed opinion, dated on or about such date, of the independent legal counsel representing the Company for the purpose of such registration, addressed to the underwriters, if any, and if such Registrable Stock is not being sold through underwriters, then to the Stockholder, as to such matters as such underwriters or the Stockholder, as the case may be, may reasonably request and as would be customary in such a transaction, and (2) letters dated on or about such date and the date the offering is priced from the independent certified public accountants of the Company, addressed to the underwriters, if any, and if such Registrable Stock is not being sold through underwriters, then to the Stockholder, if such accountants refuse to deliver such letters to the Stockholder, then to the Company (i) stating that they are independent certified public accountants within the meaning of the Securities Act and that, in the opinion of such accountants, the financial statements and other financial data of the Company included in the registration statement or the prospectus, or any amendment or supplement thereto, comply as to form in all material respects with the applicable accounting requirements of the Securities Act and (ii) covering such other financial matters (including information as to the period ending not more than five Business Days prior to the date of such letters) with respect to the registration in respect of which such letter is being given as such underwriters or the Stockholder, as the case may be, may reasonably request and as would be customary in such a transaction; (g) enter into customary agreements (including, if the method of distribution is by means of an underwriting, an underwriting agreement in customary form) and take such other actions as are reasonably required in order to expedite or facilitate the disposition of the Registrable Stock to be so included in the registration statement; (h) otherwise use best efforts to comply with all applicable rules and regulations of the SEC, and make available to its securityholders, as soon as reasonably practicable, but not later than 18 months after the effective date of the registration statement, an earnings statement covering the period of at least 12 months beginning with the first full month after the effective date of such registration statement, which earnings statements shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder; and (i) use all reasonable efforts to list the Registrable Stock covered by such registration statement with any U.S. nationally recognized securities exchange on which the Company Common Stock is then listed. 17 For purposes of Sections 5.06(a) and 5.06(b), the period of distribution of Registrable Stock in a firm commitment underwritten public offering shall be deemed to extend until each underwriter has completed the distribution of all securities purchased by it, and the period of distribution of Registrable Stock in any other registration shall be deemed to extend until the earlier of the sale of all Registrable Stock covered thereby and six months after the effective date thereof. SECTION 5.07. Furnish Information. It shall be a condition precedent to the obligations of the Company to take any action pursuant to Article V of this Agreement that the Stockholder shall furnish to the Company such information regarding the Stockholder, the Registrable Stock held by it, and the intended method of disposition of such securities as the Company shall reasonably request and as shall be required in connection with the action to be taken by the Company. SECTION 5.08. Expenses of Registration. All expenses incurred in connection with each registration pursuant to Sections 5.03, 5.04 and 5.05 of this Agreement, excluding underwriters' discounts and commissions, but including, without limitation, all registration, filing and qualification fees, word processing, duplicating, printers' and accounting fees (including the expenses of any special audits or "cold comfort" letters required by or incident to such performance and compliance), fees of the National Association of Securities Dealers, Inc. or listing fees, messenger and delivery expenses, all fees and expenses of complying with state securities or "blue sky" laws, and the fees and disbursements of counsel for the Company, and the reasonable fees and disbursements of counsel for the Stockholder (which counsel shall be selected by the Stockholder), shall be paid by the Company; provided, however, that if a registration request pursuant to Section 5.03 or 5.05 is subsequently withdrawn by the Stockholder, the Company shall not be required to pay any expenses of such registration proceeding and the Stockholder shall bear such expenses. The Stockholder shall bear and pay the underwriting commissions and discounts applicable to securities offered for its account and the fees and disbursements of its counsel in connection with any registrations, filings and qualifications made pursuant to this Agreement. SECTION 5.09. Underwriting Requirements. In connection with any underwritten offering, the Company shall not be required under Section 5.04 to include shares of Registrable Stock in such underwritten offering unless the Stockholder accepts the terms of the underwriting of such offering that have been reasonably agreed upon between the Company and the underwriters selected by the Stockholder. SECTION 5.10. Indemnification. In the event any Registrable Stock is included in a registration statement under this Agreement: (a) The Company shall indemnify and hold harmless the Stockholder, the Stockholder's directors and officers, each Person who participates in the offering of such Registrable Stock, and each Person, if any, who controls the Stockholder or participating 18 Person within the meaning of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which they may become subject under the Securities Act, the Exchange Act, state securities or "blue sky" laws or otherwise, insofar as such losses, claims, damages or liabilities (or proceedings in respect thereof) arise out of or are based on any untrue or alleged untrue statement of any material fact contained in such registration statement on the effective date thereof (including any preliminary prospectus or prospectus filed under Rule 424 under the Securities Act or any amendments or supplements thereto) or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and shall reimburse the Stockholder, the Stockholder's directors and officers, such participating Person or controlling Person for any legal or other expenses reasonably incurred by them (but not in excess of expenses incurred in respect of one counsel for all of them unless there is an actual conflict of interest between any indemnified parties, which indemnified parties may be represented by separate counsel) in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the indemnity agreement contained in this Section 5.10(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Company; provided further that the Company shall not be liable to the Stockholder, the Stockholder's directors and officers, participating Person or controlling Person in any such case for any such loss, claim, damage, liability or action to the extent that it arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in connection with such registration statement, preliminary prospectus, final prospectus or amendments or supplements thereto, in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by the Stockholder, the Stockholder's directors and officers, participating Person or controlling Person. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Stockholder, the Stockholder's directors and officers, participating Person or controlling Person, and shall survive the Transfer of such securities by the Stockholder. (b) The Stockholder shall indemnify and hold harmless the Company, each of its directors and officers, each Person, if any, who controls the Company within the meaning of the Securities Act, and each agent and any underwriter for the Company (within the meaning of the Securities Act) against any losses, claims, damages or liabilities, joint or several, to which the Company or any such director, officer, controlling Person, agent or underwriter may become subject, under the Securities Act, the Exchange Act, state securities or "blue sky" laws or otherwise, insofar as such losses, claims, damages or liabilities (or proceedings in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in such registration statement on the effective date thereof (including any preliminary prospectus or prospectus filed under Rule 424 under the Securities Act or any amendments or 19 supplements thereto) or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in such registration statement, preliminary or final prospectus, or amendments or supplements thereto, in reliance upon and in conformity with written information furnished by or on behalf of the Stockholder expressly for use in connection with such registration; and the Stockholder shall reimburse any legal or other expenses reasonably incurred by the Company or any such director, officer, controlling Person, agent or underwriter (but not in excess of expenses incurred in respect of one counsel for all of them unless there is an actual conflict of interest between any indemnified parties which indemnified parties may be represented by separate counsel) in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the indemnity agreement contained in this Section 5.10(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Stockholder, which consent shall not be unreasonably withheld or delayed, and provided further that the liability of the Stockholder hereunder shall be limited to the proportion of any such loss, claim, damage, liability or expense which is equal to the proportion that the net proceeds from the sale of the shares of Common Stock sold by the Stockholder under such registration statement bears to the total net proceeds from the sale of all securities sold thereunder, but not in any event to exceed the net proceeds received by the Stockholder from the sale of Registrable Stock covered by such registration statement. (c) Promptly after receipt by an indemnified party under this Section 5.10 of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against any indemnifying party under this Section 5.10, notify the indemnifying party in writing of the commencement thereof and the indemnifying party shall have the right to participate in and assume the defense thereof with counsel selected by the indemnifying party and reasonably satisfactory to the indemnified party; provided, however, that an indemnified party shall have the right to retain its own counsel, with all fees and expenses thereof to be paid by such indemnified party, and to be apprised of all progress in any proceeding the defense of which has been assumed by the indemnifying party. The failure to notify an indemnifying party promptly of the commencement of any such action shall not relieve the indemnifying party from any liability in respect of such action which it may have to such indemnified party on account of the indemnity contained in this Section 5.10, unless (and only to the extent) the indemnifying party was prejudiced by such failure, and in no event shall such failure relieve the indemnifying party from any other liability which it may have to such indemnified party. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any claim or pending or threatened proceeding in respect of which the indemnified party is or could have been a party and indemnity could have been 20 sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability arising out of such claim or proceeding. (d) To the extent any indemnification by an indemnifying party is prohibited or limited by applicable law, the indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities in such proportion as is appropriate to reflect the relative fault of the indemnifying party and the indemnified party in connection with the actions which resulted in such losses, claims, damages or liabilities as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, such indemnifying party or indemnified party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party as a result of the losses, claims, damages or liabilities referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such party in connection with any investigation or proceeding. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 5.10(d) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. SECTION 5.11. Transfer of Registration Rights. Subject to Article IV, the registration rights of the Stockholder under this Agreement with respect to any Registrable Stock may be transferred to any Permitted Transferee of such Registrable Stock; provided, however, that (i) the Stockholder shall give the Company written notice at or prior to the time of such Transfer stating the name and address of the Permitted Transferee and identifying the securities with respect to which the rights under this Agreement are being transferred; (ii) such Permitted Transferee shall agree in writing, in form and substance reasonable satisfactory to the Company, to be bound by the provisions of this Agreement as if it were a stockholder of the Company; and (iii) immediately following such Transfer, the further disposition of such securities by such transferee is restricted under the Securities Act. SECTION 5.12. Rule 144 Information. Subject to Article IV, and with a view to making available the benefits of certain rules and regulations of the SEC which may at any time 21 permit the sale of the Registrable Stock to the public without registration, at all times after ninety (90) days after any Shelf Registration Statement covering a public offering of securities of the Company under the Securities Act shall have become effective, the Company agrees to: (a) make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act; (b) use its best efforts to file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and (c) furnish to the Stockholder forthwith upon request a written statement by the Company as to its compliance with the reporting requirements of such Rule 144 and of the Securities Act and the Exchange Act, a copy of the most recent annual or quarterly report of the Company, and such other reports and documents so filed by the Company as the Stockholder may reasonably request in availing itself of any rule or regulation of the SEC allowing the Stockholder to sell any Registrable Stock without registration. SECTION 5.13. Limitations on Registration Rights. Notwithstanding anything herein to the contrary, neither the Stockholder nor any Permitted Transferee shall be entitled to exercise any registration rights specified in this Article V for so long as the Stockholder is in material breach of any of its covenants, agreements or other obligations under the Distribution Agreement. ARTICLE VI GENERAL PROVISIONS SECTION 6.01. Waiver. The Company and the Stockholder may (a) extend the time for the performance of any of the obligations or other acts of the other party or (b) waive compliance with any of the agreements or conditions of the other party contained herein. Any such extension or waiver shall be valid only if set forth in an instrument in writing signed by the party to be bound thereby. Any waiver of any term or condition shall not be construed as a waiver of any subsequent breach or a subsequent waiver of the same term or condition, or a waiver of any other term or condition, of this Agreement. The failure of any party to assert any of its rights hereunder shall not constitute a waiver of any of such rights. SECTION 6.02. Expenses. Except as otherwise specified in this Agreement, all costs and expenses, including, without limitation, fees and disbursements of counsel and financial advisors, incurred in connection with this Agreement shall be paid by the party incurring such costs and expenses. 22 SECTION 6.03. Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by courier service, by cable, by telecopy, by telegram, by 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 in a notice given in accordance with this Section 6.03): (a) if to the Company: HemaSure Inc. 140 Locke Drive Marlborough, MA 01752 Fax: 508-485-6045 Attention: President and Chief Executive Officer with a copy to: Battle Fowler LLP Park Avenue Tower 75 East 55th Street New York, NY 10022-3205 Fax: 212-339-9150 Attention: Luke P. Iovine, III, Esq. (b) if to COBE: COBE Laboratories, Inc. 1201 Oak Street Lakewood, CO 80215-4498 Fax: 303-231-4151 Attention: Edward C. Wood 23 with a copy to: Legal Department COBE Laboratories, Inc. 1201 Oak Street Lakewood, CO 80215 Telecopy: 303-231-2519 and Shearman & Sterling 599 Lexington Avenue New York, NY 10022 Telecopy: 212-848-7179 Attention: Peter D. Lyons, Esq. and Kenneth A. Gerasimovich, Esq. SECTION 6.04. Headings. The descriptive headings contained in this Agreement are for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement. SECTION 6.05. Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any Law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect 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 6.06. Entire Agreement. This Agreement and the other Alliance Agreements constitute the entire agreement of the parties hereto with respect to the subject matter hereof and thereof and supersedes all prior agreements and undertakings, both written and oral, between the Company and COBE with respect to the subject matter hereof and thereof. SECTION 6.07. Assignment. This Agreement may not be assigned without the express written consent of the Company and the Stockholder (which consent shall not be unreasonably withheld or delayed by the Company or the Stockholder, as the case may be); provided, however, that all covenants and agreements contained in this Agreement by or on behalf of any parties hereto will bind and inure to the benefit of their respective successors and assigns. 24 SECTION 6.08. No Third Party Beneficiaries. Except for the provisions of Section 5.10 relating to indemnified parties, this Agreement shall be binding upon and inure solely to the benefit of the parties hereto and their permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement. SECTION 6.09. Amendment. This Agreement may not be amended or modified except (a) by an instrument in writing signed by, or on behalf of, the Company and COBE or (b) by a waiver in accordance with Section 6.01. SECTION 6.10. Governing Law. This Agreement shall be governed by the laws of the State of New York, excluding (to the greatest extent permissible by law) any rule of law that would cause the application of the laws of any jurisdiction other than the State of New York. SECTION 6.11. Arbitration. (a) If a dispute arises from or relates to this Agreement or the breach thereof, whether of law or fact, of any nature whatsoever, and such dispute cannot be settled through direct discussions between the parties, the parties agree to endeavor first to settle the dispute in an amicable manner by mediation administered by the American Arbitration Association under its Commercial Mediation Rules before resorting to litigation. Mediation shall take place in New York, New York. If the dispute cannot be resolved within 60 days of the initiation thereof by such party, any party may initiate arbitration in accordance with the provisions of Section 6.11(b) below. (b) All disputes arising under this Agreement that cannot be amicably resolved under Section 6.11(a) above, shall be settled by binding arbitration. Judgment upon the award rendered may be entered in any court in the New York, New York metropolitan area. Each party agrees to the following arbitration procedures: (i) Any party requesting arbitration shall serve a written demand for arbitration on the other party. The demand shall set forth in reasonable detail a statement of the nature of the dispute, the amount involved and the remedies sought. No later than 20 calendar days after a demand for arbitration is served, the parties shall jointly select and appoint a retired judge of the Courts of the State of New York to act as the arbitrator. In the event that the parties do not agree on the selection of an arbitrator, the party seeking arbitration shall apply to the United States District Court for the Southern District of New York, as applicable, for appointment of a retired judge to serve as arbitrator. (ii) No later than 10 calendar days after appointment of an arbitrator, the parties shall jointly prepare and submit to the arbitrator a set of rules for the arbitration. In the event that the parties cannot agree on the rules for the arbitration, the arbitrator shall establish the rules. No later than 10 calendar days after the arbitrator is appointed, such arbitrator shall arrange for a hearing to commence on a mutually convenient date. 25 The hearing shall commence no later than 120 calendar days after the arbitrator is appointed and shall continue from day to day until completed. (iii) The arbitrator shall issue his or her award in writing no later than 20 calendar days after the conclusion of the hearing. The arbitration award shall be final and binding regardless of whether any party fails or refuses to participate in the arbitration. The arbitrator is empowered to hear and determine all disputes between the parties hereto concerning the subject matter of this Agreement, and the arbitrator may award money damages (but specifically not punitive damages), injunctive relief, rescission, restitution, costs, and attorneys' fees. The arbitrator shall not have the power to amend this Agreement in any respect. (iv) In the event that any party serves a proper demand for arbitration under this Agreement, all parties may pursue discovery in accordance with the Rules of Civil Procedure of the State of New York, the provisions of which are incorporated herein by reference, with the following exceptions: (A) the parties hereto may conduct all discovery, including depositions for discovery purposes, without leave of the arbitrator; and (B) all discovery shall be completed no later than the commencement of the arbitration hearing or 120 calendar days after the date that a proper demand for arbitration is served, whichever occurs earlier, unless upon a showing of good cause the arbitrator extends or shortens that period. SECTION 6.12. Counterparts. This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. SECTION 6.13. Specific Performance. The parties hereto agree that irreparable damage would occur in the event any provision of this Agreement was not performed in accordance with the terms hereof and that the parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy at law or equity. 26 IN WITNESS WHEREOF, the Company and the Stockholder have caused this Agreement to be executed as of the date first above written by their respective officers thereunto duly authorized. HEMASURE INC. By: /s/ John F. McGuire, III -------------------------------------- Name: John F. McGuire, III Title: President COBE LABORATORIES, INC. By: /s/ Edward C. Wood, Jr. -------------------------------------- Name: Edward C. Wood, Jr. Title: Vice President EX-10.4 5 AMENDED AND RESTATED DISTRIBUTION AGREEMENT AMENDED AND RESTATED EXCLUSIVE DISTRIBUTION AGREEMENT BETWEEN HEMASURE INC. AND COBE LABORATORIES, INC. Amended and Restated Exclusive Distribution Agreement (this "Distribution Agreement") dated as of May 3, 1999, between HEMASURE INC., a corporation organized under the laws of Delaware ("HemaSure"), and COBE LABORATORIES, INC., a corporation organized under the laws of the State of Colorado ("COBE"). RECITALS A. HemaSure manufactures and distributes certain medical products and supplies, together with parts necessary for repair and replacement and including all devices now or hereafter manufactured or designed by HemaSure that filter blood and its components. HemaSure's current Products are identified in the list attached as Exhibit 1 (collectively, the "Products"), and such list may be updated with mutual agreement from time to time to reflect additional Products as described above (the "Product List"). B. HemaSure and COBE BCT, Inc. ("COBE BCT") entered into an Exclusive Distribution Agreement on August 14, 1998 (the "Former Distribution Agreement") whereby (1) COBE BCT became the exclusive distributor, and HemaSure became the exclusive supplier to COBE BCT, in each case, during the term of the Former Distribution Agreement, for the Products throughout the world except for China and the United States, for a term commencing on August 14, 1998, and (2) HemaSure would supply to COBE BCT certain Products to be incorporated into medical devices manufactured by COBE BCT for sale to Affiliates of COBE BCT and to third parties (the "COBE Products"). C. The parties hereto desire to amend and restate the Former Distribution Agreement in its entirety, as provided herein. D. The parties hereto desire that (1) COBE be the exclusive distributor, and that HemaSure be the exclusive supplier to COBE, pursuant to this Distribution Agreement for the Products throughout the Territory (as defined below) for a term commencing on the date hereof (the "Commencement Date") and continuing throughout the term of this Distribution Agreement set forth in Article X hereof and (2) HemaSure supply to COBE and its Affiliates certain Products to be incorporated into the COBE Products. 2 In consideration of these premises and the mutual promises made herein by the parties to each other, they agree as follows: ARTICLE 1 - APPOINTMENT 1.1 Except as otherwise specifically provided herein, HemaSure hereby appoints COBE as its exclusive distributor for the Products with the right to appoint sub-distributors, in the Territory and for the term of this Distribution Agreement, and COBE hereby accepts this appointment. In return, COBE appoints HemaSure as its sole and exclusive supplier of the Products, for the term of this Distribution Agreement, and HemaSure accepts this appointment. For purposes of this Distribution Agreement, the "Territory" shall be, subject to the provisions of Sections 10.7 and 10.8, the entire world. Notwithstanding any provision of this Distribution Agreement to the contrary, HemaSure shall maintain the exclusive right to distribute products (including, but not limited to, the Products) made by HemaSure or its Subsidiaries to the American Red Cross and its Affiliates solely as end-users (subject to COBE's right to sell OEM (as defined in Section 3.2) products to the American Red Cross and its Affiliates). 1.2 All Products shall meet specifications set forth in Exhibit 1; provided, however, that HemaSure, upon thirty (30) days' prior written notice specifying the nature of and reasons for such changes, shall have the right to make any changes in the specifications of the Products to the extent necessary to satisfy regulatory requirements or to avoid a material adverse affect on the quality or performance of the Products. 1.3 If COBE requests additional Products from HemaSure, or additional development with respect to a Product, the parties agree to negotiate in good faith the terms of a development agreement (a "Development Agreement") for the additional Products or development services. Product development shall be conducted in accordance with mutually agreed upon plans setting forth the estimated cost and expense, the proposed specifications for and uses of the Products and the requirements for and timing of the design, performance, quality and manufacturability validation, regulatory approval and manufacturing requirements. 1.4 In connection with any development pursuant to a Development Agreement, if COBE pays for the complete development of any additional Products or portions thereof, any improvements to HemaSure's Owned Intellectual Property resulting therefrom (the "Improvements") shall be COBE's Owned Intellectual Property, but HemaSure shall have a perpetual, non-exclusive, world-wide, royalty-free license under such Improvements and Intellectual Property outside the field of devices that filter blood and its components. If HemaSure's Owned Intellectual Property existing on the date of any such Development Agreement is required to practice any such COBE's 3 Owned Intellectual Property, COBE shall have a perpetual non-exclusive, world-wide, royalty-free license under such HemaSure Owned Intellectual Property for the term of this Distribution Agreement (as such term may be extended), limited to the field of devices that filter blood and its components. Additionally, after the term of this Distribution Agreement, the provisions of Section 10.10 shall apply to any product sales by COBE utilizing such HemaSure Owned Intellectual Property, and HemaSure shall be entitled to the 12% royalty contemplated in Section 10.10. Notwithstanding the above, any final Development Agreement may set forth terms and conditions which are different than those set forth in this Section 1.4. 1.5 COBE's sole compensation under this Distribution Agreement shall be the profit it may realize from the resale of the Products. 1.6 If Sections 10.7 and 10.8 become applicable, COBE shall not, without the written consent of HemaSure: (i) seek customers or establish any branch or maintain any distribution depot for the Products outside the Territory or (ii) knowingly sell the Products to any customer for use outside the Territory. 1.7 COBE shall be fully responsible for the acts and conduct of its employees, agents, sub-agents and sub-distributors and shall indemnify and hold HemaSure harmless from all claims, liabilities and damages arising out of any negligence or misconduct of COBE or its employees, agents, sub-agents or sub-distributors. 1.8 Neither COBE nor HemaSure shall disclose to any third party any trade secrets of the other party or any Confidential Information (as such term is defined in the Confidentiality Agreement) concerning the other party, its Products or its business. The terms of the Confidentiality Agreement are incorporated herein by reference thereto in Exhibit 2, as amended in such Exhibit 2. When this Distribution Agreement terminates, except as otherwise agreed, each party shall promptly return to the other party all trade secret and Confidential Information of said other party and shall not disclose or otherwise use such information for a period of three years after the date of termination. 1.9 The following definitions shall apply to this Distribution Agreement: (a) "Affiliate" means, with respect to any specified Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such specified Person. (b) "Change in Control" means the occurrence of any of the following events: (i) any Person, other than a trustee or other fiduciary holding securities under an employee benefit plan of HemaSure or any subsidiary of HemaSure or any stockholder 4 (and such stockholder's affiliates) as of the date hereof and direct transferees thereof, becomes, after the date hereof, the "beneficial owner" (as defined in Rule 13d-3 of the Securities Exchange Act of 1934, as amended), directly or indirectly, of securities of HemaSure representing 50.1% or more of the total voting power represented by HemaSure's then outstanding securities on a fully diluted basis that vote generally in the election of directors ("Voting Securities"); or (ii) the merger or consolidation of HemaSure with any other corporation, other than a merger or consolidation in which the Voting Securities of HemaSure outstanding immediately prior thereto continue to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entity) at least a majority of the total voting power of the surviving entity; or (iii) the sale or transfer (in one transaction or a series of transactions) of all or substantially all of the assets of HemaSure, other than to a subsidiary of HemaSure. (c) "Intellectual Property" of COBE or HemaSure, as the case may be, means (i) inventions, whether or not patentable, whether or not reduced to practice, and whether or not yet made the subject of a pending patent application or applications, (ii) 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, (iii) 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, (iv) trademarks, service marks, trade dress, logos, trade names and corporate names, whether or not registered, and all rights therein provided by international treaties or conventions, (v) copyrights (registered or otherwise) and registrations and applications for registration thereof, and all rights therein provided by international treaties or conventions, (vi) computer software, including, without limitation, source code, operating systems and specifications, data, data bases, files, documentation and other materials related thereto, data and documentation, (vii) 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), (viii) 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, (ix) copies and tangible embodiments of all the foregoing, in whatever form or medium, (x) all rights to obtain and rights to apply for patents, and to register trademarks and copyrights, and (xi) all rights to sue or recover and retain damages and costs and attorneys' fees for present and past infringement of any of the foregoing. 5 (d) "Licensed Intellectual Property" means all Intellectual Property licensed or sublicensed to COBE or HemaSure, as the case may be, from a third party. (e) "Owned Intellectual Property" means all Intellectual Property, other than the Licensed Intellectual Property, in and to which COBE or HemaSure, as the case may be, holds, or has a right to hold, any right, title or interest. (f) "Person" means an individual, corporation, partnership, association, trust, joint venture, unincorporated organization, other entity or group (as defined in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended). ARTICLE 2 - DUTIES OF COBE During the term of this Distribution Agreement, COBE shall: ----------------------------------------------------------- 2.1 Use commercially reasonable efforts to market and sell the Products and develop a profitable market for them in the Territory. 2.2 Maintain and utilize such personnel, organization and facilities as will be competent and adequate to enable COBE to satisfy its obligations under this Distribution Agreement. 2.3 At least thirty days before the end of each calendar quarter, prepare and furnish to HemaSure a proposed annual purchase forecast by month for the following four calendar quarters, specifying the quantities of the Products which COBE forecasts will be purchased for delivery during each month of that year; provided, however, that in no event may HemaSure be required to deliver quantities of any Product during a month which exceed 110% of the maximum deliveries of such Product to COBE during any earlier calendar month. All orders for shipment of Products within 30 days from the order shall be deemed to be firm and non-cancelable. 2.4 Purchase from HemaSure and at all times maintain the minimum inventories of Products to provide adequate service and delivery to customers in the Territory. COBE shall meet the minimum purchase requirement set forth in Exhibit 3, attached hereto, unless Exhibit 4 shall be applicable pursuant to the provisions of Sections 10.7 and 10.8 in which case COBE shall meet the minimum purchase requirements set forth therein, as the same shall be amended from time to time. In the event that Exhibit 4 is applicable, the parties shall meet at least three months before the end of each calendar year with respect to the matters set forth in Exhibit 4 and negotiate in good faith the minimum purchase requirements for the following calendar year, provided, that if they fail to agree by the beginning of the year the aggregate 6 minimum purchase requirements for all Products during that year shall equal 110% of such aggregate minimum requirements for the preceding year. 2.5 Advise HemaSure of inquiries which COBE or any Affiliates receive from potential customers for the Products outside the Territory, if applicable, and shall use its commercially reasonable efforts to transfer to HemaSure all customers who are reasonably likely to use the Products outside the Territory, if applicable. 2.6 Except as otherwise agreed by the parties in writing, obtain all regulatory approvals, registrations, and listing of Products required (Food and Drug Administration (the "F.D.A."), C.E., C.S.A., etc.) in the Territory to make and sell Products incorporated into COBE Products, or certify that such approvals and registrations have been obtained or are not required, and comply with all applicable laws, standards, rules and regulations. 2.7 Not modify or alter the Products in any way without the prior written approval of HemaSure. 2.8 Indemnify and hold harmless HemaSure and its Affiliates and customers, and their officers, directors, agents and employees, from and against losses, claims and damages (including reasonable fees and expenses of counsel) ("Losses") as they are incurred, but solely to the extent such Losses arise out of or are related to any claim by a third party that any Product modifications or specifications requested by COBE on Products sold by COBE conflict with or infringe upon Intellectual Property owned or licensed by the third party. An exception to the above is that COBE will not indemnify and hold harmless HemaSure and its Affiliates for any additional Losses arising from a determination of willful infringement. 2.9 Indemnify and hold harmless HemaSure and its Affiliates and customers, and their officers, directors, agents and employees, from and against Losses as they are incurred, solely to the extent such Losses arise out of or are related to any claim by a third party that any Product has caused personal injury or other loss to the third party, and only to the extent such actual or alleged personal injury or loss arises from willful misconduct, gross negligence, failure to follow HemaSure's written instructions, or alterations of a Product or Products without HemaSure's written approval. COBE shall maintain product liability insurance with reputable insurers in such amounts and covering such risks and on such terms and conditions as are in accordance with normal industry practice. 2.10 In connection with the promotion and marketing of the Products, (i) make clear in all dealing with customers that it is acting as a distributor of the Products and not as an agent of HemaSure, (ii) comply with all material legal requirements with respect to the storage and sale of the Products, (iii) provide, at the reasonable request 7 of HemaSure, copies of its price lists and copies of promotional aids and literature, (iv) permit HemaSure's representatives to visit during normal business hours, upon reasonable advance notice, any premises of COBE used in connection with the sale of the Products, and (v) use only those advertising, promotional and other selling materials approved by HemaSure (which approval shall not be unreasonably withheld). 2.11 Provide full traceability of the Products to its customers. COBE agrees that at all times it will be able to know its customer for each individual Product lot for all Products delivered by HemaSure to COBE. 2.12 Be responsible (when applicable) for obtaining any necessary import licenses, or other requisite documents, with respect to the importation of the Products into the Territory and their resale in the Territory. 2.13 Provide information to HemaSure on Product complaints received. A complaint is considered to be any oral or written expression of dissatisfaction with the identity, quality, durability, reliability, safety, effectiveness, or performance of a product. Any complaint involving injury or death will be reported immediately to HemaSure. COBE will be responsible for follow-up communication with the customer. 2.14 Cause its warehouses and distribution networks to be maintained and operated (i) in a manner that will protect the integrity and quality of the Products, maintaining safety and efficacy at all times; (ii) to ISO 9000 standards with respect to traceability and complaints; and (iii) to conform to all national regulatory and other requirements. 2.15 Purchase from HemaSure all of its requirements for Products from HemaSure and any and all devices and products substantially identical to the Products for sale in the Territory, or that have uses or intended uses substantially identical to the Products. ARTICLE 3 - DUTIES OF HEMASURE During the term of this Distribution Agreement, HemaSure shall: --------------------------------------------------------------- 3.1 Manufacture each Product in sufficient quantities to permit timely delivery of the quantities of the Product provided for in COBE's forecast. 3.2 Package and mark the Products under COBE's name, in such manner as COBE may reasonably direct, provided that Products sold to an original equipment manufacturer ("OEM") unaffiliated with COBE for incorporation into devices 8 manufactured by the OEM may be labeled with HemaSure's trademarks upon HemaSure's receipt from COBE of its written consent regarding the same. 3.3 Advise COBE of inquiries which HemaSure or its other distributors, if any, receive from potential customers for the Products within the Territory and shall use its commercially reasonable efforts to transfer to COBE all customers for the Products who are located within the Territory. 3.4 Except as otherwise agreed by the parties, obtain all regulatory approvals, registrations, and listing of Products required (F.D.A., C.E., C.S.A., etc.) to sell the Products in the Territory (other than for Products incorporated into COBE Products), or certify that such approvals and registrations have been obtained or are not required, and comply with all applicable laws, standards, rules and regulations. 3.5 Perform any investigations required with respect to Product complaints and similar events and take necessary corrective action, keeping COBE informed of such investigations and corrective action. HemaSure will conduct any field actions which may be necessary, including Product recalls, modifications and upgrades, as determined by HemaSure in its reasonable discretion. Any extraordinary costs of conducting a field action, such as replacement of Product and return of Product, shall be borne by HemaSure. 3.6 Notify COBE at least 90 days in advance of any changes in the Products. 3.7 Comply with the Good Manufacturing Practices (GMP) regulations of the F.D.A. and similar requirements of other jurisdictions within the Territory, making HemaSure's records and documents available and cooperating with COBE should COBE audit HemaSure for compliance with regulatory requirements. 3.8 Replace all defective Products at HemaSure's expense, including all reasonable delivery, handling and related costs of the replacement. 3.9 Subject to Article 5, take such commercially reasonable actions as may be needed in order to protect its rights in HemaSure's Owned Intellectual Property against infringement, and to maintain its proprietary interest in its Owned Intellectual Property in full force and effect. 3.10 Indemnify and hold harmless COBE and its Affiliates and customers, and their officers, directors, agents and employees, from and against Losses as they are incurred, arising out of or related to any claim by a third party that any Product conflicts with or infringes upon Intellectual Property owned or licensed by 9 the third party. An exception to the above is that HemaSure will not indemnify and hold harmless COBE and its Affiliates for any additional Losses arising from a determination of willful infringement. 3.11 Indemnify and hold harmless COBE and its Affiliates and customers, and their officers, directors, agents and employees, from and against Losses as they are incurred, arising out of or related to any claim by a third party that any Product has caused personal injury or other loss to the third party. HemaSure shall maintain product liability insurance with reputable insurers in such amounts and covering such risks and on such terms and conditions as are in accordance with normal industry practice. 3.12 Warrant the Products to COBE and its customers under its standard product warranty as set forth in Exhibit 5 hereto; provided, however, that the representations, warranties and indemnification given by HemaSure herein are subject to the conditions that HemaSure shall not be under liability in respect of any defect in the Products: (i) to the extent such defect arises solely from any modifications made by COBE or its customers and not approved by HemaSure in writing, or (ii) to the extent such defect arises solely from willful misconduct, gross negligence, failure to follow HemaSure's written instruction, or alteration of the Products without HemaSure's approval. 3.13 Have the right to sell Products to other manufacturers (other than COBE or its Affiliates) to be included in said manufacturer's products to be sold to end-users. ARTICLE 4 - TRADEMARKS 4.1 COBE may use HemaSure's names and marks (the "Trademarks") in advertising, or marketing and information materials, on COBE's letterheads or at its place of business, to indicate that the Product is manufactured for COBE by HemaSure (but not that COBE is otherwise associated with HemaSure). COBE may not otherwise use HemaSure's Trademarks, trade names, or company name in connection with the promotion or sale of any goods or services, except with HemaSure's prior written approval. Upon termination of this Distribution Agreement for any reason, COBE will immediately stop using HemaSure's Trademarks and trade or company names and will 10 stop advertising or otherwise indicating that COBE is a distributor of the Products. COBE hereby acknowledges that HemaSure has the sole rights to such trade names, company names and Trademarks. 4.2 COBE shall not: (i) make any modifications to the Products or their packaging, except on specific instructions from local, state or federal authorities (any modifications for purposes of enhancing the product sales is to be submitted to HemaSure for approval and said approval shall not be unreasonably withheld); (ii) alter, remove or tamper with any Trademarks, number, or other means of identification used on or in relation to the Products; (iii) use any of the Trademarks in any way which might prejudice their distinctiveness or validity or the goodwill of HemaSure; (iv) use in relation to the Products any trademarks other than the Trademarks without obtaining the prior written consent of HemaSure; or (v) use in the Territory any trademarks or trade names in any way similar to any Trademark or trade names of HemaSure or which would be likely to cause confusion to customers or potential customers; provided that Section 4.2(i), (ii) and (iv) shall not apply to COBE Products. 4.3 COBE shall, at the expense of HemaSure, take all such reasonable steps as HemaSure may reasonably require to assist HemaSure in maintaining the validity and enforceability of the Trademarks of HemaSure during the term of this Distribution Agreement. COBE shall at the request of HemaSure execute such registered user agreements or licenses in respect of the use of the Trademarks in the Territory as HemaSure may reasonably require, provided that the provisions of any such agreement or license are not more onerous or restrictive than the provisions of this Distribution Agreement. 4.4 COBE shall promptly notify HemaSure in writing of any actual or threatened (in writing) infringement in the Territory of any Trademarks of HemaSure which comes to COBE's actual notice and of any claim by any third party so coming to its notice that the importation of the Products into the Territory, or their sale therein, infringes any rights with respect to trademarks of any other person, and COBE shall at 11 the request and expense of HemaSure do all such reasonable things as may be reasonably required to assist HemaSure in taking or resisting any proceedings in relation to any such infringement or claim. 4.5 HemaSure may seek to register its Trademarks, trade names and company names in the Territory, and do whatever it deems desirable to prevent their unauthorized use by others. 4.6 To the extent necessary to fulfill HemaSure's obligations under Section 3.2, HemaSure is hereby licensed by COBE to apply COBE's trademarks and trade names to Products to be sold by COBE. COBE shall at all times have control of the quality of goods bearing COBE's trademarks and trade names and may reject any products not meeting COBE's quality requirements. Such quality requirements shall be comparable to the quality requirements established by COBE for goods manufactured by COBE. HemaSure may not otherwise use COBE's trademarks, trade names, or company names in connection with the promotion of sale of any goods or services, except with COBE's prior written approval. Upon termination of this Distribution Agreement for any reason, HemaSure will immediately stop using COBE's trademarks and trade or company names. HemaSure hereby acknowledges that COBE has the sole rights to such trademarks and trade and company names. 4.7 COBE may seek to register its trademarks and trade and company names for use in connection with its sale of the Products in the Territory, and do whatever COBE deems desirable to prevent their use by others. ARTICLE 5 - EXPENSES FOR NEW PATENT LITIGATION 5.1 The parties hereby agree to jointly appoint counsel in connection with any new patent infringement litigation proceeding (including, without limitation, any declaratory judgment action and specifically the action commenced on April 5, 1999 against Pall Corporation in the United States District Court for the District of Colorado and any other related action) and, to the extent the parties agree on the appointment of counsel, COBE shall pay all of the expenses incident thereto, including the fees and expenses of such counsel (even in the event of an unsuccessful action). COBE's obligation to pay expenses incident to the new patent infringement litigation proceeding does not include an obligation to pay any damages that may be assessed against HemaSure and/or COBE or any of their Affiliates in such new proceeding. HemaSure may, at its own sole expense, appoint its own counsel at any time to advise and represent HemaSure. 12 5.2 Such appointed counsel will represent both COBE and HemaSure. Both parties will consult and use best efforts to mutually agree on the litigation strategy and related decisions. 5.3 Either party shall have the right to settle any such patent infringement litigation on its own behalf. If COBE settles such patent infringement litigation without the prior written consent of HemaSure, then HemaSure shall not be obligated to indemnify COBE pursuant to this Distribution Agreement or to pay any damages or other award that COBE agrees to pay as part of such a settlement. Either party who settles any such patent infringement litigation without the prior written consent of the other party shall indemnify the other non-settling party for any damages, prejudice or adverse effect caused by such settlement on the non-settling party. With respect to any such settlement, neither party shall, without the consent of the other party (which consent shall not be unreasonably withheld), admit that the Product infringes the intellectual property rights of another or expressly admit that a third party's patent is valid or enforceable. 5.4 Subject to Section 6.5 below, all rights and obligations of the parties with respect to the matters described under this Article 5 (other than with respect to the payment of fees and expenses) shall terminate upon termination of any portion of this Distribution Agreement. ARTICLE 6 - CONFIDENTIAL LITIGATION INFORMATION In addition to each of the parties' rights and obligations pursuant to the Confidentiality Agreements listed, and incorporated by reference, on Exhibit 2 to this Distribution Agreement, COBE and HemaSure shall each have the following rights and obligations in connection with the confidential information: 6.1 It may be necessary during the course of any new patent infringement litigation for COBE and HemaSure to share litigation confidential information. For purposes of this Article 6, litigation confidential information refers to information that a producing party claims in writing to be its trade secret or other confidential research, development, or commercial information within the meaning of Rule 26(c)(7) of the Federal Rules of Civil Procedure, as may be amended from time to time. 6.2 Other than pursuant to a court order or similar order from a governmental or regulatory authority, the party receiving litigation confidential information agrees to maintain all such information in confidence, the receiving party will limit access to the litigation confidential information on a need-to-know basis, and 13 the receiving party agrees not to release the litigation confidential information outside the company without the prior written approval of the disclosing party. 6.3 All documents and litigation confidential information remain the sole property of the disclosing party. The receiving party agrees to return all documents and any copies to the disclosing party at the disclosing party's request. 6.4 The obligations of the parties under this Article 6 are in addition to any other obligations of the parties under this Distribution Agreement and the Confidentiality Agreements listed, and incorporated by reference, in Exhibit 2 hereto, with respect to Confidential Information. 6.5 Notwithstanding Section 5.4 above, the provisions contained in this Article 6 shall govern the relationship of the parties with respect to the exchange of litigation confidential information in the context of any new patent infringement litigation and shall remain in full force and effect notwithstanding termination of this Distribution Agreement. ARTICLE 7 - PRIVILEGED INFORMATION In addition to each of the parties' rights and obligations pursuant to the Confidentiality Agreements listed, and incorporated by reference, on Exhibit 2 to this Distribution Agreement, COBE and HemaSure shall each have the following rights and obligations in connection with the privileged information: 7.1 It may be necessary during the course of any new patent infringement litigation for COBE and HemaSure to share privileged information. Privileged information is information that is subject to a claim of attorney-client privilege or work-product immunity as defined under applicable law. 7.2 Subject to Section 4 of the Confidentiality Agreement, (a) the party receiving privileged information agrees to maintain such privilege; (b) the receiving party will limit access to the privileged information on a need-to-know basis, and the receiving party agrees not to release the privileged information beyond its own officers, directors, employees and counsel without the prior written approval of the disclosing party; and (c) the receiving party agrees that privileged information will not be used in testimony at trial, at any motion hearing, and at depositions and will not be offered into evidence at trial or at any motion hearing without the prior written approval of the disclosing party. 7.3 The receiving party will not assert waiver or estoppel based upon its receipt of the privileged information. 14 7.4 Notwithstanding Section 5.4 above, the provisions contained in this Article 7 shall remain in full force and effect notwithstanding termination of this Distribution Agreement. ARTICLE 8 - TERMS OF SALES 8.1 Subject to the terms of Exhibit 3 hereto, if applicable, COBE shall pay the prices determined as specified in Exhibit 1 for the Products. The prices set forth in Exhibit 1 will remain in effect until December 31, 1999. Thereafter, HemaSure and COBE shall negotiate annually in good faith to establish annual price changes to remain in effect for each annual period following 1999. Unless otherwise agreed, prices for each Product shall increase or decrease each year by a percentage equal to any percentage increase or decrease in the standard manufacturing cost for the Product (as determined by HemaSure in accordance with generally accepted accounting principles and HemaSure's historical accounting practices) during HemaSure's preceding fiscal year, provided that in no event shall such percentage change exceed the percentage change in COBE's average selling price for the Product during the preceding fiscal year. 8.2 Unless otherwise agreed in writing, all prices for the Products shall be F.O.B. HemaSure's factory, freight collect, and shall be inclusive of all taxes, duties and other governmental charges assessed or assessable prior to passage of title to COBE. Title to the Products and risk of loss shall pass to COBE on delivery of the Products to the destination specified by COBE in its purchase orders. Products shall be shipped against COBE purchase orders specifying shipment dates, transportation requirements and quantities of Products. 8.3 Unless otherwise agreed in writing, all payments for the Products shall be made in U.S. dollars, payable within 30 days after delivery, by check drawn on a U.S. bank. 8.4 The Products will be packaged for shipping in packaging labeled as provided in Section 3.2, substantially comparable in all other respects to HemaSure's standard packaging, which shall be appropriate for shipment by the means/carrier specified by COBE in its purchase orders. 8.5 Other terms of sale shall be as agreed to by the parties. ARTICLE 9 - TRAINING; MARKETING 9.1 To the extent deemed reasonably necessary by COBE and HemaSure, HemaSure will provide COBE's service personnel with reasonable technical 15 training for the proper maintenance of the Products, at a mutually agreed upon location and date. For this purpose, HemaSure will pay for the expenses of its personnel and, unless the parties have agreed otherwise in advance, COBE shall bear all expenses of its personnel associated with this training. 9.2 To the extent deemed reasonably necessary by COBE and HemaSure, HemaSure will provide marketing and sales training and product information to COBE's sales personnel at a mutually agreed upon location and date. For this purpose, HemaSure will pay the expenses of its personnel and, unless the parties have agreed otherwise in advance, COBE shall bear all expenses of its personnel associated with the training. 9.3 At COBE's reasonable request HemaSure will make technical visits and presentations to COBE customers, at such times and places as COBE may reasonably request and subject to the availability of appropriate HemaSure personnel. COBE will reimburse HemaSure for its reasonable out-of-pocket costs for such visits and presentations, including per diem charges based on HemaSure's actual costs for the employees involved. HemaSure may also initiate such visits and presentations with COBE's prior approval and at the expense of HemaSure. 9.4 HemaSure shall supply COBE with standard product information in the English language and such other English language advertising material, sales literature and instructions as HemaSure and COBE deem appropriate to assist COBE in the promotion, sale and service of the Products in the Territory. Additional quantities of such materials may be purchased by COBE at prices quoted by HemaSure from time to time. Unless otherwise agreed, any other advertising and promotional expenses shall be paid by COBE. COBE may modify, adapt or reproduce any such information provided by HemaSure to the extent COBE deems appropriate to fulfill its obligations under this Distribution Agreement, subject to the approval of HemaSure, which will not be withheld unreasonably. ARTICLE 10 - TERM OF AGREEMENT 10.1 This Distribution Agreement shall become effective as of the Commencement Date and, unless earlier terminated in accordance with its provisions, shall remain in effect for a period of five (5) years from the date of receipt of 510(k) approval from the F.D.A. for the r/LS Leukoreduction Filter (the "Approval Date"). At any time in the next to last year of a term either party may give written notice to the other party of its intent to terminate this Distribution Agreement at the end of the then-current term. If neither party gives such notice to the other party, this Distribution Agreement shall be extended automatically for an additional term of three (3) years. 16 10.2 Either party may terminate this Distribution Agreement for a material breach of this Distribution Agreement by the other party, by notifying the other party in writing of such breach and, except as otherwise provided in Sections 10.3, 10.4 and 10.5, allowing sixty (60) days within which to cure the breach. If the breach is not cured within the sixty (60) day period, the complaining party may terminate this Distribution Agreement at any time thereafter by giving written notice of termination to the defaulting party. Failure to exercise this right of termination in any instance of breach shall not be a waiver of this right as to any subsequent breach. 10.3 This Distribution Agreement shall terminate automatically, upon written notice by one party to the other party, without any further notice, summons or process whatever, if one of the following circumstances occurs: (a) An event of bankruptcy occurs with respect to the other party; or (b) Either party ceases to engage in the business or activities which are the subject of this Distribution Agreement. 10.4 COBE may, at its discretion, terminate this Distribution Agreement for cause immediately upon written notice if: (a) HemaSure has failed to supply any Products in quantities greater than 85% of the minimum amounts forecasted for two of any six consecutive calendar quarters. (b) HemaSure violates the provisions of Section 1.1. 10.5 Notwithstanding the foregoing, HemaSure's sole remedy in the event COBE fails to meet the minimum purchase requirements of (a) Exhibit 3, if applicable, shall be as set forth under the heading "Consequences of Exceeding or Failure to Meet Minimum Volume Targets" in Exhibit 3, or (b) Exhibit 4, if applicable, shall be the remedies set forth in such Exhibit 4; provided, that with respect to Exhibit 4 COBE may cure any such breach within the sixty (60) day notice period by ordering sufficient Products to fulfill the minimum for the quarter during which the sixty (60) day period ends. 10.6 Neither HemaSure nor COBE owns or shall be deemed to own any right of property in this Distribution Agreement. 10.7 HemaSure shall have the right to terminate this Distribution Agreement with respect to the United States of America in the event of a Change in Control of HemaSure, and, in the event of such termination, the definition of the "Territory" and the minimum volume purchase requirements of COBE shall be revised 17 as provided in Section 10.8 below. In the event that HemaSure desires to terminate this Distribution Agreement in the United States of America pursuant to the preceding sentence, HemaSure shall deliver written notice to COBE setting forth (i) a description of the Change in Control and (ii) the date the termination process (as contemplated below) shall commence; provided that in no event shall the date of the commencement of such termination process be less than 18 months after the Approval Date. The termination process shall be completed by, and the date of termination of this Distribution Agreement with respect to the United States of America pursuant to this Section 10.7 shall be, the first-year anniversary of the date of commencement of the termination process (as specified in HemaSure's termination notice to COBE). During the period of the termination process and prior to the termination date with respect to the United States of America, (i) HemaSure may, by itself or through other distributors, distribute or co-distribute Products under its own brand name or any other brand name (other than COBE's brand names) or no brand name to any Person, (ii) COBE shall not solicit any new customers for Products, other than such customers as COBE shall have identified to HemaSure in a written schedule (which schedule shall consist of customers that COBE is then currently in negotiations with for the sale of Products) delivered to HemaSure not later than 10 business days after COBE's receipt of such notice of termination, (iii) each of COBE and HemaSure will use their respective best efforts to facilitate an orderly transition of COBE's business for the sale of Products in the United States of America on the date of delivery of such termination notice by HemaSure and (iv) COBE shall not be bound by the second sentence of Section 1.1 and Section 2.15 with respect to the United States of America. 10.8 In the event HemaSure exercises its rights under Section 10.7, upon the effective date of the termination contemplated thereby, (i) the Territory shall be the entire world other than the United States of America and (ii) the minimum purchase requirement shall be as set forth on Exhibit 4, not Exhibit 3. 10.9 In the event of termination of this Distribution Agreement for any reason, the provisions of Articles 6 and 7 and Sections 1.4, 1.7, 1.8, 2.8, 2.9, 3.8 through 3.12, 10.7 through 10.13 and 13.5 through 13.8 shall nevertheless remain in effect. 10.10 If this Distribution Agreement expires by its terms, or is terminated for any reason, including pursuant to Section 10.7, other than willful default by COBE, COBE shall have and is hereby granted a non-exclusive, world-wide perpetual license of HemaSure's Owned Intellectual Property (but only to the extent such Owned Intellectual Property exists and is in effect as of the date of the termination) to make, have made, use and sell devices for filtration of blood and its components, for a royalty, as to any Product (but only in the Territory) and/or COBE Product (on a world-wide basis) incorporating such HemaSure Owned Intellectual Property, equal to 12% of the most recent net purchase price paid by COBE to HemaSure for that Product. The 18 indemnification by HemaSure set forth in Section 3.10 of this Distribution Agreement shall not apply to the activities of COBE done pursuant to a license granted under this Section 10.10. 10.11 Notwithstanding Section 10.10, above, if termination or expiration happens solely as a result of COBE's providing HemaSure notice of termination at the end of the then-current term under Section 10.1 above, then the COBE license provided for in Section 10.10 will be a limited time period license for all Products (except those Products used as a component of COBE's own products, which shall remain a perpetual license), so as to allow a commercially reasonable market transition by COBE to other suppliers or distributors. 10.12 Notwithstanding any other provision contained in this Distribution Agreement, including, without limitation, Section 10.7 of this Distribution Agreement, upon Termination of this Distribution Agreement for any reason, in whole or in part, HemaSure shall continue to supply all Products required by COBE (i) in order to permit COBE to fulfill its obligations under COBE's then existing third party contracts and (ii) with respect to all of COBE's existing and future OEM arrangements and products. In the event that HemaSure should deliver its notice of termination with respect to the United States of America portion of the Territory pursuant to Section 10.7, COBE shall not, after receipt of such notification and except as permitted by Section 10.7, enter into any new contracts for the supply of Products in the United States of America which would extend beyond the date of the expiration of the termination process contemplated by Section 10.7. 10.13 Within sixty days following the expiration or termination of this Distribution Agreement, HemaSure shall repurchase from COBE at the original purchase price any Products delivered to COBE in the sixty days prior to the expiration or termination of this Distribution Agreement, which remain in COBE's inventory and which have remaining shelf life and are in good re-sellable condition. ARTICLE 11 - ASSIGNMENT 11.1 HemaSure shall not take any action that would result in the assignment of this Distribution Agreement, in whole or in part, without the express written consent of COBE, which consent shall not be unreasonably withheld or delayed. In addition, subject to the terms of this Distribution Agreement, including, without limitation, Sections 10.7 and 10.8, HemaSure shall not sell or transfer, in one transaction or a series of transactions, all or substantially all of the assets of HemaSure unless the acquiror of such assets agrees to be bound by the provisions of this Distribution Agreement. This Distribution Agreement shall not be assignable by COBE without the prior written consent of HemaSure, which consent shall not be 19 unreasonably withheld or delayed, except that COBE may assign this Distribution Agreement to an Affiliate and, subject to HemaSure's rights of termination in Article 10, COBE may assign this Distribution Agreement as a part of the sale of substantially all of its assets related to its blood filtration products business. ARTICLE 12 - LIMIT OF LIABILITY 12.1 The parties shall not be liable for any breach of this Distribution Agreement resulting from any cause beyond their control including, without limitation, acts of God, fire, flood, strike, lockout, factory shutdown, act of civil or military authority, priority request, order of any government or any department or agency thereof, insurrection, riot, war, embargo, or a party's inability to obtain labor or materials from its usual sources. Any suspension of a party's performance by reason of this Section shall be limited to the period during which the cause of such suspension exists, but shall not affect or extend the running of the term of this Distribution Agreement. 12.2 HemaSure shall maintain its current comprehensive general and product liability insurance in effect for the term of this Distribution Agreement. The insurance shall name COBE on the list of distributors subject to vendor's coverage. Upon receiving COBE's prior written instruction, HemaSure shall provide COBE proof of the continued maintenance of the insurance annually. 12.3 COBE assumes all risk and liability for loss, damage or injury to any person or property arising from repair, alteration, misuse, mishandling, or negligence in storing or handling, of any Products by COBE, including its agents and employees. COBE's product liability insurance shall cover Products incorporated into COBE Products. ARTICLE 13 - MISCELLANEOUS 13.1 The parties shall comply with all governmental rules and regulations in force within the Territory relating to this Distribution Agreement, including without limitation any registration or approval required for the import and sale of the Products, except where non-compliance would not have a material adverse effect on either party. HemaSure shall comply with all governmental rules and regulations to the extent necessary for the performance of HemaSure's obligations under this Distribution Agreement. 13.2 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 telecopy or by registered or certified 20 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 COBE: COBE Laboratories, Inc. 1185 Oak Street Lakewood, Colorado 80215 Attention: Edward C. Wood Telecopier: (303) 988-5782 with copies to: Legal Department COBE Laboratories, Inc. 1201 Oak Street Lakewood, Colorado 80215 Telecopier: (303) 231-4198 and to: Shearman & Sterling 599 Lexington Avenue New York, New York 10022 Telecopy: (212) 848-7179 Attention: Peter D. Lyons, Esq. and Kenneth A. Gerasimovich, Esq. (b) if to HemaSure: HemaSure Inc. 140 Locke Drive Marlborough, Massachusetts 01752 Attention: James B. Murphy Telecopier: (508) 485-6045 21 with a copy to: Battle Fowler LLP 75 East 55th Street New York, New York 10022 Attention: Luke P. Iovine, III, Esq. Telecopier: (212) 339-9150 13.3 The failure of either party to exercise any rights hereunder shall not be deemed to be a waiver of such right. 13.4 No modification or amendment to this Distribution Agreement shall be binding unless in writing, duly executed by both parties. In the event of any inconsistent term or condition of a purchase order, invoice or other document utilized by the parties in connection with matters contemplated under this Distribution Agreement, the terms and conditions of this Distribution Agreement shall be deemed to govern. 13.5 In the event that either party initiates any action under either Section 13.6 or Section 13.7 of this Distribution Agreement, this Distribution Agreement shall be governed by and construed under the laws of the State of New York, without reference to its conflicts of laws provisions. 13.6 If a dispute arises from or relates to this Distribution Agreement or the breach thereof, whether of law or fact, of any nature whatsoever, and such dispute cannot be settled through direct discussions between the parties, the parties agree to endeavor first to settle the dispute in an amicable manner by mediation administered by the American Arbitration Association under its Commercial Mediation Rules before resorting to litigation. The parties agree that the mediator shall be a person who is, or has served as, a senior vice president of a medical products company for at least five (5) years. Mediation shall take place in New York, New York. If the dispute cannot be resolved within 60 days of the initiation thereof by either party, either party may initiate arbitration in accordance with the provisions of Section 13.7 of this Distribution Agreement. 13.7 All disputes arising under this Distribution Agreement that cannot be amicably resolved under Section 13.6, shall be settled by binding arbitration. Judgment upon the award rendered may be entered in any court in the New York, New York metropolitan area. (a) Any party requesting arbitration shall serve a written demand for arbitration on the other party. The demand shall set forth in reasonable detail a statement of the nature of the dispute, the amount involved and the remedies sought. 22 No later than twenty (20) calendar days after a demand for arbitration is served, the parties shall jointly select and appoint a retired judge of the Courts of the State of New York to act as the arbitrator. In the event that the parties do not agree on the selection of an arbitrator, the party seeking arbitration shall apply to the United States District Court for the Southern District of New York for appointment of a retired judge to serve as arbitrator. (b) No later than ten (10) calendar days after appointment of an arbitrator, the parties shall jointly prepare and submit to the arbitrator a set of rules for the arbitration. In the event that the parties cannot agree on the rules for the arbitration, the arbitrator shall establish the rules. No later than ten (10) calendar days after the arbitrator is appointed he shall arrange for a hearing to commence on a mutually convenient date. The hearing shall commence no later than one hundred twenty (120) calendar days after the arbitrator is appointed and shall continue from day to day until completed. (c) The arbitrator shall issue his or her award in writing no later than twenty (20) calendar days after the conclusion of the hearing. The arbitration award shall be final and binding regardless of whether any party fails or refuses to participate in the arbitration. The arbitrator is empowered to hear and determine all disputes between the parties hereto concerning the subject matter of this Distribution Agreement, and the arbitrator may award money damages (but specifically not punitive damages), injunctive relief, rescission, restitution, costs, and attorneys' fees. The arbitrator shall not have the power to amend this Distribution Agreement in any respect. (d) In the event that any party serves a proper demand for arbitration under this Distribution Agreement, all parties may pursue discovery in accordance with the Rules of Civil Procedure of the State of New York, the provisions of which are incorporated herein by reference, with the following exceptions: (x) the parties hereto may conduct all discovery, including depositions for discovery purposes, without leave of the arbitrator; and (y) all discovery shall be completed no later than the commencement of the arbitration hearing or one hundred twenty (120) calendar days after the date that a proper demand for arbitration is served, whichever occurs earlier, unless upon a showing of good cause the arbitrator extends or shortens that period. 13.8 If any provision of this Distribution Agreement is held by any Court, or other authority having jurisdiction, to be invalid or unenforceable under the law applicable thereto, the provision shall be deemed modified or deleted to the extent necessary to result in compliance with such applicable legal provision and this Distribution Agreement, as so modified or amended, shall continue in full force and effect in all other respects. 23 13.9 Any waiver by either party of a breach of any provision of this Distribution Agreement shall not be considered as a waiver of any subsequent breach of the same or any other provision. 13.10 As of the date hereof, the Former Distribution Agreement is amended and restated hereby in its entirety and is no longer in effect, and by its execution of this Distribution Agreement, each of HemaSure and COBE BCT agrees that the Former Distribution Agreement is so amended and restated in its entirety and is no longer in effect. 24 IN WITNESS WHEREOF, the undersigned have executed this Distribution Agreement as of the date first written above. COBE LABORATORIES, INC. By: /s/ Edward C. Wood, Jr. ------------------------------- Edward C. Wood, Vice President COBE BCT, INC. By: /s/ Edward C. Wood, Jr. ------------------------------- Edward C. Wood, President HEMASURE INC. By: /s/ John F. McGuire, III ------------------------------- John F. McGuire III, President -----END PRIVACY-ENHANCED MESSAGE-----