As filed with the Securities and Exchange Commission on July 31, 2013

 

File No. 001-            

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

FORM 10

 

GENERAL FORM FOR REGISTRATION OF SECURITIES
Pursuant to Section 12(b) or (g) of The Securities Exchange Act of 1934

 


 

Harvard Apparatus Regenerative Technology, Inc.
(Exact name of registrant as specified in its charter)

 


 

     
Delaware
(State or other jurisdiction of
incorporation or organization)
  45-5210462
(I.R.S. Employer
Identification No.)

84 October Hill Road
Holliston, MA
(Address of principal executive offices)
 
01746
(Zip Code)

 

Registrant's telephone number, including area code:
(508) 893-8999

 

Securities to be registered pursuant to Section 12(b) of the Act:

 

Title of each class to be so registered   Name of each exchange on which
each class is to be registered
Common Stock, par value $0.01 per
share
 

The NASDAQ Stock Market LLC

 

Securities to be registered pursuant to Section 12(g) of the Act:

 

None

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer  o   Accelerated filer  o   Non-accelerated filer  £
(Do not check if a
smaller reporting company)
  Smaller reporting company  S

 

 
 

 

Harvard Apparatus Regenerative Technology, Inc.
Cross-Reference Sheet Between Information Statement and Items of Form 10

 

The information required by the following Form 10 registration statement items is contained in the information statement sections that are identified below, each of which is incorporated herein by reference.

 

Item 1.    Business.

 

The information required by this item is contained under the sections “Summary,” “Risk Factors,” “Forward-Looking Statements,” “The Separation,” “Management's Discussion and Analysis of Financial Condition and Results of Operations,” “Business,” “Certain Relationships and Related-Party Transactions,” and “Where You Can Find More Information.”

 

Item 1A.    Risk Factors.

 

The information required by this item is contained under the sections “Risk Factors” and “Forward-Looking Statements.”

 

Item 2.    Financial Information.

 

The information required by this item is contained under the sections “Selected Historical Financial Data,” and “Management's Discussion and Analysis of Financial Condition and Results of Operations.”

 

Item 3.    Properties.

 

The information required by this item is contained under the section “Business—Properties.”

 

Item 4.    Security Ownership of Certain Beneficial Owners and Management.

 

The information required by this item is contained under the section “Security Ownership of Certain Beneficial Owners and Management.”

 

Item 5.    Directors and Executive Officers.

 

The information required by this item is contained under the section “Management.”

 

Item 6.    Executive Compensation.

 

The information required by this item is contained under the sections “Management” and “Director and Executive Compensation.”

 

Item 7.    Certain Relationships and Related Transactions, and Director Independence.

 

The information required by this item is contained under the sections “Certain Relationships and Related-Party Transactions” and “Management.”

 

Item 8.    Legal Proceedings.

 

The information required by this item is contained under the section “Business—Legal Proceedings.”

 

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Item 9.    Market Price of and Dividends on the Registrant's Common Equity and Related Stockholder Matters.

 

The information required by this item is contained under the sections “Summary,” “Risk Factors,” “The Separation,” “Director and Executive Compensation,” “Description of Securities.”

 

Item 10.    Recent Sales of Unregistered Securities.

 

Not applicable.

 

Item 11.    Description of Registrant's Securities to Be Registered.

 

The information required by this item is contained under the sections “Summary,” “The Separation,” and “Description of Securities.”

 

Item 12.    Indemnification of Directors and Officers.

 

The information required by this item is contained under the section “Description of Securities—Limitation on Liability of Directors and Indemnification of Directors and Officers.”

 

Item 13.    Financial Statements and Supplementary Data.

 

The information required by this item is contained under the sections “Index to Financial Statements,” and the financial statements referenced therein.

 

Item 14.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

 

Not applicable.

 

Item 15.    Financial Statements and Exhibits.

 

(a)

Financial Statements

 

The information required by this item is contained under the sections “Index to Financial Statements,” and the financial statements referenced therein.

 

(b)

Exhibits

 

The information required by this item is contained in the Exhibit Index following the signature page to this registration statement on Form 10.

 

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SIGNATURE

 

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  Harvard Apparatus Regenerative Technology , INC.
   
  By: /s/ David Green
    Name:      David Green
    Title:        President and Chief Executive Officer
   

Dated: July 31, 2013

 

 

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EXHIBIT INDEX

 

Exhibit
Number
  Description of Exhibit
2.1§*   Form of Separation and Distribution Agreement between Harvard Apparatus Regenerative Technology, Inc. and Harvard Bioscience, Inc.
3.1*   Amended and Restated Certificate of Incorporation of Registrant
3.2*   By-laws of the Registrant
3.3*   Form of Amended and Restated By-laws of the Registrant
3.4*   Form of Certificate of Designations of Series A Junior Participating Cumulative Preferred Stock of Harvard Apparatus Regenerative Technology, Inc.
4.1*   Specimen Stock Certificate evidencing the shares of common stock
4.2*   Form of Shareholders Rights Agreement between Harvard Apparatus Regenerative Technology, Inc., and Registrar and Transfer Company, as Rights Agent
10.1*   Form of Transition Services Agreement between Harvard Apparatus Regenerative Technology, Inc. and Harvard Bioscience, Inc.
10.2*   Form of Tax Sharing Agreement between Harvard Apparatus Regenerative Technology, Inc. and Harvard Bioscience, Inc.
10.3#*   Form of Employment Agreement between Harvard Apparatus Regenerative Technology, Inc. and David Green
10.4#*   Form of Employment Agreement between Harvard Apparatus Regenerative Technology, Inc. and Thomas McNaughton
10.5*   Form of Product Distribution Agreement between Harvard Apparatus Regenerative Technology, Inc. and Harvard Bioscience, Inc.
10.6*   Form of Intellectual Property Matters Agreement between Harvard Apparatus Regenerative Technology, Inc. and Harvard Bioscience, Inc.
10.7*   Form of Indemnification Agreement for Officers and Directors
10.8*   Form of 2013 Equity Incentive Plan
10.9*   Form of Employee Stock Purchase Plan
10.10*   Form of Incentive Stock Option Agreement
10.11*   Form of Non-Qualified Stock Option Agreement for executive officers
10.12*   Form of Non-Qualified Stock Option Agreement for directors
10.13*   Form of Deferred Stock Award Agreement
10.14#*   Director Compensation Arrangements
10.15†* (1)   Sublicense Agreement dated as of December 7, 2012 between Harvard Apparatus Regenerative Technology, Inc. and Harvard Bioscience, Inc., and related Trademark License Agreement, dated December 19, 2002, by and between Harvard Bioscience, Inc. and President and Fellows of Harvard College
10.16*   Patent Rights Assignment dated December 21, 2012 between Harvard Apparatus Regenerative Technology, Inc. and Dr. Paolo Macchiarini
10.17*   Sponsored Research Agreement dated August 5, 2009 by and among Harvard Apparatus Regenerative Technology, Inc. (as assignee of Harvard Bioscience, Inc.), Sara Mantero, Maria Adelaide Asnaghi, and Department of Bioengineering of the Politecnico Di Milano

 

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10.18†* (2)   Exclusive License Agreement dated August 6, 2009 by and between Harvard Apparatus Regenerative Technology, Inc. (as assignee of Harvard Bioscience, Inc.) and Sara Mantero and Maria Adelaide Asnaghi
10.19*   Novel Surgery Agreement dated as of May 21, 2012 between Harvard Apparatus Regenerative Technology, Inc. and State Budget Institution of Public Health Department Regional Clinical Hospital #1 and Vladimir Alekseevich Porhanov
10.20*   Novel Surgery Agreement dated as of May 24, 2012 between Harvard Apparatus Regenerative Technology, Inc. and OSF Healthcare System, owner and operator of Saint Francis Medical Center and Children’s Hospital of Illinois, and Mark Holterman, M.D.
10.21*   Amendment to Novel Surgery Agreement dated as of April 5, 2013 between Harvard Apparatus Regenerative Technology, Inc. and OSF Healthcare System, owner and operator of Saint Francis Medical Center and Children’s Hospital of Illinois, and Mark Holterman, M.D.
10.22*   Amendment to Novel Surgery Agreement dated as of June 26, 2013 between Harvard Apparatus Regenerative Technology, Inc. and State Budget Institution of Public Health Department Regional Clinical Hospital #1 and Igor S. Polyakov
21*   Subsidiaries of the Registrant
99.1*   Preliminary Information Statement of Harvard Apparatus Regenerative Technology, Inc., subject to completion, dated July 31, 2013*

* Filed herewith. All other exhibits which are not filed herewith or incorporated by reference are to be filed by amendment.

§ The schedules and exhibits to the Separation Agreement have been omitted. A copy of any omitted schedule or exhibit will be furnished to the Securities and Exchange Commission supplementally upon request.

† Confidential portions of this exhibit (indicated by asterisks) have been redacted and filed separately with the Securities and Exchange Commission pursuant to a confidential treatment request.

# Management contract or compensatory plan or arrangement.

(1) Previously filed as Exhibit 10.15 to the Registrant's Amendment No. 2 to Form S-1 Registration Statement (File No. 333-18589) filed on February 15, 2013 and incorporated by reference thereto.

(2) Previously filed as Exhibit 10.19 to the Registrant's Amendment No. 2 to Form S-1 Registration Statement (File No. 333-18589) filed on February 15, 2013 and incorporated by reference thereto.

 

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EXHIBIT 2.1

 

SEPARATION AND DISTRIBUTION AGREEMENT

 

BY AND BETWEEN

 

HARVARD BIOSCIENCE, INC.

 

AND

 

HARVARD APPARATUS REGENERATIVE TECHNOLOGY, INC.

 

DATED AS OF [ ], 2013

 

 
 

 

TABLE OF CONTENTS

 

ARTICLE I  DEFINITIONS 2
     
ARTICLE II THE SEPARATION 12
     
2.1. Transfer of Assets and Assumption of Liabilities 12
     
2.2. HART Assets 13
     
2.3. HART Liabilities 13
     
2.4. Transfer of Excluded Assets; Assumption of Excluded Liabilities 15
     
2.5. Approvals and Notifications 15
     
2.6. Bank Accounts; Cash Balances 16
     
2.7. Other Documents, Items and Ancillary Agreements 16
     
2.8. Termination of Agreements 17
     
2.9. Disclaimer of Representations and Warranties 17
     
ARTICLE III THE FORM 10 REGISTRATION 18
     
3.1. Transactions Prior to the Effectiveness of the Form 10 Registration Statement 18
     
ARTICLE IV THE DISTRIBUTION 18
     
4.1. The Distribution 18
     
4.2. Actions Prior to the Distribution 18
     
4.3. Conditions to Distribution 19
     
4.4. Fractional Shares 20
     
ARTICLE V  MUTUAL RELEASES; INDEMNIFICATION 20
     
5.1. Release of Pre-Closing Claims 20
     
5.2. Indemnification by HART 22
     
5.3. Indemnification by HBIO 22
     
5.4. Indemnification Obligations Net of Insurance Proceeds and Other Amounts 23
     
5.5. Procedures for Indemnification of Third-Party Claims 23
     
5.6. Additional Matters 24
     
5.7. Remedies Cumulative 25
     
5.8. Survival of Indemnities 25

 

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5.9. Effect of Ancillary Agreements 25
     
ARTICLE VI INTERIM OPERATIONS AND CERTAIN OTHER MATTERS 25
     
6.1. Financial Covenants 25
     
6.2. Other Covenants 27
     
6.3. Covenants Relating to the Incurrence of Indebtedness 28
     
6.4. Auditors and Audits; Annual Financial Statements and Accounting 29
     
6.5. Insurance Matters 30
     
ARTICLE VII EXCHANGE OF INFORMATION; CONFIDENTIALITY 32
     
7.1. Agreement for Exchange of Information; Archives 32
     
7.2. Ownership of Information 32
     
7.3. Compensation for Providing Information 32
     
7.4. Record Retention 33
     
7.5. Limitations of Liability 33
     
7.6. Other Agreements Providing for Exchange of Information 33
     
7.7. Production of Witnesses; Records; Cooperation 33
     
7.8. Confidentiality 34
     
7.9. Protective Arrangements 34
     
ARTICLE VIII MATTERS RELATING TO EMPLOYEES AND OTHER PARTICIPANTS 34
     
8.1. General Principles 34
     
8.2. Annual Bonus Awards 36
     
8.3. Certain Welfare Benefit Matters 36
     
8.4. [Reserved.] 37
     
8.5. Qualified Defined Contribution Plan 37
     
8.6. Deferred Compensation 38
     
8.7. Assignment of Individual Letter Agreements 38
     
8.8. Treatment of Outstanding HBIO Equity Awards 38
     
8.9. No Severance Rights 41
     
8.10. No Third-Party Beneficiaries 41
     
8.11. Fiduciary Matters 42
     
8.12. Consent of Third Parties 42
     
ARTICLE IX DISPUTE RESOLUTION 42
     
9.1. Agreement to Resolve Disputes 42

 

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9.2. Dispute Resolution 43
     
9.3. Arbitration 43
     
9.4. Continuity of Service and Performance 44
     
ARTICLE X FURTHER ASSURANCES AND ADDITIONAL COVENANTS 44
     
10.1. Further Assurances and Additional Covenants 44
     
ARTICLE XI TERMINATION 45
     
11.1. Termination by Mutual Consent 45
     
11.2. Other Termination 45
     
11.3. Effect of Termination 45
     
ARTICLE XII MISCELLANEOUS 45
     
12.1. Counterparts; Entire Agreement; Corporate Power 45
     
12.2. Governing Law, Jurisdiction and WAIVER 46
     
12.3. Assignability 46
     
12.4. Third-Party Beneficiaries 46
     
12.5. Notices 46
     
12.6. Severability 47
     
12.7. Force Majeure 47
     
12.8. Publicity 47
     
12.9. Expenses 48
     
12.10. Headings 48
     
12.11. Survival of Covenants 48
     
12.12. Waivers of Default 48
     
12.13. Specific Performance 49
     
12.14. Amendments 49
     
12.15. Interpretation 49
     
12.16. Limitations of Liability 49

 

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    SCHEDULES
     
Schedule 1.1   Certain HART Contracts
Schedule 1.2(a)   Certain HART Registrable IP
Schedule 2.2(a)(i)   Certain HART Assets

 

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SEPARATION AND DISTRIBUTION AGREEMENT

 

This SEPARATION AND DISTRIBUTION AGREEMENT, dated as of [ ], 2013 (this “ Agreement ”), is by and between HARVARD BIOSCIENCE, INC., a Delaware corporation (“ HBIO ”) and HARVARD APPARATUS REGENERATIVE TECHNOLOGY, INC., a Delaware corporation (“ HART ”) (each, a “ Party ” and, collectively, the “ Parties ”). Capitalized terms used herein and not otherwise defined shall have the respective meanings assigned to them in Article I hereof.

 

RECITALS

 

WHEREAS, HBIO is a global developer, manufacturer and marketer of a broad range of specialized products, primarily apparatus and scientific instruments, used to advance life science research and regenerative medicine;

 

WHEREAS, the Board of Directors of HBIO (the “ HBIO Board ”) has determined that it is appropriate, desirable and in the best interests of HBIO and its stockholders to separate HBIO into two independent companies, one for each of: (i) the HBIO Business, which shall continue to be owned and conducted, directly or indirectly, in addition to any other line of business it may conduct, by HBIO, and (ii) the HART Business (as defined below), which shall be owned and conducted, directly or indirectly, by HART;

 

WHEREAS, in furtherance of the foregoing, the HBIO Board and the board of directors of HART (the “ HART Board ”) have determined that it is appropriate and desirable for HBIO and its applicable Subsidiaries to transfer the HART Assets to HART and its applicable Subsidiaries, and for HART and its applicable Subsidiaries to assume the HART Liabilities, in each case, as more fully described in this Agreement and the Ancillary Agreements (the “ Separation ”);

 

WHEREAS, HART has been incorporated for purpose of the Separation;

 

WHEREAS, HBIO currently intends that, after the Separation, HBIO shall distribute to holders of shares of HBIO Common Stock, through a spin-off, the outstanding shares of the common stock, par value $0.01 per share, of HART (the “ HART Common Stock ”) then owned directly or indirectly by HBIO, as more fully described in this Agreement and the Ancillary Agreements (the “ Distribution ”);

 

WHEREAS, for U.S. federal income tax purposes, the Contribution (as defined below) and the Distribution, if effected, taken together, are intended to qualify as a tax-free spin-off under Section 355 and 368(a)(1)(D) of the Code;

 

WHEREAS, HBIO has received a private letter ruling from the U.S. Internal Revenue Service (the “ IRS ”) substantially to the effect that, among other things, the contribution by HBIO (itself) of the assets of the regenerative medicine device business to HART (itself) (the “ Contribution ”) and the Distribution, if effected, taken together, will qualify as a transaction that is tax-free for U.S. federal income tax purposes under Section 355 and 368(a)(1)(D) of the Code (the “ Private Letter Ruling ”);

 

WHEREAS, this Agreement is intended to be a “plan of reorganization” within the meaning of Treas. Reg. 1.368-2(g);

 

WHEREAS, it is appropriate and desirable to set forth the principal corporate transactions required to effect the Contribution, the Separation and the Distribution and certain other agreements that will govern certain matters relating to the Contribution, the Separation and the Distribution and the relationship of HBIO, HART and their respective Subsidiaries following the Contribution and the Distribution.

 

NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained in this Agreement, the Parties, intending to be legally bound, hereby agree as follows:

 

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ARTICLE I

DEFINITIONS

 

For the purpose of this Agreement, the following terms shall have the following meanings:

 

Action ” shall mean any demand, action, claim, dispute, suit, countersuit, arbitration, inquiry, subpoena, proceeding or investigation of any nature (whether criminal, civil, legislative, administrative, regulatory, prosecutorial or otherwise) by or before any federal, state, local, foreign or international Governmental Authority or any arbitration or mediation tribunal.

 

Affiliate ” (including, with a correlative meaning, “ affiliated ”) shall mean, when used with respect to a specified Person, a Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with such specified Person. For the purpose of this definition, “ control ” (including with correlative meanings, “ controlled by ” and “ under common control with ”), when used with respect to any specified Person shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or other interests, by contract, agreement, obligation, indenture, instrument, lease, promise, arrangement, release, warranty, commitment, undertaking or otherwise. It is expressly agreed that, from and after the Separation Date and for purposes of this Agreement and the other Ancillary Agreements, (1) no member of the HART Group shall be deemed to be an Affiliate of any member of the HBIO Group, and (2) no member of the HBIO Group shall be deemed to be an Affiliate of any member of the HART Group.

 

Agent ” means the distribution agent to be appointed by HBIO to distribute to the shareholders of HBIO all of the shares of HART Common Stock held by HBIO pursuant to the Distribution.

 

Agreement ” shall have the meaning set forth in the Preamble.

 

Ancillary Agreements ” means collectively, all of the agreements, instruments, understandings, assignments or other arrangements entered into in connection with the transactions contemplated hereby, including, without limitation, this Agreement, the Transition Services Agreement, the Tax Sharing Agreement, Contribution Agreement, Sublease Agreement, Sublicense Agreement, Intellectual Property Matters Agreement, Product Distribution Agreement, and the Transfer Documents, and individually, each such agreement.

 

Approvals or Notifications ” shall mean any consents, waivers, approvals, permits or authorizations to be obtained from, notices, registrations or reports to be submitted to, or other filings to be made with, any third Person, including any Governmental Authority.

 

Assets ” means, with respect to any Person, the assets, properties, claims and rights (including goodwill) of such Person, wherever located (including in the possession of vendors or other third Persons or elsewhere), of every kind, character and description, whether real, personal or mixed, tangible, intangible or contingent, in each case whether or not recorded or reflected or required to be recorded or reflected on the books and records or financial statements of such Person, including the following:

 

(a) all accounting and other books, records and files whether in paper, microfilm, microfiche, computer tape or disc, magnetic tape, electronic or any other form;

 

(b) all apparatus, computers and other electronic data processing and communications equipment, fixtures, machinery, equipment, furniture, office equipment, automobiles, trucks, vessels, motor vehicles and other transportation equipment and other tangible personal property;

 

(c) all inventories of materials, parts, raw materials, components, supplies, work-in-process and finished goods and products;

 

(d) all interests in real property of whatever nature, including easements, whether as owner, mortgagee or holder of a Security Interest in real property, lessor, sublessor, lessee, sublessee or otherwise;

 

(e) (i) all interests in any capital stock or other equity interests of any Subsidiary or any other Person, (ii) all bonds, notes, debentures or other securities issued by any Subsidiary or any other Person, (iii) all loans, advances or other extensions of credit or capital contributions to any Subsidiary or any other Person and (iv) all other investments in securities of any Person;

 

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(f) all license agreements, leases of personal property, open purchase orders for raw materials, supplies, parts or services and other contracts, agreements or commitments;

 

(g) all deposits and letters of credit;

 

(h) all written (including in electronic form) or oral technical information, data, specifications, research and development information, engineering drawings and specifications, operating and maintenance manuals, and materials and analyses prepared by consultants and other third Persons;

 

(i) all Intellectual Property and Technology;

 

(j) all Software;

 

(k) all cost information, sales and pricing data, customer prospect lists, supplier records, customer and supplier lists, customer and vendor data, correspondence and lists, product data and literature, artwork, design, formulations and specifications, quality records and reports and other books, records, studies, surveys, reports, plans and documents;

 

(l) all prepaid expenses, trade accounts and other accounts and notes receivable;

 

(m) all rights under contracts or agreements, all claims or rights against any Person arising from the ownership of any Asset, all rights in connection with any bids or offers and all claims, choses in action or similar rights, whether accrued or contingent;

 

(n) all licenses, permits, approvals and authorizations which have been issued by any Governmental Authority;

 

(o) all cash or cash equivalents, bank accounts, lock boxes and other deposit arrangements; and

 

(p) all interest rate, currency, commodity or other swap, collar, cap or other hedging or similar agreements or arrangements.

 

Benefit Plan ” means, with respect to an entity or any of its Subsidiaries, (a) each “employee welfare benefit plan” (as defined in Section 3(1) of ERISA) and all other employee benefits arrangements, policies or payroll practices (including, without limitation, severance pay, sick leave, vacation pay, salary continuation, disability, retirement, deferred compensation, bonus, stock option or other equity-based compensation, hospitalization, medical insurance or life insurance) sponsored or maintained by such entity or by any of its Subsidiaries (or to which such entity or any of its Subsidiaries contributes or is required to contribute) and (b) all “employee pension benefit plans” (as defined in Section 3(2) of ERISA), occupational pension plan or arrangement or other pension arrangements sponsored, maintained or contributed to by such entity or any of its Subsidiaries (or to which such entity or any of its Subsidiaries contributes or is required to contribute). For the avoidance of doubt, “Benefit Plans” includes Health and Welfare Plans. When immediately preceded by “HBIO,” Benefit Plan means any Benefit Plan sponsored, maintained or contributed to by HBIO or a member of the HBIO Group. When immediately preceded by “HART,” Benefit Plan means any Benefit Plan sponsored, maintained or contributed to by HART or any member of the HART Group.

 

Business Day ” means a day other than a Saturday, a Sunday or a day on which banking institutions located in Boston, Massachusetts or New York, New York are authorized or obligated by law or executive order to close.

 

COBRA ” means the continuation coverage requirements for “group health plans” under Title X of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and as codified in Code § 4980B and ERISA §§ 601 through 608.

 

Code ” shall mean the Internal Revenue Code of 1986, as amended.

 

Committee ” shall have the meaning set forth in Section 8.8(a) .

 

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Contribution ” shall have the meaning set forth in the Recitals.

 

Contribution Agreement ” means the Contribution Agreement, dated as of the date hereof, between HBIO and HART.

 

Covered Subsidiary ” means a corporation or other legal entity controlled or owned, directly or indirectly, by HBIO that is covered under an HBIO insurance policy.

 

DC Trust ” shall have the meaning set forth in Section 8.5(a).

 

Disclosure Committee ” shall have the meaning set forth in Section 6.1(d).

 

Dispute ” shall have the meaning set forth in Section 9.2.

 

Dispute Notice ” shall have the meaning set forth in Section 9.2.

 

Distribution ” shall have the meaning set forth in the Recitals.

 

Distribution Date ” shall mean the date determined in accordance with Section 4.3(a) on which the Distribution occurs.

 

Distribution Ratio ” shall mean a ratio of a certain number of shares of HART Common Stock for every certain number of shares of HBIO Common Stock as determined by the HBIO Board with respect to the Distribution.

 

Environmental Law ” shall mean any Law relating to pollution, protection or restoration of or prevention of harm to the environment or natural resources, including the use, handling, transportation, treatment, storage, disposal, Release or discharge of Hazardous Materials or the protection of or prevention of harm to human health and safety.

 

Environmental Liabilities ” shall mean all Liabilities relating to, arising out of or resulting from any Hazardous Materials, Environmental Law or contract or agreement relating to environmental, health or safety matters (including all removal, remediation or cleanup costs, investigatory costs, response costs, natural resources damages, property damages, personal injury damages, costs of compliance with any product take back requirements or with any settlement, judgment or other determination of Liability and indemnity, contribution or similar obligations) and all costs and expenses, interest, fines, penalties or other monetary sanctions in connection therewith.

 

Exchange Act ” shall mean the U.S. Securities Exchange Act of 1934, as amended, together with the rules and regulations promulgated thereunder.

 

Excluded Assets ” shall have the meaning set forth in Section 2.2(b).

 

Excluded Liabilities ” shall have the meaning set forth in Section 2.3(b).

 

Existing HBIO Exercise Price ” means for each HBIO Option, the per share exercise price of such HBIO Option immediately prior to the Distribution Date.

 

Existing HBIO Option Amount ” means for each HBIO Option, the number of shares of HBIO Common Stock subject to such HBIO Option immediately prior to the Distribution Date.

 

Existing HBIO Restricted Stock Unit Amount ” means the number of shares of HBIO Common Stock subject to the respective HBIO Restricted Stock Unit immediately prior to the Distribution Date.

 

Force Majeure ” means, with respect to a Party, any acts of God, storms, floods, riots, fires, sabotage, civil commotion or civil unrest, interference by civil or military authorities, acts of war (declared or undeclared) or armed hostilities or other national or international calamity or one or more acts of terrorism or failure of energy sources or distribution facilities, that are beyond the control of such Party (or any Person acting on its behalf), which by its nature could not have been reasonably foreseen by such Party (or such Person), or, if it could have been reasonably foreseen, was unavoidable.

 

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Form 10 Registration Statement ” shall mean the registration statement on Form 10 to be filed under the Exchange Act, pursuant to which the HART Common Stock will be registered under the Exchange Act, together with all amendments thereto.

 

Former HART Employee ” means any individual who as of the Separation Date is a former employee of the HART Group or the HBIO Group, and whose last employment with the HART Group or the HBIO Group, was with a member of the HART Group.

 

Former HBIO Employee ” means any individual who as of the Separation Date is a former employee of the HBIO Group or the HART Group, and whose last employment with the HBIO Group or HART Group, was with a member of the HBIO Group.

 

GAAP ” shall mean United States generally accepted accounting principles.

 

Governmental Approvals ” shall mean any notices, reports or other filings to be made, or any consents, registrations, approvals, permits or authorizations to be obtained from, any Governmental Authority.

 

Governmental Authority ” shall mean any nation or government, any state, municipality or other political subdivision thereof, and any entity, body, agency, commission, department, board, bureau, court, tribunal or other instrumentality, whether federal, state, local, domestic, foreign or multinational, exercising executive, legislative, judicial, regulatory, administrative or other similar functions of, or pertaining to, government and any executive official thereof.

 

Group ” shall mean either the HART Group or the HBIO Group, as the context requires.

 

HART ” shall have the meaning set forth in the Preamble.

 

HART 401(k) Plan ” shall have the meaning set forth in Section 8.5 .

 

HART’s Auditors ” shall have the meaning set forth in Section 6.1(i) .

 

HART Accounts ” shall have the meaning set forth in Section 2.6(a) .

 

HART Assets ” shall have the meaning set forth in Section 2.2(a) .

 

HART Balance Sheet ” shall mean the unaudited combined balance sheet of the HART Group, including the notes thereto, as of [_______________________].

 

HART Benefit Plan ” shall mean, any Benefit Plan sponsored or maintained by HART.

 

HART Board ” shall have the meaning set forth in the Recitals.

 

HART Business ” means the development, manufacture and sale of products for use in human regenerative medicine. This includes the development, manufacture and sale of pumps for human clinical injections and bioreactors and scaffolds for regenerating human organs and tissues and products for use on humans (or on human cells, tissue or organs) as part of a procedure that involves an injection, implant or transplant into a human. As used in this Agreement, the term “HART Business” includes any of the aforementioned activities plus any natural expansion of such business in the regenerative medicine field for use in humans by comparable companies in the regenerative medicine field for use in humans.

 

HART Capital Stock ” shall mean all classes or series of capital stock of HART, including the HART Common Stock, and all options, warrants and other rights to acquire such capital stock.

 

HART Common Stock ” shall have the meaning set forth in the Recitals.

 

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HART Contracts ” shall mean the following contracts and agreements to which HBIO or any of its Affiliates is a party or by which it or any of its Affiliates or any of their respective Assets is bound, whether or not in writing, except for any such contract or agreement that is contemplated to be retained by HBIO or any member of the HBIO Group pursuant to any provision of this Agreement or any other Ancillary Agreement:

 

(a) any customer, distribution, supply or vendor contracts or agreements entered into after the date hereof and prior to the Separation Date that relate exclusively to the HART Business;

 

(b) any contract or agreement entered into in the name of, or expressly on behalf of, any division, business unit or member of the HART Group;

 

(c) any joint venture agreement entered into by entities within the HART Group;

 

(d) any guarantee, indemnity, representation, warranty or other Liability of any member of the HART Group or the HBIO Group in respect of any other HART Contract, any HART Liability or the HART Business;

 

(e) any employment, change of control, retention, consulting, indemnification, termination, severance or other similar agreements with any HART Group Employee or consultants of the HART Group that are in effect as of the Separation Date; and

 

(f) any contract or agreement that is otherwise expressly contemplated pursuant to this Agreement or any of the other Ancillary Agreements to be assigned to HART or any member of the HART Group; or

 

(g) any contract or agreement listed on Schedule 1.1 .

 

HART Employee ” means (i) any individual who, immediately prior to the Separation, is either actively employed by, or then on an approved leave of absence from, any member of the HART Group and (ii) any Transferred Employee.

 

HART Employment ” means a HART Employee’s employment with any member of the HART Group.

 

HART Fair Value Per Option ” means for each HART Option, the Black Scholes value per share of such HART Option immediately following the Distribution as determined by the Compensation Committee of the HBIO Board in its sole discretion, based on assumptions necessary to preserve the value of the Existing HBIO Option Amounts and Existing HBIO Restricted Stock Unit Amount as adjusted in accordance with the requirements of Article VIII hereof.

 

HART Group ” shall mean HART, each Subsidiary of HART immediately after the Separation Date and each other Person that is controlled directly or indirectly by HART immediately after the Separation Date.

 

HART Indebtedness ” means the aggregate principal amount of total liabilities (whether long-term or short-term) for borrowed money (including capitalized leases) of the HART Group collectively, as determined for purposes of its annual and quarterly financial statements prepared in accordance with GAAP.

 

HART Indemnitees ” shall have the meaning set forth in Section 5.3.

 

HART Intellectual Property ” means (a) the patents, patent applications, statutory invention registrations, registered trademarks, registered service marks, registered Internet domain names and copyright registrations (collectively, “ Registrable IP ”) set forth on Schedule 1.2(a) , (b) all Registrable IP that is owned exclusively by any member of the HART Group at or prior to the Separation Date, excluding any such Registrable IP that has been assigned by any member of the HART Group to any member of the HBIO Group prior to the Separation Date, and (c) all Intellectual Property, other than Registrable IP, that is owned by or licensed to any member of the HBIO Group or HART Group and that is used or held for use primarily in the HART Business as of the Separation Date.

 

HART Liabilities ” shall have the meaning set forth in Section 2.3(a).

 

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HART Long-Term Incentive Plan ” means the Harvard Apparatus Regenerative Technology Inc. 2013 Equity Incentive Plan.

 

HART Participant ” shall mean any individual who, immediately following the Separation Date, is a HART Employee, a Former HART Employee, a Transferred Employee or a beneficiary, dependent or alternate payee of any of the foregoing who participates in or is eligible for benefits under a HART Benefit Plan.

 

HART Option ” means an option which may be exercised to acquire HART common stock and issued by HART in connection with the equitable adjustment of a HBIO Option as part of the Distribution.

 

HART Ratio ” means the quotient obtained by dividing the HART Stock Value by the HBIO Stock Value, carried out to four decimal places.

 

HART Software ” means all Software owned by any member of the HBIO Group or HART Group and that is primarily used or held for use in the HART Business as of the Separation Date.

 

HART Stock Value ” means, unless otherwise determined by the Compensation Committee of the HBIO Board in its sole discretion in order to effect an equitable adjustment of a HBIO Option in connection with the Distribution, the closing per share trading price of HART Common Stock on a when issued basis on the Distribution Date or, if none, the opening per share trading price of HART Common Stock on the first date following the Distribution Date on which there is trading) .

 

HART Technology ” means all Technology owned by any member of the HBIO Group or HART Group and that is primarily used or held for use in the HART Business as of the Separation Date.

 

HART Transfer Documents ” shall have the meaning set forth in Section 2.4(b).

 

HART Value Factor ” means Twenty Percent (20%).

 

HBIO ” shall have the meaning set forth in the Preamble.

 

HBIO 401(k) Plan ” shall mean the Harvard Bioscience Inc. 401(k) Plan.

 

HBIO Annual Statements ” shall have the meaning set forth in Section 6.4(b).

 

HBIO’s Auditors ” shall have the meaning set forth in Section 6.4(b).

 

HBIO Accounts ” shall have the meaning set forth in Section 2.6(a).

 

HBIO Benefit Plan ” shall mean, any Benefit Plan sponsored or maintained by HBIO.

 

HBIO Board ” shall have the meaning set forth in the Recitals.

 

HBIO Business ” means the business of HBIO and its various existing and future business units and subsidiaries not including the HART Business.

 

HBIO Common Stock ” shall mean the common stock, par value $.01 per share, of HBIO.

 

HBIO Disclosure Portions ” means all (a) information set forth in, incorporated by reference into, or omitted from, the Form 10 Registration Statement to the extent relating exclusively to (i) the HBIO Group, (ii) all business and operations of HBIO that is not included in the HART Business, (iii) HBIO’s intentions with respect to the Distribution, or (iv) the terms of the Distribution, including, without limitation, the form, structure and terms of any transaction(s) and/or offering(s) to effect the Distribution and the timing of and conditions to the consummation of the Distribution and (b) information publicly disclosed by HBIO outside of the Form 10 Registration Statement to the extent relating exclusively to (x) the items enumerated in subparagraphs (i)-(iv) above, or (y) HART, in each case to the extent that such information is attributed to HART and/or HART’s directors and officers, for liability purposes under the Securities Act or the Exchange. For the avoidance of doubt, information publicly disclosed by HART Employees regarding information related to HART shall not be deemed to be information publicly disclosed by HBIO notwithstanding that such HART Employees may have been employees of HBIO at the time of the public disclosure.

 

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HBIO Employee ” means any individual who, immediately prior to the Separation Date, is either actively employed by, or then on an approved leave of absence from, any member of the HBIO Group, excluding the Transferred Employees.

 

HBIO Employment ” means an HBIO Employee’s employment with any member of the HBIO Group.

 

HBIO Group ” shall mean HBIO, each Subsidiary of HBIO immediately after the Separation Date and each other Person that is controlled directly or indirectly by HBIO immediately after the Separation Date (in each case other than any member of the HART Group).

 

HBIO Indemnitees ” shall have the meaning set forth in Section 5.2.

 

HBIO Intellectual Property ” means (i) the HBIO Name and HBIO Marks and (ii) all other Intellectual Property that is owned by any member of the HBIO Group or the HART Group, other than the HART Intellectual Property.

 

HBIO Long-Term Incentive Plan ” means collectively, the Harvard Bioscience, Inc. Third Amended and Restated 2000 Stock Option and Incentive Plan, Harvard Apparatus, Inc. 1996 Stock Option and Grant Plan.

 

HBIO Name and HBIO Marks ” means the names, marks, trade dress, logos, monograms, domain names and other source or business identifiers of HBIO or any of its Affiliates using or containing “HBIO” (in block letters or otherwise), “HBIO” either alone or in combination with other words or elements and all names, marks, trade dress, logos, monograms, domain names and other source or business identifiers confusingly similar to or embodying any of the foregoing either alone or in combination with other words or elements, together with the goodwill associated with any of the foregoing.

 

HBIO Nonqualified Plans ” shall have the meaning set forth in Section 8.6(a).

 

HBIO Option ” means each option issued by HBIO and outstanding on the Distribution Date which may be exercised to acquire HBIO common stock.

 

HBIO Post-Distribution Fair Value Per Option ” means for each HBIO Option, the Black Scholes value per share of such HBIO Option immediately following the Distribution as determined by the Compensation Committee of the HBIO Board in its sole discretion, based on assumptions necessary to preserve the value of the Existing HBIO Option Amounts and Existing HBIO Restricted Stock Unit Amount as adjusted in accordance with the requirements of Article VIII hereof.

 

HBIO Post-Distribution Stock Value ” means, unless otherwise determined by the Compensation Committee of the HBIO Board in its sole discretion in order to effect an equitable adjustment of a HBIO Option in connection with the Distribution, the closing per share trading price of HBIO Common Stock on an ex-distribution basis on the Distribution Date or, if none, the closing per share trading price of HBIO Common Stock on the Distribution Date (or, if there is no trading on the Distribution Date, on the first following date on which there is trading).

 

HBIO Pre-Distribution Fair Value Per Option ” means for each HBIO Option, the Black Scholes value per share of such HBIO Option immediately prior to the Distribution Date as determined by the Compensation Committee of the HBIO Board in its sole discretion, based on assumptions necessary to preserve the value of the Existing HBIO Option Amounts and Existing HBIO Restricted Stock Unit Amount as adjusted in accordance with the requirements of Article VIII hereof.

 

HBIO Public Filings ” shall have meaning set forth in Section 6.1(i).

 

HBIO Ratio ” means the quotient obtained by dividing the HBIO Post-Distribution Stock Value to the HBIO Stock Value, carried out to four decimal places.

 

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HBIO Software ” means all Software that is owned by any member of the HBIO Group or the HART Group, other than the HART Software.

 

HBIO Stock Value ” means the closing per share trading price of HBIO Common Stock on the day immediately preceding the Distribution Date.

 

HBIO Technology ” means all Technology that is owned by any member of the HBIO Group or the HART Group, other than the HART Technology.

 

HBIO Transfer Documents ” shall have the meaning set forth in Section 2.1(b).

 

HBIO Value Factor ” means Eighty Percent (80%).

 

Hazardous Materials ” means any chemical, material, substance, waste, pollutant, emission, discharge, release or contaminant that could result in liability under, or that is prohibited, limited or regulated by or pursuant to, any Environmental Law, and any natural or artificial substance (whether solid, liquid or gas, noise, ion, vapor or electromagnetic) which could cause harm to human health or the environment, including petroleum, petroleum products and byproducts, asbestos and asbestos-containing materials, urea formaldehyde foam insulation, electronic, medical or infectious wastes, polychlorinated biphenyls, radon gas, radioactive substances, chlorofluorocarbons and all other ozone-depleting substances.

 

Health and Welfare Plans ” means any plan, fund or program which was established or is maintained for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance or otherwise, medical, dental, surgical or hospital care or benefits, or benefits in the event of sickness, accident, disability, death or unemployment, or vacation benefits, apprenticeship or other training programs or day care centers, scholarship funds, or prepaid legal services, including any such plan, fund or program as defined in Section 3(1) of ERISA. When immediately preceded by “HBIO,” Health and Welfare Plans means each Health and Welfare Plan that is a HBIO Benefit Plan. When immediately preceded by “HART,” Health and Welfare Plans means each Health and Welfare Plan that is a HART Benefit Plan.

 

HIPAA ” means the health insurance portability and accountability requirements for “group health plans” under the Health Insurance Portability and Accountability Act of 1996, as amended.

 

Indemnifying Party ” shall have the meaning set forth in Section 5.4(a).

 

Indemnitee ” shall have the meaning set forth in Section 5.4(a).

 

Indemnity Payment ” shall have the meaning set forth in Section 5.4(a).

 

Information ” shall mean information, whether or not patentable or copyrightable, in written, oral, electronic or other tangible or intangible forms, stored in any medium, including studies, reports, records, books, contracts, instruments, surveys, discoveries, ideas, concepts, know-how, techniques, designs, specifications, drawings, blueprints, diagrams, models, prototypes, samples, flow charts, data, computer data, disks, diskettes, tapes, computer programs or other software, marketing plans, customer names, communications by or to attorneys (including attorney-client privileged communications), memos and other materials prepared by attorneys or under their direction (including attorney work product), and other technical, financial, employee or business information or data.

 

Information Statement ” shall mean each preliminary, final or supplemental information statement forming a part of the Form 10 Registration Statement.

 

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Intellectual Property ” means all of the following whether arising under the Laws of the United States or of any other foreign or multinational jurisdiction: (i) patents, patent applications (including patents issued thereon) and statutory invention registrations, including reissues, divisions, continuations, continuations in part, substitutions, renewals, extensions and reexaminations of any of the foregoing, and all rights in any of the foregoing provided by international treaties or conventions, (ii) trademarks, service marks, trade names, service names, trade dress, logos and other source or business identifiers, including all goodwill associated with any of the foregoing, and any and all common law rights in and to any of the foregoing, registrations and applications for registration of any of the foregoing, all rights in and to any of the foregoing provided by international treaties or conventions, and all reissues, extensions and renewals of any of the foregoing, (iii) Internet domain names, (iv) copyrightable works, copyrights, moral rights, mask work rights, database rights and design rights, in each case, other than Software, whether or not registered, and all registrations and applications for registration of any of the foregoing, and all rights in and to any of the foregoing provided by international treaties or conventions, (v) confidential and proprietary information, including trade secrets, invention disclosures, processes and know-how, in each case, other than Software, (vi) intellectual property rights arising from or in respect of any Technology, and (vii) Software, other than commercially available “off-the-shelf” software.

 

Intellectual Property Matters Agreement ” means the Intellectual Property Matters Agreement, dated as of the date hereof, between HBIO and HART.

 

IRS ” shall have the meaning set forth in the Recitals.

 

Insurance Proceeds ” shall mean those monies: (a) received by an insured from an insurance carrier; or (b) paid by an insurance carrier on behalf of the insured; in any such case net of any applicable premium adjustments (including reserves and retrospectively rated premium adjustments) and net of any costs or expenses incurred in the collection thereof; provided, however, with respect to a captive insurance arrangement, Insurance Proceeds shall only include amounts received by the captive insurer in respect of any reinsurance arrangement.

 

Law ” shall mean any applicable national, supranational, federal, state, provincial, local or similar law (including common law), statute, code, order, ordinance, rule, regulation, treaty (including any income tax treaty), license, permit, authorization, approval, consent, decree, injunction, binding judicial or administrative interpretation or other requirement, in each case, enacted, promulgated, issued or entered by a Governmental Authority.

 

Liabilities ” shall mean any and all debts, guarantees, assurances, commitments, liabilities, responsibilities, Losses, remediation, deficiencies, damages, fines, penalties, settlements, sanctions, costs, expenses, interest and obligations, whether accrued or fixed, absolute or contingent, matured or unmatured, accrued or not accrued, asserted or unasserted, liquidated or unliquidated, foreseen or unforeseen, known or unknown, reserved or unreserved, or determined or determinable, including those arising under any Law, claim (including any Third-Party Claim), demand, Action, or order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority or arbitration tribunal, and those arising under any contract, agreement, obligation, indenture, instrument, lease, promise, arrangement, release, warranty, commitment or undertaking, or any fines, damages or equitable relief that is imposed, in each case, including all costs and expenses relating thereto.

 

Losses ” shall mean actual losses (including any diminution in value), costs, damages, penalties and expenses (including legal and accounting fees and expenses and costs of investigation and litigation), whether or not involving a Third-Party Claim.

 

NASDAQ ” shall mean the NASDAQ Capital Market.

 

Option ” shall mean either HBIO Option, HART Option, or both, as the context requires.

 

Participating Company ” means (a) HBIO and (b) any other Person (other than an individual) that participates in a plan sponsored by any member of the HBIO Group.

 

Person ” shall mean an individual, a general or limited partnership, a corporation, a trust, a joint venture, an unincorporated organization, a limited liability entity, any other entity and any Governmental Authority.

 

Private Letter Ruling ” shall have the meaning set forth in the Recitals.

 

Privilege ” shall mean, relating to the members of the HBIO Group or HART Group, information and advice that has been previously developed of such entities but is legally protected from disclosure under legal privileges, such as the attorney-client privilege or work product exemption and other concepts of legal privilege.

 

Product Distribution Agreement ” means the Product Distribution Agreement, dated as of the date hereof, between HBIO and HART.

 

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Record Date ” shall mean, in the case of a Distribution that is a spin-off, the close of business on the date to be determined by the HBIO Board as the record date for determining shareholders of HBIO entitled to receive shares of HART Common Stock in such Distribution.

 

Release ” means any release, spill, emission, discharge, leaking, pumping, pouring, dumping, injection, deposit, disposal, dispersal, leaching or migration of Hazardous Materials into the environment (including, ambient air, surface water, groundwater and surface or subsurface strata).

 

Replacement Fair Value ” means the result obtained by subtracting (A) the product obtained by multiplying the Existing HBIO Option Amount by the related HBIO Post-Distribution Fair Value Per Option from (B) the product obtained by multiplying (a) the Existing HBIO Option Amount by (b) the related HBIO Pre-Distribution Fair Value Per Option.

 

Representatives ” means, with respect to any Person, any of such Person’s directors, officers, employees, agents, consultants, advisors, accountants, attorneys or other representatives.

 

Response ” shall have the meaning set forth in Section 9.2.

 

Restricted Stock Unit ” when immediately preceded by “HBIO,” means a deferred stock award of restricted stock units issued under the HBIO Long-Term Incentive Plan and, when immediately preceded by “HART,” means a deferred stock award of restricted stock units issued under the HART Long-Term Incentive Plan.

 

SEC ” shall mean the U.S. Securities and Exchange Commission.

 

Securities Act ” shall mean the U.S. Securities Act of 1933, as amended, together with the rules and regulations promulgated thereunder.

 

Security Interest ” shall mean any mortgage, security interest, pledge, lien, charge, claim, option, right to acquire, voting or other restriction, right-of-way, covenant, condition, easement, encroachment, restriction on transfer, or other encumbrance of any nature whatsoever.

 

Separation ” shall have the meaning set forth in the Recitals.

 

Separation Date ” shall mean the date first set forth above in this Agreement.

 

Software ” means any and all (i) computer programs, including any and all software implementation of algorithms, models and methodologies, whether in source code, object code, human readable form or other form, (ii) databases and compilations, including any and all data and collections of data, whether machine readable or otherwise, (iii) descriptions, flow charts and other work products used to design, plan, organize and develop any of the foregoing, screens, user interfaces, report formats, firmware, development tools, templates, menus, buttons and icons, and (iv) documentation, including user manuals and other training documentation, relating to any of the foregoing.

 

Subsidiary ” or “ subsidiary ” shall mean, with respect to any Person, any corporation, limited liability company, joint venture or partnership of which such Person (i) beneficially owns, either directly or indirectly, more than fifty percent (50%) of (A) the total combined voting power of all classes of voting securities of such Person, (B) the total combined equity interests or (C) the capital or profit interests, in the case of a partnership, or (ii) otherwise has the power to vote, either directly or indirectly, sufficient securities to elect a majority of the board of directors or similar governing body.

 

Tax Sharing Agreement ” means the Tax Sharing Agreement, dated as of the date hereof, between HBIO and HART.

 

Taxes ” shall have the meaning set forth in the Tax Sharing Agreement.

 

Technology ” means tangible embodiments, whether in electronic, written or other media, of technology, including designs, design and manufacturing documentation (such as bill of materials, build instructions and test reports), schematics, algorithms, routines, software, databases, lab notebooks, development and lab equipment, processes, prototypes and devices. Technology does not include Intellectual Property in any of the foregoing.

 

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Third-Party Claim ” shall have the meaning set forth in Section 5.5(a).

 

Transfer Documents ” shall have the meaning set forth in Section 2.4(b).

 

Transferred Employee ” means any individual who in connection with the Separation (at the time of the Separation or thereafter) is transferring his or her primary employment from HBIO or any member of the HBIO Group to HART or any member of the HART Group.

 

Transition Services Agreement ” shall mean the Transition Services Agreement, dated as of the date hereof, by and between HBIO and HART.

 

ARTICLE II

THE SEPARATION

 

2.1. Transfer of Assets and Assumption of Liabilities .

 

(a) On the Separation Date, to the extent not previously effectuated prior to the date hereof:

 

(i) HBIO shall, and shall cause its applicable Subsidiaries to, assign, transfer, convey and deliver to HART, or certain of HART’s Subsidiaries designated by HART, and HART or such Subsidiaries shall accept from HBIO and its applicable Subsidiaries, all of HBIO’s and such Subsidiaries’ respective direct or indirect right, title and interest in and to all of the HART Assets, including without limitation all transfers of all “Transferred Intellectual Property”, “Transferred Licenses”, (in both cases, as such terms are defined in the Intellectual Property Matters Agreement) and Technology used in the HART Business, in each case pursuant to the Intellectual Property Matters Agreement;

 

(ii) HART and certain of its Subsidiaries designated by HART shall accept, assume and agree faithfully to perform, discharge and fulfill all the HART Liabilities in accordance with their respective terms. HART and such Subsidiaries shall be responsible for all HART Liabilities, regardless of when or where such HART Liabilities arose or arise, or whether the facts on which they are based occurred prior to or subsequent to the Separation Date, regardless of where or against whom such HART Liabilities are asserted or determined (including any HART Liabilities arising out of claims made by HBIO’s or HART’s respective directors, officers, employees, agents, Subsidiaries or Affiliates against any member of the HBIO Group or the HART Group) or whether asserted or determined prior to the date hereof, and regardless of whether arising from or alleged to arise from negligence, recklessness, violation of Law, fraud or misrepresentation by any member of the HBIO Group or the HART Group, or any of their respective directors, officers, employees, agents, Subsidiaries or Affiliates;

 

(b) In furtherance of the assignment, transfer, conveyance and delivery of the HART Assets and the assumption of the HART Liabilities in accordance with Sections 2.1(a)(i) and 2.1(a)(ii), on the date that such HART Assets are assigned, transferred, conveyed or delivered or such HART Liabilities are assumed (i) HBIO shall execute and deliver, and shall cause its Subsidiaries to execute and deliver, such bills of sale, quitclaim deeds, stock powers, certificates of title, assignments of contracts and other instruments of transfer, conveyance and assignment as and to the extent necessary to evidence the transfer, conveyance and assignment of all of HBIO’s and its Subsidiaries’ (other than HART and its Subsidiaries) right, title and interest in and to the HART Assets to HART and its Subsidiaries, and (ii) HART shall execute and deliver, and shall cause its Subsidiaries to execute and deliver, such assumptions of contracts and other instruments of assumption as and to the extent necessary to evidence the valid and effective assumption of the HART Liabilities by HART and its Subsidiaries. All of the foregoing documents contemplated by this Section 2.1(b) shall be referred to collectively herein as the “ HBIO Transfer Documents ”.

 

(c) In the event that at any time or from time to time (whether prior to or after any Separation Date), any Party hereto (or any member of such Party’s respective Group), shall receive or otherwise possess any Asset that is allocated to any other Person pursuant to this Agreement or any other Ancillary Agreement, such Party shall promptly transfer, or cause to be transferred, such Asset to the Person so entitled thereto. Prior to any such transfer, the Person receiving or possessing such Asset shall hold such Asset in trust for any such other Person.

 

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(d) HART hereby waives compliance by each and every member of the HBIO Group with the requirements and provisions of any “bulk-sale” or “bulk-transfer” Laws of any jurisdiction that may otherwise be applicable with respect to the transfer or sale of any or all of the HART Assets to any member of the HART Group.

 

(e) HBIO hereby waives compliance by each and every member of the HART Group with the requirements and provisions of any “bulk-sale” or “bulk-transfer” Laws of any jurisdiction that may otherwise be applicable with respect to the transfer or sale of any or all of the Excluded Assets to any member of the HBIO Group.

 

2.2. HART Assets .

 

(a) For purposes of this Agreement, “ HART Assets ” shall mean (without duplication):

 

(i) all Assets that are expressly provided by this Agreement or any other Ancillary Agreement as Assets to be transferred to HART or any other member of the HART Group, including the Assets listed on Schedule 2.2(a)(i) ;

 

(ii) all HART Contracts;

 

(iii) all Assets reflected as assets of HART or its Subsidiaries, if any, on the HART Balance Sheet, subject to any dispositions of such Assets subsequent to the date of the HART Balance Sheet;

 

(iv) all HART Intellectual Property, HART Software and HART Technology; and

 

(v) except as contemplated by Section 2.5(b), any and all Assets owned or held immediately prior to the Separation Date by HBIO or any of its Subsidiaries that are used primarily in the HART Business. The intention of this clause (v) is only to rectify any inadvertent omission of transfer or conveyance of any Assets that, had the Parties given specific consideration to such Asset as of the date hereof, would have otherwise been classified as a HART Asset. No Asset shall be deemed to be a HART Asset solely as a result of this clause (v) if such Asset is within the category or type of Asset expressly covered by the terms of an Ancillary Agreement unless the Party claiming entitlement to such Asset can establish that the omission of the transfer or conveyance of such Asset was inadvertent.

 

Notwithstanding the foregoing, the HART Assets shall not in any event include the Excluded Assets referred to in Section 2.2(b). All rights of the HART Group in respect of HBIO insurance policies are set forth in Section 6.5 and shall not otherwise be included in the HART Assets.

 

(b) For the purposes of this Agreement, “ Excluded Assets ” shall mean (without duplication):

 

(i) any and all Assets that are expressly contemplated by this Agreement or any other Ancillary Agreement (or the Schedules hereto or thereto) as Assets to be retained by HBIO or any other member of the HBIO Group;

 

(ii) any cash or cash equivalents withdrawn from HART Accounts in accordance with Section 2.6(e);

 

(iii) the HBIO Intellectual Property and the HBIO Technology; and

 

(iv) any and all Assets of any members of the HBIO Group that are not HART Assets.

 

2.3. HART Liabilities .

 

(a) For the purposes of this Agreement, “ HART Liabilities ” shall mean (without duplication):

 

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(i) all Liabilities, including any Environmental Liabilities and any Liability relating to the protection of human and occupational health and safety, the protection or restoration of, or prevention of harm to, the environment or natural resources, relating to, arising out of or resulting from:

 

(A) the operation of the HART Business, as conducted at any time prior to, on or after the Separation Date (including any Liability relating to, arising out of or resulting from any act or failure to act by any Representative (whether or not such act or failure to act is or was within such Person’s authority));

 

(B) the operation of any business conducted by any member of the HART Group at any time after the Separation Date (including any Liability relating to, arising out of or resulting from any act or failure to act by any Representative (whether or not such act or failure to act is or was within such Person’s authority)); or

 

(C) any HART Assets (including without limitation any HART Contracts and any real property and leasehold interests);

 

in any such case whether arising before, on or after the Separation Date;

 

(ii) any and all Liabilities that are expressly provided by this Agreement or any other Ancillary Agreement (or the schedules or exhibits hereto or thereto) as Liabilities to be assumed by HART or any member of the HART Group, and all agreements, obligations and Liabilities of any member of the HART Group under this Agreement or any of the other Ancillary Agreements;

 

(iii) all Liabilities relating to, arising out of or resulting from any terminated, divested or discontinued businesses and operations of the HART Business;

 

(iv) all Liabilities reflected as liabilities or obligations of HART or its Subsidiaries on the HART Balance Sheet, subject to any discharge of such Liabilities subsequent to the date of the HART Balance Sheet; and

 

(v) all Liabilities arising out of claims made by HBIO’s or HART’s respective directors, officers, shareholders, employees, agents, Subsidiaries or Affiliates against any member of the HBIO Group or the HART Group to the extent relating to, arising out of or resulting from the HART Business.

 

Notwithstanding the foregoing, the HART Liabilities shall not include the Excluded Liabilities referred to in Section 2.3(b) below.

 

(b) For the purposes of this Agreement, “ Excluded Liabilities ” shall mean (without duplication):

 

(i) any and all Liabilities that are expressly contemplated by this Agreement or any other Ancillary Agreement (or the Schedules hereto or thereto) as Liabilities to be retained or assumed by HBIO or any other member of the HBIO Group, and all agreements and obligations of any member of the HBIO Group under this Agreement or any of the other Ancillary Agreements;

 

(ii) any and all Liabilities of a member of the HBIO Group to the extent relating to, arising out of or resulting from any Excluded Assets;

 

(iii) any and all Liabilities of any members of the HBIO Group that are not HART Liabilities; and

 

(iv) any and all third-party legal, accounting and other operating costs and expenses actually incurred with respect to the HART Business through the Distribution (including without limitation those relating to the Separation and Distribution).

 

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2.4. Transfer of Excluded Assets; Assumption of Excluded Liabilities .

 

(a) To the extent any Excluded Asset is transferred or assigned to, or any Excluded Liability is assumed by, a member of the HART Group at the Separation Date or is owned or held by a member of the HART Group after the Separation Date, from and after the Separation Date:

 

(i) HART shall, and shall cause its applicable Subsidiaries to, promptly assign, transfer, convey and deliver to HBIO or certain of its Subsidiaries designated by HBIO, and HBIO or such Subsidiaries shall accept from HART and its applicable Subsidiaries, all of HART’s and such Subsidiaries’ respective right, title and interest in and to such Excluded Assets; and

 

(ii) HBIO and certain of its Subsidiaries designated by HBIO will promptly accept, assume and agree faithfully to perform, discharge and fulfill all such Excluded Liabilities in accordance with their respective terms.

 

(b) In furtherance of the assignment, transfer, conveyance and delivery of Excluded Assets and the assumption of Excluded Liabilities set forth in Sections 2.4(a)(i) and 2.4(a)(ii) and without any additional consideration therefor: (A) HART shall execute and deliver, and shall cause its Subsidiaries to execute and deliver, such bills of sale, quitclaim deeds, stock powers, certificates of title, assignments of contracts and other instruments of transfer, conveyance and assignment as and to the extent necessary to evidence the transfer, conveyance and assignment of all of HART’s and its Subsidiaries’ right, title and interest in and to the Excluded Assets to HBIO and its Subsidiaries, and (B) HBIO shall execute and deliver such assumptions of contracts and other instruments of assumption as and to the extent necessary to evidence the valid and effective assumption of the Excluded Liabilities by HBIO. All of the foregoing documents contemplated by this Section 2.4(b) shall be referred to collectively herein as the “ HART Transfer Documents ” and, together with the HBIO Transfer Documents, the “ Transfer Documents .”

 

2.5. Approvals and Notifications .

 

(a) To the extent that the transfer or assignment of any HART Asset, the assumption of any HART Liability, the Separation or the Distribution requires any Approvals or Notifications, the Parties will use their commercially reasonable efforts to obtain or make such Approvals or Notifications as soon as reasonably practicable; provided , however , that, except to the extent expressly provided in this Agreement or any of the other Ancillary Agreements, neither HBIO nor HART shall be obligated to contribute capital or pay any consideration in any form (including providing any letter of credit, guaranty or other financial accommodation) to any Person in order to obtain or make such Approvals or Notifications.

 

(b) If and to the extent that the valid, complete and perfected transfer or assignment to the HART Group of any HART Assets or assumption by the HART Group of any HART Liabilities would be a violation of applicable Law or require any Approvals or Notifications in connection with the Separation or the Distribution, that has not been obtained or made by the Separation Date then, unless the Parties hereto mutually shall otherwise determine, the transfer or assignment to the HART Group of such HART Assets or the assumption by the HART Group of such HART Liabilities, as the case may be, shall be automatically deemed deferred and any such purported transfer, assignment or assumption shall be null and void until such time as all legal impediments are removed or such Approvals or Notifications have been obtained or made. Notwithstanding the foregoing, any such HART Assets or HART Liabilities shall continue to constitute HART Assets and HART Liabilities for all other purposes of this Agreement.

 

(c) If any transfer or assignment of any HART Asset or any assumption of any HART Liabilities intended to be transferred, assigned or assumed hereunder, as the case may be, is not consummated on or prior to the Separation Date, whether as a result of the provisions of Section 2.5(b) or for any other reason, then, insofar as reasonably possible, the member of the HBIO Group retaining such HART Asset or such HART Liability, as the case may be, shall thereafter hold such HART Asset or HART Liability, as the case may be, for the use and benefit of the member of the HART Group entitled thereto (at the expense of the member of the HART Group entitled thereto). In addition, the member of the HBIO Group retaining such HART Asset or such HART Liability shall, insofar as reasonably possible and to the extent permitted by applicable Law, treat such HART Asset or HART Liability in the ordinary course of business in accordance with past practice and take such other actions as may be reasonably requested by the member of the HART Group to whom such HART Asset is to be transferred or assigned, or which will assume such HART Liability, as the case may be, in order to place such member of the HART Group in a substantially similar position as if such HART Asset or HART Liability had been transferred, assigned or assumed as contemplated hereby and so that all the benefits and burdens relating to such HART Asset or HART Liability, as the case may be, including use, risk of loss, potential for gain, and dominion, control and command over such HART Asset or HART Liability, as the case may be, is to inure from and after the Separation Date to the HART Group.

 

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(d) If and when the Approvals or Notifications, the absence of which caused the deferral of transfer or assignment of any HART Asset or the deferral of assumption of any HART Liability pursuant to Section 2.5(b), are obtained or made, and, if and when any other legal impediments for the transfer or assignment of any HART Asset or the assumption of any HART Liability have been removed, the transfer or assignment of the applicable HART Asset or the assumption of the applicable HART Liability, as the case may be, shall be effected in accordance with the terms of this Agreement and/or the applicable Ancillary Agreement.

 

(e) Any member of the HBIO Group retaining a HART Asset or HART Liability due to the deferral of the transfer or assignment of such HART Asset or the deferral of the assumption of such HART Liability, as the case may be, shall not be obligated, in connection with the foregoing, to expend any money unless the necessary funds are advanced (or otherwise made available) by HART or the member of the HART Group entitled to the HART Asset or HART Liability, other than reasonable out-of-pocket expenses, attorneys’ fees and recording or similar fees, all of which shall be promptly reimbursed by HART or the member of the HART Group entitled to such HART Asset or HART Liability.

 

2.6. Bank Accounts; Cash Balances .

 

(a) HBIO and HART each agrees to take, or cause the respective members of their respective Groups to take, at the Distribution Date (or such earlier time as HBIO and HART may agree), all actions necessary to amend all contracts or agreements governing each bank and brokerage account owned by HART or any other member of the HART Group (collectively, the “ HART Accounts ”) so that such HART Accounts, if currently linked (whether by automatic withdrawal, automatic deposit or any other authorization to transfer funds from or to, hereinafter “ linked ”) to any bank or brokerage account owned by HBIO or any other member of the HBIO Group (collectively, the “ HBIO Accounts ”) are no longer linked following the Distribution.

 

(b) HBIO and HART each agrees to take, or cause the respective members of their respective Groups to take, at the Distribution Date (or such earlier time as HBIO and HART may agree), all actions necessary to amend all HART Contracts governing the HBIO Accounts so that such HBIO Accounts, if currently linked to a HART Account, are de-linked from the HART Accounts.

 

(c) It is intended that, following consummation of the actions contemplated by Sections 2.6(a) and 2.6(b), there will be in place separate cash management processes for each of HBIO and HART, pursuant to which (i) the HBIO Accounts will be managed separately and funds collected will be transferred into one (1) or more accounts maintained by HBIO, and (ii) the HART Accounts will be managed separately and funds collected will be transferred into one (1) or more accounts maintained by HART.

 

(d) With respect to any outstanding checks issued by HBIO, HART, or any of their respective Subsidiaries prior to the Separation, such outstanding checks shall be honored following the Separation by the Person or Group owning the account on which the check is drawn.

 

(e) As between HBIO and HART (and the members of their respective Groups) all payments made and reimbursements received after the Distribution Date by either Party (or member of its Group) that relate to a business, Asset or Liability of the other Party (or member of its Group), shall be held by such Party in trust for the use and benefit of the Party entitled thereto and, promptly upon receipt by such Party of any such payment or reimbursement, such Party shall pay over, or shall cause the applicable member of its Group to pay over to the other Party the amount of such payment or reimbursement.

 

2.7. Other Documents, Items and Ancillary Agreements . Effective as of the date hereof, or such later date as agreed to by the Parties (but not with respect to clause (ii) below), each of HBIO and HART will execute, deliver and/or provide (as applicable), or will cause its appropriate Subsidiaries to execute and deliver, all of the following items and agreements applicable to such Party:

 

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(i) all Ancillary Agreements to which it is a Party;

 

(ii) HBIO shall make a capital contribution to HART in the amount of at least $15 million; and

 

(iii) such other agreements, documents or instruments as the Parties may agree are necessary or desirable in order to achieve the purposes hereof.

 

2.8 Termination of Agreements . (a) Except as set forth in Section 2.8(b), on behalf of the Parties and their respective Groups, the Parties hereby terminate any and all written or oral agreements, arrangements, commitments or understandings, between or among them, effective as of the Distribution Date; and each Party shall, at the reasonable request of the other Party, take, or cause to be taken, such other actions as may be necessary to effect the foregoing.

 

(b) The provisions of Section 2.8(a) shall not apply to any of the following agreements, arrangements, commitments or understandings (or to any of the provisions thereof): (i) this Agreement and the Ancillary Agreements (and each other agreement or instrument expressly contemplated by this Agreement or any other Ancillary Agreement to be entered into by any of the Parties hereto or any of the members of their respective Groups that shall survive in accordance with their respective terms); (ii)  any agreements, arrangements, commitments or understandings to which any Person other than the parties hereto and their respective Affiliates is a party (it being understood that to the extent that the rights and obligations of the parties and the members of their respective Groups under any such agreements, arrangements, commitments or understandings constitute HART Assets or HART Liabilities, they shall be assigned pursuant to Section 2.1); (iii) any intercompany accounts payable or accounts receivable accrued as of the Distribution Date that are reflected in the books and records of the parties or otherwise documented in writing in accordance with past practices; (iv) any agreements, arrangements, commitments or understandings to which any non-wholly owned Subsidiary of HBIO or HART, as the case may be, is a party; and (v) any other agreements, arrangements, commitments or understandings that this Agreement or any other Ancillary Agreement expressly contemplates will survive the Distribution Date.

 

2.9. Disclaimer of Representations and Warranties . EACH OF HBIO (ON BEHALF OF ITSELF AND EACH MEMBER OF THE HBIO GROUP) AND HART (ON BEHALF OF ITSELF AND EACH MEMBER OF THE HART GROUP) UNDERSTANDS AND AGREES THAT, EXCEPT AS EXPRESSLY SET FORTH HEREIN OR IN ANY OTHER ANCILLARY AGREEMENT, NO PARTY TO THIS AGREEMENT, ANY ANCILLARY AGREEMENT OR ANY OTHER AGREEMENT OR DOCUMENT CONTEMPLATED BY THIS AGREEMENT, ANY ANCILLARY AGREEMENT OR OTHERWISE, IS REPRESENTING OR WARRANTING IN ANY WAY AS TO THE ASSETS, BUSINESSES OR LIABILITIES TRANSFERRED OR ASSUMED AS CONTEMPLATED HEREBY OR THEREBY, AS TO ANY CONSENTS OR APPROVALS REQUIRED IN CONNECTION THEREWITH, AS TO THE VALUE OR FREEDOM FROM ANY SECURITY INTERESTS OF, OR ANY OTHER MATTER CONCERNING, ANY ASSETS OF SUCH PARTY, OR AS TO THE ABSENCE OF ANY DEFENSES OR RIGHT OF SETOFF OR FREEDOM FROM COUNTERCLAIM WITH RESPECT TO ANY CLAIM OR OTHER ASSET, INCLUDING ANY ACCOUNTS RECEIVABLE, OF ANY PARTY, OR AS TO THE LEGAL SUFFICIENCY OF ANY ASSIGNMENT, DOCUMENT OR INSTRUMENT DELIVERED HEREUNDER TO CONVEY TITLE TO ANY ASSET OR THING OF VALUE UPON THE EXECUTION, DELIVERY AND FILING HEREOF OR THEREOF. EXCEPT AS MAY EXPRESSLY BE SET FORTH HEREIN OR IN ANY OTHER ANCILLARY AGREEMENT, ALL SUCH ASSETS ARE BEING TRANSFERRED ON AN “AS IS,” “WHERE IS” BASIS (AND, IN THE CASE OF ANY REAL PROPERTY, BY MEANS OF A QUITCLAIM OR SIMILAR FORM DEED OR CONVEYANCE) AND THE RESPECTIVE TRANSFEREES SHALL BEAR THE ECONOMIC AND LEGAL RISKS THAT (I) ANY CONVEYANCE WILL PROVE TO BE INSUFFICIENT TO VEST IN THE TRANSFEREE GOOD AND MARKETABLE TITLE, FREE AND CLEAR OF ANY SECURITY INTEREST, AND (II) ANY NECESSARY APPROVALS OR NOTIFICATIONS ARE NOT OBTAINED OR THAT ANY REQUIREMENTS OF LAWS OR JUDGMENTS ARE NOT COMPLIED WITH.

 

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ARTICLE III

THE FORM 10 REGISTRATION

 

3.1. Transactions Prior to the Effectiveness of the Form 10 Registration Statement .

 

(a) HBIO and HART shall use their reasonable best efforts to cause the Form 10 Registration Statement to be declared effective. Such actions shall include, but not necessarily be limited to, those specified in this Section 3.1.

 

(b) HART shall file such amendments or supplements to the Form 10 Registration Statement as may be necessary in order to cause the same to become and remain effective as required by Law, including, but not limited to, filing such amendments to the Form 10 Registration Statement as may be required by the SEC or federal, state or foreign securities Laws. HBIO and HART shall also cooperate in preparing, filing with the SEC and causing to become effective any registration statements or amendments thereof which are required to reflect the establishment of, or amendments to, any employee benefit and other plans necessary or appropriate in connection with the Separation, the Distribution or the other transactions contemplated by this Agreement and the Ancillary Agreements.

 

(c) HART shall prepare, file and use reasonable best efforts to seek to make effective, an application for listing of the HART Common Stock on the NASDAQ, subject to official notice of issuance.

 

(d) At or prior to the Separation, HBIO and HART shall each take all actions that may be required to provide for the adoption, and filing as necessary, by HART of an Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws, each in form mutually acceptable to the HBIO Board and HART Board.

 

ARTICLE IV

THE DISTRIBUTION

 

4.1. The Distribution .

 

(a) HART shall cooperate with HBIO to accomplish the Distribution and shall, at HBIO’s direction, promptly take any and all actions necessary or desirable to effect the Distribution, including, without limitation, the registration under the Securities Act of HART Common Stock on an appropriate registration form or forms to be designated by HBIO. HBIO shall select any investment bank or manager in connection with the Distribution, as well as any financial printer, solicitation and/or exchange agent and financial, legal, accounting and other advisors for HBIO. HART and HBIO, as the case may be, will provide to the Agent all share certificates and any information required in order to complete the Distribution.

 

(b) Subject to Section 4.3 hereof, on or prior to the Distribution Date, HBIO will deliver to the Agent for the benefit of holders of record of HBIO Common Stock on the Record Date all of the outstanding shares of HART Common Stock then owned by HBIO or any member of the HBIO Group (including, if such shares are represented by one or more stock certificates, such stock certificates, endorsed by HBIO in blank), and shall cause the transfer agent for the shares of HBIO Common Stock to instruct the Agent to distribute on the Distribution Date the appropriate number of such shares of HART Common Stock to each such holder or designated transferee or transferees of such holder. The Distribution shall be effective at 12:01 a.m. Eastern Standard Time on the Distribution Date or at such other time as the Parties may agree.

 

(c) Subject to Section 4.4, each holder of HBIO Common Stock on the Record Date (or such holder’s designated transferee or transferees) will be entitled to receive in the Distribution a number of shares of HART Common Stock equal to the number of shares of HBIO Common Stock held by such holder on the Record Date multiplied by the Distribution Ratio.

 

4.2. Actions Prior to the Distribution .

 

(a) HBIO and HART shall prepare, and HBIO shall mail, prior to the Distribution Date, to the holders of HBIO Common Stock, such information concerning HART, its business, operations and management, the Distribution and such other matters as HBIO shall reasonably determine and as may be required by Law. HBIO shall bear the cost of any such delivery to its stockholders. HBIO and HART will prepare, and HART will, to the extent required under applicable Law, file with the SEC any such documentation and any requisite no-action letters which HBIO determines are necessary or desirable to effectuate the Distribution and HBIO and HART shall each use its reasonable best efforts to obtain all necessary approvals from the SEC with respect thereto as soon as practicable.

 

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(b) HBIO and HART shall take all such action as may be necessary or appropriate under the securities or blue sky Laws of the United States (and any comparable Laws under any foreign jurisdiction) in connection with the Distribution.

 

(c) HBIO and HART shall take all reasonable steps necessary and appropriate to cause the conditions set forth in Section 4.3 (subject to Section 11.2(b)) to be satisfied and to effect the Distribution on any Distribution Date.

 

(d) HART shall prepare and file, and shall use its reasonable best efforts to have approved, an application for the listing of the HART Common Stock to be distributed in the Distribution on NASDAQ, subject to official notice of distribution.

 

4.3. Conditions to Distribution .

 

(a) Following the consummation of the Separation, HBIO currently intends to effect the Distribution by means of a spin-off. HBIO shall, in its sole discretion, determine the terms of the Distribution, including, without limitation, the form (including whether to effect the transaction as a spin-off, a split-off or a combination of both transactions), structure and all other terms of any transaction and/or offering to effect the Distribution. HBIO shall have sole discretion to determine the date of consummation of the Distribution at any time after the Separation; and such date as so determined by HBIO is referred to herein as the “Distribution Date.” The consummation of the Distribution will be subject to the satisfaction, or waiver by HBIO in its sole discretion, of the following conditions:

 

(i) The Separation shall have been completed in accordance with the provisions of Section 2.

 

(ii) The Form 10 Registration Statement shall have been filed and declared effective by the SEC.

 

(iii) HBIO shall have made a capital contribution to HART in the amount of at least $15 million.

 

(iv) The Ancillary Agreements shall have been duly executed and delivered by the parties thereto.

 

(v) HBIO shall own at least 80.1% of the total voting power with respect to the election and removal of directors of the outstanding HART Common Stock immediately prior to the Distribution.

 

(vi) Such other actions as the Parties hereto may, based upon the advice of counsel, reasonably request to be taken prior to the Separation and Distribution in order to assure the successful completion of the Separation and Distribution and the other transactions contemplated by this Agreement shall have been taken.

 

(vii) This Agreement shall not have been terminated.

 

(viii) The private letter ruling received by HBIO from the IRS prior to the date hereof in connection with the transactions contemplated hereby shall continue in effect and such ruling shall be in form and substance satisfactory to HBIO in its sole discretion, and HBIO’s receipt of an opinion from Burns & Levinson, LLP, counsel to HBIO, to the effect that the Contribution and the Distribution, taken together, will qualify as a transaction that is described in Section 355(a) and 368(a)(1)(D) of the Code.

 

(ix) All Governmental Approvals necessary to consummate the Distribution shall have been obtained and be in full force and effect.

 

(x) The actions and filings necessary or appropriate under applicable securities Laws in connection with the Distribution will have been taken or made, and, where applicable, have become effective or been accepted by the applicable Governmental Authority.

 

(xi) No order, injunction or decree issued by any court or agency of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the Distribution or any of the related transactions shall be in effect, and no other event outside the control of HBIO shall have occurred or failed to occur that prevents the consummation of the Distribution or any of the related transactions.

 

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(xii) The approval for listing on NASDAQ for the shares of the HART Common Stock to be distributed to the HBIO stockholders in the Distribution shall have been obtained.

 

(xiii) No other events or developments shall have occurred subsequent to the completion of the Separation that, in the judgment of the HBIO Board, would result in the Distribution not being in the best interest of HBIO or its shareholders.

 

(xiv) the receipt by HBIO of an opinion, in form and substance satisfactory to it, from its financial advisor to the effect that HART and HBIO each will be solvent, adequately capitalized immediately after the Distribution and able to pay its liabilities as they become absolute and mature and that HBIO has sufficient surplus under Delaware law to declare the dividend of HART Common Stock.

 

(b) The foregoing conditions are for the sole benefit of HBIO and shall not give rise to or create any duty on the part of HBIO or the HBIO Board to waive or not waive such conditions or in any way limit HBIO’s right to terminate this Agreement as set forth in Article XI or alter the consequences of any such termination from those specified in such Article. Any determination made by the HBIO Board prior to the Distribution concerning the satisfaction or waiver of any or all of the conditions set forth in this Section 4.3 shall be conclusive.

 

4.4. Fractional Shares . As soon as practicable after the Distribution Date, HBIO shall direct the Agent to determine the number of whole shares and fractional shares of HART Common Stock allocable to each holder of record or beneficial owner of HBIO Common Stock as of the Record Date, to aggregate all such fractional shares and to sell the whole shares obtained thereby in open market transactions (with the Agent, in its sole discretion, determining when, how, through which broker-dealer at what price to make such sales), and to cause to be distributed to each such holder or for the benefit of each such beneficial owner, in lieu of any fractional share, such holder’s or owner’s ratable share of the proceeds of such sale, after making appropriate deductions of the amount required to be withheld for federal income tax purposes and after deducting an amount equal to all brokerage charges, commissions and transfer taxes attributed to such sale.

 

ARTICLE V

MUTUAL RELEASES; INDEMNIFICATION

 

5.1. Release of Pre-Closing Claims .

 

(a) Except as provided in Section 5.1(c) and 5.1(d), effective as of the Distribution Date, HART does hereby, for itself and each other member of the HART Group, their respective Affiliates (other than any member of the HBIO Group), successors and assigns, and all Persons who at any time prior to the Distribution Date have been stockholders, directors, officers, agents or employees of any member of the HART Group (in each case, in their respective capacities as such), remise, release and forever discharge HBIO and the members of the HBIO Group, their respective Affiliates (other than any member of the HART Group), successors and assigns, and all Persons who at any time prior to the Distribution Date have been stockholders, directors, officers, agents or employees of any member of the HBIO Group (in each case, in their respective capacities as such), and their respective heirs, executors, administrators, successors and assigns, from any and all Liabilities whatsoever, whether at law or in equity (including any right of contribution), whether arising under any contract or agreement, by operation of law or otherwise, existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged to have existed on or before the Distribution Date , including in connection with the transactions and all other activities to implement any of the Separation and the Distribution.

 

(b) Except as provided in Section 5.1(c), effective as of the Distribution Date , HBIO does hereby, for itself and each other member of the HBIO Group, their respective Affiliates (other than any member of the HART Group), successors and assigns, and all Persons who at any time prior to the Distribution Date have been stockholders, directors, officers, agents or employees of any member of the HBIO Group (in each case, in their respective capacities as such), remise, release and forever discharge HART, the respective members of the HART Group, their respective Affiliates (other than any member of the HBIO Group), successors and assigns, and all Persons who at any time prior to the Distribution Date have been stockholders, directors, officers, agents or employees of any member of the HART Group (in each case, in their respective capacities as such), and their respective heirs, executors, administrators, successors and assigns, from any and all Liabilities whatsoever, whether at law or in equity (including any right of contribution), whether arising under any contract or agreement, by operation of law or otherwise, existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged to have existed on or before the Distribution Date, including in connection with the transactions and all other activities to implement any of the Separation and the Distribution.

 

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(c) Nothing contained in Section 5.1(a) or (b) shall impair any right of any Person to enforce this Agreement, any other Ancillary Agreement or any agreements, arrangements, commitments or understandings that are specified in Section 2.8(b) or the applicable exhibits or schedules thereto not to terminate as of the Separation Date, in each case in accordance with its terms. Nothing contained in Section 5.1(a) or (b) shall release any Person from:

 

(i) any Liability provided in or resulting from any agreement among any members of the HBIO Group or the HART Group that is specified in Section 2.8(b) or the applicable schedules or exhibits thereto as not to terminate as of the Separation Date, or any other Liability specified in such Section 2.8(b) as not to terminate as of the Separation Date;

 

(ii) any Liability, contingent or otherwise, assumed, transferred, assigned or allocated to the Group of which such Person is a member in accordance with, or any other Liability of any member of any Group under, this Agreement or any other Ancillary Agreement;

 

(iii) any Liability for the sale, lease, construction or receipt of goods, property or services purchased, obtained or used in the ordinary course of business by a member of one Group from a member of the other Group prior to the Separation Date;

 

(iv) any Liability for unpaid amounts for products or services or refunds owing on products or services due on a value-received basis for work done by a member of one Group at the request or on behalf of a member of the other Group;

 

(v) any Liability that the Parties may have with respect to indemnification or contribution pursuant to this Agreement for claims brought against the Parties by third Persons, which Liability shall be governed by the provisions of this Article V and Article VI and, if applicable, the appropriate provisions of the Ancillary Agreements or other agreement specified in Section 2.8(b) or the applicable schedules or exhibits thereto; or

 

(vi) any Liability the release of which would result in the release of any Person other than a Person released pursuant to this Section 5.1.

 

In addition, nothing contained in Section 5.1(a) shall release HBIO from honoring its existing obligations to indemnify any director, officer or employee of HART who was a director, officer or employee of HBIO on or prior to the Distribution Date, to the extent such director, officer or employee becomes a named defendant in any Action with respect to which such director, officer or employee was entitled to such indemnification pursuant to then existing obligations.

 

(d) HART shall not make, and shall not permit any member of the HART Group to make, any claim or demand, or commence any Action asserting any claim or demand, including any claim of contribution or any indemnification, against HBIO or any member of the HBIO Group, or any other Person released pursuant to Section 5.1(a), with respect to any Liabilities released pursuant to Section 5.1(a). HBIO shall not, and shall not permit any member of the HBIO Group, to make any claim or demand, or commence any Action asserting any claim or demand, including any claim of contribution or any indemnification against HART or any member of the HART Group, or any other Person released pursuant to Section 5.1(b), with respect to any Liabilities released pursuant to Section 5.1(b).

 

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(e) It is the intent of each of HBIO and HART, by virtue of the provisions of this Section 5.1, to provide for a full and complete release and discharge of all Liabilities existing or arising from all acts and events occurring or failing to occur or alleged to have occurred or to have failed to occur and all conditions existing or alleged to have existed on or before the Separation Date, between or among HART or any member of the HART Group, on the one hand, and HBIO or any member of the HBIO Group, on the other hand (including any contractual agreements or arrangements existing or alleged to exist between or among any such members on or before the Separation Date), except as expressly set forth in Section 5.1(c). At any time, at the request of any other Party, each Party shall cause each member of its respective Group to execute and deliver releases reflecting the provisions hereof.

 

5.2. Indemnification by HART . Except as provided in Section 5.4, HART shall, and shall cause the other members of the HART Group to, jointly and severally, indemnify, defend and hold harmless HBIO, each member of the HBIO Group and each of their respective directors, officers and employees, and each of the heirs, executors, successors and assigns of any of the foregoing (collectively, the “ HBIO Indemnitees ”), from and against any and all Liabilities of the HBIO Indemnitees relating to, arising out of or resulting from any of the following items (without duplication):

 

(a) the failure of HART or any other member of the HART Group or any other Person to pay, perform or otherwise promptly discharge any HART Liabilities or HART Contract in accordance with its respective terms, whether prior to or after the Separation Date or the date hereof;

 

(b) the HART Business, any HART Liability or any HART Contract (including, without limitation, any claims by third parties relating to the HART Business arising prior to, on or after the Separation Date);

 

(c) any breach by HART or any member of the HART Group of this Agreement;

 

(d) any guarantee, indemnification obligation, surety bond or other credit support agreement, arrangement, commitment or understanding for the benefit of HART or its Subsidiaries by HBIO or any of its Subsidiaries (other than HART or its Subsidiaries) that survives following the Separation Date; and

 

(e) any untrue statement or alleged untrue statement of a material fact or omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, with respect to all information contained in any Form 10 Registration Statement or Information Statement (including in any amendments or supplements thereto), other than any such statement or omission in the Form 10 Registration Statement or Prospectus pertaining to the HBIO Disclosure Portions.

 

5.3. Indemnification by HBIO . Except as provided in Section 5.4, HBIO shall, and shall cause the other members of the HBIO Group to, jointly and severally, indemnify, defend and hold harmless HART, each member of the HART Group and each of their respective directors, officers and employees, and each of the heirs, executors, successors and assigns of any of the foregoing (collectively, the “ HART Indemnitees ”), from and against any and all Liabilities of the HART Indemnitees relating to, arising out of or resulting from any of the following items (without duplication):

 

(a) the failure of HBIO or any other member of the HBIO Group or any other Person to pay, perform or otherwise promptly discharge any Excluded Liabilities, whether prior to or after the Separation Date or the date hereof;

 

(b) the Excluded Liabilities;

 

(c) any breach by HBIO or any member of the HBIO Group of this Agreement;

 

(d) any action or failure to act by HART or any member of the HART Group at the written direction of HBIO;

 

(e) the HBIO Disclosure Portions; and

 

(f) any guarantee, indemnification obligation, surety bond or other credit support agreement, arrangement, commitment or understanding for the benefit of HBIO or its Subsidiaries by HART or any of its Subsidiaries (other than HBIO or its Subsidiaries) that survives following the Separation Date.

 

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5.4. Indemnification Obligations Net of Insurance Proceeds and Other Amounts .

 

(a) The Parties intend that any Liability subject to indemnification or reimbursement pursuant to this Article V or Article VI will be net of Insurance Proceeds that actually reduce the amount of the Liability. Accordingly, the amount which any Party (an “ Indemnifying Party ”) is required to pay to any Person entitled to indemnification hereunder (an “ Indemnitee ”) will be reduced by any Insurance Proceeds theretofore actually recovered by or on behalf of the Indemnitee in respect of the related Liability. If an Indemnitee receives a payment (an “ Indemnity Payment ”) required by this Agreement from an Indemnifying Party in respect of any Liability and subsequently receives Insurance Proceeds, then the Indemnitee will pay to the Indemnifying Party an amount equal to the excess of the Indemnity Payment received over the amount of the Indemnity Payment that would have been due if the Insurance Proceeds had been received, realized or recovered before the Indemnity Payment was made.

 

(b) An insurer who would otherwise be obligated to pay any claim shall not be relieved of the responsibility with respect thereto or, solely by virtue of the indemnification provisions hereof, have any subrogation rights with respect thereto, it being expressly understood and agreed that no insurer or any other third party shall be entitled to a “windfall” ( i.e. , a benefit they would not be entitled to receive in the absence of the indemnification provisions) by virtue of the indemnification provisions hereof.

 

(c) The Parties intend that any indemnification or reimbursement payment in respect of a Liability pursuant to this Article V or Article VI shall be (i) reduced to take into account the amount of any Tax Benefit (as defined in the Tax Sharing Agreement) to the indemnified or reimbursed Person resulting from the Liability so indemnified or reimbursed and (ii) increased so that the amount of such payment, reduced by the amount of all Income Taxes (as defined in the Tax Sharing Agreement) payable with respect to the receipt thereof (but taking into account all correlative Tax Benefits resulting from the payment of such Income Taxes), shall equal the amount of the payment which the Person receiving such payment would otherwise be entitled to receive pursuant to this Agreement. For purposes of this Section 5.4(c), the amount of any Tax Benefit and any Income Taxes shall be calculated on the basis that the indemnified or reimbursed Person is subject to the highest marginal regular statutory income Tax rate, has sufficient taxable income to permit the realization or receipt of any relevant Tax Benefit at the earliest possible time and is not subject to the alternative minimum tax.

 

5.5. Procedures for Indemnification of Third-Party Claims .

 

(a) If an Indemnitee shall receive notice or otherwise learn of the assertion by a Person (including any Governmental Authority) who is not a member of the HBIO Group or the HART Group of any claim or of the commencement by any such Person of any Action (each such claim or Action, a “ Third-Party Claim ”) with respect to which an Indemnifying Party may be obligated to provide indemnification to such Indemnitee pursuant to Section 5.2 or 5.3, or any other Section of this Agreement or any other Ancillary Agreement, such Indemnitee shall give such Indemnifying Party written notice thereof within twenty (20) days after becoming aware of such Third-Party Claim. Any such notice shall describe the Third-Party Claim in reasonable detail and include copies of all notices and documents (including court papers) received by the Indemnitee relating to the Third-Party Claim. Notwithstanding the foregoing, the failure of an Indemnitee to provide notice in accordance with this Section 5.5(a) shall not relieve an Indemnifying Party of its indemnification obligations under this Agreement, except to the extent to which the Indemnifying Party is actually prejudiced by the Indemnitee’s failure to provide notice in accordance with this Section 5.5(a).

 

(b) An Indemnifying Party may elect to defend (and, unless the Indemnifying Party has specified any reservations or exceptions, to seek to settle or compromise), at such Indemnifying Party’s own expense and by such Indemnifying Party’s own counsel, any Third-Party Claim. Within 30 days after the receipt of notice from an Indemnitee in accordance with Section 5.5(a) (or sooner, if the nature of such Third-Party Claim so requires), the Indemnifying Party shall notify the Indemnitee of its election whether the Indemnifying Party will assume responsibility for defending such Third-Party Claim, which election shall specify any reservations or exceptions. After notice from an Indemnifying Party to an Indemnitee of its election to assume the defense of a Third-Party Claim, such Indemnitee shall have the right to employ separate counsel and to participate in (but not control) the defense, compromise, or settlement thereof, but the fees and expenses of such counsel shall be the expense of such Indemnitee except as set forth in the next sentence. In the event that the Indemnifying Party has elected to assume the defense of the Third-Party Claim but has specified, and continues to assert, any reservations or exceptions in such notice, then, in any such case, the reasonable fees and expenses of one separate counsel for all Indemnitees shall be borne by the Indemnifying Party.

 

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(c) If an Indemnifying Party elects not to assume responsibility for defending a Third-Party Claim, or fails to notify an Indemnitee of its election as provided in Section 5.5(b), such Indemnitee may defend such Third-Party Claim at the cost and expense of the Indemnifying Party.

 

(d) Unless the Indemnifying Party has failed to assume the defense of the Third-Party Claim in accordance with the terms of this Agreement, no Indemnitee may settle or compromise any Third-Party Claim without the consent of the Indemnifying Party, such consent not to be unreasonably withheld, delayed or conditioned.

 

(e) In the case of a Third-Party Claim, no Indemnifying Party shall consent to entry of any judgment or enter into any settlement of the Third-Party Claim without the consent of the Indemnitee if the effect thereof is to permit any injunction, declaratory judgment, other order or other non-monetary relief to be entered, directly or indirectly against any Indemnitee.

 

(f) The above provisions of this Section 5.5 and the provisions of Section 5.6 do not apply to Taxes (Taxes being governed by the Tax Sharing Agreement). In the case of any conflict between this Agreement and the Tax Sharing Agreement in relation to any matters addressed by the Tax Sharing Agreement, the Tax Sharing Agreement shall prevail.

 

5.6. Additional Matters .

 

(a) Indemnity Payments in respect of any Liabilities for which an Indemnitee is entitled to indemnification under this Article V shall be paid by the Indemnifying Party to the Indemnitee as such Liabilities are incurred upon demand by the Indemnitee, including reasonably satisfactory documentation setting forth the basis for the amount of such indemnification payment, including documentation with respect to calculations made and consideration of any Insurance Proceeds that actually reduce the amount of such Liabilities. The indemnity agreements contained in this Article V shall remain operative and in full force and effect, regardless of (i) any investigation made by or on behalf of any Indemnitee, (ii) the knowledge by the Indemnitee of Liabilities for which it might be entitled to indemnification hereunder and (iii) any termination of this Agreement.

 

(b) Any claim on account of a Liability which does not result from a Third-Party Claim shall be asserted by written notice given by the Indemnitee to the related Indemnifying Party. Such Indemnifying Party shall have a period of 30 days after the receipt of such notice within which to respond thereto. If such Indemnifying Party does not respond within such 30-day period, such Indemnifying Party shall be deemed to have refused to accept responsibility to make payment. If such Indemnifying Party does not respond within such 30-day period or rejects such claim in whole or in part, such Indemnitee shall be free to pursue such remedies as may be available to such Party as contemplated by this Agreement and the Ancillary Agreements. Notwithstanding anything to the contrary contained herein, except in connection with indemnification for a Third-Party Claim, to the extent of such claim, no Indemnifying Party shall, in any event, be liable to any Indemnitee for any Liabilities that are punitive, exemplary, treble or any other form of non-compensatory monetary damages.

 

(c) In the event of payment by or on behalf of any Indemnifying Party to any Indemnitee in connection with any Third-Party Claim, such Indemnifying Party shall be subrogated to and shall stand in the place of such Indemnitee as to any events or circumstances in respect of which such Indemnitee may have any right, defense or claim relating to such Third-Party Claim against any claimant or plaintiff asserting such Third-Party Claim or against any other Person. Such Indemnitee shall cooperate with such Indemnifying Party in a reasonable manner, and at the cost and expense of such Indemnifying Party, in prosecuting any subrogated right, defense or claim.

 

(d) In the event of an Action in which the Indemnifying Party is not a named defendant, if either the Indemnitee or Indemnifying Party shall so request, the Parties shall endeavor to substitute the Indemnifying Party for the named defendant. If such substitution or addition cannot be achieved for any reason or is not requested, the named defendant shall allow the Indemnifying Party to manage the Action as set forth in this section, the Indemnifying Party shall fully indemnify the named defendant against all costs of defending the Action (including court costs, sanctions imposed by a court, attorneys’ fees, experts fees and all other external expenses), the costs of any judgment or settlement, and the cost of any interest or penalties relating to any judgment or settlement.

 

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5.7. Remedies Cumulative. The remedies provided in this Article V shall be cumulative and shall not preclude assertion by any Indemnitee of any other rights or the seeking of any and all other remedies against any Indemnifying Party.

 

5.8. Survival of Indemnities . The rights and obligations of each of HBIO and HART and their respective Indemnitees under this Article V shall survive the sale or other transfer by any Party of any Assets or businesses or the assignment by it of any Liabilities.

 

5.9. Effect of Ancillary Agreements . To the extent the indemnity provisions of this Article V conflict with the indemnity or similar provisions of any Ancillary Agreement in relation to any matters addressed by such Ancillary Agreement, the terms of the respective Ancillary Agreement shall prevail.

 

ARTICLE VI

INTERIM OPERATIONS AND CERTAIN OTHER MATTERS

 

6.1. Financial Covenants . HART agrees that, for so long as HBIO is required to consolidate the results of operations and financial position of HART and any other members of the HART Group or to account for its investment in HART or any other member of the HART Group under the equity method of accounting (determined in accordance with GAAP consistently applied and consistent with SEC reporting requirements), or with respect to only clause (g) below, for so long as the auditors of HBIO need information pertaining to HART and any other members of the HART Group with respect to audits, notes, opinions and related matters of HBIO:

 

(a) Disclosure of Financial Controls . HART will, and will cause each other member of the HART Group to, maintain, as of and after the Separation Date, disclosure controls and procedures and internal control over financial reporting as defined in Exchange Act Rule 13a-15 promulgated under the Exchange Act; HART will, and will cause each other member of the HART Group to, maintain as of and after the Separation Date internal systems and procedures that will provide reasonable assurance that (A) HART’s annual and quarterly financial statements are reliable and timely prepared in accordance with GAAP and applicable law, (B) all transactions of members of the HART Group are recorded as necessary to permit the preparation of HART’s annual and quarterly financial statements, (C) the receipts and expenditures of members of the HART Group are authorized at the appropriate level within HART, and (D) unauthorized use or disposition of the assets of any member of the HART Group that could have a material effect on HART’s annual and quarterly financial statements is prevented or detected in a timely manner.

 

(b) Fiscal Year . HART will, and will cause each member of the HART Group organized in the U.S. to, maintain a fiscal year that commences and ends on the same calendar days as HBIO’s fiscal year commences and ends, and to maintain monthly accounting periods that commence and end on the same calendar days as HBIO’s monthly accounting periods commence and end.

 

(c) Monthly Financial Reports . No later than eight (8) Business Days after the end of each month (including the last month of HBIO’s fiscal year), HART will deliver to HBIO a consolidated income statement and, if requested by HBIO, income statements for each HART Affiliate which is consolidated with HART, for such period. HART will also deliver to HBIO a consolidated balance sheet and statement of cash flows for HART for such period and, if requested, balance sheets and statements of cash flow for each HART Affiliate which is consolidated with HART, no later than twelve (12) Business Days after the end of each monthly accounting period of HART (including the last monthly accounting period of HART of each fiscal year). The income statements, balance sheets and statements of cash flows will be in such format and detail as HBIO may request. As long as HBIO is required to consolidate the results of operations and financial position of HART in its financial statements, the information supporting such statements shall be submitted electronically for inclusion in HBIO’s financial reporting systems by such date to permit timely preparation of HBIO’s consolidated financial statements. In addition, if HART makes adjustments or other corrections to such financial information, adjustments or other corrections will be delivered by HART to HBIO as soon as practicable, and in any event within twenty-four (24) hours thereafter.

 

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(d) Quarterly and Annual Financial Statements . HART shall establish a disclosure committee (the “ Disclosure Committee ”) for the purposes of review and approval of HART’s Forms 10-Q and Form 10-K and other significant filings with the SEC (collectively, “ HART Public Filings ”) prior to the filing of such documents. HBIO will have the sole discretion to select up to three (3) of its employees to participate in all meetings of such committee for the purpose of reviewing the consistency of such documents with similar documents or other disclosures of HBIO. Distribution of documents by HART for review by HBIO should be made at the time such documents are distributed to the HART participants and should provide a reasonable period for review prior to the applicable meeting. The management of HART shall be solely liable for the completeness and accuracy of any such filings, including any financial statements included therein, and as such, subject at all times to HART’s continued compliance with the applicable provisions of this Agreement, HART will determine in its sole discretion the final form and content of all HART Public Filings. HART will cause each of its principal executive and principal financial officers to sign and deliver to HBIO the certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 and will include the certifications in HART’s periodic reports, as and when required pursuant to Exchange Act Rule 13a-14 and Item 601 of Regulation S-K.

 

(e) Conformance with HBIO Financial Presentation . All information provided by any HART Group member to HBIO or filed with the SEC pursuant to Section 6.1(c) through (f) inclusive will be consistent in terms of format and detail and otherwise with HBIO’s policies with respect to the application of GAAP and practices in effect on the Separation Date with respect to the provision of such financial information by such HART Group member to HBIO, with such changes therein as may be required by GAAP or requested by HBIO from time to time consistent with changes in such accounting principles and practices.

 

(f) Budgets and Financial Projections . HART will, as promptly as practicable, deliver to HBIO copies of all annual budgets and periodic financial projections (consistent in terms of format and detail and otherwise required by HBIO) relating to HART on a consolidated basis and will provide HBIO an opportunity to meet with management of HART to discuss such budgets and projections. HART will continue to provide to HBIO projections on a monthly basis consistent with past practices, including income, cash flow and operating indicators, as well as capital expenditure detail on a quarterly basis. Such projections will be submitted electronically for inclusion in HBIO’s management reporting systems.

 

(g) Other Information . With reasonable promptness, HART will deliver to HBIO such additional financial and other information and data with respect to the HART Group and their business, properties, financial positions, results of operations and prospects as from time to time may be reasonably requested by HBIO.

 

(h) Press Releases and Similar Information . HART and HBIO will consult with each other as to the timing of their annual and quarterly earnings releases and any interim financial guidance for a current or future period and will give each other the opportunity to review the information therein relating to the HART Group and to comment thereon. HBIO and HART will make reasonable efforts to coordinate the issuance of their respective quarterly earnings releases, which are generally expected to both occur within one business day at approximately the same time on the same date. No later than twenty-four (24) hours prior to the time and date that a Party intends to publish its regular quarterly earnings release or any financial guidance for a current or future period, such Party will deliver to the other Party copies of drafts (or relevant portions thereof) of all press releases and other statements to be made available by any member of that Party’s Group to its employees or to the public concerning any matters that could be reasonably likely to have a material financial impact on the earnings, results of operations, financial condition or prospects of any HART Group member. In addition, prior to the time and date that a Party intends to publish its regular quarterly earnings release or any financial guidance for a current or future period, such Party will deliver to the other Party copies of substantially final drafts of all press releases and other statements to be made available by any member of that Party’s Group to its employees or to the public concerning any matters that could be reasonably likely to have a material financial impact on the earnings, results of operations, financial condition or prospects of any HART Group member. In addition, prior to the issuance of any such press release or public statement that meets the criteria set forth in the preceding two sentences, HART will consult with HBIO regarding any changes (other than typographical or other similar minor changes) to such substantially final drafts. Immediately following the issuance thereof, HART will deliver to HBIO copies of final drafts of all press releases and other public statements.

 

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(i) Cooperation on HBIO Filings . HART shall (i) except as may be set forth in the Transition Services Agreement, maintain in effect at its own cost and expense adequate systems and controls to the extent necessary to enable the members of the HBIO Group to satisfy their respective reporting, accounting, audit and other obligations, and (ii) provide, or cause to be provided, to HBIO in such form as HBIO shall request, at no charge to HBIO (except with respect to any reasonable out-of-pocket costs incurred by HART in fulfilling such requests), all financial and other data and information as HBIO determines necessary or advisable in order to prepare its financial statements and reports or filings with any Governmental Authority, including copies of all quarterly and annual financial information and other reports and documents HART intends to file with the SEC prior to such filings (as well as final copies upon filing), and copies of HART’s budgets and financial projections. HART will cooperate fully, and use commercially reasonable efforts to cause HART’s independent certified public accountants (“ HART’s Auditors ”) to cooperate fully, with HBIO to the extent requested by HBIO in the preparation of HBIO’s public earnings or other press releases, Quarterly Reports on Form 10-Q, Annual Reports to Shareholders, Annual Reports on Form 10-K, any Current Reports on Form 8-K, financial statements and notes, audits, and any other proxy, information and registration statements, reports, notices, prospectuses and any other filings made by HBIO with the SEC, any national securities exchange or otherwise made publicly available (collectively, the “ HBIO Public Filings ”). HART is responsible for the preparation of its financial statements in accordance with HBIO’s policies with respect to the application of GAAP and shall indemnify HBIO for any liabilities it shall incur with respect to inaccuracy of such statements in accordance with Article V. HART will continue to prepare the quarterly and annual financial reporting analysis and provide support for financial statement footnotes and other information included in HBIO’s filings with the SEC. Such information and the timing thereof will be consistent with the HBIO financial statement processes in place prior to the Separation. HART also agrees to provide to HBIO all other information that HBIO reasonably requests in connection with any HBIO Public Filings or that, in the judgment of HBIO’s legal department and its outside securities counsel, is required to be disclosed or incorporated by reference therein under any Law. HART will provide such information in a timely manner on the dates requested by HBIO (which may be earlier than the dates on which HART otherwise would be required hereunder to have such information available) to enable HBIO to prepare, print and release all HBIO Public Filings on such dates as HBIO will determine but in no event later than as required by applicable Law. HART will use its commercially reasonable efforts to cause HART’s Auditors to consent to any reference to them as experts in any HBIO Public Filings required under any law, rule or regulation. If and to the extent requested by HBIO, HART will diligently and promptly review all drafts of such HBIO Public Filings and prepare in a diligent and timely fashion any portion of such HBIO Public Filing pertaining to HART. HART management’s responsibility for reviewing such disclosures shall include a determination that such disclosures are complete and accurate and consistent with other public filings or other disclosures which have been made by HART. Prior to any printing or public release of any HBIO Public Filing, an appropriate executive officer of HART will, if requested by HBIO, certify that the information relating to any HART Group member in such HBIO Public Filing is accurate, true, complete and correct in all material respects. Unless required by applicable Law, HART will not publicly release any financial or other information which conflicts with the information with respect to any HART Group member that is included in any HBIO Public Filing without HBIO’s prior written consent. Prior to the release or filing thereof, HBIO will provide HART with a draft of any portion of a HBIO Public Filing containing information relating to the HART Group and will give HART an opportunity to review such information and comment thereon; provided that HBIO will determine in its sole discretion the final form and content of all HBIO Public Filings.

 

(j) For the avoidance of doubt, HART’s requirements under this Section 6.1 will continue until the reporting for all financial statement periods during which HBIO was required to consolidate the results of operations and financial position of HART and any other members of the HART Group or to account for its investment in HART or any other member of the HART Group under the equity method of accounting (determined in accordance with GAAP consistently applied and consistent with SEC reporting requirements) has been completed. For example, if HART ceases to be a consolidated subsidiary or equity method affiliate of HBIO on September 30 of a given year, HART’s obligations with regard to information required for HBIO’s Form 10-K for such year ended December 31 will remain in effect until such Form 10-K has been filed.

 

6.2. Other Covenants .

 

(a) For so long as HBIO beneficially owns at least 50% of the total voting power of HART’s outstanding capital stock entitled to vote in the election of the HART Board:

 

(i) HART will not, without the prior written consent of HBIO (which HBIO may withhold in its sole discretion), take, or cause to be taken, directly or indirectly, any action, including making or failing to make any election under the Law of any state, which has the effect, directly or indirectly, of restricting or limiting the ability of HBIO to freely sell, transfer, assign, pledge or otherwise dispose of shares of HART Common Stock or would restrict or limit the rights of any transferee of HBIO as a holder of HART Common Stock. Without limiting the generality of the foregoing, HART will not, without the prior written consent of HBIO (which HBIO may withhold in its sole discretion), take any action, or take any action to recommend to its stockholders any action, which would among other things, limit the legal rights of, or deny any benefit to, HBIO as a HART stockholder either (i) solely as a result of the amount of HART Common Stock owned by HBIO or (ii) in a manner not applicable to HART stockholders generally.

 

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(ii) To the extent that HBIO is a party to any contract that provides that certain actions or inactions of HBIO Affiliates (which for purposes of such contract includes any member of the HART Group) which may result in HBIO being in breach of or in default under such contract and HBIO has advised HART of the existence, and has furnished HART with copies, of such contracts (or the relevant portions thereof), HART will not take or fail to take, as applicable, and HART will use commercially reasonable efforts to cause the other members of the HART Group not to take or fail to take, as applicable, any actions that reasonably could result in HBIO being in breach of or in default under any such contract. The Parties acknowledge and agree that from time to time HBIO may in good faith (and not solely with the intention of imposing restrictions on HART pursuant to this covenant) enter into additional contracts or amendments to existing contracts that provide that certain actions or inactions of HBIO Subsidiaries or Affiliates (including, for purposes of this Section 6.2(a)(ii), members of the HART Group) may result in HBIO being in breach of or in default under such contracts. In such event, provided HBIO has notified HART of such additional contracts or amendments to existing contracts, HART will not thereafter take or fail to take, as applicable, and HART will use commercially reasonable efforts to cause the other members of the HART Group not to take or fail to take, as applicable, any actions that reasonably could result in HBIO being in breach of or in default under any such additional contracts or amendments to existing contracts. HBIO acknowledges and agrees that HART will not be deemed in breach of this Section 6.2(a)(ii) to the extent that, prior to being notified by HBIO of an additional contract or an amendment to an existing contract pursuant to this Section 6.2(a)(ii), a HART Group member already has taken or failed to take one or more actions that would otherwise constitute a breach of this Section 6.2(a)(ii) had such action(s) or inaction(s) occurred after such notification, provided that HART does not, after notification by HBIO, take any further action or fail to take any action that contributes further to such breach or default. HART agrees that any Information provided to it pursuant to this Section 6.2(a)(ii) will constitute Information that is subject to HART’s obligations under Article VII.

 

(b) For so long as HBIO beneficially owns at least 80% of the total voting power of HART’s outstanding capital stock entitled to vote in the election of the HART Board, HART will not, without the prior written consent of HBIO (which it may withhold in its sole discretion), issue any shares of HART Capital Stock or any rights, warrants or options to acquire HART Capital Stock (including, without limitation, securities convertible into or exchangeable for HART Capital Stock), if after giving effect to such issuances and considering all of the shares of HART Capital Stock acquirable pursuant to such rights, warrants and options to be outstanding on the date of such issuance (whether or not then exercisable), HBIO could own (a) less than eighty percent (80%) of the total voting power of the outstanding shares of HART Capital Stock entitled to vote in the election of HART directors, (b) less than eighty percent (80%) of the outstanding shares of any class of HART Capital Stock not entitled to vote in the election of HART directors, or (c) less than eighty percent (80%) of the value of the outstanding shares of HART Capital Stock.

 

6.3. Covenants Relating to the Incurrence of Indebtedness .

 

(a) HART covenants and agrees that through the Distribution Date, HART will not, and HART will not permit any other member of the HART Group to, without HBIO’s prior written consent (which HBIO may withhold in its sole discretion), directly or indirectly, solicit, initiate or encourage any negotiations or discussions with respect to any offer or proposal for HART Indebtedness (other than any such negotiations or discussions regarding ordinary course non-convertible HART Indebtedness).

 

(b) In addition to Section 6.3(c), HART covenants and agrees that after the Separation Date and through the Distribution Date, HART will not, and HART will not permit any other member of the HART Group to, without HBIO’s prior written consent (which HBIO may withhold in its sole discretion), directly or indirectly, incur any HART Indebtedness.

 

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(c) HART covenants and agrees that after the Separation Date and through the Distribution Date, HART will not, and HART will not permit any other member of the HART Group to, without HBIO’s prior written consent (which HBIO may withhold in its sole discretion), create, incur, assume or suffer to exist any HART Indebtedness if the incurrence of such HART Indebtedness would cause HBIO to be in breach of or in default under any contract the existence of which HBIO has advised HART, or if the incurrence of such HART Indebtedness could be reasonably likely to adversely impact the credit rating of any commercial HBIO indebtedness.

 

(d) In order to implement this Section 6.3, HART will notify HBIO in writing, at least thirty (30) days prior to the time it or any other member of the HART Group intends to incur any additional HART Indebtedness, of its intention to do so and will either (i) demonstrate to HBIO’s satisfaction that this Section 6.3 will not be violated by such proposed additional HART Indebtedness or (ii) obtain HBIO’s prior written consent to the incurrence of such proposed additional HART Indebtedness. Any such written notification from HART to HBIO will include documentation of any existing HART Indebtedness and estimated HART Indebtedness after giving effect to such proposed incurrence of additional HART Indebtedness. HBIO will have the right to verify the accuracy of such information and HART will cooperate fully with HBIO in such effort (including, without limitation, by providing HBIO with access to the working papers and underlying documentation related to any calculations used in determining such information).

 

6.4. Auditors and Audits; Annual Financial Statements and Accounting . HART agrees that, for so long as HBIO is required to consolidate the results of operations and financial position of HART and any other members of the HART Group or to account for its investment in HART or any other member of the HART Group under the equity method of accounting (determined in accordance with GAAP consistently applied and consistent with SEC reporting requirements):

 

(a) Auditor . No member of the HART Group shall change its independent auditors without HBIO’s prior written consent, which shall not be unreasonably withheld or delayed.

 

(b) Audit Timing . HART shall use commercially reasonable efforts to enable its independent auditors to complete their audit such that they will date their opinion on HART’s audited annual financial statements on the same date that HBIO’s independent certified public accountants (“ HBIO’s Auditors ”) date their opinion on HBIO’s audited annual financial statements (the “ HBIO Annual Statements ”), and to enable HBIO to meet its timetable for the printing, filing and public dissemination of the HBIO Annual Statements, all in accordance with Section 6.1 hereof and as required by applicable law;

 

(c) Information Needed by HBIO . HART shall provide to HBIO on a timely basis all information that HBIO reasonably requires to meet its schedule for the preparation, printing, filing, and public dissemination of the HBIO Annual Statements in accordance with Section 6.1 hereof and as required by applicable Law. Without limiting the generality of the foregoing, HART will provide all required financial information with respect to the HART Group to HART’s Auditors in a sufficient and reasonable time and in sufficient detail to permit HART’s Auditors to take all steps and perform all reviews necessary to provide sufficient assistance to HBIO’s Auditors with respect to information to be included or contained in the HBIO Annual Statements;

 

(d) Access to HART Auditors . HART shall authorize HART’s Auditors to make available to HBIO’s Auditors both the personnel who performed, or are performing, the annual audit of HART and work papers related to the annual audit of HART, in all cases within a reasonable time prior to HART’s Auditors’ opinion date, so that HBIO’s Auditors are able to perform the procedures they consider necessary to take responsibility for the work of HART’s Auditors as it relates to HBIO’s Auditors’ report on HBIO’s statements, all within sufficient time to enable HBIO to meet its timetable for the printing, filing and public dissemination of the HBIO Annual Statements; and

 

(e) Access to Records . If HBIO determines in good faith that there may be some inaccuracy in a HART Group member’s financial statements or deficiency in a HART Group member’s internal accounting controls or operations that could materially impact HBIO’s financial statements, at HBIO’s request, HART will provide HBIO with access to the HART Group’s books and records upon reasonable notice and during normal business hours so that HBIO may conduct reasonable audits relating to the financial statements provided by HART under this Agreement as well as to the internal accounting controls and operations of the HART Group.

 

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(f) Notice of Changes . Subject to Section 6.1(g), HART will give HBIO as much prior notice as reasonably practicable of any proposed determination of, or any significant changes in, HART’s accounting estimates or accounting principles from those in effect on the Separation Date. HART will consult with HBIO and, if requested by HBIO, HART will consult with HBIO’s Auditors with respect thereto. HART will not make any such determination or changes without HBIO’s prior written consent if such a determination or a change would be sufficiently material to be required to be disclosed in HART’s or HBIO’s financial statements as filed with the SEC or otherwise publicly disclosed therein.

 

(g) Accounting Changes Requested by HBIO . Notwithstanding clause (g) above, HART will make any changes in its accounting estimates or accounting principles that are requested by HBIO in order for HART’s accounting practices and principles to be consistent with those of HBIO.

 

(h) Special Reports of Deficiencies or Violations . HART will report in reasonable detail to HBIO the following events or circumstances promptly after any executive officer of HART or any member of the HART Board becomes aware of such matter: (A) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect HART’s ability to record, process, summarize and report financial information; (B) any fraud, whether or not material, that involves management or other employees who have a significant role in HART’s internal control over financial reporting; (C) any illegal act within the meaning of Section 10A(b) and (f) of the Exchange Act; and (D) any report of a material violation of law that an attorney representing any HART Group member has formally made to any officers or directors of HART pursuant to the SEC’s attorney conduct rules (17 C.F.R. Part 205).

 

(i) For the avoidance of doubt, HART’s requirements under this Section 6.4 will continue until the reporting for all financial statement periods during which HBIO was required to consolidate the results of operations and financial position of HART and any other members of the HART Group or to account for its investment in HART or any other member of the HART Group under the equity method of accounting (determined in accordance with GAAP consistently applied and consistent with SEC reporting requirements) has been completed. For example, if HART ceases to be a consolidated subsidiary or equity method affiliate of HBIO on September 30 of a given year, HART’s obligations with regard to information required for HBIO’s Form 10-K for such year will remain in effect until such Form 10-K has been filed.

 

6.5. Insurance Matters .

 

(a)          (i) HART and each Covered Subsidiary that is a member of the HART Group, and each of their respective directors and officers shall be covered under HBIO’s directors’ and officers’ insurance program until the Distribution Date. HART shall promptly pay or reimburse HBIO for all costs and expenses associated with this coverage that are properly allocated to HART and any members of the HART Group by HBIO consistent with HBIO’s allocation of such costs and expenses with respect to the HART Business as of the Separation Date. HART may review HBIO’s directors’ and officers’ insurance policies upon request. HART acknowledges that such directors’ and officers’ insurance coverage shall terminate as of the Distribution Date, and HART covenants and agrees that it shall take appropriate steps to secure directors’ and officers’ insurance coverage for itself, each of its Subsidiaries, if any, and each of their respective directors and officers no later than the Distribution Date.

 

(ii) Except as set forth in Section 6.5(a)(i) with respect to directors’ and officers’ insurance, during the period from the Separation Date through the Distribution Date, HBIO will, subject to insurance market conditions and other factors beyond HBIO’s control, maintain, for the protection of HART and its Covered Subsidiaries, policies of insurance that are comparable to those maintained generally for HBIO and its Covered Subsidiaries during the same period. HART shall promptly pay or reimburse HBIO for all costs and expenses associated with this coverage that are properly allocated to HART and any members of the HART Group by HBIO consistent with HBIO’s allocation of such costs and expenses with respect to the HART Business as of the Separation Date. To the extent HBIO purchases a new type of insurance, or an amount or level of insurance not previously purchased by HBIO in order to protect, at least in part, HART or any of its Covered Subsidiaries, that portion of the costs and expenses of such insurance attributable to HART or any of its Covered Subsidiaries, as determined in HBIO’s sole discretion, shall be reimbursed by HART.

 

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(b) HBIO and HART agree to cooperate in good faith to provide for an orderly transition of insurance coverage from the date hereof through the Distribution Date. Except with respect to HBIO’s obligation to indemnify the HART Indemnitees pursuant to Section 5.3 if applicable, in no event shall HBIO, any other member of the HBIO Group or any HBIO Indemnitee have liability or obligation whatsoever to any member of the HART Group solely as a result of any insurance policy or other contract or policy of insurance being terminated or otherwise ceasing to be in effect (except with respect to HBIO’s obligation to indemnify the HART Indemnitees pursuant to Section 5.3 that are impacted by any instance in which such insurance policy or other contract or policy of insurance that was required to be maintained by the HBIO Group or any HBIO Indemnitee hereunder (i) is terminated voluntarily by HBIO or any member of the HBIO Group or (ii) lapses as a result of HBIO or any member of the HBIO Group failing to pay any insurance premium when due), being unavailable or inadequate to cover any Liability of any member of the HART Group for any reason whatsoever or not being renewed or extended beyond the current expiration date.

 

(c) From and after the Distribution Date, other than as provided in Section 6.5(d), neither HART nor any member of the HART Group shall have any rights to or under any of HBIO’s or its Affiliates’ insurance policies. At the Distribution Date, HART shall have in effect all insurance programs required to comply with HART’s contractual obligations and such other insurance policies as reasonably necessary or customary for companies operating a business similar to HART’s. Such insurance programs may include, but are not limited to, general liability, commercial auto liability, workers’ compensation, employer’s liability, product liability, professional services liability, property, cargo, employment practices liability, employee dishonesty/crime, aircraft hull and liability, directors’ and officers’ liability and fiduciary liability.

 

(d) From and after the Distribution Date, with respect to any losses, damages and liability incurred by any member of the HART Group prior to the Distribution Date, HBIO will provide HART with access to, and HART may make claims under HBIO’s third-party insurance policies in place at the time of the Distribution and HBIO’s historical policies of insurance, but solely to the extent that such policies provided coverage for the HART Group prior to the Distribution; provided , that such access to, and the right to make claims under such insurance policies, shall be subject to the terms and conditions of such insurance policies, including any limits on coverage or scope, any deductibles and other fees and expenses, and shall be subject to the following additional conditions:

 

(A) HART shall report, as promptly as practicable claims in accordance with HBIO’s claim reporting procedures in effect immediately prior to the Distribution Date (or in accordance with any modifications to such procedures after the Distribution Date communicated by HBIO to HART in writing);

 

(B) HART and its Affiliates shall indemnify, hold harmless and reimburse HBIO and its Affiliates for any deductibles, self-insured retention, fees and expenses incurred by HBIO or its Affiliates to the extent resulting from any access to, any claims made by HART or any of its Affiliates under, any insurance provided pursuant to this Section 6.5(d) , including any indemnity payments, settlements, judgments, legal fees and allocated claims expenses and claim handling fees, whether such claims are made by HART, its employees or third Persons; and

 

(C) Except with respect to HBIO’s obligation to indemnify the HART Indemnitees pursuant to Section 5.3 if applicable, HART shall exclusively bear (and neither HBIO nor its Affiliates shall have any obligation to repay or reimburse HART or its Affiliates for) and shall be liable for all uninsured, uncovered, unavailable or uncollectible amounts of all such claims made by HART or any of its Affiliates under the policies as provided for in this Section 6.5(d) .

 

In the event an insurance policy aggregate is exhausted, or believed likely to be exhausted, due to noticed claims, the HART Group, on the one hand, and the HBIO Group, on the other hand, shall be responsible for their pro rata portion of the reinstatement premium, based upon the losses of such Group submitted to HBIO’s insurance carrier(s) (including any submissions prior to the Distribution Date). To the extent that the HBIO Group or the HART Group is allocated more than its pro rata portion of such premium due to the timing of losses submitted to HBIO’s insurance carrier(s), the other Party shall promptly pay the first Party an amount so that each Group has been properly allocated its pro rata portion of the reinstatement premium. HBIO and HART can mutually agree not to reinstate the policy aggregate and each Group then will bear all of its own future costs.

 

(e) All payments and reimbursements by HART pursuant to this Section 6.5 will be made within thirty (30) days after HART’s receipt of an invoice therefor from HBIO. If HBIO incurs costs to enforce HART’s obligations herein, HART agrees to indemnify HBIO for such enforcement costs, including attorneys’ fees.

 

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(f) HBIO shall retain the exclusive right to control its insurance policies and programs, including the right to exhaust, settle, release, commute, buy-back or otherwise resolve disputes with respect to any of its insurance policies and programs and to amend, modify or waive any rights under any such insurance policies and programs, notwithstanding whether any such policies or programs apply to any HART Liabilities and/or claims HART has made or could make in the future, and no member of the HART Group shall, without the prior written consent of HBIO, erode, exhaust, settle, release, commute, buy-back or otherwise resolve disputes with HBIO’s insurers with respect to any of HBIO’s insurance policies and programs, or amend, modify or waive any rights under any such insurance policies and programs. HART shall cooperate with HBIO and share such information as is reasonably necessary in order to permit HBIO to manage and conduct its insurance matters as it deems appropriate. Neither HBIO nor any of its Affiliates shall have any obligation to secure extended reporting for any claims under any of HBIO’s or its Affiliates’ liability policies for any acts or omissions by any member of the HART Group incurred prior to the Distribution Date.

 

(g) This Agreement shall not be considered as an attempted assignment of any policy of insurance or as a contract of insurance and shall not be construed to waive any right or remedy of any member of the HBIO Group in respect of any insurance policy or any other contract or policy of insurance.

 

(h) HART does hereby, for itself and each other member of the HART Group, agree that no member of the HBIO Group shall have any Liability whatsoever as a result of the insurance policies and practices of HBIO and its Affiliates as in effect at any time, including as a result of the level or scope of any such insurance, the creditworthiness of any insurance carrier, or the terms and conditions of any policy, and except with respect to HBIO’s obligation to indemnify the HART Indemnitees pursuant to Section 5.3 if applicable, the adequacy or timeliness of any notice to any insurance carrier with respect to any claim or potential claim or otherwise.

 

ARTICLE VII

EXCHANGE OF INFORMATION; CONFIDENTIALITY

 

7.1. Agreement for Exchange of Information; Archives . Subject to Section 7.8 and any other applicable confidentiality obligations, each of HBIO and HART, on behalf of its respective Group, agrees to provide, or cause to be provided, to the other Group, at any time before or after the Separation Date, as soon as reasonably practicable after written request therefor, any Information in the possession or under the control of such respective Group which the requesting Party reasonably needs (i) to comply with reporting, disclosure, filing or other requirements imposed on the requesting Party (including under applicable securities or Tax Laws) by a Governmental Authority having jurisdiction over the requesting Party, (ii) for use in any other judicial, regulatory, administrative, tax or other proceeding or in order to satisfy audit, accounting, claims, regulatory, litigation, tax or other similar requirements, in each case other than claims or allegations that one Party to this Agreement has against the other, or (iii) subject to the foregoing clause (ii), to comply with its obligations under this Agreement or any other Ancillary Agreement; provided , however , that, in the event that any Party determines that any such provision of Information could be commercially detrimental, violate any Law or agreement, or waive any attorney-client privilege, the Parties shall take all reasonable measures to permit the compliance with such obligations in a manner that avoids any such harm or consequence.

 

7.2. Ownership of Information . Any Information owned by one Group that is provided to a requesting Party pursuant to Section 7.1 or Section 7.7 shall be deemed to remain the property of the providing Party. Unless specifically set forth herein, nothing contained in this Agreement shall be construed as granting or conferring rights of license or otherwise in any such Information.

 

7.3. Compensation for Providing Information . Except as set forth in Section 7.1, the Party requesting Information agrees to reimburse the other Party for the reasonable costs, if any, of creating, gathering and copying such Information, to the extent that such costs are incurred for the benefit of the requesting Party. Except as may be otherwise specifically provided elsewhere in this Agreement or in any other agreement between the Parties, such costs shall be computed in accordance with the providing Party’s standard methodology and procedures.

 

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7.4. Record Retention . To facilitate the possible exchange of Information pursuant to this Article VII and other provisions of this Agreement after the Separation Date, the Parties agree to use their reasonable best efforts to retain all Information in their respective possession or control on the Separation Date in accordance with the policies of HBIO as in effect on the Separation Date or such other policies as may be adopted by HBIO after the Separation Date (provided, in the case of HART, that HBIO notifies HART of any such change). No Party will destroy, or permit any of its Subsidiaries to destroy, any Information which the other Party may have the right to obtain pursuant to this Agreement prior to the end of the retention period set forth in such policies without first notifying the other Party of the proposed destruction and giving the other Party the opportunity to take possession of such information prior to such destruction; provided , however , that in the case of any Information relating to Taxes, employee benefits or Environmental Liabilities, such retention period shall be extended to the expiration of the applicable statute of limitations (giving effect to any extensions thereof). Notwithstanding the foregoing, Section 9 of the Tax Sharing Agreement will govern the retention of Tax Records (as defined in the Tax Sharing Agreement).

 

7.5. Limitations of Liability . No Party shall have any liability to any other Party in the event that any Information exchanged or provided pursuant to this Agreement which is an estimate or forecast, or which is based on an estimate or forecast, is found to be inaccurate in the absence of willful misconduct by the Party providing such Information. No Party shall have any liability to any other Party if any Information is destroyed after reasonable best efforts by such Party to comply with the provisions of Section 7.4.

 

7.6. Other Agreements Providing for Exchange of Information .

 

The rights and obligations granted under this Article VII are subject to any specific limitations, qualifications or additional provisions on the sharing, exchange, retention or confidential treatment of Information (however it may be elsewhere defined) set forth in any Ancillary Agreement.

 

7.7. Production of Witnesses; Records; Cooperation .

 

(a) After the Separation Date, except in the case of an adversarial Action by one Party against another Party, each Party hereto shall use its commercially reasonable efforts to make available to each other Party, upon written request, the directors, officers and employees of the members of its respective Group as witnesses and any books, records or other documents within its control, to the extent that any such Person (giving consideration to business demands of such directors, officers and employees) or books, records or other documents may reasonably be required in connection with any Action in which the requesting Party may from time to time be involved, regardless of whether such Action is a matter with respect to which indemnification may be sought hereunder. The requesting Party shall bear all costs and expenses in connection therewith.

 

(b) If an Indemnifying Party chooses to defend or to seek to compromise or settle any Third-Party Claim, the other parties shall make available to such Indemnifying Party, upon written request, the directors, officers and employees of the members of its respective Group as witnesses and any books, records or other documents within its control, to the extent that any such Person (giving consideration to business demands of such directors, officers and employees) or books, records or other documents may reasonably be required in connection with such defense, settlement or compromise, or such prosecution, evaluation or pursuit, as the case may be, and shall otherwise cooperate in such defense, settlement or compromise, or such prosecution, evaluation or pursuit, as the case may be.

 

(c) Without limiting the foregoing, the Parties shall cooperate and consult to the extent reasonably necessary with respect to any Actions.

 

(d) Without limiting any provision of this Section 7.7 or the Intellectual Property Matters Agreement, each of the Parties agrees to cooperate, and to cause each member of its respective Group to cooperate, with each other in the defense of any infringement or similar claim with respect any intellectual property and shall not claim to acknowledge, or permit any member of its respective Group to claim to acknowledge, the validity or infringing use of any intellectual property of a third Person in a manner that would hamper or undermine the defense of such infringement or similar claim.

 

(e) The obligation of the Parties to provide witnesses pursuant to this Section 7.7 is intended to be interpreted in a manner so as to facilitate cooperation and shall include the obligation to provide as witnesses inventors and other officers without regard to whether the witness or the employer of the witness could assert a possible business conflict (subject to the exception set forth in the first sentence of Section 7.7(a)).

 

(f) In connection with any matter contemplated by this Section 7.7, the Parties will enter into a mutually acceptable joint defense agreement so as to maintain to the extent practicable any applicable attorney-client privilege or work product immunity of any member of any Group.

 

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7.8. Confidentiality .

 

(a) Subject to Section 7.9 , each of HBIO and HART, on behalf of itself and each member of its respective Group, agrees to hold, and to cause its respective Representatives to hold, in strict confidence, with at least the same degree of care that applies to HBIO’s confidential and proprietary information pursuant to policies in effect as of the Separation Date, all Information concerning each such other Group that is either in its possession (including Information in its possession prior to any of the date hereof, the Separation Date or any Distribution Date) or furnished by any such other Group or its respective Representatives at any time pursuant to this Agreement, any other Ancillary Agreement or otherwise, and shall not use any such Information other than for such purposes as shall be expressly permitted hereunder or under and Ancillary Agreement, except, in each case, to the extent that such Information is or has been (i) in the public domain through no fault of such Party or any member of such Group or any of their respective Representatives, (ii) later lawfully acquired from other sources by such Party (or any member of such Party’s Group) which sources are not themselves bound by a confidentiality obligation with respect to such Information, (iii) independently generated without reference to or use of any proprietary or confidential Information of the other Party, or (iv) approved for release or disclosure by written authorization of the non-disclosing Party.

 

(b) Each Party agrees not to release or disclose, or permit to be released or disclosed, any such Information to any other Person, except its Representatives who need to know such Information and who shall be subject by agreement or otherwise to confidentiality restrictions at least as restrictive as those set forth herein with respect to such Information, except as permitted pursuant to Section 7.9 . Without limiting the foregoing, when any Information is no longer needed for the purposes contemplated by this Agreement or any other Ancillary Agreement, each Party will promptly after request of the other Party either return to the other Party all Information in a tangible form (including all copies thereof and all notes, extracts or summaries based thereon) or certify to the other Party that it has destroyed such Information (and such copies thereof and such notes, extracts or summaries based thereon).

 

7.9. Protective Arrangements . In the event that any Party or any member of its Group either determines on the advice of its counsel that it is required to disclose any Information pursuant to applicable Law or receives any demand under lawful process or from any Governmental Authority to disclose or provide Information of any other Party (or any member of any other Party’s Group) that is subject to the confidentiality provisions hereof, such Party shall notify the other Party prior to disclosing or providing such Information and shall cooperate at the expense of the requesting Party in seeking any and all commercially feasible protective arrangements requested by such other Party. Subject to the foregoing, the Person that received such request may thereafter disclose or provide Information, or portions thereof, only to the extent required by such Law (as so advised by counsel) or by lawful process or such Governmental Authority.

 

ARTICLE VIII

MATTERS RELATING TO EMPLOYEES AND OTHER PARTICIPANTS

 

8.1. General Principles .

 

(a) Employment of HART Employees . All HART Employees shall continue to be employees of HART or another member of the HART Group, as the case may be, immediately after the Separation Date. All Transferred Employees shall be deemed to be employees exclusively of HART or the applicable member of the HART Group, as the case may be, on or immediately after the Separation Date except for the President and Chief Financial Officer of HBIO who may be employees of both HART and HBIO prior to the Distribution Date, and except for certain foreign Transferred Employees whom HBIO and HART agree will be transitioning to HART on or prior to the Distribution Date. Following the Separation Date, HART hereby agrees to promptly, and in event prior to the Distribution Date or later period that HBIO agrees to provide related transition services pertaining to such foreign Transferred Employees to HART, transfer such foreign Transferred Employees to the appropriate members of the HART Group.

 

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(b) Assumption and Retention of Liabilities; Related Assets .

 

(i) As of through the Separation Date, except as expressly provided in this Article VIII, the HBIO Group shall assume or retain and pay, perform, fulfill and discharge, in due course in full (A) all Liabilities under all HBIO Benefit Plans in accordance with the terms thereof, (B) all other Liabilities with respect to the employment or termination of employment of all HBIO Employees, Former HBIO Employees, Transferred Employees and their dependents and beneficiaries, and other service providers (including any individual who is, or was, an independent contractor, or other non-employee service provider of any member of the HBIO Group), arising in connection with or as a result of the provision of services to any member of the HBIO Group; and (C) any other Liabilities expressly assigned to HBIO under this Article VIII.

 

(ii) From and after the Separation Date, except as expressly provided in this Article VIII, the HART Group shall assume or retain, and pay, perform, fulfill and discharge, in due course and in full, (A) all Liabilities under all HART Benefit Plans, (B) all other Liabilities with respect to the employment or termination of employment of all HART Employees (including without limitation any Transferred Employees), Former HART Employees and their dependents and beneficiaries, and other service providers (including any individual who is, or was, an independent contractor or other non-employee service provider of any member of the HART Group or arising in connection with or as a result of the provision of services to any member of the HART Group; and (C) any other Liabilities expressly assigned to any member of the HART Group under this Article VIII. Notwithstanding anything herein to the contrary, until the President and Chief Financial Officer of HBIO and certain foreign Transferred Employees are transferred to the exclusive employ of HART or the HART Group on or prior to the Distribution Date, the HART Liabilities for all such individuals shall be governed by the Transition Services Agreement.

 

(iii) HART Participation in HBIO Benefit Plans . Except as expressly provided in this Article VIII, effective as of the Separation Date, HART and each other member of the HART Group shall cease to be a Participating Company in any HBIO Benefit Plan, and each HART Employee who is a participant in one or more HBIO Benefit Plans immediately prior to the Separation Date shall cease active participation in such HBIO Benefit Plans as of the Separation Date. Notwithstanding anything herein to the contrary, any Transferred Employee who is a participant in one or more HBIO Benefit Plans immediately prior to the Distribution Date shall cease active participation in such HBIO Benefit Plans as of the Distribution Date. Notwithstanding anything herein to the contrary, for purposes of counting service for eligibility, vesting and the accrual of benefits under any HART Benefit Plan, the HBIO Employment of any Transferred Employee shall count as HART Employment.

 

(c) Commercially Reasonable Efforts . HBIO and HART shall use commercially reasonable efforts to (i) enter into any necessary agreements to accomplish the assumptions and transfers contemplated by this Article VIII; (ii) amend any Benefit Plans; and (iii) provide for the transfer and maintenance of the necessary participant records. After the Separation Date, HBIO and HART shall each be individually responsible for the appointment of the trustees and the engagement of record keepers, investment managers, providers, and insurers for its respective Benefit Plans.

 

(d) Regulatory Compliance . HBIO and HART shall, in connection with the actions taken pursuant to this Article VIII, cooperate, as reasonably necessary and appropriate, in making any and all filings required under the Code, ERISA and any applicable securities laws, disseminating all appropriate communications with participants, transferring appropriate records and taking all such other actions as may be reasonably necessary and appropriate to implement the provisions of this Article VIII in a timely manner.

 

(e) Approval by HBIO as Sole Stockholder . Prior to the Distribution Date, HBIO shall cause HART to adopt the Harvard Apparatus Regenerative Technology Inc. 2013 Equity and Incentive Plan and any other HART Benefit Plan that may require stockholder approval under applicable Law.

 

(f) Sections 162(m)/409A . Notwithstanding anything in this Agreement to the contrary (including the treatment of supplemental and deferred compensation plans, outstanding long-term incentive awards, annual incentive awards as described herein, and awards under the Harvard Apparatus Regenerative Technology Inc. 2013 Equity and Incentive Plan), the Parties agree to negotiate in good faith regarding the need for any treatment different from that otherwise provided in this Article VIII to ensure that (i) a federal income Tax deduction for the payment of such supplemental or deferred compensation or long-term incentive award, annual incentive award or other compensation is not limited by reason of Section 162(m) of the Code, and (ii) the treatment of such supplemental or deferred compensation or long-term incentive award, annual incentive award or other compensation does not cause the imposition of a tax under Section 409A of the Code.

 

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(g) No Change in Control . The Parties hereto acknowledge and agree that the transactions contemplated by this Agreement do not constitute a “change of control” for purposes of any Benefit Plan, and to the extent that any Benefit Plan provides otherwise, such Benefit Plan shall be promptly amended to comply with this provision (in any event prior to the Distribution Date), provided that such amendment does not trigger adverse tax results under Code Section 409A or otherwise.

 

(h) Effect on Employment . Except as expressly provided in this Agreement, the occurrence of the Separation and Distribution alone shall not cause any employee of a member of either the HART Group or the HBIO Group to be deemed to have incurred a termination of employment which entitles such individual to the commencement of benefits under any of the HBIO Benefit Plans. Furthermore, nothing in this Agreement is intended to confer upon any employee or former employee of HBIO, HART or either of their respective Affiliates any right to continued employment, or any recall or similar rights to an individual on layoff or any type of approved leave. Additional conditions to the Separation will be (1) that the President and Chief Financial Officer of HBIO who are transferring to the employ of HART as of the Distribution Date shall execute employment agreements with HART with a term commencing on the Distribution Date, and (2) that each HART Employee or Transferred Employee having an employment agreement with HBIO, shall execute an agreement in favor of HBIO terminating his or her employment agreement with HBIO as of the Distribution Date, and acknowledging that no severance payments are due as a result of such termination of employment. Notwithstanding anything herein to the contrary, such HBIO termination agreement executed by the President or Chief Financial Officer shall be effective as of the Distribution Date. Notwithstanding anything in this paragraph to the contrary, HART acknowledges and agrees that it shall assume any and all Liabilities relating to any termination of HBIO employment by any HART Employee or Transferred Employee, described hereinabove (including any severance).

 

(i) Consent Of Third Parties . If any provision of this Agreement is dependent on the consent of any third party and such consent is withheld, the Parties hereto shall use their reasonable best efforts to implement the applicable provisions of this Agreement to the fullest extent practicable. If any provision of this Agreement cannot be implemented due to the failure of such third party to consent, the Parties hereto shall negotiate in good faith to implement the provision in a mutually satisfactory manner.

 

(j) Beneficiary Designation/Release Of Information/Right To Reimbursement . To the extent permitted by applicable Law and except as otherwise provided for in this Agreement or the HART Benefit Plans, all beneficiary designations, authorizations for the release of Information and rights to reimbursement made by or relating to HART participants under HBIO Benefit Plans shall be transferred to and be in full force and effect under the corresponding HART Benefit Plans as of the Separation Date until such beneficiary designations, authorizations or rights are replaced or revoked by, or no longer apply, to the relevant HART participant.

 

8.2. Annual Bonus Awards

 

(a) HART Bonus Awards . HART shall be responsible for determining all bonus awards payable for any time period following the Separation Date with respect to individuals who are employees of the HART Group on or after the Separation Date. HART shall be responsible for all Liabilities with respect to such bonus awards.

 

(b) HBIO Bonus Awards . HBIO shall be responsible for determining, and shall retain all Liabilities with respect to, any bonus awards payable to HBIO Employees for 2013 and thereafter. In addition, HBIO shall be responsible for determining, and shall retain all Liabilities with respect to any portion of bonus awards pertaining to any periods prior to the Separation Date, if any, that are payable to HART Employees who were also employees of the HBIO Group during such period. HBIO shall pay to each such HART Employee the amount of any such bonus pertaining to any periods prior to the Separation Date.

 

8.3. Certain Welfare Benefit Matters .

 

(a) HART Health and Welfare Plans . HART (or any third party with which HART contracts) shall be responsible for all Liabilities relating to, arising out of or resulting from health and welfare coverage or claims under the HART Health and Welfare Plans from and after the Distribution Date which shall also be the effective date of such HART Health and Welfare Plans. From the Separation Date to the Distribution Date, HART Employees (including any Transferred Employees) shall participate in the HBIO Health and Welfare Plans, and HBIO shall charge HART its pro rata share of the cost of such coverage for Transferred Employees and other HART Employees.

 

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(b) HBIO Health and Welfare Plans . HBIO (or any third party with which HART contracts) shall be responsible for all Liabilities relating to, arising out of or resulting from health and welfare coverage or claims under the HBIO Health and Welfare Plans, including but not limited to the claims of HART Employees (including any Transferred Employees) participating in such Plans before the Distribution Date.

 

(c) Workers’ Compensation Liabilities . All workers’ compensation Liabilities relating to, arising out of, or resulting from any claim by a HBIO Employee or Former HBIO Employee with respect to HBIO Employment, shall be retained by HBIO. All workers’ compensation Liabilities relating to, arising out of, or resulting from any claim by a HART Employee (including without limitation Transferred Employees) or Former HART Employee with respect to HART Employment shall be retained by HART. To the extent necessary, HBIO and HART shall cooperate with respect to any notification to appropriate governmental agencies of the effective time and the issuance of new, or the transfer of existing, workers’ compensation insurance policies and claims handling contracts.

 

(d) COBRA and HIPAA Compliance . HBIO shall be responsible for administering compliance with the health care continuation requirements of COBRA, the certificate of creditable coverage requirements of HIPAA, and the corresponding provisions of the HBIO Health and Welfare Plans with respect to HBIO Employees, Former HBIO Employees, Transferred Employees and their covered dependents who incur a COBRA qualifying event or loss of coverage under the HBIO Health and Welfare Plans at any time before, on or after the Separation Date. HART shall be responsible for administering compliance with the health care continuation requirements of COBRA, the certificate of creditable coverage requirements of HIPAA, and the corresponding provisions of the HART Health and Welfare Plans with respect to HART Employees (including, as applicable Transferred Employees) and Former HART Employees and their covered dependents who incur a COBRA qualifying event or loss of coverage under the HART Health and Welfare Plans at any time before, on or after the Separation Date.

 

8.4. [Reserved.]

 

8.5. Qualified Defined Contribution Plan .

 

(a)(i) Subject to the terms of this §8.5(e), Assets and Liabilities attributable to the vested and unvested account balances of the Transferred Employees (or any other applicable HART Employee who is an HBIO Participant) , including any notes relating to outstanding plan loans, which are held in the trust under the Harvard Bioscience, Inc. 401(k) Plan (the “ DC Trust ”) shall be spun off to a new 401(k) plan, the provisions of which shall initially mirror the plan under the DC Trust, and which HART shall sponsor and maintain (the “ HART 401(k) Plan ”). The Parties hereto shall cooperate in good faith to complete such separation on commercially reasonable terms and conditions, effective as of the Distribution Date or as soon thereafter as reasonably practicable. For purposes of counting service for eligibility, vesting and the accrual of benefits under the HART 401(k) Plan, the HBIO Employment of any Transferred Employee (or other HART Employee) shall count as HART Employment under the HART 401(k) Plan, as of the effective date of such Plan.

 

(a)(ii) HART shall be responsible for taking all necessary, reasonable and appropriate actions to establish, maintain and administer the HART 401(k) Plan so that it is qualified under Section 401(a) of the Code, so that the trust related thereto is exempt from Federal income tax under Section 501(a) of the Code. HART (acting directly or through one or more of its Affiliates) shall be responsible for any and all Liabilities and other obligations with respect to the HART 401(k) Plan.

 

(b)  Transfer of Assets . The transfer described in subsection (a) hereof shall occur as soon as practicable following both the establishment of the HART 401(k) Plan and the Distribution Date, subject to the terms of clause (e) hereof. HART shall cause the HART 401(k) Plan to accept such transfer of accounts and underlying Assets and Liabilities, and, effective as of the date of such transfer, HART shall assume and fully perform, pay and discharge, all obligations of the HBIO 401(k) Plan relating to the accounts of HART Participants. Any transfer of Assets pursuant to this Section 8.5 shall be conducted in accordance with Section 414(l) of the Code, Treasury Regulation Section 1.414(1)-1, and Section 208 of ERISA.

 

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(c)  Continuation of Elections . As soon as practicable following the establishment of the HART 401(k) Plan, HART (acting directly or through its Affiliates) shall, to the extent practicable, cause the HART 401(k) Plan to recognize and maintain all HBIO 401(k) Plan elections, including, but not limited to, loan arrangements, deferral, investment, and the form of payment, beneficiary designations, and the rights of alternate payees under qualified domestic relations orders with respect to HART Participants who are HBIO Participants); otherwise, HART shall require HART Participants to make new elections or designations, as necessary and appropriate with respect to the HART 401(k) Plan.

 

(d)  Form 5310-A . No later than thirty (30) days prior to the date of any transfer of Assets and Liabilities pursuant to Section 8.5(b), HBIO and HART (each acting directly or through their respective Affiliates) shall, if required, file Internal Revenue Service Form 5310-A regarding the transfer of Assets and Liabilities from the HBIO 401(k) Plan to the HART 401(k) Plan as described in this Section 8.5.

 

(e)  Contributions to the HART 401(k) Plan . The transfer of Assets and Liabilities described in (b) hereof shall include all contributions payable to the HBIO 401(k) Plan for any employee deferrals and contributions, HBIO matching contributions and other contributions, whether vested or unvested, and loan repayments, and any rollovers accounts that are allocable to the accounts of each and every Transferred Employee (or other HART Employee) who is a HBIO Participant, plus any suspense accounts or forfeiture accounts attributable to said Employees, where the amount of such transfer is determined through date, after the Distribution Date, that is established for transfer by the mutual agreement of HBIO and HART, determined in accordance with the terms and provisions of the HBIO 401(k) Plan, the HART 401(k) Plan, applicable law, and this section 8.5.

 

8.6. Deferred Compensation

 

(a) HBIO shall retain, or cause any member of the HBIO Group to retain, all Assets and all Liabilities arising out of or relating to any HBIO Benefit Plans that provide for nonqualified deferred compensation (the “ HBIO Nonqualified Plans ”), and any and all trusts relating to such HBIO Benefit Plans, including any grantor or “rabbi trust,” and shall make payments to all participants in such plans who are HART Employees (including without limitation any Transferred Employees), or Former HART Employees and their respective beneficiaries in accordance with the terms of the applicable HBIO Nonqualified Plan.

 

(b) Except as otherwise provided under the applicable HBIO Nonqualified Plan, HBIO and HART intend that neither the Separation nor the Distribution nor any of the other transactions contemplated by this Agreement will alone trigger a payment or distribution of compensation under the HBIO Nonqualified Plans for any HART Employee or Former HART Employee, but rather, that the payment or distribution of any compensation to which any HART Employee (including without limitation any Transferred Employee) or Former HART Employee is entitled under any HBIO Nonqualified Plan will occur upon such HART Employee’s separation from service from the HBIO Group or at such other time as provided in such HBIO Nonqualified Plan or such HART Employee’s deferral election. If any HBIO Nonqualified Plan must be amended to comply with this subsection (b), it shall be amended only if it is expected that the amendment shall not trigger any adverse tax consequence under Code Section 409A.

 

8.7. [Reserved].

 

8.8. Treatment of Outstanding HBIO Equity Awards . HBIO and HART shall use commercially reasonable efforts to take all actions necessary or appropriate so that each outstanding HBIO Option and HBIO Restricted Stock Unit held by any individual shall be adjusted as set forth in this Section 8.8 , provided that such adjustment does not trigger taxation under Code Section 409A.

 

(a) HBIO Options Held by HBIO Employees, Former HBIO Employees, HBIO Directors and HART Employees . As determined by the Compensation Committee of the HBIO Board (the “ Committee ”) pursuant to its authority under the applicable HBIO Long-Term Incentive Plan, and as approved by the HART Board pursuant to its authority under the applicable HART Long-Term Incentive Plan, each HBIO Option held by an HBIO Employee, a Former HBIO Employee, a member of the HBIO Board of Directors or a HART Employee (including without limitation, any Transferred Employee), whether vested or unvested, shall be converted on the Distribution Date into both an adjusted HBIO Option and a HART Option, each as described below, provided that tax under Code section 409A is not expected to be triggered thereby, and except as modified in accordance with this Section 8.8 below (including clause (c)), shall otherwise be subject to the same terms and conditions after the Distribution Date as the terms and conditions applicable to such HBIO Option immediately prior to the Distribution Date; provided , however , that from and after the Distribution Date:

 

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(i) the number of shares of HBIO Common Stock available for purchase upon the exercise of such adjusted HBIO Option shall be equal to the sum of (I) the respective Existing HBIO Option Amount, plus (II) the result, rounded down to the nearest whole dollar, obtained by multiplying (A) the Replacement Fair Value pertaining to such HBIO Option by (B) the HBIO Value Factor and dividing the product by (C) the HBIO Post-Distribution Fair Value Per Option pertaining to such HBIO Option,

 

(ii) the per share exercise price of such HBIO Option, rounded up to the nearest whole cent, shall be equal to the product of (A) the Existing HBIO Exercise Price times (B) the HBIO Ratio, provided that such per share exercise price after the Distribution Date complies with the conversion requirements of Treas. Reg. §1.409A-1(b)(5)(v)(D), and, if not, is adjusted so to comply,

 

(iii) the number of shares of HART Common Stock available for purchase upon the exercise of HART Option shall be equal to the result, rounded down to the nearest whole dollar, obtained by multiplying (A) the Replacement Fair Value pertaining to such HBIO Option by (B) the HART Value Factor and dividing the product by (C) the HART Fair Value Per Option pertaining to such HART Option,

 

(iv) the per share exercise price of the HART Option, rounded up to the nearest whole cent, shall be equal to the product of (A) the Existing HBIO Exercise Price times (B) the HART Ratio, provided that such per share exercise price after the Distribution Date complies with the conversion requirements of Treas. Reg. §1.409A-1(b)(5)(v)(D), and, if not, is adjusted so to comply,

 

provided , however , that the exercise price, the number of shares of HBIO Common Stock and HART Common Stock subject to such options, the requirements of this section, and the terms and conditions of vesting and exercise of such options shall be determined such that tax is not triggered under Section 409A of the Code; provided , further , that, in the case of any HBIO Option to which Section 421 of the Code applies by reason of its qualification under Section 422 of the Code immediately prior to the Distribution Date, the exercise price, the number of shares of HBIO Common Stock and HART Common Stock subject to such option and the terms and conditions of exercise of such option shall be determined in a manner consistent with the requirements of Section 424(a) of the Code.

 

(b) HBIO Restricted Stock Units .

 

(i) As determined by the Committee pursuant to its authority under the applicable HBIO Long-Term Incentive Plan, and approved by the HART Board pursuant to its authority under the applicable HART Long-Term Incentive Plan, with respect to each unvested HBIO Restricted Stock Unit, such HBIO Restricted Stock Unit shall be converted on the Distribution Date into both an adjusted HBIO Restricted Stock Unit and a HART Restricted Stock Unit, provided that such conversion shall not trigger Code Section 409A tax, and except as modified in accordance with Section 8.8(c), shall otherwise be subject to the same terms and conditions after the Distribution Date as the terms and conditions applicable to such HBIO Restricted Stock Unit immediately prior to the Distribution Date; provided , however , that from and after the Distribution Date:

 

(i) the number of shares of HBIO Common Stock subject to such HBIO Restricted Stock Unit, rounded down to the nearest whole share, shall be equal to the sum of (I) the Existing HBIO Restricted Stock Unit Amount plus (II) the amount obtained by multiplying (A) the Existing HBIO Restricted Stock Unit Amount times (B) the Distribution Ratio times (C) the HART Stock Value times (D) the HBIO Value Factor and dividing the result by (E) the HBIO Post-Distribution Stock Value,

 

(ii) the number of shares of HART Common Stock subject to such HART Restricted Stock Unit rounded down to the nearest whole share, shall be equal to the amount obtained by multiplying (A) the Existing HBIO Restricted Stock Unit Amount times (B) the Distribution Ratio times (C) the HART Stock Value times (D) the HART Value Factor and dividing the result by (E) the HART Stock Value;

 

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provided , however , that the number of shares of HBIO Common Stock and HART Common Stock subject to such Restricted Stock Units and the vesting and other terms and conditions of such Restricted Stock Unit shall be determined such that tax is not triggered under Section 409A of the Code; provided , further , that, in the case of any HBIO Restricted Stock Unit to which Section 421 of the Code applies by reason of its qualification under Section 422 of the Code as of immediately prior to the Distribution Date, the number of shares of HBIO Common Stock and HART Common Stock subject to such Restricted Stock Unit and the vesting and other terms and conditions such Restricted Stock Unit shall be determined in a manner consistent with the requirements of Section 424(a) of the Code.

 

(c) Miscellaneous Option and Restricted Stock Unit Terms . After the Distribution Date, HBIO Options and HBIO Restricted Stock Units adjusted pursuant to this Section 8.8, regardless of by whom held, shall be settled by HBIO, and HART Options and HART Restricted Stock Units (including any corresponding dividend equivalents), regardless of by whom held, shall be settled by HART. It is intended that, to the extent of the issuance of such HART Options and HART Restricted Stock Units in connection with the adjustment provisions of this Section 8.8, the HART Long-Term Incentive Plan shall be considered a successor to each of the HBIO Long-Term Incentive Plans and to have assumed the obligations of the applicable HBIO Long-Term Incentive Plan to make the adjustment of the HBIO Options and HBIO Restricted Stock Units as set forth in this Section 8.8 provided that any such adjustment does not trigger tax under Code Section 409A. With respect to grants adjusted pursuant to this Section 8.8, employment with or service for HBIO shall be treated as employment with or service for HART with respect to for exercisability, vesting, and the post-termination exercise period for HART Options and HART Restricted Stock Units held by HBIO Employees and HBIO Directors and employment with or service for HART shall be treated as employment with or service for HBIO for exercisability, vesting, and the post-termination exercise period for HBIO Options and HBIO Restricted Stock Units held by HART Employees and HART Directors.

 

Prior to the Distribution Date, HBIO shall amend the applicable HBIO Long-Term Incentive Plan as necessary, effective as of the Distribution Date, to provide that for purposes of the post Distribution HBIO Options and HBIO Restricted Stock Units issued in accordance with this Section 8.8 (including in determining exercisability, vesting and the post-termination exercise period), a HART Employee’s or HART Director’s continued service with the HART Group following the Distribution Date shall be deemed continued service with HBIO. HART shall issue each HART Option and HART Restricted Stock Unit referenced above in this Section 8.8 under the HART Long-Term Incentive Plan, which shall provide that, except as otherwise provided herein, the terms and conditions applicable to such HART Options and HART Restricted Stock Units shall be substantially similar to the terms and conditions applicable to the corresponding HBIO Options and HBIO Restricted Stock Units, including the terms and conditions relating to exercisability, vesting and the post-termination exercise period (as set forth in the applicable plan, award agreement or in the option holder’s then applicable employment agreement with HBIO or its Affiliates, which terms shall remain in effect even after the expiration or termination of such employment agreement) and shall include a provision to the effect that, for purposes of the HART Options and HART Restricted Stock Units issued in accordance with this Section 8.8, continued service with the HBIO Group from and after the Distribution Date shall be deemed to constitute service with HART for exercisability, vesting, the post-termination exercise period and eligibility purposes.

 

(d) Waiting Period for Exercisability of Options and Grant of Options and Awards . The HBIO Options and HART Options shall not be exercisable during a period beginning on a date prior to the Distribution Date determined by HBIO in its sole discretion, and continuing until the HBIO Post-Distribution Stock Value and the HART Stock Value are determined after the Distribution Date, or such longer period as HBIO, with respect to HBIO Options, and HART, with respect to HART Options, determines necessary to implement the provisions of this Section 8.8. The HBIO Restricted Stock Units and HART Restricted Stock Units shall not be settled during a period beginning on a date prior to the Distribution Date determined by HBIO in its sole discretion, and continuing until the HBIO Post-Distribution Stock Value and the HART Stock Value are determined immediately after the Distribution Date, or such longer period as HBIO, with respect to HBIO Restricted Stock Units, and HART, with respect to HART Restricted Stock Units, determines necessary to implement the provisions of this Section 8.8.

 

(e) Registration Requirements . Promptly following the effectiveness of the Form 10 Registration Statement (and on or before the Distribution Date), HART agrees that it shall file a Form S-8 Registration Statement with respect to and cause to be registered pursuant to the Securities Act, the shares of HART Common Stock authorized for issuance under the HART Long-Term Incentive Plan as required pursuant to the Securities Act and any applicable rules or regulations thereunder.

 

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(f) Change in Control . Following the Distribution, for any award adjusted under this Section 8.8, any reference to a “change in control,” “change of control” or similar definition in an award agreement, employment agreement or HBIO Long-Term Incentive Plan applicable to such award (i) with respect to post-Distribution equity awards denominated in shares of HBIO Common Stock, such reference shall be deemed to refer to a “change in control,” “change of control” or similar definition as set forth in the applicable award agreement, employment agreement or HBIO Long-Term Incentive Plan, and (ii) with respect to post-Distribution equity awards denominated in shares of HART Common Stock, such reference shall be deemed to refer to a “Change of Control” as defined in the HART Long-Term Incentive Plan. The Parties hereto acknowledge and agree that the transactions contemplated by this Agreement do not constitute a “change in control” for purposes of any Benefit Plan.

 

(g) Employee Stock Purchase Plan. As of the Distribution Date, HART Employees (including without limitation any Transferred Employees), shall cease to be eligible to participate actively in the Harvard Bioscience, Inc. Employee Stock Purchase Plan, and if the Parties deem necessary, such plan shall be amended before the Distribution Date to reflect that termination of participation. HART has established the Harvard Apparatus Regenerative Technology, Inc. Employee Stock Purchase Plan, the terms and conditions of which may be amended from time to time. The Harvard Apparatus Regenerative Technology, Inc. Employee Stock Purchase Plan shall not be considered a “mirror” or a successor plan to Harvard Bioscience, Inc. Employee Stock Purchase Plan. Participation in the Harvard Apparatus Regenerative Technology, Inc. Employee Stock Purchase Plan shall be subject to the terms and conditions of such plan and any new elections made with respect to such plan. Participants’ elections and benefits or accounts in the Harvard Bioscience, Inc. Employee Stock Purchase Plan shall not be transferred or carried over to the Harvard Apparatus Regenerative Technology, Inc. Employee Stock Purchase Plan.

 

8.9. No Severance Rights . HBIO and HART intend that the transactions contemplated by this Agreement will not constitute a termination of employment of any HBIO Employee, HART Employee (including any Transferred Employees) for purposes of any policy, plan, program or agreement of HBIO or HART or any member of the HBIO Group or HART Group that provides for the payment of severance, separation pay, salary continuation or similar benefits in the event of a termination of employment, and any HART or HBIO policy, plan, program or agreement providing for such benefit shall be promptly amended (in any event before the Distribution Date), as necessary, to reflect this intent. A HART Employee shall not be deemed to have terminated employment for purposes of determining eligibility for severance benefits from any member of the HBIO Group in connection with or in anticipation of the consummation of the transactions contemplated by this Agreement. HART shall be solely responsible for all Liabilities in respect of all costs arising out of payments and benefits relating to the termination or alleged termination of any HART Employee or Former HART Employee’s employment that occurs prior to, as a result of, in connection with or following the consummation of the transactions contemplated by this Agreement, including any amounts required to be paid (including any payroll or other taxes), and the costs of providing benefits, under any applicable severance, separation, redundancy, termination or similar plan, program, practice, contract, agreement, law or regulation (such benefits to include any medical or other welfare benefits, outplacement benefits, accrued vacation, and taxes). Notwithstanding anything herein to the contrary, any accrued but unused vacation that a HART Employee (including any Transferred Employee) has earned for service to any member of the HBIO Group as of the Separation Date shall be rolled over and treated as accrued vacation under HART for such Employee as of such Date.

 

8.10. No Third-Party Beneficiaries . This Agreement is solely for the benefit of the Parties hereto and is not intended to confer upon any other Persons any rights or remedies hereunder. Except as expressly provided in this Agreement, nothing in this Agreement shall preclude HBIO or any other member of the HBIO Group, at any time after the Separation Date, from amending, merging, modifying, terminating, eliminating, reducing, or otherwise altering in any respect any HBIO Benefit Plan, any benefit under any HBIO Benefit Plan or any trust, insurance policy or funding vehicle related to any HBIO Benefit Plan. Except as expressly provided otherwise in this Agreement, nothing in this Agreement shall preclude HART or any other entity in the HART Group, at any time after the Separation Date, from amending, merging, modifying, terminating, eliminating, reducing, or otherwise altering in any respect any HART Benefit Plan, any benefit under any HART Benefit Plan or any trust, insurance policy or funding vehicle related to any HART Benefit Plan.

 

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8.11. Fiduciary Matters . It is acknowledged that actions required to be taken pursuant to this Agreement may be subject to fiduciary duties or standards of conduct under ERISA or other applicable law, and no Party shall be deemed to be in violation of this Agreement if it fails to comply with any provisions hereof based upon its good faith determination that to do so would violate such a fiduciary duty or standard. Each Party hereto shall be responsible for taking such actions as are deemed necessary and appropriate to comply with its own fiduciary responsibilities and shall fully release and indemnify the other Party hereto for any Liabilities caused by the failure to satisfy any such responsibility.

 

8.12. Consent of Third Parties . If any provision of this Agreement is dependent on the consent of any third party (such as a vendor) and such consent is withheld, the Parties hereto shall use commercially reasonable efforts to implement the applicable provisions of this Agreement to the full extent practicable. If any provision of this Agreement cannot be implemented due to the failure of such third party to consent, the Parties hereto shall negotiate in good faith to implement the provision in a mutually satisfactory manner. The phrase “commercially reasonable efforts” as used herein shall not be construed to require any Party hereto to incur any non-routine or unreasonable expense or Liability or to waive any right.

 

ARTICLE IX

DISPUTE RESOLUTION

 

9.1 Agreement to Resolve Disputes .

 

(a) Except as otherwise provided in any Ancillary Agreement, the procedures for discussion, negotiation and dispute resolution set forth in this Article IX shall apply to all disputes, controversies or claims (whether sounding in contract, tort or otherwise) that may arise out of or relate to or arise under or in connection with this Agreement or any Ancillary Agreement, or the transactions contemplated hereby or thereby (including all actions taken in furtherance of the transactions contemplated hereby or thereby on or prior to the date hereof), or the commercial or economic relationship of the parties relating hereto or thereto, between or among any member of the HBIO Group on the one hand and the HART Group on the other hand. Except as otherwise specifically provided in any Ancillary Agreement, each Party agrees on behalf of itself and each member of its respective Group that the procedures set forth in this Article IX shall be the sole and exclusive remedy in connection with any dispute, controversy or claim relating to any of the foregoing matters and irrevocably waives any right to commence any Action in or before any Governmental Authority, except as otherwise required by Law or permitted by Section 9.3.

 

(b) EACH PARTY HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE ANCILLARY AGREEMENTS, OR THE SUBJECT MATTER HEREOF OR THEREOF. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THE SEPARATION AND DISTRIBUTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS (INCLUDING NEGLIGENCE), BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THIS SECTION HAS BEEN FULLY DISCUSSED BY EACH OF THE PARTIES HERETO AND THESE PROVISIONS WILL NOT BE SUBJECT TO ANY EXCEPTIONS. EACH PARTY HERETO HEREBY FURTHER WARRANTS AND REPRESENTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.

 

(c) The specific procedures set forth in this Article IX, including the time limits referenced therein, may be modified by agreement of both of the parties in writing.

 

(d) All applicable statutes of limitations and defenses based upon the passage of time shall be tolled while the procedures specified in this Article IX are pending. The parties will take any necessary or appropriate action required to effectuate such tolling.

 

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9.2 Dispute Resolution .

 

(a) Either Party may commence the dispute resolution process of this Section 9.2 by giving the other Party written notice (a “ Dispute Notice ”) of any of any controversy, claim or dispute of whatever nature arising out of or relating to or in connection with this Agreement, any Ancillary Agreement or the breach, termination, enforceability or validity hereof or thereof (a “ Dispute ”) which has not been resolved in the normal course of business or as provided in the relevant Ancillary Agreement. The parties shall attempt in good faith to resolve any Dispute by negotiation between executive officers of each Party (“ Senior Party Representatives ”) who have authority to settle the Dispute and, unless discussions between the parties are already at a senior management level, who are at a higher level of management than the Persons who have direct responsibility for the administration of this Agreement or the relevant Ancillary Agreement. Within fifteen (15) days after delivery of the Dispute Notice, the receiving Party shall submit to the other a written response (the “ Response ”). The Dispute Notice and the Response shall include (i) a statement setting forth the position of the Party giving such notice and a summary of arguments supporting such position and (ii) the name and title of such Party’s Senior Party Representative and any other Persons who will accompany the Senior Party Representative at the meeting at which the parties will attempt to settle the Dispute. Within thirty (30) days after the delivery of the Dispute Notice, the Senior Party Representatives of both parties shall meet at a mutually acceptable time and place, and thereafter as often as they reasonably deem necessary, to attempt to resolve the Dispute. The parties shall cooperate in good faith with respect to any reasonable requests for exchanges of Information regarding the Dispute or a Response thereto.

 

(b) All negotiations, conferences and discussions pursuant to this Section 9.2 shall be confidential and shall be treated as compromise and settlement negotiations. Nothing said or disclosed, nor any document produced, in the course of such negotiations, conferences and discussions that is not otherwise independently discoverable shall be offered or received as evidence or used for impeachment or for any other purpose in any current or future arbitration.

 

(c) Any Dispute regarding the following matters is not required to be negotiated prior to seeking relief from an arbitrator: (i) breach of any obligation of confidentiality or waiver of Privilege; (ii) the competitive restrictions set forth in Article XIII of the Intellectual Property Matters Agreement, and (iii) any other claim where interim relief is sought to prevent serious and irreparable injury to one of the parties. However, the parties shall make a good faith effort to negotiate such Dispute, according to the above procedures, while such arbitration is pending.

 

(d) In the event of any Dispute, either Party may pursuant to its rights under Section 12.13 , submit a request for interim injunctive relief to the arbitrator appointed pursuant to Section 9.3 ( provided , that, if the arbitrator shall not have been selected, either Party may seek interim relief before any court of competent jurisdiction) without first complying with the provisions of Sections 9.2 and 9.3 if, in the reasonable opinion of such Party, such interim injunctive relief is necessary to preserve its rights pending resolution of the Dispute.

 

9.3 Arbitration .

 

(a) Subject to Section 9.3(b), if for any reason a Dispute is not resolved within sixty (60) days from delivery of the Dispute Notice in accordance with the dispute resolution process described in Section 9.2 , the parties agree that such Dispute shall be settled by binding arbitration before a single arbitrator administered by JAMS pursuant to its Comprehensive Arbitration Rules and Procedures. The arbitrator selected to resolve the Dispute shall be bound exclusively by the laws of the Commonwealth of Massachusetts without regard to its choice of law rules. Any decisions of award of the arbitrator will be final and binding upon the Parties and may be entered as a judgment by the Parties, provided that in no instance will the parties be bound by any decision of the Arbitrator that could in any manner result in the Contribution and the Distribution, if effected, taken together, to fail to qualify as a transaction that is tax-free for U.S. federal income tax purposes under Section 355 and 368(a)(1)(D) of the Code. Any rights to appeal or review such award by any court or tribunal are hereby waived to the extent permitted by Law.

 

(b) Costs of the arbitration shall be borne equally by the parties involved in the matter, except that each Party shall be responsible for its own expenses, unless and to the extent otherwise determined by the arbitrator; provided , in the case of any Disputes relating to the parties’ rights and obligations with respect to indemnification under this Agreement, the prevailing Party shall be entitled to reimbursement by the other Party of its reasonable out-of-pocket fees and expenses (including attorneys’ fees) incurred in connection with the arbitration. In addition, if a Dispute involves claims of a Party in excess of $1,000,000, then such Dispute shall not be subject to the requirements of Section 9.3 and each Party shall be permitted to seek legal and equitable remedies available to it, including, without limitation, filing actions in any court of competent jurisdiction, including any federal or state court located in the Boston, Massachusetts.

 

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(c) The parties agree to comply and cause the members of their applicable Group to comply with any award made in any arbitration proceeding pursuant to this Section 9.3, and agree to enforcement of or entry of judgment upon such award in any court of competent jurisdiction, including any federal or state court located in the Boston, Massachusetts. The arbitrator shall be entitled to award any remedy in such proceedings, including monetary damages, specific performance and all other forms of legal and equitable relief; provided, however, that the arbitrator shall not be entitled to award punitive, exemplary, treble or any other form of non-compensatory monetary damages unless in connection with indemnification for a Third-Party Claim, to the extent of such claim.

 

(d) A Party obtaining an order of interim injunctive relief may enter judgment upon such award in any court of competent jurisdiction. The final award in an arbitration pursuant to this Article IX shall be conclusive and binding upon the parties, and a Party obtaining a final award may enter judgment upon such award in any court of competent jurisdiction.

 

(e) If a Dispute includes both arbitrable and nonarbitrable claims, counterclaims or defenses, the parties shall arbitrate all such arbitrable claims, counterclaims or defenses and shall concurrently litigate all such nonarbitrable claims, counterclaims or defenses.

 

9.4 Continuity of Service and Performance . Unless otherwise agreed in writing, the parties will continue to provide service and honor all other commitments under this Agreement and each Ancillary Agreement during the course of dispute resolution pursuant to the provisions of this Article IX with respect to all matters not subject to such Dispute.

 

ARTICLE X

FURTHER ASSURANCES AND ADDITIONAL COVENANTS

 

10.1. Further Assurances and Additional Covenants .

 

(a) In addition to the actions specifically provided for elsewhere in this Agreement, each of the Parties hereto shall use its reasonable best efforts, prior to, on and after the Separation Date, to take, or cause to be taken, all actions, and to do, or cause to be done, all things, reasonably necessary, proper or advisable under applicable Laws, regulations and agreements to consummate and make effective the transactions contemplated by this Agreement and the Ancillary Agreements.

 

(b) Without limiting the foregoing, prior to, on and after the Separation Date, each Party hereto shall cooperate with the other Parties, and without any further consideration, but at the expense of the requesting Party, to execute and deliver, or use its reasonable best efforts to cause to be executed and delivered, all instruments, including instruments of conveyance, assignment and transfer, and to make all filings with, and to obtain all consents, approvals or authorizations of, any Governmental Authority or any other Person under any permit, license, agreement, indenture or other instrument (including any Consents or Governmental Approvals), and to take all such other actions as such Party may reasonably be requested to take by any other Party hereto from time to time, consistent with the terms of this Agreement and the Ancillary Agreements, in order to effectuate the provisions and purposes of this Agreement and the Ancillary Agreements and the transfers of the HART Assets and the assignment and assumption of the HART Liabilities and the other transactions contemplated hereby and thereby. Without limiting the foregoing, each Party will, at the reasonable request, cost, and expense of any other Party, take such other actions as may be reasonably necessary to vest in such other Party good and marketable title, free and clear of any Security Interest created by the non-requesting Party, if and to the extent it is commercially feasible to do so.

 

(c) On or prior to the Separation Date, HBIO and HART in their respective capacities as direct and indirect stockholders of their respective Subsidiaries, shall each ratify any actions which are reasonably necessary or desirable to be taken by HBIO, HART or any other Subsidiary of HBIO, as the case may be, to effectuate the transactions contemplated by this Agreement and the Ancillary Agreements. On or prior to the Separation Date, HBIO and HART shall take all actions as may be necessary to approve the stock-based employee benefit plans of HART in order to satisfy the requirement of Rule 16b-3 under the Exchange Act.

 

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(d) HBIO and HART, and each of the members of their respective Groups, waive (and agree not to assert against any of the others) any claim or demand that any of them may have against any of the others for any Liabilities or other claims relating to or arising out of: (i) the failure of HART or any member of the HART Group, on the one hand, or of HBIO or any member of the HBIO Group, on the other hand, to provide any notification or disclosure required under any state Environmental Law in connection with the Separation or the other transactions contemplated by this Agreement, including the transfer by any member of any Group to any member of the other Group of ownership or operational control of any Assets not previously owned or operated by such transferee; or (ii) any inadequate, incorrect or incomplete notification or disclosure under any such state Environmental Law by the applicable transferor. To the extent any Liability to any Governmental Authority or any third Person arises out of any action or inaction described in clause (i) or (ii) above, the transferee of the applicable Asset hereby assumes and agrees to pay any such Liability.

 

ARTICLE XI

TERMINATION

 

11.1. Termination by Mutual Consent .

 

This Agreement may be terminated and the terms and conditions of the Distribution may be amended, modified or abandoned at any time prior to the Distribution Date by the mutual consent of HBIO and HART.

 

11.2. Other Termination .

 

(a) The obligations of the Parties under Article IV (including the obligation to pursue or effect the Distribution) may be terminated by HBIO if at any time, the board of Directors of HBIO determines, in its sole discretion, that the Distribution is not in the best interests of HBIO or its stockholders.

 

11.3. Effect of Termination .

 

(a) In the event of any termination of this Agreement on or after the Separation Date, only the provisions of Article IV will terminate and the other provisions of this Agreement and each Ancillary Agreement shall remain in full force and effect, unless otherwise agreed in writing by the Parties.

 

ARTICLE XII

MISCELLANEOUS

 

12.1. Counterparts; Entire Agreement; Corporate Power .

 

(a) This Agreement and each Ancillary Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each of the Parties and delivered (by facsimile, electronic transmission, or otherwise) to the other Party.

 

(b) This Agreement, the Ancillary Agreements, the exhibits, the schedules and appendices hereto and thereto contain the entire agreement between the Parties with respect to the subject matter hereof and thereof, supersede all previous agreements, negotiations, discussions, writings, understandings, commitments and conversations with respect to such subject matter and there are no agreements or understandings between the Parties other than those set forth or referred to herein or therein.

 

(c) HBIO represents on behalf of itself and each other member of the HBIO Group, and HART represents on behalf of itself and each other member of the HART Group, as follows:

 

(i) each such Person has the requisite corporate or other power and authority and has taken all corporate or other action necessary in order to execute, deliver and perform each of this Agreement and each other Ancillary Agreements to which it is a party and to consummate the transactions contemplated hereby and thereby; and

 

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(ii) this Agreement and each Ancillary Agreement to which it is a party has been duly executed and delivered by it and constitutes a valid and binding agreement of it enforceable in accordance with the terms thereof.

 

(d) Each Party hereto acknowledges that it and each other Party hereto is executing certain of the Ancillary Agreements by facsimile, stamp or mechanical signature. Each Party hereto expressly adopts and confirms each such facsimile, stamp or mechanical signature made in its respective name as if it were a manual signature, agrees that it will not assert that any such signature is not adequate to bind such Party to the same extent as if it were signed manually and agrees that at the reasonable request of any other Party hereto at any time it will as promptly as reasonably practicable cause each such Ancillary Agreement to be manually executed (any such execution to be as of the date of the initial date thereof).

 

(e) Notwithstanding any provision of this Agreement or any other Ancillary Agreement, neither HBIO nor HART shall be required to take or omit to take any act that would violate its fiduciary duties to any minority stockholders of any non-wholly owned Subsidiary of HBIO or HART, as the case may be (it being understood that directors’ qualifying shares or similar interests will be disregarded for purposes of determining whether a Subsidiary is wholly owned).

 

12.2. Governing Law and Jurisdiction . This Agreement and, unless expressly provided therein, each Ancillary Agreement (and any claims or disputes arising out of or related hereto or thereto or to the transactions contemplated hereby and thereby or to the inducement of any Party to enter herein and therein, whether for breach of contract, tortious conduct or otherwise and whether predicated on common law, statute or otherwise) shall be governed by and construed and interpreted in accordance with the Laws of the Commonwealth of Massachusetts irrespective of the choice of laws principles of the Commonwealth of Massachusetts as to all matters, including matters of validity, construction, effect, enforceability, performance and remedies. If any dispute arises out of or in connection with this Agreement or any Ancillary Agreement, except as expressly contemplated by another provision of this Agreement or any Ancillary Agreement, the parties irrevocably (and the parties will cause each other member of their respective Group to irrevocably) (a) consent and submit to the exclusive jurisdiction of federal and state courts located in Boston, Massachusetts, and (b) waive any objection to that choice of forum based on venue or to the effect that the forum is not convenient.

 

12.3. Assignability . Except as set forth in any Ancillary Agreement, this Agreement and each other Ancillary Agreement shall be binding upon and inure to the benefit of the Parties hereto and thereto, respectively, and their respective successors and permitted assigns; provided, however, that no Party hereto or thereto may assign its respective rights or delegate its respective obligations under this Agreement or any other Ancillary Agreement without the express prior written consent of the other Parties hereto or thereto (which consent may be withheld in such Party’s sole and absolute discretion) and any assignment or attempted assignment in violation of the foregoing will be null and void. Notwithstanding the preceding sentence, a Party may assign this Agreement in connection with a merger transaction in which such Party is not the surviving entity or the sale by such Party of all or substantially all of its Assets, and upon the effectiveness of such assignment the assigning Party shall be released from all of its obligations under this Agreement if the surviving entity of such merger or the transferee of such Assets shall agree in writing, in form and substance reasonably satisfactory to the other Party, to be bound by all terms of this Agreement as if named as a “Party” hereto.

 

12.4. Third-Party Beneficiaries . Except for the indemnification rights under this Agreement of any HBIO Indemnitee or HART Indemnitee in their respective capacities as such, (i) the provisions of this Agreement and each Ancillary Agreement are solely for the benefit of the Parties and are not intended to confer upon any Person except the Parties any rights or remedies hereunder, and (ii) there are no third-party beneficiaries of this Agreement or any other Ancillary Agreement and neither this Agreement nor any other Ancillary Agreement shall provide any third person with any remedy, claim, liability, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement or any other Ancillary Agreement.

 

12.5. Notices . All notices, requests, claims, demands or other communications under this Agreement and, to the extent, applicable and unless otherwise provided therein, under each of the Ancillary Agreements 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 overnight courier service, by facsimile or electronic transmission with receipt confirmed (followed by delivery of an original via overnight courier service) 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 12.5:

 

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If to HBIO, to:

 

Harvard Bioscience, Inc.

84 October Hill Road

Holliston, Massachusetts 01746

Attn: Chief Executive Officer

 

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

 

Burns & Levinson, LLP

125 Summer Street

Boston, MA 02110

Attention: Josef B. Volman

Chad J. Porter

Facsimile: (617) 345-3299

 

If to HART to:

 

Harvard Apparatus Regenerative Technology, Inc.

84 October Hill Road
Holliston, Massachusetts 01746

Attn: Chief Executive Officer

 

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

 

Feinberg Hanson LLP

57 River Street, Suite 204

Wellesley, Massachusetts 02481

Attention: Harry A. Hanson, III

Facsimile: (781) 283-5776

 

Any Party may, by written notice to the other Party, change the address to which such notices are to be given.

 

12.6. Severability . If any provision of this Agreement or any other Ancillary Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof or thereof, or the application of such provision to Persons or circumstances or in jurisdictions other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby. Upon such determination, the Parties shall negotiate in good faith in an effort to agree upon such a suitable and equitable provision to effect the original intent of the Parties.

 

12.7. Force Majeure . No Party shall be deemed in default of this Agreement to the extent that any delay or failure in the performance of its obligations under this Agreement results from a Force Majeure. In the event of an occurrence of a Force Majeure, the Party whose performance is affected thereby shall give notice of suspension as soon as reasonably practicable to the other stating the date and extent of such suspension and the cause thereof, and such Party shall resume the performance of such obligations as soon as reasonably practicable after the removal of such cause.

 

12.8. Publicity . Prior to the Distribution, each of HART and HBIO shall consult with each other prior to issuing any press releases or otherwise making public statements with respect to the Separation, the Distribution or any of the other transactions contemplated hereby and prior to making any filings with any Governmental Authority with respect thereto.

 

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12.9. Expenses . Except as expressly set forth in this Agreement (including Sections 6.5, 7.7(a), 7.9, 10.1(b), Article IX and Article V) or in any other Ancillary Agreement, all fees, costs and expenses incurred in connection with the preparation, execution, delivery and implementation of this Agreement and any Ancillary Agreement, and with the consummation of the transactions contemplated hereby and thereby, will be borne by the Party incurring such fees, costs or expenses.  

 

12.10. Headings . The article, section and paragraph headings contained in this Agreement and in the Ancillary Agreements are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement or any other Ancillary Agreement.

 

12.11. Survival of Covenants . Except as expressly set forth in any Ancillary Agreement, the covenants, representations and warranties contained in this Agreement and each Ancillary Agreement, and liability for the breach of any obligations contained herein, shall survive each of the Separation and the Distribution and shall remain in full force and effect.

 

12.12. Waivers of Default . Waiver by any Party of any default by the other Party of any provision of this Agreement or any other Ancillary Agreement shall not be deemed a waiver by the waiving Party of any subsequent or other default, nor shall it prejudice the rights of the other Party. No failure or delay by any Party in exercising any right, power or privilege under this Agreement or any other Ancillary Agreement shall operate as a waiver thereof nor shall a single or partial exercise thereof prejudice any other or further exercise thereof or the exercise of any other right, power or privilege.

 

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12.13. Specific Performance . Subject to the provisions of Article IX, in the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement or any other Ancillary Agreement, the Party or Parties who are, or are to be, thereby aggrieved shall have the right to specific performance and injunctive or other equitable relief in respect of its or their rights under this Agreement or such Ancillary Agreement, in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative. The Parties agree that the remedies at law for any breach or threatened breach, including monetary damages, are inadequate compensation for any loss and that any defense in any action for specific performance that a remedy at law would be adequate is waived. Any requirements for the securing or posting of any bond with such remedy are waived by each of the Parties to this Agreement.

 

12.14. Amendments . No provisions of this Agreement or any other Ancillary Agreement shall be deemed waived, amended, supplemented or modified by any Party, unless such waiver, amendment, supplement or modification is in writing and (i) in the case of a waiver, signed by the authorized representative of the Party against whom it is sought to enforce such waiver, or (ii) in the case of an amendment, supplement or modification to this Agreement, signed by the authorized representatives of both Parties.

 

12.15. Interpretation . In this Agreement and any other Ancillary Agreement, (a) words in the singular shall be held to include the plural and vice versa and words of one gender shall be held to include the other genders as the context requires; (b) the terms “hereof,” “herein,” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement (or the applicable Ancillary Agreement) as a whole (including all of the Schedules, Exhibits and Appendices hereto and thereto) and not to any particular provision of this Agreement (or such Ancillary Agreement); (c) Article, Section, exhibit, schedule and appendix references are to the Articles, Sections, exhibits, schedules and appendices to this Agreement (or the applicable Ancillary Agreement if so indicated) unless otherwise specified; (d) the word “including” and words of similar import when used in this Agreement (or the applicable Ancillary Agreement) shall mean “including, without limitation,” (e) the word “or” shall not be exclusive; (f) unless expressly stated to the contrary in this Agreement or in any other Ancillary Agreement, all references to “the date hereof,” “the date of this Agreement,” “hereby” and “hereupon” and words of similar import shall all be references to [ ], 2013, regardless of any amendment or restatement hereof.

 

12.16. Limitations of Liability . Notwithstanding anything in this Agreement to the contrary, neither HART or its Affiliates, on the one hand, nor HBIO or its Affiliates, on the other hand, shall be liable under this Agreement (but expressly not including any Ancillary Agreements, including the Intellectual Property Matters Agreement and Product Distribution Agreement, unless expressly limited in accordance with the terms of such agreement) to the other for any special, indirect, punitive, exemplary, remote, speculative or similar damages in excess of compensatory damages of the other arising in connection with the transactions contemplated hereby, regardless of the likelihood of such damages and whether or not such Party has been advised of the possibility of such damages (other than any such liability with respect to a Third-Party Claim for which a Party must indemnify pursuant to this Agreement).

 

[signatures on following page]

 

- 49 -
 

 

IN WITNESS WHEREOF, the Parties have caused this Separation and Distribution Agreement to be executed by their duly authorized representatives.

 

  HARVARD BIOSCIENCE, INC.
     
  By:  
    Name:
    Title:
     
 

HARVARD APPARATUS

REGENERATIVE TECHNOLOGY, INC.

     
  By:  
    Name:
    Title:

 

 

 

 

EXHIBIT 3.1

 

  State of Delaware
  Secretary of State
  Division of Corporations
  Delivered 11:49 AM 03/28/2013
  FILED 11:24 AM 03/28/2013
  SRV 130370912 – 5149517 FILE

 

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

 

OF

 

Harvard Apparatus Regenerative Technology , INC.

 

Harvard Apparatus Regenerative Technology, Inc. (the “Corporation”), a corporation organized and existing under the laws of the State of Delaware, hereby certifies as follows:

 

1.          The name of the Corporation is Harvard Apparatus Regenerative Technology, Inc. The Corporation’s Certificate of Incorporation was originally filed with the Secretary of State of Delaware on May 3, 2012 (the “Original Certificate”).

 

2.          This Amended and Restated Certificate of Incorporation (the “Certificate”) amends, restates and integrates the provisions of the Original Certificate, and was duly adopted in accordance with the provisions of Sections 242 and 245 of the Delaware General Corporation Law (the “DGCL”).

 

3.          The text of the Original Certificate is hereby amended and restated in its entirety to provide as follows:

 

ARTICLE I

 

The name of the Corporation is Harvard Apparatus Regenerative Technology, Inc.

 

ARTICLE II

 

The address of the Corporation’s registered office in the State of Delaware is 160 Greentree Drive, Suite 101, in the City of Dover, County of Kent, 19904. The name of its registered agent at such address is National Registered Agents, Inc.

 

ARTICLE III

 

The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the DGCL.

 

ARTICLE IV

 

CAPITAL STOCK

 

The total number of shares of capital stock which the Corporation shall have authority to issue is thirty-two million (32,000,000) shares, of which (i) thirty million (30,000,000) shares shall be a class designated as common stock, par value $0.01 per share (the “Common Stock”), and (ii) two million (2,000,000) shares shall be a class designated as undesignated preferred stock, par value $0.01 per share (the “Undesignated Preferred Stock”).

 

 
 

 

The number of authorized shares of the class of Undesignated Preferred Stock may from time to time be increased or decreased (but not below the number of shares outstanding) by the affirmative vote of the holders of a majority of the outstanding shares of Common Stock entitled to vote, without a vote of the holders of the Undesignated Preferred Stock (except as otherwise provided in any certificate of designations of any series of Undesignated Preferred Stock).

 

The powers, preferences and rights of, and the qualifications, limitations and restrictions upon, each class or series of stock shall be determined in accordance with, or as set forth below in, this Article IV.

 

A. COMMON STOCK

 

Subject to all the rights, powers and preferences of the Undesignated Preferred Stock and except as provided by law or in this Article IV (or in any certificate of designations of any series of Undesignated Preferred Stock):

 

(a)   the holders of the Common Stock shall have the exclusive right to vote for the election of directors of the Corporation (the “Directors”) and on all other matters requiring stockholder action, each outstanding share entitling the holder thereof to one vote on each matter properly submitted to the stockholders of the Corporation for their vote; provided , however , that, except as otherwise required by law, holders of Common Stock, as such, shall not be entitled to vote on any amendment to this Certificate (or on any amendment to a certificate of designations of any series of Undesignated Preferred Stock) that alters or changes the powers, preferences, rights or other terms of one or more outstanding series of Undesignated Preferred Stock if the holders of such affected series are entitled to vote, either separately or together with the holders of one or more other such series, on such amendment pursuant to this Certificate (or pursuant to a certificate of designations of any series of Undesignated Preferred Stock) or pursuant to the DGCL, irrespective of the provisions of Section 242(b)(2) of the DGCL;

 

(b)   dividends may be declared and paid or set apart for payment upon the Common Stock out of any assets or funds of the Corporation legally available for the payment of dividends, but only when and as declared by the Board of Directors of the Corporation (the “Board of Directors”) or any authorized committee thereof; and

 

(c)   upon the voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the net assets of the Corporation shall be distributed pro rata to the holders of the Common Stock.

 

B. UNDESIGNATED PREFERRED STOCK

 

The Board of Directors or any authorized committee thereof is expressly authorized, to the fullest extent permitted by law, to provide for the issuance of the shares of Undesignated Preferred Stock in one or more series of such stock, and by filing a certificate pursuant to applicable law of the State of Delaware, to establish or change from time to time the number of shares of each such series, and to fix the designations, powers, including voting powers, full or limited, or no voting powers, preferences and the relative, participating, optional or other special rights of the shares of each series and any qualifications, limitations and restrictions thereof. The powers, preferences and relative, participating, optional or other special rights of each series of Undesignated Preferred Stock, and any qualifications, limitations or restrictions thereof, may differ from those of any and all other series outstanding at any time.

 

2
 

 

ARTICLE V

 

STOCKHOLDER ACTION

 

1. ACTION WITHOUT A MEETING.

 

(a)   Subject to all the rights, powers and preferences of any series of Undesignated Preferred Stock, any action required or permitted to be taken by the stockholders of the Corporation must be effected at an annual or special meeting of the stockholders and may not be effected by written consent in lieu of a meeting, provided , however , notwithstanding the foregoing, for so long as HBIO beneficially owns shares of Common Stock representing at least a majority of the votes that would be entitled to be cast on such action, any action required or permitted to be taken by the stockholders may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action to be taken, are signed by the holders of outstanding stock having at least the minimum number of votes necessary to authorize such action.

 

2. SPECIAL MEETINGS. Except as otherwise required by the DGCL and subject to the rights, if any, of the holders of any series of Undesignated Preferred Stock, special meetings of the stockholders of the Corporation may be called only by the Board of Directors acting pursuant to a resolution approved by the affirmative vote of a majority of the Directors then in office. Only those matters set forth in the notice of the special meeting may be considered or acted upon at a special meeting of stockholders of the Corporation.

 

ARTICLE VI

 

DIRECTORS

 

1. GENERAL. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors except as otherwise provided herein or required by law.

 

2. ELECTION OF DIRECTORS. Election of Directors need not be by written ballot unless the By-laws of the Corporation (the “By-laws”) shall so provide.

 

3. NUMBER OF DIRECTORS; TERM OF OFFICE. Subject to all the rights, powers and preferences of any series of Undesignated Preferred Stock, the number of Directors of the Corporation shall be fixed solely and exclusively by resolution duly adopted from time to time by the Board of Directors. The Directors, other than those who may be elected by the holders of any series of Undesignated Preferred Stock, shall be classified, with respect to the term for which they severally hold office, into three classes, designated Class I, Class II and Class III. Each class shall consist, as nearly as reasonably may be possible, of one-third of the total number of Directors constituting the entire Board of Directors. The Board of Directors is authorized to assign members of the Board of Directors already in office to Class I, Class II or Class III at the time such classification becomes effective. The initial Class I Directors shall serve for a term expiring at the annual meeting of stockholders to be held in 2014, the initial Class II Directors shall serve for a term expiring at the annual meeting of stockholders to be held in 2015, and the initial Class III Directors shall serve for a term expiring at the annual meeting of stockholders to be held in 2016. At each annual meeting of stockholders, Directors elected to succeed those Directors whose terms expire shall be elected for a term of office to expire at the third succeeding annual meeting of stockholders after their election. Notwithstanding the foregoing, the Directors elected to each class shall hold office until their successors are duly elected and qualified or until their earlier resignation or removal.

 

3
 

 

Notwithstanding the foregoing, whenever, pursuant to the provisions of Article IV of this Certificate, the holders of any one or more series of Undesignated Preferred Stock shall have the right, voting separately as a series or together with holders of other such series, to elect Directors at an annual or special meeting of stockholders, the election, term of office, filling of vacancies and other features of such directorships shall be governed by the terms of this Certificate and any certificate of designations applicable thereto.

 

4. VACANCIES. Subject to the rights, if any, of the holders of any series of Undesignated Preferred Stock to elect Directors and to fill vacancies in the Board of Directors relating thereto, any and all vacancies in the Board of Directors, however occurring, including, without limitation, by reason of an increase in size of the Board of Directors, or the death, resignation, disqualification or removal of a Director, shall be filled solely and exclusively by the affirmative vote of a majority of the remaining Directors then in office, even if less than a quorum of the Board of Directors, and not by the stockholders. Any Director appointed in accordance with the preceding sentence shall hold office for the remainder of the full term of the class of Directors in which the new directorship was created or the vacancy occurred and until such Director’s successor shall have been duly elected and qualified or until his or her earlier resignation or removal. Subject to the rights, if any, of the holders of any series of Undesignated Preferred Stock to elect Directors, when the number of Directors is increased or decreased, the Board of Directors shall, subject to Article VI.3 hereof, determine the class or classes to which the increased or decreased number of Directors shall be apportioned; provided , however , that no decrease in the number of Directors shall shorten the term of any incumbent Director. In the event of a vacancy in the Board of Directors, the remaining Directors, except as otherwise provided by law, shall exercise the powers of the full Board of Directors until the vacancy is filled.

 

5. REMOVAL. Any Director or the entire Board of Directors may be removed from office at any time, but only for cause and only by the affirmative vote of the holders of shares representing at least a majority of the votes that would be entitled to be cast on such matter by the then-outstanding shares of all classes and series of capital stock of the Corporation at any annual or special meeting of stockholders, voting together as a single class; provided , however , that, from and after the date that HBIO ceases to beneficially own shares of Common Stock representing at least a majority of the votes entitled to be cast by the then-outstanding shares of all classes and series of capital stock of the Corporation entitled generally to vote on the election of the Directors of the Corporation (or any class thereof) at any annual or special meeting of stockholders, any Director or the entire Board of Directors may be removed from office at any time, but only for cause and only by the affirmative vote of the holders of shares representing at least 75% of the votes that would be entitled to be cast on such matter by the then-outstanding shares of all classes and series of capital stock of the Corporation at any annual or special meeting of stockholders, voting together as a single class. At least forty-five (45) days prior to any meeting of stockholders at which it is proposed that any Director be removed from office, written notice of such proposed removal and the alleged grounds thereof shall be sent to the Director whose removal will be considered at the meeting.

 

ARTICLE VII

 

LIMITATION OF LIABILITY

 

To the fullest extent permitted by the DGCL, as the same exists or as may hereafter be amended, a Director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a Director; provided , however , that nothing contained in this Article VII shall eliminate or limit the liability of a Director (i) for any breach of the Director’s duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) pursuant to the provisions of Section 174 of the DGCL, or (iv) for any transaction from which the Director derived an improper personal benefit. If the DGCL is amended after the effective date of this Certificate to authorize corporate action further eliminating or limiting the personal liability of Directors, then the liability of a Director of the Corporation shall be eliminated or limited to the fullest extent permitted by the DGCL, as so amended.

 

4
 

 

Any repeal or modification of this Article VII by either of (i) the stockholders of the Corporation or (ii) an amendment to the DGCL, shall not adversely affect any right or protection existing at the time of such repeal or modification with respect to any acts or omissions occurring before such repeal or modification of a person serving as a Director at the time of such repeal or modification.

 

ARTICLE VIII

 

AMENDMENT OF BY-LAWS

 

1. AMENDMENT BY DIRECTORS. Except as otherwise provided by law, the Board of Directors is expressly authorized to adopt, repeal, alter or amend the By-laws of the Corporation by the affirmative vote of a majority of the Directors then in office.

 

2. AMENDMENT BY STOCKHOLDERS. The By-laws of the Corporation may be amended or repealed at any annual meeting of stockholders, or special meeting of stockholders called for such purpose as provided in the By-laws, by the affirmative vote of at least a majority of the combined voting power of the outstanding shares of all classes and series of capital stock of the Corporation entitled to vote on such amendment or repeal, voting together as a single class; provided , however , that, from and after the date that HBIO ceases to beneficially own shares of Common Stock representing at least a majority of the votes entitled to be cast by the then-outstanding shares of all classes and series of capital stock of the Corporation entitled to vote on such amendment or repeal, the By-laws of the Corporation may be amended or repealed by the affirmative vote of the holders of shares representing at least 75% of the votes that would be entitled to be cast on such matter by the then-outstanding shares of all classes and series of capital stock of the Corporation at any annual or special meeting of stockholders, voting together as a single class.

 

ARTICLE IX

 

AMENDMENT OF CERTIFICATE OF INCORPORATION

 

The Corporation reserves the right to amend or repeal this Certificate in the manner now or hereafter prescribed by the DGCL and this Certificate, and all rights conferred upon stockholders herein are granted subject to this reservation. Whenever any vote of the holders of voting stock is required to amend or repeal any provision of this Certificate, and in addition to any other vote of holders of voting stock that is required by this Certificate or by law, such amendment or repeal shall require the affirmative vote of the majority of the outstanding shares entitled to vote on such amendment or repeal, and the affirmative vote of the majority of the outstanding shares of each class entitled to vote thereon as a class, at a duly constituted meeting of stockholders called expressly for such purpose; provided , however , that the affirmative vote of not less than 75% of the outstanding shares entitled to vote on such amendment or repeal, and the affirmative vote of not less than 75% of the outstanding shares of each class entitled to vote thereon as a class, shall be required to amend or repeal any provision of Article V, Article VI, Article

VII, Article IX, Article X, Article XI or Article XII of this Certificate.

 

5
 

 

ARTICLE X

 

FORUM

 

Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer, employee or other agent of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL, this Certificate or the By-laws, or (iv) any action asserting a claim governed by the internal affairs doctrine, in each case, subject to said Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein.

 

ARTICLE XI

 

1. This Article XI anticipates the possibility that (A) HBIO may be a controlling, majority or significant stockholder of the Corporation, (B) certain HBIO Officials may also serve as Corporation Officials, and (C) benefits may be derived by the Corporation Entities through their contractual, corporate and business relations with the HBIO Entities. The provisions of this Article XI shall, to the fullest extent permitted by law, define the conduct of certain affairs of the Corporation Entities and Corporation Officials as they may involve the HBIO Entities, and the powers, rights, duties and liabilities of the Corporation Entities and Corporation Officials in connection therewith.

 

2. No contract, agreement, arrangement or transaction (or any amendment, modification or termination thereof) entered into between any Corporation Entity, on the one hand, and any HBIO Entity, on the other hand, before the Corporation ceases to be a wholly owned subsidiary of HBIO shall be void or voidable or be considered unfair to the Corporation or any Corporation Affiliate for the reason that any HBIO Entity is a party thereto, or because any HBIO Official is a party thereto, or because any HBIO Official was present at or participated in any meeting of the Board of Directors, or committee thereof, or the board of directors, or committee thereof, of any Corporation Affiliate, that authorized the contract, agreement, arrangement or transaction (or any amendment, modification or termination thereof), or because his, her or their votes were counted for such purpose. No such contract, agreement, arrangement or transaction (or any amendment, modification or termination thereof) or the performance thereof by any Corporation Entity shall be considered to be contrary to any fiduciary duty owed to any of the Corporation Entities or to any of their respective stockholders by any HBIO Entity or by any Corporation Official (including any Corporation Official who may have been a HBIO Official) and each such Corporation Official shall be deemed to have acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation Entities, and shall be deemed not to have breached his or her duties of loyalty to the Corporation Entities and their respective stockholders, and not to have derived an improper personal benefit therefrom. No Corporation Official shall have or be under any fiduciary duty to any Corporation Entity or its stockholders to refrain from acting on behalf of any such Corporation Entity (or on behalf of any HBIO Entity if such Corporation Official is also a HBIO Official) in respect of any such contract, agreement, arrangement or transaction (or any amendment, modification, or termination thereof) or to refrain from performing any such contract, agreement, arrangement or transaction (or any amendment, modification or termination thereof) in accordance with its terms.

 

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3. The Corporation may from time to time enter into and perform, and cause or permit any Corporation Affiliate to enter into and perform, one or more agreements (or amendments or modifications to pre-existing agreements) with any one or more of the HBIO Entities pursuant to which any one or more Corporation Entities, on the one hand, and any one or more of the HBIO Entities, on the other hand, agree to engage in transactions of any kind or nature, or agree to compete, or to refrain from competing or to limit or restrict their competition, with each other (or with any one or more other HBIO Entities or Corporation Entities, respectively), including to allocate and to cause Corporation Officials and HBIO Officials (including any person who is both a Corporation Official and a HBIO Official) to allocate or refer opportunities between such Corporation Entities and HBIO Entities. To the fullest extent permitted by law, neither any such agreement, nor the performance thereof by any Corporation Entity or any HBIO Entity, shall be considered contrary to (1) any fiduciary duty that any HBIO Entity may owe to any Corporation Entity, or its stockholders, by reason of any HBIO Entity being, directly or indirectly, a controlling, majority or significant stockholder of any such Corporation Entity or participating in the control of any such Corporation Entity or (2) any fiduciary duty that any Corporation Official who is also a HBIO Official may owe to any Corporation Entity or its stockholders. To the fullest extent permitted by law, no HBIO Entity, by reason of being, directly or indirectly, a controlling, majority or significant stockholder of any Corporation Entity or participant in control of any Corporation Entity, shall have or be under any fiduciary duty to refrain from entering into any agreement or participating in any transaction referred to above, and no Corporation Official who is also a HBIO Official shall have or be under any fiduciary duty to any Corporation Entity, or its stockholders, to refrain from acting on behalf of any Corporation Entity or any HBIO Entity in respect of any such agreement or transaction or performing any such agreement in accordance with its terms.

 

4.      Anything in this Certificate to the contrary notwithstanding, the provisions of Section 3 of this Article XI shall automatically terminate, expire and have no further force and effect from and after the date on which the HBIO Entities collectively cease to beneficially own shares of Common Stock representing at least 20% of the votes entitled to be cast by the then-outstanding shares of all classes and series of capital stock of the Corporation entitled generally to vote on the election of the Directors of the Corporation (or any class thereof) at any annual or special meeting of stockholders.

 

ARTICLE XII

 

Except as otherwise defined in this Certificate, the following terms shall have the meanings ascribed to them below:

 

Corporation Affiliate ” shall mean (1) any person of which the Corporation is the beneficial owner (directly or indirectly) of 20% or more of the outstanding voting stock, voting power, partnership interests or similar voting interests or (2) any other person that (directly or indirectly) is controlled by the Corporation;

 

Corporation Entity ” shall mean any one or more of the Corporation and the Corporation Affiliates;

 

Corporation Official ” shall mean each person who is a director or an officer (or both) of the Corporation or one or more Corporation Affiliates;

 

HBIO ” shall mean Harvard Bioscience, Inc., a Delaware corporation, any of its successors by way of merger or share exchange, any acquiror of all or substantially all of its assets and any person of which HBIO becomes a subsidiary;

 

HBIO Affiliate ” shall mean, other than the Corporation or any Corporation Affiliate, (1) any person of which HBIO is the beneficial owner (directly or indirectly) of 20% or more of the outstanding voting stock, voting power, partnership interests or similar voting interests or (2) any other person that (directly or indirectly) is controlled by HBIO, controls HBIO or is under common control with HBIO;

 

HBIO Entity ” shall mean any one or more of HBIO and the HBIO Affiliates;

 

HBIO Official ” shall mean each person who is a director or an officer (or both) of HBIO or one or more HBIO Affiliates;

 

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person ” shall mean a natural person, corporation, partnership, limited liability company, joint venture, association or legal entity of any kind; each reference to a “natural person” (or to a “record holder” of shares, if a natural person) shall be deemed to include in his or her representative capacity a guardian, committee, executor, administrator or other legal representative of such natural person or record holder; and

 

subsidiary ” shall mean, as to any person, a corporation, partnership, limited liability company, joint venture, association or other entity in which such person beneficially owns (directly or indirectly) 50% or more of the outstanding voting power or partnership interests or similar voting interests.

 

For purpose of the foregoing definitions, the term “control” (including the terms “controlling,” “controlled by” and “under common control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of an entity, whether through the ownership of voting securities, by contract, or otherwise.

 

* * *

 

4.          The foregoing Amended and Restated Certificate of Incorporation has been duly adopted by the Corporation’s directors and stockholders in accordance with the applicable provisions of Sections 228, 242 and 245 of the DGCL.

 

This Amended and Restated Certificate of Incorporation is executed as of this 28th day of March, 2013.

 

  Harvard Apparatus Regenerative
  Technology, Inc .
     
  By: \s\ David Green
  Name: David Green
  Title: Chief Executive Officer

 

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Exhibit 3.2

 

BY-LAWS

 

OF

 

HARVARD APPARATUS REGENERATIVE TECHNOLOGY, INC.

 

ARTICLE I

 

Stockholders

 

1.           Annual Meeting . The annual meeting of stockholders shall be held on the 31st day of December (or if that be a legal holiday in the place where the meeting is to be held, on the next succeeding full business day) at the principal office of the corporation at 11:00 a.m., unless a different date, hour or place within or without the State of Delaware is fixed by the Board of Directors or the President. The purposes for which the annual meeting is to be held, in addition to those prescribed by law, by the Certificate of Incorporation or by these By-laws, may be specified by the Board of Directors or the President or Chairman. If no annual meeting has been held on the date fixed above, a special meeting in lieu thereof may be held or there may be action by written consent of the stockholders on matters to be voted on at the annual meeting, and such special meeting or written consent shall have for the purposes of these By-Laws or otherwise all the force and effect of an annual meeting.

 

2.           Special Meetings . Special meetings of stockholders may be called by the President or Chairman or by the Board of Directors. Special meetings shall be called by the Secretary, or in case of death, absence, incapacity or refusal of the Secretary, by any other officer, upon written application of one or more stockholders who hold at least twenty-five percent in interest of the capital stock entitled to vote at such meeting. The call for the meeting shall state the place, date, hour and purposes of the meeting. Only the purposes specified in the notice of special meeting shall be considered or dealt with at such special meeting.

 

3.           Notice of Meetings . A written notice stating the place, date and hour of all meetings of stockholders, and in the case of special meetings, the purposes of the meeting shall be given by the Secretary (or other person authorized by these By-Laws or by law) not less than ten nor more than sixty days before the meeting to each stockholder entitled to vote thereat and to each stockholder who, under the Certificate of Incorporation or under these By-laws is entitled to such notice, by delivering such notice to him or by mailing it, postage prepaid, and addressed to such stockholder at his address as it appears in the records of the corporation. Without limiting the manner by which notice otherwise may be given effectively to stockholders, notice of meetings may also be given to stockholders by means of electronic transmission in accordance with applicable law. Notice need not be given to a stockholder if a written waiver of notice is executed before or after the meeting by such stockholder, if communication with such stockholder is unlawful, or if such stockholder attends the meeting in question, unless such attendance was for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting was not lawfully called or convened. If a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place are announced at the meeting at which the adjournment is taken, except that if the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.

 

 
 

 

4.           Quorum . The holders of a majority in interest of all stock issued, outstanding and entitled to vote at a meeting shall constitute a quorum. Any meeting may be adjourned from time to time by a majority of the votes properly cast upon the question, whether or not a quorum is present. The stockholders present at a duly constituted meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to reduce the voting shares below a quorum.

 

5.           Voting and Proxies . Stockholders shall have one vote for each share of stock entitled to vote owned by them of record according to the books of the corporation, unless otherwise provided by law or by the Certificate of Incorporation. Stockholders may vote either in person or by written proxy or express directly or by written proxy their consent or dissent to a corporate action taken without a meeting, but no proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period or is irrevocable and coupled with an interest. Proxies shall be filed with the Secretary of the meeting, or of any adjournment thereof. Except as otherwise limited therein, proxies shall entitle the persons authorized thereby to vote at any adjournment of such meeting.

 

6.           Action at Meeting . When a quorum is present, any matter before the meeting shall be decided by vote of the holders of a majority of the shares of stock voting on such matter, except where a larger vote is required by law, by the Certificate of Incorporation or by these By-laws. Any election by stockholders shall be determined by a plurality of the votes cast, except where a larger vote is required by law, by the Certificate of Incorporation or by these By-laws. The corporation shall not directly or indirectly vote any share of its own stock; provided, however, that the corporation may vote shares which it holds in a fiduciary capacity to the extent permitted by law.

 

7.           Action Without a Meeting . Any action required or permitted by law to be taken at any annual or special meeting of stockholders may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting, at which all shares entitled to vote thereon were present and voted and shall be delivered to the corporation by delivery to its registered office, by hand or by certified mail, return receipt requested, or to the corporation’s principal place of business or to the officer of the corporation having custody of the minute book. Every written consent shall bear the date of signature and no written consent shall be effective unless, within sixty days of the earliest dated consent delivered pursuant to these By-laws, written consents signed by a sufficient number of stockholders entitled to take action are delivered to the corporation in the manner set forth in these By-laws. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing.

 

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8.           Stockholder Lists . The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present.

 

ARTICLE II

 

Directors

 

1.           Powers . The business of the corporation shall be managed by or under the direction of a Board of Directors who may exercise all the powers of the corporation, except as otherwise provided by law, by the Certificate of Incorporation or by these By-laws. In the event of a vacancy in the Board of Directors, the remaining Directors, except as otherwise provided by law, may exercise the powers of the full Board of Directors until the vacancy is filled.

 

2.           Election and Qualification . Unless otherwise provided in the Certificate of Incorporation or in these By-laws, the number of Directors which shall constitute the whole Board of Directors shall be determined by vote of the Board of Directors or by the stockholders at the annual meeting. Directors need not be stockholders.

 

3.           Vacancies; Reduction of Board . A majority of the Directors then in office, although less than a quorum, or a sole remaining Director, may fill vacancies in the Board of Directors occurring for any reason and newly created directorships resulting from any increase in the authorized number of Directors. In lieu of filling any vacancy, the stockholders or the Board of Directors may reduce the number of Directors.

 

4.           Enlargement of the Board . The Board of Directors may be enlarged by the stockholders at any meeting or by vote of a majority of the Directors then in office.

 

5.           Tenure . Except as otherwise provided by law, by the Certificate of Incorporation or by these By-laws, Directors shall hold office until their successors are elected and qualified or until their earlier resignation or removal. Any Director may resign by delivering his written resignation to the corporation. Such resignation shall be effective upon receipt, unless it is specified to be effective at some other time or upon the happening of some other event.

 

6.           Removal . To the extent permitted by law, a Director may be removed from office with or without cause by vote of the holders of a majority of the shares of stock entitled to vote in the election of Directors. A Director may be removed for cause only after reasonable notice and opportunity to be heard before the body proposing to remove him.

 

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7.           Meetings . Regular meetings of the Board of Directors may be held without notice at such time, date and place as the Board of Directors may from time to time determine. Special meetings of the Board of Directors may be called, orally or in writing, by the President, Chairman, Treasurer or two or more Directors, designating the time, date and place thereof. Directors may participate in meetings of the Board of Directors by means of conference telephone or similar communications equipment by means of which all Directors participating in the meeting can hear each other, and participation in a meeting in accordance herewith shall constitute presence in person at such meeting.

 

8.           Notice of Meetings . Notice of the time, date and place of all special meetings of the Board of Directors shall be given to each Director by the Secretary, or Assistant Secretary, or in case of the death, absence, incapacity or refusal of such persons, by the officer or one of the Directors calling the meeting. Notice shall be given to each Director in person or by telephone or by telegram sent to his business or home address at least twenty-four hours in advance of the meeting, or by written notice mailed to his business or home address at least forty-eight hours in advance of the meeting. Without limiting the manner by which notice otherwise may be given effectively to Directors, notice of meetings may also be given to Directors by means of electronic transmission in accordance with applicable law. Notice need not be given to any Director if a written waiver of notice is executed by him before or after the meeting, or if communication with such Director is unlawful. A notice or waiver of notice of a meeting of the Board of Directors need not specify the purposes of the meeting.

 

9.           Quorum . At any meeting of the Board of Directors, a majority of the Directors then in office shall constitute a quorum. Less than a quorum may adjourn any meeting from time to time and the meeting may be held as adjourned without further notice.

 

10.         Action at Meeting . At any meeting of the Board of Directors at which a quorum is present, a majority of the Directors present may take any action on behalf of the Board of Directors, unless a larger number is required by law, by the Certificate of Incorporation or by these By-laws.

 

11.         Action by Consent . Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if a written consent thereto is signed by all the Directors and filed with the records of the meetings of the Board of Directors. Such consent shall be treated as a vote of the Board of Directors for all purposes.

 

12.         Committees . The Board of Directors, by vote of a majority of the Directors then in office, may establish one or more committees, each committee to consist of one or more Directors, and may delegate thereto some or all of its powers except those which by law, by the Certificate of Incorporation, or by these By-laws may not be delegated. Except as the Board of Directors may otherwise determine, any such committee may make rules for the conduct of its business, but in the absence of such rules its business shall be conducted so far as possible in the same manner as is provided in these By-laws for the Board of Directors. All members of such committees shall hold their committee offices at the pleasure of the Board of Directors, and the Board of Directors may abolish any committee at any time. Each such committee shall report its action to the Board of Directors who shall have power to rescind any action of any committee without retroactive effect.

 

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ARTICLE III

Officers

 

1.           Enumeration . The officers of the Corporation shall consist of a President, a Treasurer, a Secretary and such other officers, including, without limitation, a Chairman of the Board of Directors, a Chief Executive Officer and one or more Vice Presidents (including Executive Vice Presidents or Senior Vice Presidents), Assistant Vice Presidents, Assistant Treasurers and Assistant Secretaries, as the Board of Directors may determine.

 

2.           Election . At the regular annual meeting of the Board of Directors following the annual ,eeting, the Board of Directors shall elect the President, the Treasurer and the Secretary. Other officers may be elected by the Board of Directors at such regular annual meeting of the Board of Directors or at any other regular or special meeting.

 

3.           Qualification . No officer need be a stockholder or Director. Any two or more offices may be held by the same person. Any officer may be required by the Board of Directors to give bond for the faithful performance of his duties in such amount and with such sureties as the Board of Directors may determine.

 

4.           Tenure . Except as otherwise provided by the Certificate of Incorporation or by these By-laws, each of the officers of the corporation shall hold his office until his successor is elected and qualified or until his earlier resignation or removal. Any officer may resign by delivering his written resignation to the corporation, and such resignation shall be effective upon receipt unless it is specified to be effective at some other time or upon the happening of some other event.

 

5.           Removal . The Board of Directors may remove any officer with or without cause by a vote of a majority of the entire number of Directors then in office; provided, that an officer may be removed for cause only after reasonable notice and opportunity to be heard by the Board of Directors.

 

6.           Vacancies . Any vacancy in any office may be filled for the unexpired portion of the term by the Board of Directors.

 

7.           Chairman of the Board and Vice Chairman . The Chairman of the Board of Directors, if one is elected, shall preside, when present, at all meetings of the stockholders and of the Board of Directors. The Chairman of the Board of Directors shall have such other powers and shall perform such other duties as the Board of Directors may from time to time designate.

 

Any Vice Chairman of the Board of Directors shall have such powers and shall perform such duties as the Board of Directors may from time to time designate.

 

8.           Chief Executive Officer . The Chief Executive Officer, if one is elected, shall have such powers and shall perform such duties as the Board of Directors may from time to time designate.

 

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9.           President and Vice Presidents . The President shall have general charge of the corporation’s business operations, subject to the direction of the Board of Directors. In the absence of the Chairman, the President shall preside, when present, at all meetings of stockholders and the Board of Directors. The Board of Directors shall have the authority to appoint a temporary presiding officer to serve at any meeting of the stockholders or Board of Directors if the Chairman or the President is unable to do so for any reason.

 

Any Vice President shall have such powers and shall perform such duties as the Board of Directors may from time to time designate. In the absence of the President or in the event of his inability or refusal to act, the Vice President (or in the event there be more than one Vice President, the Vice Presidents in the order designated by the Board of Directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the President, and when so acting, shall have all the powers and responsibility of and be subject to all the restrictions upon the President.

 

10.          Treasurer and Assistant Treasurers . The Treasurer shall, subject to the direction of the Board of Directors, have general charge of the financial affairs of the corporation and shall cause to be kept accurate books of account. He shall have custody of all funds, securities, and valuable documents of the corporation, except as the Board of Directors may otherwise provide.

 

Any Assistant Treasurer shall have such powers and perform such duties as the Board of Directors may from time to time designate.

 

11.          Secretary and Assistant Secretaries . The Secretary shall record the proceedings of all meetings of the stockholders and the Board of Directors in books kept for that purpose. In his absence from any such meeting, an Assistant Secretary, or if he is absent, a temporary secretary chosen at the meeting, shall record the proceedings thereof.

 

The Secretary shall have charge of the stock ledger (which may, however, be kept by any transfer or other agent of the corporation) and shall have such other duties and powers as may be designated from time to time by the Board of Directors or the President.

 

Any Assistant Secretary shall have such powers and perform such duties as the Board of Directors may from time to time designate.

 

12.          Other Powers and Duties . Subject to these By-laws, each officer of the corporation shall have in addition to the duties and powers specifically set forth in these By-laws, such duties and powers as are customarily incident to his office, and such duties and powers as may be designated from time to time by the Board of Directors.

 

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ARTICLE IV

Capital Stock

 

1.           Certificates of Stock . Each stockholder shall be entitled to a certificate of the capital stock of the corporation in such form as may from time to time be prescribed by the Board of Directors. Such certificate shall be signed by the Chairman, Vice Chairman, President or a Vice President and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary. Such signatures may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed on such certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the time of its issue. Every certificate for shares of stock which are subject to any restriction on transfer and every certificate issued when the corporation is authorized to issue more than one class or series of stock shall contain such legend with respect thereto as is required by law. The corporation shall be permitted to issue fractional shares.

 

2.           Transfers . Subject to any restrictions on transfer, shares of stock may be transferred on the books of the corporation by the surrender to the corporation or its transfer agent of the certificate therefor properly endorsed or accompanied by a written assignment or power of attorney properly executed, with transfer stamps (if necessary) affixed, and with such proof of the authenticity of signature as the corporation or its transfer agent may reasonably require.

 

3.           Record Holders . Except as may otherwise be required by law, by the Certificate of Incorporation or by these By-laws, the corporation shall be entitled to treat the record holder of stock as shown on its books as the owner of such stock for all purposes, including the payment of dividends and the right to vote with respect thereto, regardless of any transfer, pledge or other disposition of such stock, until the shares have been transferred on the books of the corporation in accordance with the requirements of these By-laws.

 

It shall be the duty of each stockholder to notify the corporation of his post office address.

 

4.           Record Date . In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not precede the date on which it is established, and which shall not be more than sixty nor less than ten days before the date of such meeting, more than ten days after the date on which the record date for stockholder consent without a meeting is established, nor more than sixty days prior to any other action. In such case only stockholders of record on such record date shall be so entitled, notwithstanding any transfer of stock on the books of the corporation after the record date.

 

If no record date is fixed, (a) the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held, (b) the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is necessary, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the corporation by delivery to its registered office in this state, to its principal place of business, or to an officer or agent of the corporation having custody of the book in which proceedings of meetings of stockholders are recorded, and (c) the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.

 

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5.           Replacement of Certificates . In case of the alleged loss, destruction or mutilation of a certificate of stock, a duplicate certificate may be issued in place thereof, upon such terms as the Board of Directors may prescribe.

 

ARTICLE V

Indemnification

 

1.           Indemnification of Directors and Officers . The corporation shall indemnify, to the fullest extent permitted by the General Corporation Law of the State of Delaware, any person who was or is a party or is threatened to be made a party to or is otherwise involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, investigative or otherwise, and whether by or in the right of the corporation, its stockholders, a third party or otherwise (a “Proceeding”), by reason of the fact that he is or was a Director or officer of the corporation, or is or was a Director or officer of the corporation serving at its request as a Director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against all expense (including, but not limited to, attorneys’ fees), liability, loss, judgments, fines, excise taxes, penalties and amounts paid in settlement actually and reasonably incurred by him in connection with such Proceeding, including expenses incurred in seeking such indemnification. However, such indemnification shall exclude (i) indemnification with respect to any improper personal benefit which a Director or officer is determined to have received and of the expenses of defending against an improper personal benefit claim, unless the Director or officer is successful on the merits in said defense, and (ii) indemnification of present or former officers, Directors, employees or agents of a constituent corporation absorbed in a merger or consolidation transaction with this corporation with respect to their activities prior to said transaction, unless specifically authorized by the Board of Directors or stockholders of this corporation. Such indemnification shall include prompt payment of expenses incurred by a Director or officer in defending a Proceeding in advance of the final disposition of such Proceeding, upon receipt of an undertaking by or on behalf of the Director or officer to repay such amounts if it shall ultimately be determined that he is not entitled to be indemnified by the corporation under this Article V, which undertaking shall be an unsecured general obligation of the Director or officer and may be accepted without regard to his ability to make repayment.

 

2.           Indemnification of Employees and Agents . The corporation may, to the extent authorized from time to time by the Board of Directors, grant rights to indemnification and to an advancement of expenses, pursuant to the provisions of this Article V, to any person who was or is a party or is threatened to be made a party to or is otherwise involved in any Proceeding by reason of the fact that he is or was an employee or agent of the corporation or is or was serving at the request of the corporation, as a Director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise.

 

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3.           Nature of Indemnification Rights . The indemnification rights provided in this Article V shall be a contract right and shall not be deemed exclusive of any other rights to which any person, whether or not entitled to be indemnified hereunder, may be entitled under any statute, by-law, agreement, vote of stockholders or Directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a Director, officer, employee or agent and inure to the benefit of the heirs, executors and administrators of such a person. A Director or officer shall be entitled to the benefit of any amendment of the General Corporation Law of the State of Delaware which enlarges indemnification rights hereunder, but any such amendment which adversely affects indemnification rights with respect to prior activities shall not apply to him without his consent unless otherwise required by law. Each person who is or becomes a Director or officer of the corporation shall be deemed to have served or to have continued to serve in such capacity in reliance upon the indemnity provided for in this Article V.

 

4.           Amendment . The provisions of this Article may be amended as provided in Article VI; however, no amendment or repeal of such provisions which adversely affects the rights of a Director or officer under this Article V with respect to his acts or omissions prior to such amendment or repeal, shall apply to him without his consent.

 

ARTICLE VI

Miscellaneous Provisions

 

1.           Fiscal Year . Except as otherwise determined by the Board of Directors, the fiscal year of the corporation shall end on December 31 st of each year.

 

2.           Seal . The Board of Directors shall have power to adopt and alter the seal of the corporation.

 

3.           Execution of Instrument . All deeds, leases, transfers, contracts, bonds, notes and other obligations authorized to be executed by an officer of the corporation in its behalf shall be signed by the Chairman, President or Treasurer, or by any other officer of the corporation designated by the Board of Directors, except as the Board of Directors may generally or in particular cases otherwise determine.

 

4.           Voting of Securities . Unless otherwise provided by the Board of Directors, the Chairman or President or Treasurer may waive notice of and act on behalf of this corporation, or appoint another person or persons to act as proxy or attorney in fact for this corporation with or without discretionary power and/or power of substitution, at any meeting of stockholders or shareholders of any other corporation or organization, any of whose securities are held by this corporation.

 

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5.           Resident Agent . The Board of Directors may appoint a resident agent upon whom legal process may be served in any action or proceeding against the corporation.

 

6.           Corporate Records . The original or attested copies of the Certificate of Incorporation, By-laws and records of all meetings of the incorporators, stockholders and the Board of Directors and the stock and transfer records, which shall contain the names of all stockholders, their record addresses and the amount of stock held by each, shall be kept at the principal office of the corporation, at the office of its counsel, or at an office of its transfer agent.

 

7.           Certificate of Incorporation . All references in these By-laws to the Certificate of Incorporation shall be deemed to refer to the Certificate of Incorporation of the corporation, as amended and in effect from time to time.

 

8.           Amendments . These By-laws may be altered, amended or repealed, in whole or in part, or new By-laws may be adopted by the stockholders or by the Board of Directors, subject to any limitations set forth in the Certificate of Incorporation, at any regular or special meeting of the stockholders or of the Board of Directors; provided, however, that notice of such alteration, amendment, repeal or adoption of new By-laws be contained in the notice of such regular or special meeting of the stockholders or the Board of Directors, as the case may be. All such amendments must be approved by either the holders of a majority of the outstanding capital stock entitled to vote thereon or by a majority of the entire Board of Directors then in office. Any By-laws adopted by the Board of Directors may be amended or repealed by the stockholders.

 

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EXHIBIT 3.3

 

AMENDED AND RESTATED BY-LAWS

 

OF

 

Harvard Apparatus Regenerative Technology , INC.

(the “Corporation”)

 

ARTICLE I

 

STOCKHOLDERS

 

SECTION 1. ANNUAL MEETING. The annual meeting of stockholders (any such meeting being referred to in these By-laws as an “Annual Meeting”) shall be held at the hour, date and place within or without the United States which is fixed by the Board of Directors, the Chairman of the Board, the Chief Executive Officer or the President, which time, date and place may subsequently be changed at any time by vote of the Board of Directors. If no Annual Meeting has been held for a period of thirteen months after the Corporation’s last Annual Meeting, a special meeting in lieu thereof may be held, and such special meeting shall have, for the purposes of these By-laws or otherwise, all the force and effect of an Annual Meeting. Any and all references hereafter in these By-laws to an Annual Meeting or Annual Meetings also shall be deemed to refer to any special meeting(s) in lieu thereof. The Board of Directors may postpone, reschedule or cancel any previously scheduled Annual Meeting.

 

SECTION 2. SPECIAL MEETINGS. Except as otherwise required by statute and subject to the rights, if any, of the holders of any series of Undesignated Preferred Stock (as defined in the Certificate), special meetings of the stockholders of the Corporation may be called only by the Board of Directors acting pursuant to a resolution approved by the affirmative vote of a majority of the Directors then in office. Only those matters set forth in the notice of the special meeting may be considered or acted upon at a special meeting of stockholders of the Corporation. The Board of Directors may postpone, reschedule or cancel any previously scheduled special meeting of stockholders.

 

SECTION 3. NOTICE OF MEETINGS; ADJOURNMENTS. Except as otherwise provided by law, notice of each meeting, whether annual or special, shall be given not less than 10 days nor more than 60 days before the meeting, to each stockholder entitled to vote at such meeting as of the record date for determining the stockholders entitled to notice of the meeting. Without limiting the manner by which notice otherwise may be given to stockholders, any notice shall be effective if given by a form of electronic transmission consented to (in a manner consistent with the General Corporation Law of the State of Delaware (the “DGCL”)) by the stockholder to whom the notice is given. The notices of all meetings shall state the place, if any, date and time of the meeting, the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such meeting, and the record date for determining the stockholders entitled to vote at the meeting (if such date is different from the record date for stockholders entitled to notice of the meeting). The notice of a special meeting shall state, in addition, the purpose or purposes for which the meeting is called. If notice is given by mail, such notice shall be deemed given when deposited in the United States mail, postage prepaid, directed to the stockholder at such stockholder’s address as it appears on the records of the Corporation. If notice is given by electronic transmission, such notice shall be deemed given at the time specified in Section 232 of the DGCL.

 

 
 

 

Notice of an Annual Meeting or special meeting of stockholders need not be given to a stockholder if a written waiver of notice is signed before or after such meeting by such stockholder or if such stockholder attends such meeting, unless such attendance was for the express purpose of objecting at the

beginning of the meeting to the transaction of any business because the meeting was not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any Annual Meeting or special meeting of stockholders need be specified in any written waiver of notice.

 

The Board of Directors may postpone and reschedule any previously scheduled Annual Meeting or special meeting of stockholders and any record date with respect thereto, regardless of whether any notice or public announcement with respect to any such meeting has been sent or made pursuant to Section 4 of this Article I of these By-laws or otherwise. In no event shall the public announcement of an adjournment, postponement or rescheduling of any previously scheduled meeting of stockholders commence a new time period for the giving of a stockholder’s notice under Section 4 of this Article I of these By-laws.

 

When any meeting is convened, the presiding officer may adjourn the meeting if (a) no quorum is present for the transaction of business, (b) the Board of Directors determines that adjournment is necessary or appropriate to enable the stockholders to consider fully information which the Board of Directors determines has not been made sufficiently or timely available to stockholders, or (c) the Board of Directors determines that adjournment is otherwise in the best interests of the Corporation. When any Annual Meeting or special meeting of stockholders is adjourned to another hour, date or place, notice need not be given of the adjourned meeting other than an announcement at the meeting at which the adjournment is taken of the hour, date and place to which the meeting is adjourned; provided, however, that if the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, notice of the adjourned meeting shall be given to each stockholder of record entitled to vote thereat and each stockholder who, by law or under the Certificate or these By-laws, is entitled to such notice.

 

SECTION 4. NOTICE OF STOCKHOLDER BUSINESS.

 

(a) ANNUAL MEETING.

 

(1) Nominations of persons for election to the Board of Directors of the Corporation and the proposal of any other business to be considered by the stockholders may be made at an Annual Meeting (a) pursuant to the Corporation’s notice of meeting, (b) by or at the direction of the Board of Directors or (c) by any stockholder of the Corporation who was a stockholder of record at the time of giving of notice provided for in this Section 4 of this Article I of these By-laws, who is entitled to vote at the meeting, who is present (in person or by proxy) at the meeting and who complies with the notice procedures set forth in this Section 4 of this Article I of these By-laws. In addition to the other requirements set forth in these By-laws, for any proposal of business to be considered at an Annual Meeting, it must be a proper subject for action by stockholders of the Corporation under the DGCL.

 

(2) For nominations or other business to be properly brought before an Annual Meeting by a stockholder pursuant to clause (c) of paragraph (a)(1) of this Section 4 of this Article I of these By-laws, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely, a stockholder’s notice shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the 90 th day nor earlier than the close of business on the 120 th day prior to the first anniversary of the preceding year’s Annual Meeting; provided, however, that in the event that the date of the Annual Meeting is advanced by more than 30 days before or delayed by more than 60 days after such anniversary date, notice by the stockholder to be timely must be so delivered not earlier than the close of business on the 120 th day prior to such Annual Meeting and not later than the close of business on the later of the 90 th day prior to such Annual Meeting or the 10 th day following the day on which public announcement of the date of such meeting is first made. Notwithstanding anything to the contrary provided herein, for the first Annual Meeting following the initial public offering of common stock of the Corporation, a stockholder’s notice shall be timely if delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the later of the 90 th day prior to the scheduled date of such Annual Meeting or the 10 th day following the day on which public announcement of the date of such Annual Meeting is first made or sent by the Corporation. Such stockholder’s notice shall set forth:

 

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(a) (i) as to each person whom the stockholder proposes to nominate for election or reelection as a director, (A) such person’s name, age, business address and, if known, residence address, (B) such person’s principal occupation or employment, (C) the class and series and number of shares of stock of the Corporation that are, directly or indirectly, owned, beneficially or of record, by such person, (D) a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three years, and any other material relationships, between or among the stockholder, the beneficial owner, if any, on whose behalf the nomination is being made and the respective affiliates and associates of, or others acting in concert with, such stockholder and such beneficial owner, on the one hand, and each proposed nominee, and his or her respective affiliates and associates, or others acting in concert with such nominee(s), on the other hand, including all information that would be required to be disclosed pursuant to Item 404 of Regulation S-K if the stockholder making the nomination and any beneficial owner on whose behalf the nomination is made or any affiliate or associate thereof or person acting in concert therewith were the “registrant” for purposes of such Item and the proposed nominee were a director or executive officer of such registrant, and (E) any other information concerning such person that is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Rule 14a-11 thereunder (including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected), and (ii) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination is made, (A) the name and address of such stockholder, as they appear on the Corporation’s books, and of such beneficial owner, (B) the class and series and number of shares of stock of the Corporation that are, directly or indirectly, owned, beneficially or of record, by such stockholder and such beneficial owner, (C) a description of any agreement, arrangement or understanding between or among such stockholder and/or such beneficial owner and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are being made or who may participate in the solicitation of proxies in favor of electing such nominee(s), (D) a description of any agreement, arrangement or understanding (including any derivative or short positions, swaps, profit interests, options, warrants, convertible securities, stock appreciation or similar rights, hedging transactions, and borrowed or loaned shares) that has been entered into by, or on behalf of, such stockholder or such beneficial owner, the effect or intent of which is to mitigate loss to, manage risk or benefit of share price changes for, or increase or decrease the voting power of, such stockholder or such beneficial owner with respect to shares of stock of the Corporation, (E) any other information relating to such stockholder and such beneficial owner that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for the election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder, (F) a representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the person(s) named in its notice and (G) a representation whether such stockholder and/or such beneficial owner intends or is part of a group which intends (x) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Corporation’s outstanding capital stock reasonably believed by such stockholder or such beneficial owner to be sufficient to elect the nominee (and such representation shall be included in any such proxy statement and form of proxy) and/or (y) otherwise to solicit proxies or votes from stockholders in support of such nomination (and such representation shall be included in any such solicitation materials).

 

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Not later than 10 days after the record date for determining stockholders entitled to notice of the meeting, the information required by Items (a)(i)(A)-(E) and (ii)(A)-(E) of the preceding paragraph shall be supplemented by the stockholder giving the notice to provide updated information as of such record date. The Corporation may require any proposed nominee to furnish such other information as the Corporation may reasonably require to determine the eligibility of such proposed nominee to serve as a director of the Corporation or whether such nominee would be independent under applicable Securities and Exchange Commission and applicable stock exchange rules and the Corporation’s publicly disclosed corporate governance guidelines. A stockholder shall not have complied with this Section 4(a)(2)(a) of this Article I of these By-laws if the stockholder (or beneficial owner, if any, on whose behalf the nomination is made) solicits or does not solicit, as the case may be, proxies or votes in support of such stockholder’s nominee in contravention of the representations with respect thereto required by this Section 4 of this Article I of these By-laws.

 

(b) (i) As to any other business that the stockholder proposes to bring before the meeting, (A) a brief description of the business desired to be brought before the meeting, (B) the text of the proposal (including the exact text of any resolutions proposed for consideration and, in the event that such business includes a proposal to amend these By-laws, the exact text of the proposed amendment), (C) the reasons for conducting such business at the meeting, and (D) any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made, and the names and addresses of other stockholders known by the stockholder proposing such business to support such proposal, and the class and series and number of shares of stock of the Corporation that are, directly or indirectly, owned, beneficially or of record, by such other stockholders; and (ii) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the proposal is made (A) the name and address of such stockholder, as they appear on the Corporation’s books, and of such beneficial owner, (B) the class and series and number of shares of stock of the Corporation that are, directly or indirectly, owned, beneficially or of record, by such stockholder and such beneficial owner, (C) description of any material interest of such stockholder or such beneficial owner and the respective affiliates and associates of, or others acting in concert with, such stockholder or such beneficial owner in such business, (D) a description of any agreement, arrangement or understanding between or among such stockholder and/or such beneficial owner and any other person or persons (including their names) in connection with the proposal of such business or who may participate in the solicitation of proxies in favor of such proposal, (E) a description of any agreement, arrangement or understanding (including any derivative or short positions, swaps, profit interests, options, warrants, convertible securities, stock appreciation or similar rights, hedging transactions, and borrowed or loaned shares) that has been entered into by, or on behalf of, such stockholder or such beneficial owner, the effect or intent of which is to mitigate loss to, manage risk or benefit of share price changes for, or increase or decrease the voting power of, such stockholder or such beneficial owner with respect to shares of stock of the Corporation, (F) any other information relating to such stockholder and such beneficial owner that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for the business proposed pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder, (G) a representation that such stockholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting and (H) a representation whether such stockholder and/or such beneficial owner intends or is part of a group which intends (x) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Corporation’s outstanding capital stock required to approve or adopt the proposal (and such representation shall be included in any such proxy statement and form of proxy) and/or (y) otherwise to solicit proxies or votes from stockholders in support of such proposal (and such representation shall be included in any such solicitation materials).

 

Not later than 10 days after the record date for determining stockholders entitled to notice of the meeting, the information required by Items (b)(i)(C) and (b)(ii)(A)-(F) of the preceding paragraph shall be supplemented by the stockholder giving the notice to provide updated information as of such record date. A stockholder shall not have complied with this Section 4(a)(2)(b) of this Article I of these By-laws if the stockholder (or beneficial owner, if any, on whose behalf the proposal is made) solicits or does not solicit, as the case may be, proxies or votes in support of such stockholder’s proposal in contravention of the representations with respect thereto required by this Section 4 of this Article I of these By-laws.

 

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(3) Notwithstanding anything in the second sentence of paragraph (a)(2) of this Section 4 of this Article I of these By-laws to the contrary, in the event that the number of directors to be elected to the Board of Directors of the Corporation is increased and there is no public announcement naming all of the nominees for director or specifying the size of the increased Board of Directors made by the Corporation at least 85 days prior to the first anniversary of the preceding year’s Annual Meeting, a stockholder’s notice required by this Section 4 of this Article I of these By-laws shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the 10 th day following the day on which such public announcement is first made by the Corporation.

 

(b) GENERAL.

 

(1) Only such persons who are nominated at an Annual Meeting in accordance with the provisions of this Section 4 of this Article I of these By-laws shall be eligible for election and to serve as directors and only such business shall be conducted at an Annual Meeting as shall have been brought before the meeting in accordance with the provisions of this Section 4 of this Article I of these By-laws. The Board of Directors or a designated committee thereof shall have the power to determine whether a nomination or any business proposed to be brought before the meeting was made in accordance with the provisions of this Section 4 of this Article I of these By-laws. If neither the Board of Directors nor such designated committee makes a determination as to whether any stockholder proposal or nomination was made in accordance with the provisions of this Section 4 of this Article I of these By-laws, the presiding officer of the Annual Meeting shall have the power and duty to determine whether the stockholder proposal or nomination was made in accordance with the provisions of this Section 4 of this Article I of these By-laws. If the Board of Directors or a designated committee thereof or the presiding officer, as applicable, determines that any stockholder proposal or nomination was not made in accordance with the provisions of this Section 4 of this Article I of these By-laws, such proposal or nomination shall be disregarded and shall not be presented for action at the Annual Meeting.

 

(2) For purposes of this Section 4 of this Article I of these By-laws, “public announcement” shall include disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.

 

(3) Notwithstanding the foregoing provisions of this Section 4 of this Article I of these By-laws, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 4 of this Article I of these By-laws. Nothing in this Section 4 of this Article I of these By-laws shall be deemed to affect any rights of (i) stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act, or (ii) the holders of any series of Undesignated Preferred Stock to elect directors under specified circumstances.

 

SECTION 6. QUORUM. A majority of the shares entitled to vote, present in person or represented by proxy, shall constitute a quorum at any meeting of stockholders, unless or except to the extent that the presence of a larger number may be required by these By-laws, the Certificate or by applicable law. Broker non-votes and abstentions are considered for purposes of establishing a quorum but shall not be considered as votes cast for or against a proposal or director nominee. If less than a quorum is present at a meeting, the holders of voting stock representing a majority of the voting power present at the meeting or the presiding officer may adjourn the meeting from time to time, and the meeting may be held as adjourned without further notice, except as provided in Section 3 of this Article I of these By-laws. At such adjourned meeting at which a quorum is present, any business may be transacted which might have been transacted at the meeting as originally noticed. The stockholders present at a duly constituted meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum.

 

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SECTION 7. VOTING AND PROXIES. Stockholders shall have one vote for each share of stock entitled to vote owned by them of record according to the stock ledger of the Corporation, unless otherwise provided by law or by the Certificate. Stockholders may vote either (i) in person, (ii) by written proxy or (iii) by a transmission permitted by Section 212(c) of the DGCL, filed in accordance with the procedure established for the meeting. Any copy, facsimile telecommunication or other reliable reproduction of the writing or transmission permitted by Section 212(c) of the DGCL may be substituted for or used in lieu of the original writing or transmission for any and all purposes for which the original writing or transmission could be used; provided, that such copy, facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original writing or transmission. Proxies shall be filed in accordance with the procedures established for the meeting of stockholders. Except as otherwise limited therein or as otherwise provided by law, proxies authorizing a person to vote at a specific meeting shall entitle the persons authorized thereby to vote at any adjournment of such meeting, but they shall not be valid after final adjournment of such meeting. A proxy with respect to stock held in the name of two or more persons shall be valid if executed by or on behalf of any one of them unless at or prior to the exercise of the proxy the Corporation receives a specific written notice to the contrary from any one of them.

 

SECTION 8. NO ACTION BY WRITTEN CONSENT. Except as expressly provided for in the Certificate, any action required or permitted to be taken by the stockholders of the Corporation must be effected at a duly called Annual Meeting or a special meeting of such holders and, except as expressly provided for in the Certificate, may not be effected by any consent in writing by such stockholders.

 

SECTION 9. ACTION AT MEETING. When a quorum is present at any meeting of stockholders, any matter before any such meeting (other than an election of a director or directors) shall be decided by a majority of the votes properly cast for and against such matter, except where a larger vote is required by law, by the Certificate or by these By-laws. Any election of directors by stockholders shall be determined by a plurality of the votes properly cast on the election of directors. Abstentions and broker non-votes shall not be counted as votes cast. A direction to “withhold authority” with respect to a nominee shall be treated as a vote cast against the election of such nominee. The Corporation shall not directly or indirectly vote any shares of its own stock; provided, however, that the Corporation or any Subsidiary (as defined in Article V of these By-laws) of the Corporation may vote shares which it holds in a fiduciary capacity to the extent permitted by law.

 

SECTION 10. STOCKHOLDER LISTS. The Secretary or an Assistant Secretary (or the Corporation’s transfer agent or other person authorized by these By-laws or by law) shall prepare and make, at least 10 days before every Annual Meeting or special meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least 10 days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the hour, date and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present.

 

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SECTION 11. PRESIDING OFFICER. The Chairman of the Board, if one is elected, or if not elected or in his or her absence, the President, shall preside at all Annual Meetings or special meetings of stockholders and shall have the power, among other things, to adjourn such meeting at any time and from time to time, subject to Sections 3 and 6 of this Article I of these By-laws. The Board of Directors shall be entitled to make such rules or regulations for the conduct of meetings of stockholders as it shall deem necessary, appropriate or convenient. Subject to such rules and regulations of the Board of Directors, if any, the presiding officer of the meeting shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such presiding officer, are necessary, appropriate or convenient for the proper conduct of the meeting, including, without limitation, establishing an agenda or order of business for the meeting, rules and procedures for maintaining order at the meeting and the safety of those present, limitations on participation in such meeting to stockholders of record of the Corporation and their duly authorized and constituted proxies and such other persons as the presiding officer shall permit, restrictions on entry to the meeting after the time fixed for the commencement thereof, limitations on the time allotted to questions or comments by participants and regulation of the opening and closing of the polls for balloting on matters that are to be voted on by ballot. Unless and to the extent determined by the Board of Directors or the presiding officer of the meeting, meetings of stockholders shall not be required to be held in accordance with rules of parliamentary procedure.

 

SECTION 12. INSPECTORS OF ELECTIONS. The Corporation shall, in advance of any meeting of stockholders, appoint one or more inspectors to act at the meeting and make a written report thereof. The Corporation may designate one or more persons as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting of stockholders, the presiding officer shall appoint one or more inspectors to act at the meeting. Any inspector may, but need not, be an officer, employee or agent of the Corporation. Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability. The inspectors shall perform such duties as are required by the DGCL, including the counting of all votes and ballots. The inspectors may appoint or retain other persons or entities to assist the inspectors in the performance of the duties of the inspectors. The presiding officer may review all determinations made by the inspectors, and in so doing the presiding officer shall be entitled to exercise his or her sole judgment and discretion and he or she shall not be bound by any determinations made by the inspectors. All determinations by the inspectors and, if applicable, the presiding officer, shall be subject to further review by any court of competent jurisdiction.

 

ARTICLE II

 

DIRECTORS

 

SECTION 1. POWERS. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors except as otherwise provided by the Certificate or required by law.

 

SECTION 2. NUMBER AND TERMS. The number of directors of the Corporation shall be fixed solely and exclusively by resolution duly adopted from time to time by the Board of Directors. The directors shall hold office in the manner provided in the Certificate.

 

SECTION 3. QUALIFICATION. No director need be a stockholder of the Corporation.

 

SECTION 4. VACANCIES. Vacancies in the Board of Directors shall be filled in the manner provided in the Certificate.

 

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SECTION 5. REMOVAL. Directors may be removed from office in the manner provided in the Certificate.

 

SECTION 6. RESIGNATION. A director may resign at any time by giving written notice to the Chairman of the Board, if one is elected, the President or the Secretary. A resignation shall be effective upon receipt, unless the resignation otherwise provides.

 

SECTION 7. REGULAR MEETINGS. The regular annual meeting of the Board of Directors shall be held, without notice other than this Section 7 of this Article II of these By-laws, on the same date and at the same place as the Annual Meeting following the close of such meeting of stockholders. Other regular meetings of the Board of Directors may be held at such hour, date and place as the Board of Directors may by resolution from time to time determine and publicize by means of reasonable notice given to any director who is not present at the meeting at which such resolution is adopted.

 

SECTION 8. SPECIAL MEETINGS. Special meetings of the Board of Directors may be called, orally or in writing, by or at the request of a majority of the directors, the Chairman of the Board, if one is elected, or the President. The person calling any such special meeting of the Board of Directors may fix the hour, date and place thereof.

 

SECTION 9. NOTICE OF MEETINGS. Notice of the hour, date and place of all special meetings of the Board of Directors shall be given to each director by the Secretary or an Assistant Secretary, or in case of the death, absence, incapacity or refusal of such persons, by the Chairman of the Board, if one is elected, or the President or such other officer designated by the Chairman of the Board, if one is elected, or the President. Notice of any special meeting of the Board of Directors shall be given to each director in person, by telephone, or by facsimile, electronic mail or other form of electronic communication, sent to his or her business or home address, at least 24 hours in advance of the meeting, or by written notice mailed to his or her business or home address, at least 48 hours in advance of the meeting. Such notice shall be deemed to be delivered when hand delivered to such address, read to such director by telephone, deposited in the mail so addressed, with postage thereon prepaid if mailed, dispatched or transmitted if faxed, telexed or telecopied, or when delivered to the telegraph company if sent by telegram.

 

A written waiver of notice signed before or after a meeting by a director and filed with the records of the meeting shall be deemed to be equivalent to notice of the meeting. The attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting at the beginning of the meeting to the transaction of any business because such meeting is not lawfully called or convened. Except as otherwise required by law, by the Certificate or by these By-laws, neither the business to be transacted at, nor the purpose of, any meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting.

 

SECTION 10. QUORUM. At any meeting of the Board of Directors, a majority of the total number of directors shall constitute a quorum for the transaction of business, but if less than a quorum is present at a meeting, a majority of the directors present may adjourn the meeting from time to time, and the meeting may be held as adjourned without further notice, except as provided in Section 9 of this Article II. Any business which might have been transacted at the meeting as originally noticed may be transacted at such adjourned meeting at which a quorum is present. For purposes of this section, the total number of directors includes any unfilled vacancies on the Board of Directors.

 

SECTION 11. ACTION AT MEETING. At any meeting of the Board of Directors at which a quorum is present, the vote of a majority of the directors present shall constitute action by the Board of Directors, unless otherwise required by law, by the Certificate or by these By-laws.

 

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SECTION 12. ACTION BY CONSENT. Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if all members of the Board of Directors consent thereto in writing. Such written consent shall be filed with the records of the meetings of the Board of Directors and shall be treated for all purposes as a vote at a meeting of the Board of Directors.

 

SECTION 13. MANNER OF PARTICIPATION. Directors may participate in meetings of the Board of Directors by means of conference telephone or similar communications equipment by means of which all directors participating in the meeting can hear each other, and participation in a meeting in accordance herewith shall constitute presence in person at such meeting for purposes of these By-laws.

 

SECTION 14. COMMITTEES. The Board of Directors, by vote of a majority of the directors then in office, may elect from its number one or more committees and may delegate thereto some or all of its powers except those which by law, by the Certificate or by these By-laws may not be delegated. Except as the Board of Directors may otherwise determine, the majority of members of any such committee may make rules for the conduct of its business, but unless otherwise provided by the Board of Directors or in such rules, its business shall be conducted so far as possible in the same manner as is provided by these By-laws for the Board of Directors. All members of such committees shall hold such offices at the pleasure of the Board of Directors. The Board of Directors may abolish any such committee at any time. Any committee to which the Board of Directors delegates any of its powers or duties shall keep minutes of its meetings and shall report its action to the Board of Directors.

 

SECTION 15. COMPENSATION OF DIRECTORS. Directors shall receive such compensation for their services as shall be determined by a majority of the Board of Directors, or a designated committee thereof, provided that directors who are serving the Corporation as employees and who receive compensation for their services as such, shall not receive any salary or other compensation for their services as directors of the Corporation.

 

ARTICLE III

 

OFFICERS

 

SECTION 1. ENUMERATION. The officers of the Corporation shall consist of a President, a Treasurer, a Secretary and such other officers, including, without limitation, a Chairman of the Board of Directors, a Chief Executive Officer and one or more Vice Presidents (including Executive Vice Presidents or Senior Vice Presidents), Assistant Vice Presidents, Assistant Treasurers and Assistant Secretaries, as the Board of Directors may determine.

 

SECTION 2. ELECTION. At the regular annual meeting of the Board of Directors following the Annual Meeting, the Board of Directors shall elect the President, the Treasurer and the Secretary. Other officers may be elected by the Board of Directors at such regular annual meeting of the Board of Directors or at any other regular or special meeting.

 

SECTION 3. QUALIFICATION. No officer need be a stockholder or a director. Any person may occupy more than one office of the Corporation at any time. Any officer may be required by the Board of Directors to give bond for the faithful performance of his or her duties in such amount and with such sureties as the Board of Directors may determine.

 

SECTION 4. TENURE. Except as otherwise provided by the Certificate or by these By-laws, each of the officers of the Corporation shall hold office until his or her successor is elected and qualified or until his or her earlier resignation or removal.

 

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SECTION 5. RESIGNATION. Any officer may resign by delivering his or her written resignation to the Corporation addressed to the President or the Secretary, and such resignation shall be effective upon receipt unless it is specified to be effective at some other time or upon the happening of some other

event.

 

SECTION 6. REMOVAL. Except as otherwise provided by law, the Board of Directors may remove any officer with or without cause by the affirmative vote of a majority of the directors then in office.

 

SECTION 7. ABSENCE OR DISABILITY. In the event of the absence or disability of any officer, the Board of Directors may designate another officer to act temporarily in place of such absent or disabled officer.

 

SECTION 8. VACANCIES. Any vacancy in any office may be filled for the unexpired portion of the term by the Board of Directors.

 

SECTION 9. PRESIDENT. The President shall, subject to the direction of the Board of Directors, have general supervision and control of the Corporation’s business. If there is no Chairman of the Board or if he or she is absent, the President shall preside, when present, at all meetings of stockholders and of the Board of Directors. The President shall have such other powers and perform such other duties as the Board of Directors may from time to time designate.

 

SECTION 10. CHAIRMAN OF THE BOARD. The Chairman of the Board, if one is elected, shall preside, when present, at all meetings of the stockholders and of the Board of Directors. The Chairman of the Board shall have such other powers and shall perform such other duties as the Board of Directors may from time to time designate.

 

SECTION 11. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer, if one is elected, shall have such powers and shall perform such duties as the Board of Directors may from time to time designate.

 

SECTION 12. VICE PRESIDENTS AND ASSISTANT VICE PRESIDENTS. Any Vice President (including any Executive Vice President or Senior Vice President) and any Assistant Vice President shall have such powers and shall perform such duties as the Board of Directors or the Chief Executive Officer may from time to time designate.

 

SECTION 13. TREASURER AND ASSISTANT TREASURERS. The Treasurer shall, subject to the direction of the Board of Directors and except as the Board of Directors or the Chief Executive Officer may otherwise provide, have general charge of the financial affairs of the Corporation and shall cause to be kept accurate books of account. The Treasurer shall have custody of all funds, securities, and valuable documents of the Corporation. He or she shall have such other duties and powers as may be designated from time to time by the Board of Directors or the Chief Executive Officer.

 

Any Assistant Treasurer shall have such powers and perform such duties as the Board of Directors or the Chief Executive Officer may from time to time designate.

 

SECTION 14. SECRETARY AND ASSISTANT SECRETARIES. The Secretary shall record all the proceedings of the meetings of the stockholders and the Board of Directors (including committees of the Board) in books kept for that purpose. In his or her absence from any such meeting, a temporary secretary chosen at the meeting shall record the proceedings thereof. The Secretary shall have charge of the stock ledger (which may, however, be kept by any transfer or other agent of the Corporation). The Secretary shall have custody of the seal of the Corporation, and the Secretary, or an Assistant Secretary, shall have authority to affix it to any instrument requiring it, and, when so affixed, the seal may be attested by his or her signature or that of an Assistant Secretary. The Secretary shall have such other duties and powers as may be designated from time to time by the Board of Directors or the Chief Executive Officer. In the absence of the Secretary, any Assistant Secretary may perform his or her duties and responsibilities.

 

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Any Assistant Secretary shall have such powers and perform such duties as the Board of Directors or the Chief Executive Officer may from time to time designate.

 

SECTION 15. OTHER POWERS AND DUTIES. Subject to these By-laws and to such limitations as the Board of Directors may from time to time prescribe, the officers of the Corporation shall each have such powers and duties as generally pertain to their respective offices, as well as such powers and duties as from time to time may be conferred by the Board of Directors or the Chief Executive Officer.

 

ARTICLE IV

 

CAPITAL STOCK

 

SECTION 1. CERTIFICATES OF STOCK. Shares of the capital stock of the Corporation may be certificated or uncertificated, as provided under the DGCL. Each stockholder, upon written request to the transfer agent of the Corporation, shall be entitled to a certificate of the capital stock of the Corporation, in such form as may from time to time be prescribed by the Board of Directors. Such certificate shall be signed by the Chairman of the Board of Directors, the President or a Vice President and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary. The Corporation seal and the signatures by the Corporation’s officers, the transfer agent or the registrar may be facsimiles. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed on such certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he or she were such officer, transfer agent or registrar at the time of its issue. Every certificate for shares of stock which are subject to any restriction on transfer and every certificate issued when the Corporation is authorized to issue more than one class or series of stock shall contain such legend with respect thereto as is required by law.

 

SECTION 2. TRANSFERS. Subject to any restrictions on transfer and unless otherwise provided by the Board of Directors, shares of stock may be transferred only on the books of the Corporation (a) with respect to certificated shares, by the surrender to the Corporation or its transfer agent of the certificate theretofore properly endorsed or accompanied by a written assignment or power of attorney properly executed, with transfer stamps (if necessary) affixed, and with such proof of the authenticity of signature as the Corporation or its transfer agent may reasonably require, or (b) with respect to uncertificated shares, upon delivery of a instruction duly executed, and with such proof of authenticity of the signature as the Corporation or its transfer agent may reasonably require, in each case as well as payment of all taxes thereon.

 

SECTION 3. RECORD HOLDERS. Except as may otherwise be required by law, by the Certificate or by these By-laws, the Corporation shall be entitled to treat the record holder of stock as shown on its books as the owner of such stock for all purposes, including the payment of dividends and the right to vote with respect thereto, regardless of any transfer, pledge or other disposition of such stock, until the shares have been transferred on the books of the Corporation in accordance with the requirements of these By-laws.

 

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SECTION 4. RECORD DATE. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date: (a) in the case of determination of stockholders entitled to vote at any meeting of stockholders, shall, unless otherwise required by law, not be more than 60 nor less than 10 days before the date of such meeting and (b) in the case of any other action, shall not be more than 60 days prior to such other action. If no record date is fixed: (i) the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held; and (ii) the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.

 

SECTION 5. REPLACEMENT OF CERTIFICATES. In case of the alleged loss, destruction or mutilation of a certificate of stock, a duplicate certificate or uncertificated shares may be issued in place thereof, upon such terms as the Board of Directors may prescribe.

 

ARTICLE V

 

INDEMNIFICATION

 

SECTION 1. DEFINITIONS. For purposes of this Article:

 

(a)   “Corporate Status” describes the status of a person who is serving or has served (i) as a Director of the Corporation, (ii) as an Officer of the Corporation, or (iii) as a director, partner, trustee, officer, employee or agent of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise which such person is or was serving at the request of the Corporation. For purposes of his Section 1(a), an Officer or Director of the Corporation who is serving or has served as a director, partner, trustee, officer, employee or agent of a Subsidiary shall be deemed to be serving at the request of the Corporation;

 

(b)   “Director” means any person who serves or has served the Corporation as a director on the Board of Directors of the Corporation;

 

(c)    “Disinterested Director” means, with respect to each Proceeding in respect of which indemnification is sought hereunder, a Director of the Corporation who is not and was not a party to such Proceeding;

 

(d)    “Expenses” means all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of expert witnesses, private investigators and professional advisors (including, without limitation, accountants and investment bankers), travel expenses, duplicating costs, printing and binding costs, costs

of preparation of demonstrative evidence and other courtroom presentation aids and devices, costs incurred in connection with document review, organization, imaging and computerization, telephone charges, postage, delivery service fees, and all other disbursements, costs or expenses of the type customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, settling or otherwise participating in, a Proceeding;

 

(e)   “Non-Officer Employee” means any person who serves or has served as an employee or agent of the Corporation, but who is not or was not a Director or Officer;

 

(f)    “Officer” means any person who serves or has served the Corporation as an officer appointed by the Board of Directors of the Corporation;

 

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(g)    “Proceeding” means any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, inquiry, investigation, administrative hearing or other proceeding, whether civil, criminal, administrative, arbitrative or investigative; and

 

(h)    “Subsidiary” shall mean any corporation, partnership, limited liability company, joint venture, trust or other entity of which the Corporation owns (either directly or through or together with another Subsidiary of the Corporation) either (i) a general partner, managing member or other similar interest or (ii) (A) 50% or more of the voting power of the voting capital equity interests of such corporation, partnership, limited liability company, joint venture or other entity, or (B) 50% or more of the outstanding voting capital stock or other voting equity interests of such corporation, partnership, limited liability company, joint venture or other entity.

 

SECTION 2. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Subject to the operation of Section 4 of this Article V of these By-laws, each Director and Officer shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the DGCL, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than such law permitted the Corporation to provide prior to such amendment) against any and all Expenses, judgments, penalties, fines and amounts reasonably paid in settlement that are incurred by such Director or Officer or on such Director’s or Officer’s behalf in connection with any threatened, pending or completed Proceeding or any claim, issue or matter therein, which such Director or Officer is, or is threatened to be made, a party to or participant in by reason of such Director’s or Officer’s Corporate Status, if such Director or Officer acted in good faith and in a manner such Director or Officer reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal proceeding, had no reasonable cause to believe his or her conduct was unlawful. The rights of indemnification provided by this Section 2 shall continue as to a Director or Officer after he or she has ceased to be a Director or Officer and shall inure to the benefit of his or her heirs, executors, administrators and personal representatives. Notwithstanding the foregoing, the Corporation shall indemnify any Director or Officer seeking indemnification in connection with a Proceeding initiated by such Director or Officer only if such Proceeding was authorized by the Board of Directors of the Corporation, unless such Proceeding was brought to enforce an Officer or Director’s rights to Indemnification or, in the case of Directors, advancement of Expenses under these By-laws in accordance with the provisions set forth herein.

 

SECTION 3. INDEMNIFICATION OF NON-OFFICER EMPLOYEES. Subject to the operation of Section 4 of this Article V of these By-laws, each Non-Officer Employee may, in the discretion of the Board of Directors of the Corporation, be indemnified by the Corporation to the fullest extent authorized by the DGCL, as the same exists or may hereafter be amended, against any or all Expenses, judgments, penalties, fines and amounts reasonably paid in settlement that are incurred by such Non-Officer Employee or on such Non-Officer Employee’s behalf in connection with any threatened, pending or completed Proceeding, or any claim, issue or matter therein, which such Non-Officer Employee is, or is threatened to be made, a party to or participant in by reason of such Non-Officer Employee’s Corporate Status, if such Non-Officer Employee acted in good faith and in a manner such Non-Officer Employee reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal proceeding, had no reasonable cause to believe his or her conduct was unlawful. The rights of indemnification provided by this Section 3 shall exist as to a Non-Officer Employee after he or she has ceased to be a Non-Officer Employee and shall inure to the benefit of his or her heirs, personal representatives, executors and administrators. Notwithstanding the foregoing, the Corporation may indemnify any Non-Officer Employee seeking indemnification in connection with a Proceeding initiated by such Non-Officer Employee only if such Proceeding was authorized by the Board of Directors of the

Corporation.

 

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SECTION 4. GOOD FAITH. Unless ordered by a court, no indemnification shall be provided pursuant to this Article V to a Director, to an Officer or to a Non-Officer Employee unless a determination shall have been made that such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal Proceeding, such person had no reasonable cause to believe his or her conduct was unlawful. Such determination shall be made by (a) a majority vote of the Disinterested Directors, even though less than a quorum of the Board of Directors, (b) a committee comprised of Disinterested Directors, such committee having been designated by a majority vote of the Disinterested Directors (even though less than a quorum), (c) if there are no such Disinterested Directors, or if a majority of Disinterested Directors so directs, by independent legal counsel in a written opinion, or (d) by the stockholders of the Corporation.

 

SECTION 5. ADVANCEMENT OF EXPENSES TO DIRECTORS PRIOR TO FINAL DISPOSITION.

 

(a)    The Corporation shall advance all Expenses incurred by or on behalf of any Director in connection with any Proceeding in which such Director is involved by reason of such Director’s Corporate Status within ten (10) days after the receipt by the Corporation of a written statement from such Director requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by such Director and shall be preceded or accompanied by an undertaking by or on behalf of such Director to repay any Expenses so advanced if it shall ultimately be determined that such Director is not entitled to be indemnified against such Expenses.

 

(b)    If a claim for advancement of Expenses hereunder by a Director is not paid in full by the Corporation within 10 days after receipt by the Corporation of documentation of Expenses and the required undertaking, such Director may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and if successful in whole or in part, such Director shall also be entitled to be paid the expenses of prosecuting such claim. The failure of the Corporation (including its Board of Directors or any committee thereof, independent legal counsel, or stockholders) to make a determination concerning the permissibility of such advancement of Expenses under this Article V shall not be a defense to the action and shall not create a presumption that such advancement is not permissible. The burden of proving that a Director is not entitled to an advancement of expenses shall be on the Corporation.

 

(c)   In any suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Corporation shall be entitled to recover such expenses upon a final adjudication that the Director has not met any applicable standard for indemnification set forth in the DGCL.

 

SECTION 6. ADVANCEMENT OF EXPENSES TO OFFICERS AND NON-OFFICER EMPLOYEES PRIOR TO FINAL DISPOSITION.

 

(a) The Corporation may, at the discretion of the Board of Directors of the Corporation, advance any or all Expenses incurred by or on behalf of any Officer and Non-Officer Employee in connection with any Proceeding in which such is involved by reason of the Corporate Status of such Officer or Non-Officer Employee upon the receipt by the Corporation of a statement or statements from such Officer or Non-Officer Employee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by such Officer and Non-Officer Employee and shall be preceded or accompanied by an undertaking by or on behalf of such to repay any Expenses so advanced if it shall ultimately be determined that such Officer or Non-Officer Employee is not entitled to be indemnified against such Expenses.

 

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(b) In any suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Corporation shall be entitled to recover such expenses upon a final adjudication that the Officer or Non-Officer Employee has not met any applicable standard for indemnification set forth in the DGCL.

 

SECTION 7. CONTRACTUAL NATURE OF RIGHTS.

 

(a) The foregoing provisions of this Article V shall be deemed to be a contract between the Corporation and each Director and Officer entitled to the benefits hereof at any time while this Article V is in effect, and any repeal or modification thereof shall not affect any rights or obligations then existing with respect to any state of facts then or theretofore existing or any Proceeding theretofore or thereafter brought based in whole or in part upon any such state of facts.

 

(b) If a claim for indemnification of Expenses hereunder by a Director or Officer is not paid in full by the Corporation within 60 days after receipt by the Corporation of a written claim for indemnification, such Director or Officer may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim, and if successful in whole or in part, such Director or Officer shall also be entitled to be paid the expenses of Prosecuting such claim. The failure of the Corporation (including its Board of Directors or any committee thereof, independent legal counsel, or stockholders) to make a determination concerning the permissibility of such indemnification under this Article V shall not be a defense to the action and shall not create a presumption that such indemnification is not permissible. The burden of proving that a Director or Officer is not entitled to indemnification shall be on the Corporation.

 

(c) In any suit brought by a Director or Officer to enforce a right to indemnification hereunder, it shall be a defense that such Director or Officer has not met any applicable standard for indemnification set forth in the DGCL.

 

SECTION 8. NON-EXCLUSIVITY OF RIGHTS. The rights to indemnification and advancement of Expenses set forth in this Article V shall not be exclusive of any other right which any Director, Officer, or Non-Officer Employee may have or hereafter acquire under any statute, provision of the Certificate or these By-laws, agreement, vote of stockholders or Disinterested Directors or otherwise.

 

SECTION 9. INSURANCE. The Corporation may maintain insurance, at its expense, to protect itself and any Director, Officer or Non-Officer Employee against any liability of any character asserted against or incurred by the Corporation or any such Director, Officer or Non-Officer Employee, or arising out of any such person’s Corporate Status, whether or not the Corporation would have the power to indemnify such person against such liability under the DGCL or the provisions of this Article V.

 

ARTICLE VI

 

DIVIDENDS

 

SECTION 1. DECLARATION OF DIVIDENDS. Dividends upon the capital stock of the Corporation, subject to the provisions of the Certificate, if any, may be declared by the Board of Directors pursuant to law at any regular or special meeting. Dividends may be paid in cash, in property, or in shares of the capital stock, at the sole discretion of the Board of Directors.

 

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SECTION 2. DIVIDEND RESERVE. Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Board of Directors from time to time, in their absolute discretion, think proper and the Board of Directors may modify or abolish any such reserve in the manner in which it was created.

 

ARTICLE VII

 

MISCELLANEOUS PROVISIONS

 

SECTION 1. FISCAL YEAR. The fiscal year of the Corporation shall be determined by the Board of Directors.

 

SECTION 2. SEAL. The Board of Directors shall have power to adopt and alter the seal of the Corporation.

 

SECTION 3. EXECUTION OF INSTRUMENTS. All deeds, leases, transfers, contracts, bonds, notes and other obligations to be entered into by the Corporation in the ordinary course of its business without director action may be executed on behalf of the Corporation by the Chairman of the Board, if one is elected, the President or the Treasurer or any other officer, employee or agent of the Corporation as the Board of Directors or Executive Committee may authorize.

 

SECTION 4. VOTING OF SECURITIES. Unless the Board of Directors otherwise provides, the Chairman of the Board, if one is elected, the President or the Treasurer may waive notice of and act on behalf of this Corporation, or appoint another person or persons to act as proxy or attorney in fact for this Corporation with or without discretionary power and/or power of substitution, at any meeting of stockholders or shareholders of any other corporation or organization, any of whose securities are held by this Corporation.

 

SECTION 5. RESIDENT AGENT. The Board of Directors may appoint a resident agent upon whom legal process may be served in any action or proceeding against the Corporation.

 

SECTION 6. CORPORATE RECORDS. The original or attested copies of the Certificate, By-laws and records of all meetings of the incorporators, stockholders and the Board of Directors and the stock transfer books, which shall contain the names of all stockholders, their record addresses and the amount of stock held by each, may be kept outside the State of Delaware and shall be kept at the principal office of the Corporation, at the office of its counsel or at an office of its transfer agent or at such other place or places as may be designated from time to time by the Board of Directors.

 

SECTION 7. CERTIFICATE. All references in these By-laws to the “Certificate” shall be deemed to refer to the Amended and Restated Certificate of Incorporation of the Corporation, as amended and/or restated and in effect from time to time.

 

SECTION 8. AFFIDAVIT OF MAILING OR TRANSMISSION. An affidavit of mailing or transmission, executed by a duly authorized and competent employee of the Corporation or its transfer agent appointed with respect to the class of stock affected, specifying the name and address or the names and addresses of the stockholder or stockholders, or director or directors, to whom any such notice or notices was or were given, and the time and method of giving the same, shall be conclusive evidence of the statements therein contained.

 

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SECTION 9. ELECTRONIC TRANSMISSION. When used in these By-laws and when permitted by applicable law, the terms “written” and “in writing” shall include any “electronic transmission,” as defined in Section 232(c) of the DGCL, including without limitation any telegram, cablegram, facsimile transmission and communication by electronic mail, and “address” shall include the recipient’s electronic address for such purposes.

 

SECTION 10. ADDRESS UNKNOWN. If the address of a stockholder or director be unknown, notice to such person may be sent to the principal executive office of the Corporation.

 

SECTION 11. AMENDMENT OF BY-LAWS. These By-laws may be altered, amended or repealed, in whole or in part, or new By-laws may be adopted by the Board or by the stockholders as expressly provided in the Certificate.

 

Adopted ___________, 2013 and effective as of ___________, 2013.

 

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EXHIBIT 3.4

 

CERTIFICATE OF DESIGNATIONS

of

SERIES A JUNIOR PARTICIPATING CUMULATIVE

PREFERRED STOCK

of

Harvard Apparatus Regenerative Technology, Inc.

 

Section 1. Designation and Amount . The shares of such series shall be designated as “Series A Junior Participating Cumulative Preferred Stock” (the “Series A Preferred Stock”), and the number of shares initially constituting such series shall be 5,000; provided , however , that if more than a total of 5,000 shares of Series A Preferred Stock shall be issuable upon the exercise of Rights (the “Rights”) issued pursuant to the Shareholder Rights Agreement dated as of               , between the Corporation and Registrar and Transfer Company, as Rights Agent (the “Rights Agreement”), the Board of Directors of the Corporation, pursuant to Section 151(g) of the General Corporation Law of the State of Delaware, may direct by resolution or resolutions that a certificate be properly executed, acknowledged, filed and recorded, in accordance with the provisions of Section 103 thereof, providing for the total number of shares of Series A Preferred Stock authorized to be issued to be increased (to the extent that the Certificate of Incorporation then permits) to the largest number of whole shares (rounded up to the nearest whole number) issuable upon exercise of such Rights.

 

Section 2. Dividends and Distributions .

 

(A)(i) Subject to the rights of the holders of any shares of any series of preferred stock (or any similar stock) ranking prior and superior to the Series A Preferred Stock with respect to dividends, the holders of shares of Series A Preferred Stock, in preference to the holders of shares of common stock and of any other junior stock, shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on the first day of March, June, September and December in each year (each such date being referred to herein as a “Quarterly Dividend Payment Date”), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series A Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (a) $1.00 or (b) subject to the provisions for adjustment hereinafter set forth, 10,000 times the aggregate per share amount of all cash dividends, and 10,000 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions other than a dividend payable in shares of common stock or a subdivision of the outstanding shares of common stock (by reclassification or otherwise), declared on the common stock since the immediately preceding Quarterly Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series A Preferred Stock. The multiple of cash and non-cash dividends declared on the common stock to which holders of the Series A Preferred Stock are entitled, which shall be 10,000 initially but which shall be adjusted from time to time as hereinafter provided, is hereinafter referred to as the “Dividend Multiple.” In the event the Corporation shall at any time after                (the “Rights Declaration Date”) (i) declare or pay any dividend on common stock payable in shares of common stock, or (ii) effect a subdivision or combination or consolidation of the outstanding shares of common stock (by reclassification or otherwise than by payment of a dividend in shares of common stock) into a greater or lesser number of shares of common stock, then in each such case the Dividend Multiple thereafter applicable to the determination of the amount of dividends which holders of shares of Series A Preferred Stock shall be entitled to receive shall be the Dividend Multiple applicable immediately prior to such event multiplied by a fraction, the numerator of which is the number of shares of common stock outstanding immediately after such event and the denominator of which is the number of shares of common stock that were outstanding immediately prior to such event.

 

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(ii) Notwithstanding anything else contained in this paragraph (A), the Corporation shall, out of funds legally available for that purpose, declare a dividend or distribution on the Series A Preferred Stock as provided in this paragraph (A) immediately after it declares a dividend or distribution on the common stock (other than a dividend payable in shares of common stock); provided that, in the event no dividend or distribution shall have been declared on the common stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per share on the Series A Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date.

 

(B) Dividends shall begin to accrue and be cumulative on outstanding shares of Series A Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares of Series A Preferred Stock, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series A Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series A Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix in accordance with applicable law a record date for the determination of holders of shares of Series A Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be not more than such number of days prior to the date fixed for the payment thereof as may be allowed by applicable law.

 

Section 3. Voting Rights . In addition to any other voting rights required by law, the holders of shares of Series A Preferred Stock shall have the following voting rights:

 

(A) Subject to the provision for adjustment hereinafter set forth, each share of Series A Preferred Stock shall entitle the holder thereof to 10,000 votes on all matters submitted to a vote of the stockholders of the Corporation. The number of votes which a holder of a share of Series A Preferred Stock is entitled to cast, which shall initially be 10,000 but which may be adjusted from time to time as hereinafter provided, is hereinafter referred to as the “Vote Multiple.” In the event the Corporation shall at any time after the Rights Declaration Date (i) declare or pay any dividend on common stock payable in shares of common stock, or (ii) effect a subdivision or combination or consolidation of the outstanding shares of common stock (by reclassification or otherwise than by payment of a dividend in shares of common stock) into a greater or lesser number of shares of common stock, then in each such case the Vote Multiple thereafter applicable to the determination of the number of votes per share to which holders of shares of Series A Preferred Stock shall be entitled shall be the Vote Multiple immediately prior to such event multiplied by a fraction, the numerator of which is the number of shares of common stock outstanding immediately after such event and the denominator of which is the number of shares of common stock that were outstanding immediately prior to such event.

 

(B) Except as otherwise provided herein or by law, the holders of shares of Series A Preferred Stock and the holders of shares of common stock and the holders of shares of any other capital stock of this Corporation having general voting rights, shall vote together as one class on all matters submitted to a vote of stockholders of the Corporation.

 

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(C) Except as otherwise required by applicable law or as set forth herein, holders of Series A Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of common stock as set forth herein) for taking any corporate action.

 

Section 4. Certain Restrictions .

 

(A) Whenever dividends or distributions payable on the Series A Preferred Stock as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series A Preferred Stock outstanding shall have been paid in full, the Corporation shall not:

 

(i) declare or pay dividends on, make any other distributions on, or redeem or purchase or otherwise acquire for consideration any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock;

 

(ii) declare or pay dividends on or make any other distributions on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock, except dividends paid ratably on the Series A Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled;

 

(iii) except as permitted in subsection 4(A)(iv) below, redeem, purchase or otherwise acquire for consideration shares of any stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such parity stock in exchange for shares of any stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series A Preferred Stock; or

 

(iv) purchase or otherwise acquire for consideration any shares of Series A Preferred Stock, or any shares of any stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes.

 

(B) The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under subsection (A) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner.

 

Section 5. Reacquired Shares . Any shares of Series A Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and canceled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of preferred stock and may be reissued as part of a new series of preferred stock to be created by resolution or resolutions of the Board of Directors, subject to the conditions and restrictions on issuance set forth herein.

 

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Section 6. Liquidation, Dissolution or Winding Up . Upon any liquidation (voluntary or otherwise), dissolution or winding up of the Corporation, no distribution shall be made (x) to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock unless, prior thereto, the holders of shares of Series A Preferred Stock shall have received an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment, plus an amount equal to the greater of (1) $10,000.00 per share or (2) an aggregate amount per share, subject to the provision for adjustment hereinafter set forth, equal to 10,000 times the aggregate amount to be distributed per share to holders of common stock, or (y) to the holders of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock, except distributions made ratably on the Series A Preferred Stock and all other such parity stock in proportion to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up. In the event the Corporation shall at any time after the Rights Declaration Date (i) declare or pay any dividend on common stock payable in shares of common stock, or (ii) effect a subdivision or combination or consolidation of the outstanding shares of common stock (by reclassification or otherwise than by payment of a dividend in shares of common stock) into a greater or lesser number of shares of common stock, then in each such case the aggregate amount per share to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event under clause (x) of the preceding sentence shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of common stock outstanding immediately after such event and the denominator of which is the number of shares of common stock that were outstanding immediately prior to such event.

 

Neither the consolidation of nor merging of the Corporation with or into any other corporation or corporations, nor the sale or other transfer of all or substantially all of the assets of the Corporation, shall be deemed to be a liquidation, dissolution or winding up of the Corporation within the meaning of this Section 6.

 

Section 7. Consolidation, Merger, etc . In case the Corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of common stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case the shares of Series A Preferred Stock shall at the same time be similarly exchanged or changed in an amount per share (subject to the provision for adjustment hereinafter set forth) equal to 10,000 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of common stock is changed or exchanged, plus accrued and unpaid dividends, if any, payable with respect to the Series A Preferred Stock. In the event the Corporation shall at any time after the Rights Declaration Date (i) declare or pay any dividend on common stock payable in shares of common stock, or (ii) effect a subdivision or combination or consolidation of the outstanding shares of common stock (by reclassification or otherwise than by payment of a dividend in shares of common stock) into a greater or lesser number of shares of common stock, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series A Preferred Stock shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of common stock outstanding immediately after such event and the denominator of which is the number of shares of common stock that were outstanding immediately prior to such event.

 

Section 8. Redemption . The shares of Series A Preferred Stock shall not be redeemable; provided , however , that the foregoing shall not limit the ability of the Corporation to purchase or otherwise deal in such shares to the extent otherwise permitted hereby and by law.

 

Section 9. Ranking . Unless otherwise expressly provided in the Certificate of Incorporation or a Certificate of Designations relating to any other series of preferred stock of the Corporation, the Series A Preferred Stock shall rank junior to every other series of the Corporation’s preferred stock previously or hereafter authorized, as to the payment of dividends and the distribution of assets on liquidation, dissolution or winding up and shall rank senior to the common stock.

 

Section 10. Amendment . The Certificate of Incorporation and this Certificate of Designations shall not be amended in any manner which would materially alter or change the powers, preferences or special rights of the Series A Preferred Stock so as to affect them adversely without the affirmative vote of the holders of two-thirds or more of the outstanding shares of Series A Preferred Stock, voting separately as a class.

 

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Section 11. Fractional Shares . Series A Preferred Stock may be issued in whole shares or in any fraction of a share that is one ten-thousandth (1/10,000th) of a share or any integral multiple of such fraction, which shall entitle the holder, in proportion to such holder’s fractional shares, to exercise voting rights, receive dividends, participate in distributions and to have the benefit of all other rights of holders of Series A Preferred Stock. In lieu of fractional shares, the Corporation may elect to make a cash payment as provided in the Rights Agreement for fractions of a share other than one ten-thousandth (1/10,000th) of a share or any integral multiple thereof.

 

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EXHIBIT 4.1

 

 

 
 

 

 

 

 

EXHIBIT 4.2

 

Harvard Apparatus Regenerative Technology, Inc.

 

AND

 

REGISTRAR AND TRANSFER COMPANY

 

AS RIGHTS AGENT

 

SHAREHOLDER RIGHTS AGREEMENT

 

DATED AS OF            , 2013

 

 
 

 

TABLE OF CONTENTS

 

Section   Page
     
Section 1. Certain Definitions 3
Section 2. Appointment of Rights Agent 7
Section 3. Issue of Right Certificates 8
Section 4. Form of Right Certificates 9
Section 5. Countersignature and Registration 10
Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates 11
Section 7. Exercise of Rights; Exercise Price; Expiration Date of Rights 11
Section 8. Cancellation and Destruction of Right Certificates 13
Section 9. Reservation and Availability of Preferred Stock 13
Section 10. Preferred Stock Record Date 14
Section 11. Adjustment of Exercise Price, Number and Kind of Shares or Number of Rights 14
Section 12. Certificate of Adjusted Exercise Price or Number of Shares 21
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power 22
Section 14. Fractional Rights and Fractional Shares 24
Section 15. Rights of Action 24
Section 16. Agreement of Right Holders 24
Section 17. Right Certificate Holder Not Deemed a Shareholder 25
Section 18. Concerning the Rights Agent 25
Section 19. Merger or Consolidation or Change of Name of Rights Agent 26
Section 20. Duties of Rights Agent 26
Section 21. Change of Rights Agent 28
Section 22. Issuance of New Right Certificates 29
Section 23. Redemption 29
Section 24. Exchange 30
Section 25. Notice of Certain Events 31
Section 26. Notices 32
Section 27. Supplements and Amendments 33
Section 28. Successors 33
Section 29. Determinations and Actions by the Board of Directors 33
Section 30. Benefits of this Agreement 34
Section 31. Severability 34
Section 32. Governing Law 34
Section 33. Counterparts 34
Section 34. Descriptive Headings 34
Section 35. Force Majeure 34
     
Exhibit A - Certificate of Designations of Series A Junior Participating Cumulative Preferred Stock  
Exhibit B - Form of Right Certificate  

 

 
 

 

SHAREHOLDER RIGHTS AGREEMENT

 

This Shareholder Rights Agreement (the “ Agreement ”), dated as of               , is made by and between Harvard Apparatus Regenerative Technology, Inc., a Delaware corporation (the “ Company ”), and Registrar and Transfer Company, a New Jersey corporation (the “ Rights Agent ”).

 

WITNESSETH

 

WHEREAS, the Board of Directors of the Company desires to provide shareholders of the Company with the opportunity to benefit from the long-term prospects and value of the Company and to ensure that shareholders of the Company receive fair and equal treatment in the event of any proposed takeover of the Company;

 

WHEREAS, on               , the Board of Directors of the Company authorized and declared a dividend distribution of one Right (as such term is hereinafter defined) for each outstanding share of Common Stock, par value $0.01 per share, of the Company (the “ Common Stock ”) outstanding as of                (the “ Record Date ”), and authorized the issuance of one Right for each share of Common Stock of the Company issued (whether or not originally issued or sold from the Company’s treasury, except in the case of treasury shares having associated Rights) between the Record Date and the earlier of the Distribution Date or the Expiration Date (as such terms are hereinafter defined), each Right initially representing the right to purchase one ten-thousandth of a share of Series A Junior Participating Cumulative Preferred Stock of the Company having the rights, powers and preferences set forth on Exhibit A hereto, upon the terms and subject to the conditions hereinafter set forth (the “ Rights ”); and

 

WHEREAS, the Company desires to appoint the Rights Agent to act as rights agent hereunder, in accordance with the terms and conditions hereof.

 

NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties hereby agree as follows:

 

Section 1. Certain Definitions . For purposes of this Agreement, the following terms have the meanings indicated:

 

(a) “ Acquiring Person ” shall mean any Person (as such term is hereinafter defined) who or which, together with all Affiliates (as such term is hereinafter defined) and Associates (as such term is hereinafter defined) of such Person, shall be the Beneficial Owner (as such term is hereinafter defined) of 20% or more of the shares of Common Stock of the Company then outstanding, but shall not include (i) the Company, (ii) any Subsidiary (as such term is hereinafter defined) of the Company, (iii) any employee benefit plan or compensation arrangement of the Company or any Subsidiary of the Company or (iv) any Person holding shares of Common Stock of the Company organized, appointed or established by the Company or any Subsidiary of the Company for or pursuant to the terms of any such employee benefit plan or compensation arrangement (the Persons described in clauses (i) through (iv) above are referred to herein as “ Exempt Persons ”); provided , however , that the term “Acquiring Person” shall not include any Grandfathered Person, unless such Grandfathered Person becomes the Beneficial Owner of a percentage of the shares of Common Stock of the Company then outstanding equal to or exceeding such Grandfathered Person’s Grandfathered Percentage.

 

 
 

 

Notwithstanding the foregoing, no Person shall become an “Acquiring Person” as the result of an acquisition by the Company of Common Stock of the Company which, by reducing the number of shares outstanding, increases the proportionate number of shares Beneficially Owned by such Person to 20% (or in the case of a Grandfathered Person, the Grandfathered Percentage applicable to such Grandfathered Person) or more of the shares of Common Stock of the Company then outstanding; provided , however , that if a Person shall become the Beneficial Owner of 20% (or in the case of a Grandfathered Person, the Grandfathered Percentage applicable to such Grandfathered Person) or more of the shares of Common Stock of the Company then outstanding by reason of share purchases by the Company and shall, after such share purchases by the Company, become the Beneficial Owner of any additional shares (other than pursuant to a stock split, stock dividend or similar transaction) of Common Stock of the Company and immediately thereafter be the Beneficial Owner of 20% (or in the case of a Grandfathered Person, the Grandfathered Percentage applicable to such Grandfathered Person) or more of the shares of Common Stock of the Company then outstanding, then such Person shall be deemed to be an “Acquiring Person.”

  

In addition, notwithstanding the foregoing, and notwithstanding anything to the contrary provided in this Agreement including without limitation in Sections 1(jj), 3(a) or 27, a Person shall not be an “Acquiring Person” if the Board of Directors of the Company determines at any time that a Person who would otherwise be an “Acquiring Person,” has become such without intending to become an “Acquiring Person,” and such Person divests as promptly as practicable (or within such period of time as the Board of Directors of the Company determines is reasonable) a sufficient number of shares of Common Stock of the Company so that such Person would no longer be an “Acquiring Person,” as defined pursuant to the foregoing provisions of this Section 1(a).

 

(b) “ Adjustment Shares ” shall have the meaning set forth in Section 11(a)(ii) hereof.

 

(c) “ Affiliate ” and “ Associate ” shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations (the “ Rules ”) under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), as in effect on the date of this Agreement; provided , however , that no Person who is a director or officer of the Company shall be deemed an Affiliate or an Associate of any other director or officer of the Company solely as a result of his or her position as director or officer of the Company.

 

(d) A Person shall be deemed the “ Beneficial Owner ” of, and shall be deemed to “ Beneficially Own ” and have “ Beneficial Ownership ” of, any securities:

 

(i) which such Person or any of such Person’s Affiliates or Associates, directly or indirectly, Beneficially Owns (as determined pursuant to Rule 13d-3 of the Rules under the Exchange Act, as in effect on the date of this Agreement);

 

(ii) which such Person or any of such Person’s Affiliates or Associates, directly or indirectly, has:

 

(A) the right to acquire (whether or not such right is exercisable immediately or only after the passage of time or upon the satisfaction of any conditions or both) pursuant to any agreement, arrangement or understanding (whether or not in writing) (other than customary agreements with and between underwriters and selling group members with respect to a bona fide public offering of securities) or upon the exercise of conversion rights, exchange rights, rights (other than the Rights), warrants or options, or otherwise; provided , however , that a Person shall not be deemed the “Beneficial Owner” of, or to “Beneficially Own” or have “Beneficial Ownership” of, (1) securities tendered pursuant to a tender or exchange offer made by or on behalf of such Person or any of such Person’s Affiliates or Associates until such tendered securities are accepted for purchase or exchange; (2) securities issuable upon exercise of Rights at any time prior to the occurrence of a Triggering Event; or (3) securities issuable upon exercise of Rights from and after the occurrence of a Triggering Event, which Rights were acquired by such Person or any of such Person’s Affiliates or Associates prior to the Distribution Date or pursuant to Sections 3(a), 11(i) or 22 hereof; or

 

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(B) the right to vote pursuant to any agreement, arrangement or understanding (whether or not in writing); provided , however , that a Person shall not be deemed the “Beneficial Owner” of, or to “Beneficially Own” or have “Beneficial Ownership” of, any security under this clause (B) if the agreement, arrangement or understanding to vote such security (1) arises solely from a revocable proxy or consent given in response to a public proxy or consent solicitation made pursuant to a written proxy or consent solicitation statement filed with the Securities and Exchange Commission in accordance with the Rules of the Exchange Act and (2) is not also then reportable by such person on Schedule 13D under the Exchange Act (or any comparable or successor report); or

 

(C) the right to dispose of pursuant to any agreement, arrangement or understanding (whether or not in writing) (other than customary arrangements with and between underwriters and selling group members with respect to a bona fide public offering of securities); or

 

(iii) which are Beneficially Owned, directly or indirectly, by any other Person (or any Affiliate or Associate thereof) with which such Person or any of such Person’s Affiliates or Associates has any agreement, arrangement or understanding (whether or not in writing) (other than customary agreements with and between underwriters and selling group members with respect to a bona fide public offering of securities) for the purpose of acquiring, holding, voting (except pursuant to a revocable proxy or consent as described in clause (B) of Section 1(d)(ii) hereof) or disposing of any securities of the Company;

 

provided , however , that (1) no Person engaged in business as an underwriter of securities shall be deemed the Beneficial Owner of any securities acquired through such Person’s participation as an underwriter in good faith in a firm commitment underwriting until the expiration of forty (40) days after the date of such acquisition, and (2) no Person who is a director or an officer or employee of the Company or any Subsidiary shall be deemed, solely as a result of his or her position as director or officer or employee of the Company or any Subsidiary, the Beneficial Owner of any securities of the Company that are Beneficially Owned by any other director or officer or employee of the Company or any Subsidiary.

 

For all purposes of this Agreement, the phrase “then outstanding,” when used with reference to the percentage of the then outstanding securities Beneficially Owned by a Person, shall mean the number of securities then issued and outstanding together with the number of such securities not then actually issued and outstanding which such Person would be deemed to Beneficially Own hereunder.

 

(e) “ Business Day ” shall mean any day other than a Saturday, Sunday, or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close.

 

(f) “ Certificate of Incorporation ” when used in reference to the Company shall mean the Amended and Restated Certificate of Incorporation, as may be amended from time to time, of the Company.

 

(g) “ Close of Business ” on any given date shall mean 5:00 p.m., Boston, Massachusetts time, on such date; provided , however , that if such date is not a Business Day it shall mean 5:00 p.m., Boston, Massachusetts time, on the next succeeding Business Day.

 

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(h) “ Common Stock ” when used in reference to the Company shall mean the common stock, par value $0.01 per share, of the Company or any other shares of capital stock of the Company into which such stock shall be reclassified or changed. “Common Stock” when used with reference to any Person other than the Company organized in corporate form shall mean (i) the capital stock or other equity interest of such Person with the greatest voting power, (ii) the equity securities or other equity interest having power to control or direct the management of such Person or (iii) if such Person is a Subsidiary of another Person, the Person or Persons which ultimately control such first-mentioned Person and which have issued any such outstanding capital stock, equity securities or equity interest. “Common Stock” when used with reference to any Person not organized in corporate form shall mean units of beneficial interest which (x) shall represent the right to participate generally in the profits and losses of such Person (including without limitation any flow-through tax benefits resulting from an ownership interest in such Person) and (y) shall be entitled to exercise the greatest voting power of such Person or, in the case of a limited partnership, shall have the power to remove or otherwise replace the general partner or partners.

 

(i) “ Common Stock Equivalents ” shall have the meaning set forth in Section 11(a)(iii) hereof.

 

(j) “ Current Value ” shall have the meaning set forth in Section 11(a)(iii) hereof.

 

(k) “ Depositary Agent ” shall have the meaning set forth in Section 7(c) hereof.

 

(l) “ Distribution Date ” shall have the meaning set forth in Section 3(a) hereof.

 

(m) “ Exchange Date ” shall have the meaning set forth in Section 7(a) hereof.

 

(n) “ Exempt Person ” shall have the meaning set forth in the definition of “Acquiring Person.”

 

(o) “ Exercise Price ” shall have the meaning set forth in Section 4(a) hereof.

 

(p) “ Expiration Date ” and “ Final Expiration Date ” shall have the meanings set forth in Section 7(a) hereof.

 

(q) “ Fair Market Value ” of any securities or other property shall be as determined in accordance with Section 11(d) hereof.

 

(r) “ Grandfathered Percentage ” shall mean, with respect to any Grandfathered Person, the percentage of the outstanding shares of Common Stock of the Company that such Grandfathered Person, together with all Affiliates and Associates of such Grandfathered Person, Beneficially Owns as of the Grandfathered Time, plus an additional   1/2%; provided, however, that, in the event any Grandfathered Person shall sell, transfer, or otherwise dispose of any outstanding shares of Common Stock of the Company after the Grandfathered Time, the Grandfathered Percentage shall, subsequent to such sale, transfer or disposition, mean, with respect to such Grandfathered Person, the lesser of (i) the Grandfathered Percentage as in effect immediately prior to such sale, transfer or disposition or (ii) the percentage of outstanding shares of Common Stock of the Company that such Grandfathered Person Beneficially Owns immediately following such sale, transfer or disposition, plus an additional   1/2%.

 

(s) “ Grandfathered Person ” shall mean any Person who or which, together with all Affiliates and Associates of such Person, is, as of the Grandfathered Time, the Beneficial Owner of 20% or more of the shares of Common Stock of the Company then outstanding. Notwithstanding anything to the contrary provided in this Agreement, any Grandfathered Person who after the Grandfathered Time becomes the Beneficial Owner of less than 20% of the shares of Common Stock of the Company then outstanding shall cease to be a Grandfathered Person and shall be subject to all of the provisions of this Agreement in the same manner as any Person who is not and was not a Grandfathered Person.

 

(t) “ Grandfathered Time ” shall mean 9:00 a.m., Boston, Massachusetts time, on the Record Date.

 

(u) “ Group ” shall have the meaning set forth in clause (b) of the definition of “Person.”

 

(v) “ Person ” shall mean (a) an individual, a corporation, a partnership, a limited liability company, an association, a joint stock company, a trust, a business trust, a government or political subdivision, any unincorporated organization, or any other association or entity including any successor (by merger or otherwise) thereof or thereto, and (b) a “group” as that term is used for purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.

 

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(w) “ Preferred Stock ” shall mean shares of Series A Junior Participating Cumulative Preferred Stock, par value $0.01 per share, of the Company having the rights and preferences set forth in the form of Certificate of Designations attached hereto as Exhibit A .

 

(x) “ Preferred Stock Equivalents ” shall have the meaning set forth in Section 11(b) hereof.

 

(y) “ Principal Party ” shall have the meaning set forth in Section 13(b) hereof.

 

(z) “ Redemption Date ” shall have the meaning set forth in Section 7(a) hereof.

 

(aa) “ Redemption Price ” shall have the meaning set forth in Section 23 hereof.

 

(bb) “ Registered Common Stock ” shall have the meaning set forth in Section 13(b) hereof.

 

(cc) “ Right Certificates ” shall have the meaning set forth in Section 3(a) hereof.

 

(dd) “ Section 11(a)(ii) Event ” shall have the meaning set forth in Section 11(a)(ii) hereof.

 

(ee) “ Section 11(a)(ii) Trigger Date ” shall have the meaning set forth in Section 11(a)(iii) hereof.

 

(ff) “ Section 13 Event ” shall mean any event described in clauses (x), (y) or (z) of Section 13(a) hereof.

 

(gg) “ Section 24(a)(i) Exchange Ratio ” shall have the meaning set forth in Section 24(a)(i) hereof.

 

(hh) “ Section 24(a)(ii) Exchange Ratio ” shall have the meaning set forth in Section 24(a)(ii) hereof.

 

(ii) “ Spread ” shall have the meaning set forth in Section 11(a)(iii) hereof.

 

(jj) “ Stock Acquisition Date ” shall mean the date of the first public announcement (which for purposes of this definition shall include, without limitation, the issuance of a press release or the filing of a publicly-available report or other document with the Securities and Exchange Commission or any other governmental agency) by the Company, acting pursuant to a resolution adopted by the Board of Directors of the Company, or by an Acquiring Person, subject in each case to the last paragraph of Section 1(a), that an Acquiring Person has become such.

 

(kk) “ Subsidiary ” shall mean, with reference to any Person, any corporation or other entity of which securities or other ownership interests having ordinary voting power sufficient, in the absence of contingencies, to elect a majority of the board of directors or other persons performing similar functions of such corporation or other entity are at the time directly or indirectly Beneficially Owned or otherwise controlled by such Person either alone or together with one or more Affiliates of such Person.

 

(ll) “ Substitution Period ” shall have the meaning set forth in Section 11(a)(iii) hereof.

 

(mm) “ Triggering Event ” shall mean any Section 11(a)(ii) Event or any Section 13 Event.

 

Section 2. Appointment of Rights Agent . The Company hereby appoints the Rights Agent to act as agent for the Company and the holders of the Rights (who, in accordance with Section 3 hereof, shall prior to the Distribution Date (as hereinafter defined in Section 3(a)) also be the holders of the Common Stock of the Company) in accordance with the terms and conditions hereof, and the Rights Agent hereby accepts such appointment. The Company may from time to time appoint such Co-Rights Agents as it may deem necessary or desirable. In the event the Company appoints one or more Co-Rights Agents, the respective duties of the Rights Agent and any Co-Rights Agents shall be as the Company shall determine. The Company shall give ten (10) days’ prior written notice to the Rights Agent of the appointment of one or more Co-Rights Agents and the respective duties of the Rights Agent and any such Co-Rights Agents. The Rights Agent shall have no duty to supervise, and shall in no event be liable for, the acts or omissions of any such Co-Rights Agent.

 

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Section 3. Issue of Right Certificates .

 

(a) From the date hereof until the earlier of (i) the Close of Business on the tenth calendar day after the Stock Acquisition Date or (ii) the Close of Business on the tenth Business Day (or such later calendar day, if any, as the Board of Directors of the Company may determine in its sole discretion) after the date a tender or exchange offer by any Person, other than an Exempt Person, is first published or sent or given within the meaning of Rule 14d-4(a) of the Exchange Act, or any successor rule, if, upon consummation thereof, such Person could become the Beneficial Owner of 20% (or in the case of a Grandfathered Person, the Grandfathered Percentage applicable to such Grandfathered Person) or more of the shares of Common Stock of the Company then outstanding (including any such date which is after the date of this Agreement and prior to the issuance of the Rights) (the earliest of such dates being herein referred to as the “ Distribution Date ”), (x) the Rights will be evidenced (subject to the provisions of Section 3(b) hereof) by the certificates for the Common Stock of the Company registered in the names of the holders of the Common Stock of the Company (which certificates for Common Stock of the Company shall be deemed also to be certificates for Rights) and not by separate certificates, and (y) the Rights will be transferable only in connection with the transfer of the underlying shares of Common Stock of the Company (including a transfer to the Company). As soon as practicable after the Distribution Date, the Rights Agent will, at the Company’s expense send, by first-class, insured, postage prepaid mail, to each record holder of the Common Stock of the Company as of the Close of Business on the Distribution Date, at the address of such holder shown on the records of the Company, one or more certificates, in substantially the form of Exhibit B hereto (the “ Right Certificates ”), evidencing one Right for each share of Common Stock of the Company so held, subject to adjustment as provided herein. In the event that an adjustment in the number of Rights per share of Common Stock of the Company has been made pursuant to Section 11(o) hereof, the Company may make the necessary and appropriate rounding adjustments (in accordance with Section 14(a) hereof) at the time of distribution of the Right Certificates, so that Right Certificates representing only whole numbers of Rights are distributed and cash is paid in lieu of any fractional Rights. As of and after the Close of Business on the Distribution Date, the Rights will be evidenced solely by such Right Certificates.

 

(b) With respect to certificates for the Common Stock of the Company issued prior to the Close of Business on the Record Date, the Rights will be evidenced by such certificates for the Common Stock of the Company on or until the Distribution Date (or the earlier redemption, expiration or termination of the Rights), and the registered holders of the Common Stock of the Company also shall be the registered holders of the associated Rights. Until the Distribution Date (or the earlier redemption, expiration or termination of the Rights), the transfer of any of the certificates for the Common Stock of the Company outstanding prior to the date of this Agreement shall also constitute the transfer of the Rights associated with the Common Stock of the Company represented by such certificate.

 

(c) Certificates for the Common Stock of the Company issued after the Record Date, but prior to the earlier of the Distribution Date or the Expiration Date, shall be deemed also to be certificates for Rights, and shall bear a legend, substantially in the form set forth below:

 

This certificate also evidences and entitles the holder hereof to certain Rights as set forth in a Shareholder Rights Agreement between Harvard Apparatus Regenerative Technology, Inc. and Registrar and Transfer Company (or any successor thereto), as Rights Agent, dated as of               , as amended, restated, renewed, supplemented or extended from time to time (the “Rights Agreement”), the terms of which are hereby incorporated herein by reference and a copy of which is on file at the principal offices of Harvard Apparatus Regenerative Technology, Inc. and the stock transfer administration office of the Rights Agent. Under certain circumstances, as set forth in the Rights Agreement, such Rights will be evidenced by separate certificates and will no longer be evidenced by this certificate. Harvard Apparatus Regenerative Technology, Inc. may redeem the Rights at a redemption price of $0.01 per Right, subject to adjustment, under the terms of the Rights Agreement. Harvard Apparatus Regenerative Technology, Inc. will mail to the holder of this certificate a copy of the Rights Agreement, as in effect on the date of mailing, without charge promptly after receipt of a written request therefor. Under certain circumstances, Rights issued to or held by Acquiring Persons or any Affiliates or Associates thereof (as defined in the Rights Agreement), and any subsequent holder of such Rights, may become null and void. The Rights shall not be exercisable, and shall be void so long as held, by a holder in any jurisdiction where the requisite qualification, if any, to the issuance to such holder, or the exercise by such holder, of the Rights in such jurisdiction shall not have been obtained or be obtainable.

 

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With respect to such certificates containing the foregoing legend, the Rights associated with the Common Stock of the Company represented by such certificates shall be evidenced by such certificates alone until the earlier of the Distribution Date or the Expiration Date, and the transfer of any of such certificates shall also constitute the transfer of the Rights associated with the Common Stock of the Company represented by such certificates. In the event that the Company purchases or acquires any shares of Common Stock of the Company after the Record Date but prior to the Distribution Date, any Rights associated with such Common Stock of the Company shall be deemed canceled and retired so that the Company shall not be entitled to exercise any Rights associated with the shares of Common Stock of the Company which are no longer outstanding. The failure to print the foregoing legend on any such certificate representing Common Stock of the Company or any defect therein shall not affect in any manner whatsoever the application or interpretation of the provisions of Section 7(e) hereof.

 

Section 4. Form of Right Certificates .

 

(a) The Right Certificates (and the forms of election to purchase shares and of assignment and certificate to be printed on the reverse thereof) shall each be substantially in the form of Exhibit B hereto and may have such marks of identification or designation and such legends, summaries or endorsements printed thereon as the Company may deem appropriate and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any applicable law, rule or regulation or with any rule or regulation of any stock exchange on which the Rights may from time to time be listed, or to conform to customary usage. The Right Certificates shall be in a machine printable format and in a form reasonably satisfactory to the Rights Agent. Subject to the provisions of Section 11 and Section 22 hereof, the Right Certificates, whenever distributed, shall be dated as of the Record Date, shall show the date of countersignature, and on their face shall entitle the holders thereof to purchase such number of one ten-thousandths of a share of Preferred Stock as shall be set forth therein at the price set forth therein (the “ Exercise Price ”), but the number of such shares and the Exercise Price shall be subject to adjustment as provided herein.

 

(b) Any Right Certificate issued pursuant to Section 3(a) or Section 22 hereof that represents Rights Beneficially Owned by (i) an Acquiring Person or any Associate or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any Associate or Affiliate of an Acquiring Person) who becomes a transferee after the Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee prior to or concurrently with the Acquiring Person becoming such and receives such Rights pursuant to either (A) a transfer (whether or not for consideration) from the Acquiring Person to holders of equity interests in such Acquiring Person or to any Person with whom the Acquiring Person has any continuing agreement, arrangement or understanding (whether or not in writing) regarding the transferred Rights, the shares of Common Stock of the Company associated with such Rights or the Company or (B) a transfer which the Board of Directors of the Company has determined is part of a plan, arrangement or understanding which has as a primary purpose or effect the avoidance of Section 7(e) hereof, and any Right Certificate issued pursuant to Section 6, Section 11 or Section 22 upon transfer, exchange, replacement or adjustment of any other Right Certificate referred to in this sentence, shall have deleted therefrom the second sentence of the existing legend on such Right Certificate and in substitution therefor shall contain the following legend:

 

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The Rights represented by this Right Certificate are or were Beneficially Owned by a Person who was or became an Acquiring Person or an Affiliate or an Associate of an Acquiring Person (as such terms are defined in the Rights Agreement). This Right Certificate and the Rights represented hereby may become null and void under certain circumstances as specified in Section 7(e) of the Rights Agreement.

 

The Company shall give notice to the Rights Agent promptly after it becomes aware of the existence and identity of any Acquiring Person or any Associate or Affiliate thereof. The Company shall instruct the Rights Agent in writing of the Rights which should be so legended. The failure to print the foregoing legend on any such Right Certificate or any defect therein shall not affect in any manner whatsoever the application or interpretation of the provisions of Section 7(e) hereof.

 

Section 5. Countersignature and Registration .

 

(a) The Right Certificates shall be executed on behalf of the Company by its Chairman of the Board of Directors, or its President or any Vice President and by its Treasurer or any Assistant Treasurer, or by its Secretary or any Assistant Secretary, either manually or by facsimile signature, and shall have affixed thereto the Company’s seal or a facsimile thereof which shall be attested to by the Secretary or any Assistant Secretary of the Company, either manually or by facsimile signature. The Right Certificates shall be manually countersigned by an authorized signatory of the Rights Agent and shall not be valid for any purpose unless so countersigned, and such countersignature upon any Right Certificate shall be conclusive evidence, and the only evidence, that such Right Certificate has been duly countersigned as required hereunder. In case any officer of the Company who shall have signed any of the Right Certificates shall cease to be such officer of the Company before countersignature by the Rights Agent and issuance and delivery by the Company, such Right Certificates, nevertheless, may be countersigned by an authorized signatory of the Rights Agent, and issued and delivered by the Company with the same force and effect as though the person who signed such Right Certificates had not ceased to be such officer of the Company; and any Right Certificates may be signed on behalf of the Company by any person who, at the actual date of the execution of such Right Certificate, shall be a proper officer of the Company to sign such Right Certificate, although at the date of the execution of this Rights Agreement any such person was not such an officer.

 

(b) Following the Distribution Date, the Rights Agent will keep or cause to be kept, at one of its offices designated as the appropriate place for surrender of Right Certificates upon exercise or transfer, books for registration and transfer of the Right Certificates issued hereunder. Such books shall show the names and addresses of the respective holders of the Right Certificates, the number of Rights evidenced on its face by each of the Right Certificates and the date of each of the Right Certificates.

 

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Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates .

 

(a) Subject to the provisions of Section 4(b), Section 7(e) and Section 14 hereof, at any time after the Close of Business on the Distribution Date, and at or prior to the Close of Business on the Expiration Date, any Right Certificate or Certificates may be transferred, split up, combined or exchanged for another Right Certificate or Certificates, entitling the registered holder to purchase a like number of one ten-thousandths of a share of Preferred Stock (or following a Triggering Event, Common Stock of the Company, cash, property, debt securities, Preferred Stock or any combination thereof, including any such securities, cash or property following a Section 13 Event) as the Right Certificate or Certificates surrendered then entitled such holder to purchase and at the same Exercise Price. Any registered holder desiring to transfer, split up, combine or exchange any Right Certificate shall make such request in writing delivered to the Rights Agent, and shall surrender the Right Certificate or Certificates to be transferred, split up, combined or exchanged, with the form of assignment and certificate duly executed, at the office or offices of the Rights Agent designated for such purpose. Neither the Rights Agent nor the Company shall be obligated to take any action whatsoever with respect to the transfer of any such surrendered Right Certificate until the registered holder shall have completed and signed the certificate contained in the form of assignment on the reverse side of such Right Certificate and shall have provided such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the Company shall reasonably request. Thereupon the Rights Agent shall, subject to Section 4(b), Section 7(e) and Section 14 hereof, countersign and deliver to the Person entitled thereto a Right Certificate or Certificates, as the case may be, as so requested. The Company may require payment by the registered holder of a Right Certificate, of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer, split up, combination or exchange of Right Certificates.

 

(b) Upon receipt by the Company and the Rights Agent of evidence reasonably satisfactory to them of the loss, theft, destruction or mutilation of a Right Certificate, and, in case of loss, theft or destruction, of indemnity or security satisfactory to them, and reimbursement to the Company and the Rights Agent of all reasonable expenses incidental thereto, and upon surrender to the Rights Agent and cancellation of the Right Certificate, if mutilated, the Company will execute and deliver a new Right Certificate of like tenor to the Rights Agent for countersignature and delivery to the registered owner in lieu of the Right Certificate so lost, stolen, destroyed or mutilated.

 

Section 7. Exercise of Rights; Exercise Price; Expiration Date of Rights .

 

(a) Subject to Section 7(e) hereof, the registered holder of any Right Certificate may exercise the Rights evidenced thereby (except as otherwise provided herein) in whole or in part at any time after the Distribution Date upon surrender of the Right Certificate, with the form of election to purchase and the certificate on the reverse side thereof duly executed, to the Rights Agent at the office or offices of the Rights Agent designated for such purpose, together with payment of the aggregate Exercise Price for the total number of one ten-thousandths of a share of Preferred Stock (or other securities, cash or other assets, as the case may be) as to which such surrendered Rights are then exercised, at or prior to the earlier of (i) the Close of Business on the tenth anniversary of the Record Date (the “ Final Expiration Date ”), (ii) the time at which the Rights are redeemed as provided in Section 23 hereof (the “ Redemption Date ”) or (iii) the time at which such Rights are exchanged as provided in Section 24 hereof (the “ Exchange Date ”) (the earliest of (i), (ii) or (iii) being herein referred to as the “ Expiration Date ”). Except as set forth in Section 7(e) hereof and notwithstanding any other provision of this Agreement, any Person who prior to the Distribution Date becomes a record holder of shares of Common Stock of the Company may exercise all of the rights of a registered holder of a Right Certificate with respect to the Rights associated with such shares of Common Stock of the Company in accordance with the provisions of this Agreement, as of the date such Person becomes a record holder of shares of Common Stock of the Company.

 

(b) The Exercise Price for each one ten-thousandth of a share of Preferred Stock pursuant to the exercise of a Right shall initially be                United States Dollars ($              ), shall be subject to adjustment from time to time as provided in Section 11 and Section 13 hereof and shall be payable in lawful money of the United States of America in accordance with Section 7(c) below.

 

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(c) As promptly as practicable following the Distribution Date, the Company shall deposit with a corporation, trust, bank or similar institution in good standing organized under the laws of the United States or any State of the United States, which is authorized under such laws to exercise corporate trust or stock transfer powers and is subject to supervision or examination by a federal or state authority (such institution is hereinafter referred to as the “ Depositary Agent ”), certificates representing the shares of Preferred Stock that may be acquired upon exercise of the Rights and the Company shall cause such Depositary Agent to enter into an agreement pursuant to which the Depositary Agent shall issue receipts representing interests in the shares of Preferred Stock so deposited. Upon receipt of a Right Certificate representing exercisable Rights, with the form of election to purchase and the certificate on the reverse side thereof duly executed, accompanied by payment of the Exercise Price for the shares to be purchased and an amount equal to any applicable transfer tax (as determined by the Rights Agent) by certified check or bank draft payable to the order of the Company or by money order, the Rights Agent shall, subject to Section 20(k) and Section 14(b) hereof, thereupon promptly (i) requisition from the Depositary Agent (or make available, if the Rights Agent is the Depositary Agent) depositary receipts or certificates for the number of one ten-thousandths of a share of Preferred Stock to be purchased and the Company hereby irrevocably authorizes the Depositary Agent to comply with all such requests, (ii) when appropriate, requisition from the Company the amount of cash, if any, to be paid in lieu of issuance of fractional shares in accordance with Section 14 hereof, (iii) promptly after receipt of such certificates or depositary receipts, cause the same to be delivered to or upon the order of the registered holder of such Right Certificate, registered in such name or names as may be designated by such holder and (iv) when appropriate, after receipt of each certificate or depositary receipts promptly deliver such cash to or upon the order of the registered holder of such Right Certificate. In the event that the Company is obligated to issue other securities (including Common Stock of the Company) of the Company, pay cash or distribute other property pursuant to Section 11(a) hereof, the Company will make all arrangements necessary so that such other securities, cash or other property are available for distribution by the Rights Agent, if and when appropriate. The payment of the Exercise Price may be made by certified or bank check payable to the order of the Company, or by money order or wire transfer of immediately available funds to the account of the Company (provided that notice of such wire transfer shall be given by the holder of the related Right to the Rights Agent).

 

(d) In case the registered holder of any Right Certificate shall exercise less than all the Rights evidenced thereby, a new Right Certificate evidencing Rights equivalent to the Rights remaining unexercised shall be issued by the Rights Agent and delivered to the registered holder of such Right Certificate or to his duly authorized assigns, subject to the provisions of Section 14 hereof.

 

(e) Notwithstanding anything in this Agreement to the contrary, from and after the first occurrence of a Section 11(a)(ii) Event or Section 13 Event, any Rights Beneficially Owned by (i) an Acquiring Person or any Associate or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any Associate or Affiliate of an Acquiring Person) who becomes a transferee after the Acquiring Person becomes such or (iii) a transferee of an Acquiring Person (or of any Associate or Affiliate of an Acquiring Person) who becomes a transferee prior to or concurrently with the Acquiring Person becoming such and receives such Rights pursuant to either (A) a transfer (whether or not for consideration) from the Acquiring Person to holders of equity interests in such Acquiring Person or to any Person with whom the Acquiring Person has any continuing agreement, arrangement or understanding regarding the transferred Rights, the shares of Common Stock of the Company associated with such Rights or the Company, or (B) a transfer which the Board of Directors of the Company has determined is part of a plan, arrangement or understanding which has as a primary purpose or effect the avoidance of this Section 7(e), shall be null and void without any further action and no holder of such Rights shall have any rights whatsoever with respect to such Rights, whether under any provision of this Agreement or otherwise. The Company shall use all reasonable efforts to ensure that the provisions of this Section 7(e) and Section 4(b) hereof are complied with, but shall have no liability to any holder of Right Certificates or other Person as a result of its failure to make any determinations with respect to an Acquiring Person or any Affiliates or Associates of an Acquiring Person or any transferee of any of them hereunder.

 

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(f) Notwithstanding anything in this Agreement to the contrary, neither the Rights Agent nor the Company shall be obligated to undertake any action with respect to a registered holder of Rights upon the occurrence of any purported exercise as set forth in this Section 7 unless such registered holder shall have (i) completed and signed the certificate contained in the form of election to purchase set forth on the reverse side of the Right Certificate surrendered for such exercise, and (ii) provided such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the Company shall reasonably request.

 

Section 8. Cancellation and Destruction of Right Certificates . All Right Certificates surrendered for the purpose of exercise, transfer, split up, combination or exchange shall, if surrendered to the Company or any of its agents, be delivered to the Rights Agent for cancellation or in canceled form, or, if surrendered to the Rights Agent, shall be canceled by it, and no Right Certificates shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Agreement. The Company shall deliver to the Rights Agent for cancellation and retirement, and the Rights Agent shall so cancel and retire, any other Right Certificate purchased or acquired by the Company otherwise than upon the exercise thereof. The Rights Agent shall deliver all canceled Right Certificates to the Company.

 

Section 9. Reservation and Availability of Preferred Stock .

 

(a) The Company covenants and agrees that it will cause to be reserved and kept available out of its authorized and unissued shares of Preferred Stock or any authorized and issued shares of Preferred Stock held in its treasury, the number of shares of Preferred Stock that will be sufficient to permit the exercise in full of all outstanding and exercisable Rights. Upon the occurrence of any events resulting in an increase in the aggregate number of shares of Preferred Stock issuable upon exercise of all outstanding Rights in excess of the number then reserved, the Company shall make appropriate increases in the number of shares so reserved.

 

(b) The Company shall use its best efforts to cause, from and after such time as the Rights become exercisable, all shares of Preferred Stock issued or reserved for issuance to be listed, upon official notice of issuance, upon the principal national securities exchange, if any, upon which the Common Stock of the Company is listed or, if the principal market for the Common Stock of the Company is not on any national securities exchange, to be eligible for quotation on the National Association of Securities Dealers Automated Quotation System (“NASDAQ”) or any successor thereto or other comparable quotation system.

 

(c) The Company shall use its best efforts to (i) file, as soon as practicable following the earliest date after the occurrence of a Section 11(a)(ii) Event on which the consideration to be delivered by the Company upon exercise of the Rights has been determined in accordance with Section 11(a)(iii) hereof, or as soon as required by law following the Distribution Date, as the case may be, a registration statement under the Securities Act of 1933, as amended (the “ Securities Act ”), with respect to the securities purchasable upon exercise of the Rights on an appropriate form, (ii) cause such registration statement to become effective as soon as practicable after such filing and (iii) cause such registration statement to remain effective (with a prospectus that at all times meets the requirements of the Securities Act) until the earlier of (A) the date as of which the Rights are no longer exercisable for such securities or (B) the Expiration Date. The Company will also take such action as may be appropriate under, and which will ensure compliance with, the securities or “blue sky” laws of the various states in connection with the exercisability of the Rights. The Company may temporarily suspend, for a period of time not to exceed ninety (90) days after the date determined in accordance with the provisions of the first sentence of this Section 9(c), the exercisability of the Rights in order to prepare and file such registration statement and permit it to become effective. Upon such suspension, the Company shall issue a public announcement stating that the exercisability of the Rights has been temporarily suspended, as well as a public announcement at such time as the suspension is no longer in effect, in each case with prompt written notice to the Rights Agent. Notwithstanding any such provision of this Agreement to the contrary, the Rights shall not be exercisable in any jurisdiction unless the requisite qualification in such jurisdiction shall have been obtained.

 

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(d) The Company covenants and agrees that it will take all such action as may be necessary to ensure that all shares of Preferred Stock delivered upon the exercise of the Rights shall, at the time of delivery of the certificates or depositary receipts for such shares (subject to payment of the Exercise Price), be duly and validly authorized and issued and fully paid and nonassessable.

 

(e) The Company further covenants and agrees that it will pay when due and payable any and all federal and state transfer taxes and charges which may be payable in respect of the issuance or delivery of the Right Certificates or of any certificates for shares of Preferred Stock and/or other property upon the exercise of Rights. The Company shall not, however, be required to pay any transfer tax which may be payable in respect of any transfer or delivery of Right Certificates or the issuance or delivery of other securities or property to a person other than, or in respect of the issuance or delivery of securities or other property in a name other than that of, the registered holder of the Right Certificates evidencing Rights surrendered for exercise or to issue or deliver any certificates for securities or other property in a name other than that of the registered holder upon the exercise of any Rights until such tax shall have been paid (any such tax being payable by the holder of such Right Certificate at the time of surrender) or until it has been established to the Company’s satisfaction that no such tax is due.

 

Section 10. Preferred Stock Record Date . Each Person in whose name any certificate for Preferred Stock or other securities (including any fraction of a share of Preferred Stock or such other securities) is issued upon the exercise of Rights shall for all purposes be deemed to have become the holder of record of the shares of Preferred Stock or such other securities represented thereby on, and such certificate shall be dated, the date upon which the Right Certificate evidencing such Rights was duly surrendered and payment of the Exercise Price (and any applicable transfer taxes) was made; provided , however , that if the date of such surrender and payment is a date upon which the transfer books of the Company for the Preferred Stock or such other securities, as applicable, are closed, such person shall be deemed to have become the record holder of such shares of Preferred Stock or such other securities on, and such certificate shall be dated, the next succeeding Business Day on which the transfer books of the Company are open; and further provided , however , that if delivery of shares of Preferred Stock or such other securities is delayed pursuant to Section 9(c), such Person shall be deemed to have become the record holder of such shares of Preferred Stock or such other securities only when such shares or such other securities first become deliverable. Prior to the exercise of the Right evidenced thereby, the holder of a Right Certificate shall not be entitled to any rights of a stockholder of the Company with respect to shares for which the Rights shall be exercisable, including, without limitation, the right to vote, to receive dividends or other distributions or to exercise any preemptive rights, and shall not be entitled to receive any notice of any proceedings of the Company, except as provided herein.

 

Section 11. Adjustment of Exercise Price, Number and Kind of Shares or Number of Rights . The Exercise Price, the number and kind of shares covered by each Right and the number of Rights outstanding are subject to adjustment from time to time as provided in this Section 11.

 

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(a) (i) In the event the Company shall at any time after              (A) declare a dividend on the Preferred Stock payable in shares of Preferred Stock, (B) subdivide the outstanding Preferred Stock, (C) combine the outstanding Preferred Stock into a smaller number of shares or (D) issue, change or alter any shares of its capital stock in a reclassification or recapitalization of the Preferred Stock (including any such reclassification or recapitalization in connection with a consolidation or merger in which the Company is the continuing or surviving Person), except as otherwise provided in this Section 11(a) and Section 7(e) hereof, the Exercise Price in effect at the time of the record date for such dividend or the effective time of such subdivision, combination, reclassification or recapitalization, and the number and kind of shares of capital stock issuable on such date or at such time, shall be proportionately adjusted so that the holder of any Right exercised after such time shall be entitled to receive the aggregate number and kind of shares of capital stock which, if such Right had been exercised immediately prior to such date and at a time when the Preferred Stock transfer books of the Company were open, such holder would have owned upon such exercise and been entitled to receive by virtue of such dividend, subdivision, combination, reclassification or recapitalization; provided , however , that in no event shall the consideration to be paid upon the exercise of a Right be less than the aggregate par value of the shares of capital stock of the Company issuable upon exercise of a Right. If an event occurs which would require an adjustment under both Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided for in this Section 11(a)(i) shall be in addition to, and shall be made prior to, any adjustment required pursuant to Section 11(a)(ii) hereof.

 

(ii) Subject to the provisions of Section 24 hereof, in the event any Person, alone or together with its Affiliates and Associates, shall become an Acquiring Person, then, promptly following any such occurrence (a “ Section 11(a)(ii) Event ”), proper provision shall be made so that each holder of a Right, except as provided in Section 7(e) hereof, shall thereafter have a right to receive, upon exercise thereof at the then current Exercise Price in accordance with the terms of this Agreement, in lieu of a number of one ten-thousandths of a share of Preferred Stock, such number of shares of Common Stock of the Company as shall equal the result obtained by (x) multiplying the then current Exercise Price by the then number of one ten-thousandths of a share of Preferred Stock for which a Right was exercisable immediately prior to the first occurrence of a Section 11(a)(ii) Event, whether or not such Right was then exercisable, and dividing that product by (y) 50% of the Fair Market Value per share of Common Stock of the Company (determined pursuant to Section 11(d)) on the date of the occurrence of a Section 11(a)(ii) Event (such number of shares being referred to as the “ Adjustment Shares ”).

 

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(iii) In lieu of issuing any shares of Common Stock of the Company in accordance with Section 11(a)(ii) hereof, the Company, acting by or pursuant to a resolution of the Board of Directors of the Company, may, and in the event that the number of shares of Common Stock of the Company which are authorized by the Company’s Certificate of Incorporation but not outstanding or reserved for issuance for purposes other than upon exercise of the Rights is not sufficient to permit the exercise in full of the Rights in accordance with the foregoing subparagraph (ii) of this Section 11(a), the Company, acting by or pursuant to a resolution of the Board of Directors of the Company, shall: (A) determine the excess of (X) the Fair Market Value of the Adjustment Shares issuable upon the exercise of a Right (the “ Current Value ”) over (Y) the Exercise Price attributable to each Right (such excess being referred to as the “ Spread ”) and (B) with respect to all or a portion of each Right (subject to Section 7(e) hereof), make adequate provision to substitute for the Adjustment Shares, upon payment of the applicable Exercise Price, (1) Common Stock of the Company or equity securities, if any, of the Company other than Common Stock of the Company (including without limitation shares, or units of shares, of Preferred Stock that the Board of Directors of the Company has determined to have the same value as shares of Common Stock of the Company (such shares of Preferred Stock being referred to herein as “ Common Stock Equivalents ”)), (2) cash, (3) a reduction in the Exercise Price, (4) Preferred Stock Equivalents which the Board of Directors of the Company has deemed to have the same value as shares of Common Stock of the Company, (5) debt securities of the Company, (6) other assets or securities of the Company or (7) any combination of the foregoing, having an aggregate value equal to the Current Value, where such aggregate value has been determined by the Board of Directors of the Company after receiving the advice of a nationally recognized investment banking firm selected by the Board of Directors of the Company; provided , however , that if the Company shall not have made adequate provision to deliver value pursuant to clause (B) above within thirty (30) days following the later of (x) the first occurrence of a Section 11(a)(ii) Event and (y) the date on which the Company’s right of redemption pursuant to Section 23(a) expires (the later of (x) and (y) being referred to herein as the “ Section 11(a)(ii) Trigger Date ”), then the Company shall be obligated to deliver, upon the surrender for exercise of a Right and without requiring payment of the Exercise Price, shares of Common Stock of the Company (to the extent available) and then, if necessary, cash, which shares and/or cash have an aggregate value equal to the Spread. If the Board of Directors of the Company shall determine in good faith that it is likely that sufficient additional shares of Common Stock of the Company could be authorized for issuance upon exercise in full of the Rights, the 30-day period set forth above may be extended to the extent necessary, but not more than ninety (90) days after the Section 11(a)(ii) Trigger Date, in order that the Company may seek shareholder approval for the authorization of such additional shares (such period, as it may be extended, being referred to herein as the “ Substitution Period ”). To the extent that the Company determines that some action need be taken pursuant to the first and/or second sentences of this Section 11(a)(iii), the Company (x) shall provide, subject to Section 7(e) hereof, that such action shall apply uniformly to all outstanding Rights and (y) may suspend the exercisability of the Rights until the expiration of the Substitution Period in order to seek any authorization of additional shares and/or to decide the appropriate form of distribution to be made pursuant to such first sentence and to determine the value thereof. In the event of any such suspension, the Company shall issue a public announcement stating that the exercisability of the Rights has been temporarily suspended and a public announcement at such time as the suspension is no longer in effect. For purposes of this Section 11(a)(iii), the value of the Common Stock of the Company and of the Preferred Stock shall be the Fair Market Value (as determined pursuant to Section 11(d) hereof) per share of the Common Stock of the Company and the Preferred Stock, respectively, on the Section 11(a)(ii) Trigger Date, the value of any Common Stock Equivalent shall be deemed to have the same value as the Common Stock of the Company on such date and the value of any Preferred Stock Equivalent shall be deemed to have the same value as the Preferred Stock on such date.

 

(b) If the Company shall fix a record date for the issuance of rights, options or warrants to all holders of Preferred Stock entitling them (for a period expiring within forty-five (45) calendar days after such record date) to subscribe for or purchase Preferred Stock (or securities having the same or more favorable rights, privileges and preferences as the shares of Preferred Stock (“ Preferred Stock Equivalents ”)) or securities convertible into Preferred Stock or Preferred Stock Equivalents at a price per share of Preferred Stock or per share of Preferred Stock Equivalents (or having a conversion price per share, if a security convertible into Preferred Stock or Preferred Stock Equivalents) less than the Fair Market Value (as determined pursuant to Section 11(d) hereof) per share of Preferred Stock on such record date, the Exercise Price to be in effect after such record date shall be determined by multiplying the Exercise Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the number of shares of Preferred Stock outstanding on such record date, plus the number of shares of Preferred Stock which the aggregate offering price of the total number of shares of Preferred Stock and/or Preferred Stock Equivalents to be offered (and the aggregate initial conversion price of the convertible securities so to be offered) would purchase at such Fair Market Value and the denominator of which shall be the number of shares of Preferred Stock outstanding on such record date, plus the number of additional shares of Preferred Stock and Preferred Stock Equivalents to be offered for subscription or purchase (or into which the convertible securities so to be offered are initially convertible); provided , however , that in no event shall the consideration to be paid upon the exercise of a Right be less than the aggregate par value of the shares of stock of the Company issuable upon exercise of a Right. In case such subscription price may be paid in a consideration part or all of which shall be in a form other than cash, the value of such consideration shall be the Fair Market Value thereof determined in accordance with Section 11(d) hereof. Shares of Preferred Stock owned by or held for the account of the Company shall not be deemed outstanding for the purpose of any such computation. Such adjustments shall be made successively whenever such a record date is fixed; and in the event that such rights or warrants are not so issued, the Exercise Price shall be adjusted to be the Exercise Price which would then be in effect if such record date had not been fixed.

 

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(c) If the Company shall fix a record date for the making of a distribution to all holders of Preferred Stock (including any such distribution made in connection with a consolidation or merger in which the Company is the continuing or surviving corporation), of evidences of indebtedness, cash (other than a regular periodic cash dividend out of the earnings or retained earnings of the Company), assets (other than a dividend payable in Preferred Stock, but including any dividend payable in stock other than Preferred Stock) or convertible securities, subscription rights or warrants (excluding those referred to in Section 11(b)), the Exercise Price to be in effect after such record date shall be determined by multiplying the Exercise Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the Fair Market Value (as determined pursuant to Section 11(d) hereof) per one ten-thousandth of a share of Preferred Stock on such record date, less the Fair Market Value (as determined pursuant to Section 11(d) hereof) of the portion of the cash, assets or evidences of indebtedness so to be distributed or of such convertible securities, subscription rights or warrants applicable to one ten-thousandth of a share of Preferred Stock and the denominator of which shall be the Fair Market Value (as determined pursuant to Section 11(d) hereof) per one ten-thousandth of a share of Preferred Stock; provided , however , that in no event shall the consideration to be paid upon the exercise of a Right be less than the aggregate par value of the shares of stock of the Company issuable upon exercise of a Right. Such adjustments shall be made successively whenever such a record date is fixed; and in the event that such distribution is not so made, the Exercise Price shall again be adjusted to be the Exercise Price which would be in effect if such record date had not been fixed.

 

(d) For the purpose of this Agreement, the “ Fair Market Value ” of any share of Preferred Stock, Common Stock or any other stock or any Right or other security or any other property shall be determined as provided in this Section 11(d).

 

(i) In the case of a publicly-traded stock or other security, the Fair Market Value on any date shall be deemed to be the average of the daily closing prices per share of such stock or per unit of such other security for the 30 consecutive Trading Days (as such term is hereinafter defined) immediately prior to such date; provided , however , that in the event that the Fair Market Value per share of any share of stock is determined during a period following the announcement by the issuer of such stock of (x) a dividend or distribution on such stock payable in shares of such stock or securities convertible into shares of such stock or (y) any subdivision, combination or reclassification of such stock, and prior to the expiration of the 30 Trading Day period after the ex-dividend date for such dividend or distribution, or the record date for such subdivision, combination or reclassification, then, and in each such case, the Fair Market Value shall be properly adjusted to take into account ex-dividend trading. The closing price for each day shall be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on The NASDAQ Stock Market or the New York Stock Exchange or, if the securities are not listed or admitted to trading on The NASDAQ Stock Market or the New York Stock Exchange, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which such security is listed or admitted to trading; or, if not listed or admitted to trading on any national securities exchange, the last quoted price (or, if not so quoted, the average of the last quoted high bid and low asked prices) in the over-the-counter market, as reported by the system then in use; or, if on any such date no bids for such security are quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in such security selected by the Board of Directors of the Company. If on any such date no market maker is making a market in such security, the Fair Market Value of such security on such date shall be determined reasonably and with utmost good faith to the holders of the Rights by the Board of Directors of the Company, provided , however , that if at the time of such determination there is an Acquiring Person, the Fair Market Value of such security on such date shall be determined by a nationally recognized investment banking firm selected by the Board of Directors of the Company, which determination shall be described in a statement filed with the Rights Agent and shall be binding on the Rights Agent and the holders of the Rights. The term “ Trading Day ” shall mean a day on which the principal national securities exchange on which such security is listed or admitted to trading is open for the transaction of business or, if such security is not listed or admitted to trading on any national securities exchange, a Business Day.

 

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(ii) If a security is not publicly held or not so listed or traded, “Fair Market Value” shall mean the fair value per share of stock or per other unit of such security, determined reasonably and in good faith to the holders of the Rights by the Board of Directors of the Company; provided , however , that if at the time of such determination there is an Acquiring Person, the Fair Market Value of such security on such date shall be determined by a nationally recognized investment banking firm selected by the Board of Directors of the Company, which determination shall be described in a statement filed with the Rights Agent and shall be binding on the Rights Agent and the holders of the Rights; provided , however , that for the purposes of making any adjustment provided for by Section 11(a)(ii) hereof, the Fair Market Value of a share of Preferred Stock shall not be less than the product of the then Fair Market Value of a share of Common Stock multiplied by the higher of the then Dividend Multiple or Vote Multiple (as both of such terms are defined in the Certificate of Designations attached as Exhibit A hereto) applicable to the Preferred Stock and shall not exceed 105% of the product of the then Fair Market Value of a share of Common Stock multiplied by the higher of the then Dividend Multiple or Vote Multiple applicable to the Preferred Stock.

 

(iii) In the case of property other than securities, the Fair Market Value thereof shall be determined reasonably and in good faith to the holders of Rights by the Board of Directors of the Company; provided , however , that if at the time of such determination there is an Acquiring Person, the Fair Market Value of such property on such date shall be determined by a nationally recognized investment banking firm selected by the Board of Directors of the Company, which determination shall be described in a statement filed with the Rights Agent and shall be binding upon the Rights Agent and the holders of the Rights.

 

(e) Anything herein to the contrary notwithstanding, no adjustment in the Exercise Price shall be required unless such adjustment would require an increase or decrease of at least 1% in the Exercise Price; provided , however , that any adjustments which by reason of this Section 11(e) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 11 shall be made to the nearest cent or to the nearest one-millionth of a share of Common Stock of the Company or hundred-millionth of a share of Preferred Stock, as the case may be, or to such other figure as the Board of Directors of the Company may deem appropriate. Notwithstanding the first sentence of this Section 11(e), any adjustment required by this Section 11 shall be made no later than the earlier of (i) three (3) years from the date of the transaction which mandates such adjustment or (ii) the Expiration Date.

 

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(f) If as a result of any provision of Section 11(a) or Section 13(a) hereof, the holder of any Right thereafter exercised shall become entitled to receive any shares of capital stock of the Company other than Preferred Stock, thereafter the number of such other shares so receivable upon exercise of any Right shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Preferred Stock contained in Section 11(a), (b), (c), (d), (e), (g) through (k) and (m), inclusive, and the provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to the Preferred Stock shall apply on like terms to any such other shares.  

 

(g) All Rights originally issued by the Company subsequent to any adjustment made to the Exercise Price hereunder shall evidence the right to purchase, at the adjusted Exercise Price, the number of one ten-thousandths of a share of Preferred Stock (or other securities or amount of cash or combination thereof) purchasable from time to time hereunder upon exercise of the Rights, all subject to further adjustment as provided herein.

 

(h) Unless the Company shall have exercised its election as provided in Section 11(i), upon each adjustment of the Exercise Price as a result of the calculations made in Section 11(b) and (c), each Right outstanding immediately prior to the making of such adjustment shall thereafter evidence the right to purchase, at the adjusted Exercise Price, that number of one ten-thousandths of a share of Preferred Stock (calculated to the nearest hundred millionth) as the Board of Directors of the Company determines is appropriate to preserve the economic value of the Rights, including, by way of example, that number obtained by (i) multiplying (x) the number of one ten-thousandths of a share of Preferred Stock for which a Right may be exercisable immediately prior to this adjustment by (y) the Exercise Price in effect immediately prior to such adjustment of the Exercise Price and (ii) dividing the product so obtained by the Exercise Price in effect immediately after such adjustment of the Exercise Price.

 

(i) The Company may elect on or after the date of any adjustment of the Exercise Price to adjust the number of Rights, in substitution for any adjustment in the number of shares of Preferred Stock purchasable upon the exercise of a Right. Each of the Rights outstanding after the adjustment in the number of Rights shall be exercisable for the number of one ten-thousandths of a share of Preferred Stock for which a Right was exercisable immediately prior to such adjustment. Each Right held of record prior to such adjustment of the number of Rights shall become that number of Rights (calculated to the nearest one-millionth) obtained by dividing the Exercise Price in effect immediately prior to adjustment of the Exercise Price by the Exercise Price in effect immediately after adjustment of the Exercise Price. The Company shall make a public announcement of its election to adjust the number of Rights, indicating the record date for the adjustment, and, if known at the time, the amount of the adjustment to be made. This record date may be the date on which the Exercise Price is adjusted or any day thereafter, but, if the Right Certificates have been issued, shall be at least ten (10) days later than the date of the public announcement. If Right Certificates have been issued, upon each adjustment of the number of Rights pursuant to this Section 11(i), the Company shall, as promptly as practicable, cause to be distributed to holders of record of Right Certificates on such record date Right Certificates evidencing, subject to Section 14 hereof, the additional Rights to which such holders shall be entitled as a result of such adjustment, or, at the option of the Company, shall cause to be distributed to such holders of record in substitution and replacement for the Right Certificates held by such holders prior to the date of adjustment, and upon surrender thereof, if required by the Company, new Right Certificates evidencing all the Rights to which such holders shall be entitled after such adjustment. Right Certificates so to be distributed shall be issued, executed and countersigned in the manner provided for herein (and may bear, at the option of the Company, the adjusted Exercise Price) and shall be registered in the names of the holders of record of Right Certificates on the record date specified in the public announcement.

 

(j) Irrespective of any adjustment or change in the Exercise Price or the number of one ten-thousandths of a share of Preferred Stock issuable upon the exercise of the Rights, the Right Certificates theretofore and thereafter issued may continue to express the Exercise Price per share and the number of shares which were expressed in the initial Right Certificates issued hereunder without prejudice to any adjustment or change.

 

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(k) Before taking any action that would cause an adjustment reducing the Exercise Price below the then stated value, if any, of the number of one ten-thousandths of a share of Preferred Stock issuable upon exercise of the Rights, the Company shall take any corporate action which may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue fully paid and nonassessable shares of Preferred Stock at such adjusted Exercise Price.

 

(l) In any case in which this Section 11 shall require that an adjustment in the Exercise Price be made effective as of a record date for a specified event, the Company may elect to defer until the occurrence of such event the issuing to the holder of any Right exercised after such record date the number of one ten-thousandths of a share of Preferred Stock or other capital stock or securities of the Company, if any, issuable upon such exercise over and above the number of one ten-thousandths of a share of Preferred Stock and other capital stock or securities of the Company, if any, issuable upon such exercise on the basis of the Exercise Price in effect prior to such adjustment; provided , however, that the Company shall deliver to such holder a due bill or other appropriate instrument evidencing such holder’s right to receive such additional shares upon the occurrence of the event requiring such adjustment.

 

(m) Anything in this Section 11 to the contrary notwithstanding, the Company shall be entitled to make such reductions in the Exercise Price, in addition to those adjustments expressly required by this Section 11, as and to the extent that in its good faith judgment the Board of Directors of the Company shall determine to be advisable in order that any consolidation or subdivision of the Preferred Stock, issuance wholly for cash of any shares of Preferred Stock at less than the Fair Market Value, issuance wholly for cash of shares of Preferred Stock or securities which by their terms are convertible into or exchangeable for shares of Preferred Stock, stock dividends or issuance of rights, options or warrants referred to hereinabove in this Section 11, hereafter made by the Company to holders of its Preferred Stock, shall not be taxable to such shareholders.

 

(n) The Company covenants and agrees that it shall not, at any time after the Distribution Date and so long as the Rights have not been redeemed pursuant to Section 23 hereof or exchanged pursuant to Section 24 hereof, (i) consolidate with (other than a Subsidiary of the Company in a transaction that complies with the proviso at the end of this sentence), (ii) merge with or into, or (iii) sell or transfer (or permit any Subsidiary to sell or transfer), in one transaction or a series of related transactions, assets or earning power aggregating 50% or more of the assets or earning power of the Company and its Subsidiaries taken as a whole, to any other Person or Persons (other than the Company and/or any of its Subsidiaries in one or more transactions each of which complies with the proviso at the end of this sentence) if (x) at the time of or immediately after such consolidation, merger or sale there are any rights, warrants or other instruments outstanding or agreements or arrangements in effect which would substantially diminish or otherwise eliminate the benefits intended to be afforded by the Rights, or (y) prior to, simultaneously with or immediately after such consolidation, merger or sale the shareholders of a Person who constitutes, or would constitute, the “Principal Party” for the purposes of Section 13(a) hereof shall have received a distribution of Rights previously owned by such Person or any of its Affiliates and Associates; provided , however , that, subject to the following sentence, this Section 11(n) shall not affect the ability of any Subsidiary of the Company to consolidate with, or merge with or into, or sell or transfer assets or earning power to, any other Subsidiary of the Company. The Company further covenants and agrees that after the Distribution Date it will not, except as permitted by Section 23 or Section 27 hereof, take (or permit any Subsidiary to take) any action if at the time such action is taken it is reasonably foreseeable that such action will substantially diminish or otherwise eliminate the benefits intended to be afforded by the Rights.

 

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(o) Notwithstanding anything in this Agreement to the contrary, in the event the Company shall at any time after the date of this Agreement and prior to the Distribution Date (i) declare or pay any dividend on the outstanding Common Stock of the Company payable in shares of Common Stock of the Company or (ii) effect a subdivision, combination or consolidation of the outstanding shares of Common Stock of the Company (by reclassification or otherwise than by payment of dividends in shares of Common Stock of the Company) into a greater or lesser number of shares of Common Stock of the Company, then in any such case (A) the number of one ten-thousandths of a share of Preferred Stock purchasable after such event upon proper exercise of each Right shall be determined by multiplying the number of one ten-thousandths of a share of Preferred Stock so purchasable immediately prior to such event by a fraction, the numerator of which is the number of shares of Common Stock of the Company outstanding immediately prior to such event and the denominator of which is the number of shares of Common Stock of the Company outstanding immediately after such event, and (B) each share of Common Stock of the Company outstanding immediately after such event shall have issued with respect to it that number of Rights which each share of Common Stock of the Company outstanding immediately prior to such event had issued with respect to it. The adjustments provided for in this Section 11(o) shall be made successively whenever such a dividend is declared or paid or such a subdivision, combination or consolidation is effected.

 

(p) The exercise of Rights under Section 11(a)(ii) shall only result in the loss of Rights under Section 11(a)(ii) to the extent so exercised and neither such exercise nor any exchange of Rights pursuant to Section 24 shall otherwise affect the rights of holders of Right Certificates under this Agreement, including rights to purchase securities of the Principal Party following a Section 13 Event which has occurred or may thereafter occur, as set forth in Section 13 hereof. Upon exercise of a Right Certificate under Section 11(a)(ii), the Rights Agent shall return such Right Certificate duly marked to indicate that such exercise has occurred.

 

Section 12. Certificate of Adjusted Exercise Price or Number of Shares . Whenever an adjustment is made as provided in Section 11 or Section 13 hereof, the Company shall (a) promptly prepare a certificate setting forth such adjustment and a brief statement of the facts accounting for such adjustment, (b) promptly file with the Rights Agent and with each transfer agent for the Preferred Stock and the Common Stock of the Company a copy of such certificate and (c) mail a brief summary thereof to each holder of a Right Certificate (or, if prior to the Distribution Date, to each holder of a certificate representing shares of Common Stock of the Company) in accordance with Section 26 hereof. The Rights Agent shall be fully protected in relying on any such certificate and on any adjustment contained therein and shall not be deemed to have knowledge of any such adjustment unless and until it shall have received such certificate.

 

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Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power .

 

(a) In the event that, following the Stock Acquisition Date, directly or indirectly, (x) the Company shall consolidate with, or merge with and into, any other Person (other than a Subsidiary of the Company in a transaction which is not prohibited by Section 11(n) hereof), and the Company shall not be the continuing or surviving corporation of such consolidation or merger, (y) any Person (other than a Subsidiary of the Company in a transaction which is not prohibited by the proviso at the end of the first sentence of Section 11(n) hereof) shall consolidate with the Company, or merge with and into the Company and the Company shall be the continuing or surviving corporation of such merger and, in connection with such merger, all or part of the shares of Common Stock of the Company shall be changed into or exchanged for stock or other securities of any other Person or cash or any other property, or (z) the Company shall sell, mortgage or otherwise transfer (or one or more of its Subsidiaries shall sell, mortgage or otherwise transfer), in one transaction or a series of related transactions, assets or earning power aggregating 50% or more of the assets or earning power of the Company and its Subsidiaries (taken as a whole) to any other Person or Persons (other than the Company or any Subsidiary of the Company in one or more transactions, each of which is not prohibited by the proviso at the end of the first sentence of Section 11(n) hereof), then, and in each such case, proper provision shall be made so that: (i) each holder of a Right, except as provided in Section 7(e) hereof, shall have the right to receive, upon the exercise thereof at the then current Exercise Price in accordance with the terms of this Agreement, such number of validly authorized and issued, fully paid and nonassessable shares of freely tradable Common Stock of the Principal Party (as hereinafter defined in Section 13(b)), free and clear of rights of call or first refusal, liens, encumbrances, transfer restrictions or other adverse claims, as shall be equal to the result obtained by (1) multiplying the then current Exercise Price by the number of one ten-thousandths of a share of Preferred Stock for which a Right is exercisable immediately prior to the first occurrence of a Section 13 Event (without taking into account any adjustment previously made pursuant to Section 11(a)(ii) or 11(a)(iii) hereof), and dividing that product by (2) 50% of the Fair Market Value (determined pursuant to Section 11(d) hereof) per share of the Common Stock of such Principal Party on the date of consummation of such consolidation, merger, sale or transfer; (ii) such Principal Party shall thereafter be liable for, and shall assume, by virtue of such consolidation, merger, sale, mortgage or transfer, all the obligations and duties of the Company pursuant to this Agreement; (iii) the term “Company” shall thereafter be deemed to refer to such Principal Party, it being specifically intended that the provisions of Section 11 hereof shall apply to such Principal Party; and (iv) such Principal Party shall take such steps (including, but not limited to, the reservation of a sufficient number of shares of its Common Stock to permit exercise of all outstanding Rights in accordance with this Section 13(a) and the making of payments in cash and/or other securities in accordance with Section 11(a)(iii) hereof) in connection with such consummation as may be necessary to assure that the provisions hereof shall thereafter be applicable, as nearly as reasonably may be, in relation to its shares of Common Stock thereafter deliverable upon the exercise of the Rights.

 

(b) “ Principal Party ” shall mean

 

(i) in the case of any transaction described in clause (x) or (y) of the first sentence of Section 13(a), the Person that is the issuer of any securities into which shares of Common Stock of the Company are converted in such merger or consolidation, or, if there is more than one such issuer, the issuer of Common Stock that has the highest aggregate Fair Market Value (determined pursuant to Section 11(d)), and if no securities are so issued, the Person that is the other party to the merger or consolidation, or, if there is more than one such Person, the Person the Common Stock of which has the highest aggregate Fair Market Value (determined pursuant to Section 11(d)); and

 

(ii) in the case of any transaction described in clause (z) of the first sentence of Section 13(a), the Person that is the party receiving the greatest portion of the assets or earning power transferred pursuant to such transaction or transactions, or, if each Person that is a party to such transaction or transactions receives the same portion of the assets or earning power transferred pursuant to such transaction or transactions or if the Person receiving the largest portion of the assets or earning power cannot be determined, whichever Person the Common Stock of which has the highest aggregate Fair Market Value (determined pursuant to Section 11(d));

 

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provided , however , that in any such case described in clauses (i) or (ii) of Section 13(b) hereof, (1) if the Common Stock of such Person is not at such time and has not been continuously over the preceding 12-month period registered under Section 12 of the Exchange Act (“ Registered Common Stock ”) or such Person is not a corporation, and such Person is a direct or indirect Subsidiary or Affiliate of another Person who has Registered Common Stock outstanding, “Principal Party” shall refer to such other Person; (2) if the Common Stock of such Person is not Registered Common Stock or such Person is not a corporation, and such Person is a direct or indirect Subsidiary of another Person but is not a direct or indirect Subsidiary of another Person which has Registered Common Stock outstanding, “Principal Party” shall refer to the ultimate parent entity of such first-mentioned Person; (3) if the Common Stock of such Person is not Registered Common Stock or such Person is not a corporation, and such Person is directly or indirectly controlled by more than one Person, and one or more of such other Persons has Registered Common Stock outstanding, “Principal Party” shall refer to whichever of such other Persons is the issuer of the Registered Common Stock having the highest aggregate Fair Market Value (determined pursuant to Section 11(d)); and (4) if the Common Stock of such Person is not Registered Common Stock or such Person is not a corporation, and such Person is directly or indirectly controlled by more than one Person, and none of such other Persons has Registered Common Stock outstanding, “Principal Party” shall refer to whichever ultimate parent entity is the corporation having the greatest shareholders’ equity or, if no such ultimate parent entity is a corporation, “Principal Party” shall refer to whichever ultimate parent entity is the entity having the greatest net assets.

 

(c) The Company shall not consummate any such consolidation, merger, sale or transfer unless prior thereto (x) the Principal Party shall have a sufficient number of authorized shares of its Common Stock, which have not been issued or reserved for issuance, to permit the exercise in full of the Rights in accordance with this Section 13, and (y) the Company and each Principal Party and each other Person who may become a Principal Party as a result of such consolidation, merger, sale or transfer shall have executed and delivered to the Rights Agent a supplemental agreement providing for the terms set forth in Section 13(a) and (b) and further providing that, as soon as practicable after the date of any consolidation, merger, sale or transfer of assets mentioned in Section 13(a), the Principal Party at its own expense will:

 

(i) prepare and file a registration statement under the Securities Act with respect to the Rights and the securities purchasable upon exercise of the Rights on an appropriate form, cause such registration statement to become effective as soon as practicable after such filing and cause such registration statement to remain effective (with a prospectus that at all times meets the requirements of the Securities Act) until the Expiration Date;

 

(ii) obtain any and all regulatory approvals, and qualify or register the Rights and the securities purchasable upon exercise of the Rights under the blue sky laws of such jurisdictions as may be necessary or appropriate;

 

(iii) list (or continue the listing of) the Rights and the securities purchasable upon exercise of the Rights on a national securities exchange; and

 

(iv) deliver to holders of the Rights historical financial statements for the Principal Party and each of its Affiliates which comply in all respects with the requirements for registration on Form 10 (or any successor form) under the Exchange Act.

 

(d) In case the Principal Party which is to be a party to a transaction referred to in this Section 13 has a provision in any of its authorized securities or in its certificate of incorporation or By-laws or other instrument governing its affairs, which provision would have the effect of (i) causing such Principal Party to issue (other than to holders of Rights pursuant to this Section 13), in connection with, or as a consequence of, the consummation of a transaction referred to in this Section 13, shares of Common Stock of such Principal Party at less than the then current Fair Market Value (determined pursuant to Section 11(d)) or securities exercisable for, or convertible into, Common Stock of such Principal Party at less than such Fair Market Value, or (ii) providing for any special payment, tax or similar provisions in connection with the issuance of the Common Stock of such Principal Party pursuant to the provisions of this Section 13, then, in such event, the Company shall not consummate any such transaction unless prior thereto the Company and such Principal Party shall have executed and delivered to the Rights Agent a supplemental agreement providing that the provision in question of such Principal Party shall have been canceled, waived or amended, or that the authorized securities shall be redeemed, so that the applicable provision will have no effect in connection with, or as a consequence of, the consummation of the proposed transaction.

 

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The provisions of this Section 13 shall similarly apply to successive mergers or consolidations or sales or other transfers.

 

Section 14. Fractional Rights and Fractional Shares .

 

(a) The Company shall not be required to issue fractions of Rights, except prior to the Distribution Date as provided in Section 11(o) hereof, or to distribute Right Certificates which evidence fractional Rights. If the Company elects not to issue such fractional Rights, the Company shall pay, in lieu of such fractional Rights, to the registered holders of the Right Certificates with regard to which such fractional Rights would otherwise be issuable, an amount in cash equal to the same fraction of the Fair Market Value of a whole Right, as determined pursuant to Section 11(d) hereof.

 

(b) The Company shall not be required to issue fractions of shares of Preferred Stock (other than fractions which are integral multiples of one ten-thousandth of a share of Preferred Stock) upon exercise of the Rights or to distribute certificates which evidence fractional shares of Preferred Stock (other than fractions which are integral multiples of one ten-thousandth of a share of Preferred Stock). In lieu of fractional shares of Preferred Stock that are not integral multiples of one ten-thousandth of a share of Preferred Stock, the Company may pay to the registered holders of Right Certificates at the time such Rights are exercised as herein provided an amount in cash equal to the same fraction of the Fair Market Value of one ten-thousandth of a share of Preferred Stock. For purposes of this Section 14(b), the Fair Market Value of one ten-thousandth of a share of Preferred Stock shall be determined pursuant to Section 11(d) hereof for the Trading Day immediately prior to the date of such exercise.

 

(c) The holder of a Right by the acceptance of the Rights expressly waives his right to receive any fractional Rights or any fractional shares upon exercise of a Right, except as permitted by this Section 14.

 

Section 15. Rights of Action . All rights of action in respect of this Agreement, other than rights of action vested in the Rights Agent pursuant to Sections 18 and 20 hereof, are vested in the respective registered holders of the Right Certificates (or, prior to the Distribution Date, the registered holders of the Common Stock of the Company); and any registered holder of any Right Certificate (or, prior to the Distribution Date, of the Common Stock of the Company), without the consent of the Rights Agent or of the holder of any other Right Certificate (or, prior to the Distribution Date, of the Common Stock of the Company), may, in such registered holder’s own behalf and for such registered holder’s own benefit, enforce, and may institute and maintain any suit, action or proceeding against the Company to enforce, or otherwise act in respect of, his right to exercise the Right evidenced by such Right Certificate in the manner provided in such Right Certificate and in this Agreement. Without limiting the foregoing or any remedies available to the holders of Rights, it is specifically acknowledged that the holders of Rights would not have an adequate remedy at law for any breach of this Agreement and shall be entitled to specific performance of the obligations hereunder and injunctive relief against actual or threatened violations of the obligations hereunder of any Person subject to this Agreement. Holders of Rights shall be entitled to recover the reasonable costs and expenses, including attorneys’ fees, incurred by them in any action to enforce the provisions of this Agreement.

 

Section 16. Agreement of Right Holders . Every holder of a Right, by accepting the same, consents and agrees with the Company and the Rights Agent and with every other holder of a Right that:

 

(a) prior to the Distribution Date, each Right will be transferable only simultaneously and together with the transfer of shares of Common Stock of the Company;

 

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(b) after the Distribution Date, the Right Certificates are transferable only on the registry books of the Rights Agent if surrendered at the office or offices of the Rights Agent designated for such purpose, duly endorsed or accompanied by a proper instrument of transfer;

 

(c) subject to Sections 6(a) and 7(f), the Company and the Rights Agent may deem and treat the person in whose name a Right Certificate (or, prior to the Distribution Date, the associated certificate representing Common Stock of the Company) is registered as the absolute owner thereof and of the Rights evidenced thereby (notwithstanding any notations of ownership or writing on the Right Certificates or the associated certificate representing Common Stock of the Company made by anyone other than the Company or the Rights Agent) for all purposes whatsoever, and, subject to the last sentence of Section 7(e), neither the Company nor the Rights Agent shall be affected by any notice to the contrary; and

 

(d) notwithstanding anything in this Agreement to the contrary, neither the Company nor the Rights Agent shall have any liability to any holder of a Right or other Person as the result of the inability of the Company or the Rights Agent to perform any of its or their obligations under this Agreement by reason of any preliminary or permanent injunction or other order, decree, judgment or ruling (whether interlocutory or final) issued by a court of competent jurisdiction or by a governmental, regulatory, self-regulatory or administrative agency or commission, or any statute, rule, regulation or executive order promulgated or enacted by any governmental authority, prohibiting or otherwise restraining performance of such obligations; provided , however , that the Company must use its best efforts to have any such order, decree or ruling lifted or otherwise overturned as soon as practicable.

 

Section 17. Right Certificate Holder Not Deemed a Shareholder . No holder, as such, of any Right Certificate shall be entitled to vote, receive dividends or be deemed for any purpose the holder of the shares of Preferred Stock or any other securities of the Company which may at any time be issuable on the exercise of the Rights represented thereby, nor shall anything contained herein or in any Right Certificate be construed to confer upon the holder of any Right Certificate, as such, any of the rights of a shareholder of the Company or any right to vote for the election of directors or upon any matter submitted to shareholders at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting shareholders (except as provided in Section 25 hereof), or to receive dividends or subscription rights, or otherwise, until the Right or Rights evidenced by such Right Certificate shall have been exercised in accordance with the provisions hereof.

 

Section 18. Concerning the Rights Agent .

 

(a) The Company agrees to pay to the Rights Agent such compensation as shall be agreed to in writing between the Company and the Rights Agent for all services rendered by it hereunder and, from time to time, on demand of the Rights Agent, its reasonable expenses and attorney fees and disbursements and other disbursements incurred in the administration and execution of this Agreement and the exercise and performance of its duties hereunder. The Company also agrees to indemnify the Rights Agent for, and to hold it harmless against, any loss, liability, or expense, incurred without gross negligence, bad faith or willful misconduct on the part of the Rights Agent, for anything done or omitted by the Rights Agent in connection with the acceptance and administration of this Agreement, including the costs and expenses of defending against any claim of liability arising therefrom, directly or indirectly. The provisions of this Section 18(a) shall survive the expiration of the Rights and the termination of this Agreement.

 

(b) The Rights Agent shall be protected and shall incur no liability for or in respect of any action taken, suffered or omitted by it in connection with its administration of this Agreement in reliance upon any Right Certificate or certificate representing Common Stock of the Company, Preferred Stock, or other securities of the Company, instrument of assignment or transfer, power of attorney, endorsement, affidavit, letter, notice, direction, consent, certificate, statement, or other paper or document believed by it in good faith and without negligence to be genuine and to be signed and executed by the proper Person or Persons.

 

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(c) The Rights Agent shall not be liable for consequential damages under any provision of this Agreement or for any consequential damages arising out of any act or failure to act hereunder.

 

Section 19. Merger or Consolidation or Change of Name of Rights Agent .

 

(a) Any corporation into which the Rights Agent or any successor Rights Agent may be merged or with which it may be consolidated, or any corporation resulting from any merger or consolidation to which the Rights Agent or any successor Rights Agent shall be a party, or any corporation succeeding to the corporate trust or shareholder services business of the Rights Agent or any successor Rights Agent, shall be the successor to the Rights Agent under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties hereto; provided that such corporation would be eligible for appointment as a successor Rights Agent under the provisions of Section 21 hereof. The purchase of all or substantially all of the Rights Agent’s assets employed in the performance of transfer agent activities shall be deemed a merger or consolidation for purposes of this Section 19. In case at the time such successor Rights Agent shall succeed to the agency created by this Agreement, any of the Right Certificates shall have been countersigned but not delivered, any such successor Rights Agent may adopt the countersignature of the predecessor Rights Agent and deliver such Right Certificates so countersigned; and in case at that time any of the Right Certificates shall not have been countersigned, any successor Rights Agent may countersign such Right Certificates either in the name of the predecessor or in the name of the successor Rights Agent; and in all such cases such Right Certificates shall have the full force provided in the Right Certificates and in this Agreement.

 

(b) In case at any time the name of the Rights Agent shall be changed and at such time any of the Right Certificates shall have been countersigned but not delivered, the Rights Agent may adopt the countersignature under its prior name and deliver Right Certificates so countersigned; and in case at that time any of the Right Certificates shall not have been countersigned, the Rights Agent may countersign such Right Certificates either in its prior name or in its changed name; and in all such cases such Right Certificates shall have the full force provided in the Right Certificates and in this Agreement.

 

Section 20. Duties of Rights Agent . The Rights Agent undertakes the duties and obligations expressly imposed by this Agreement upon the following terms and conditions, by all of which the Company and the holders of Right Certificates, by their acceptance thereof, shall be bound:

 

(a) The Rights Agent may consult with legal counsel selected by it (who may be legal counsel for the Company), and the opinion of such counsel shall be full and complete authorization and protection to the Rights Agent as to any action taken or omitted by it in good faith and in accordance with such opinion.

 

(b) Whenever in the performance of its duties under this Agreement the Rights Agent shall deem it necessary or desirable that any fact or matter (including, without limitation, the identity of any Acquiring Person and the determination of Fair Market Value) be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof shall be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate signed by a person believed by the Rights Agent to be the Chairman of the Board of Directors, a Vice Chairman of the Board of Directors, the President, a Vice President, the Treasurer, any Assistant Treasurer, the Secretary or an Assistant Secretary of the Company and delivered to the Rights Agent. Any such certificate shall be full authorization to the Rights Agent for any action taken or suffered in good faith by it under the provisions of this Agreement in reliance upon such certificate.

 

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(c) The Rights Agent shall be liable hereunder only for its own gross negligence, bad faith or willful misconduct.

 

(d) The Rights Agent shall not be liable for or by reason of any of the statements of fact or recitals contained in this Agreement or in the Right Certificates (except its countersignature thereof) or be required to verify the same, but all such statements and recitals are and shall be deemed to have been made by the Company only.

 

(e) The Rights Agent shall not be under any responsibility in respect of the validity of this Agreement or the execution and delivery hereof (except the due execution hereof by the Rights Agent) or in respect of the validity or execution of any Right Certificate (except its countersignature thereof); nor shall it be responsible for any breach by the Company of any covenant or condition contained in this Agreement or in any Right Certificate; nor shall it be responsible for any change in the exercisability of the Rights (including the Rights becoming void pursuant to Section 7(e) hereof) or any adjustment required under the provisions of Sections 11, 13 or 23(c) hereof or responsible for the manner, method or amount of any such adjustment or the ascertaining of the existence of facts that would require any such adjustment (except with respect to the exercise of Rights evidenced by Right Certificates after receipt of a certificate describing any such adjustment furnished in accordance with Section 12 hereof), nor shall it be responsible for any determination by the Board of Directors of the Company of the Fair Market Value of the Rights or Preferred Stock pursuant to the provisions of Section 14 hereof; nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any shares of Common Stock of the Company or Preferred Stock to be issued pursuant to this Agreement or any Right Certificate or as to whether or not any shares of Common Stock of the Company or Preferred Stock will, when so issued, be validly authorized and issued, fully paid and nonassessable.

 

(f) The Company agrees that it will perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such further and other acts, instruments and assurances as may reasonably be required by the Rights Agent for the carrying out or performing by the Rights Agent of the provisions of this Agreement.

 

(g) The Rights Agent is hereby authorized and directed to accept instructions with respect to the performance of its duties hereunder and certificates delivered pursuant to any provision hereof from any person believed by the Rights Agent to be the Chairman of the Board of Directors, any Vice Chairman of the Board of Directors, the President, a Vice President, the Secretary, an Assistant Secretary, the Treasurer or an Assistant Treasurer of the Company, and is authorized to apply to such officers for advice or instructions in connection with its duties, and it shall not be liable for any action taken or suffered to be taken by it in good faith in accordance with instructions of any such officer. Any application by the Rights Agent for written instructions from the Company may, at the option of the Rights Agent, set forth in writing any action proposed to be taken or omitted by the Rights Agent under this Agreement and the date on or after which such action shall be taken or such omission shall be effective. The Rights Agent shall not be liable for any action taken by, or omission of, the Rights Agent in accordance with a proposal included in such application on or after the date specified in such application (which date shall not be less than five Business Days after the date any officer of the Company actually receives such application, unless any such officer shall have consented in writing to an earlier date) unless, prior to taking any such action (or the effective date in the case of an omission), the Rights Agent shall have received written instructions in response to such application specifying the action to be taken or omitted.

 

(h) The Rights Agent and any shareholder, director, officer or employee of the Rights Agent may buy, sell or deal in any of the Rights or other securities of the Company or become pecuniarily interested in any transaction in which the Company may be interested, or contract with or lend money to the Company or otherwise act as fully and freely as though it were not the Rights Agent under this Agreement. Nothing herein shall preclude the Rights Agent from acting in any other capacity for the Company or for any other legal entity.

 

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(i) The Rights Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself or by or through its attorneys or agents.

 

(j) No provision of this Agreement shall require the Rights Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of its rights if there shall be reasonable grounds for believing that repayment of such funds or adequate indemnification against such risk or liability is not reasonably assured to it.

 

(k) If, with respect to any Right Certificate surrendered to the Rights Agent for exercise or transfer, the certificate attached to the form of assignment or form of election to purchase, as the case may be, has either not been completed or indicates an affirmative response to clause (1) or clause (2) thereof, the Rights Agent shall not take any further action with respect to such requested exercise or transfer without first consulting with the Company.

 

Section 21. Change of Rights Agent . The Rights Agent or any successor Rights Agent may resign and be discharged from its duties under this Agreement upon thirty (30) days’ notice in writing mailed to the Company by first class mail, provided , however , that in the event the transfer agency relationship in effect between the Company and the Rights Agent with respect to the Common Stock of the Company terminates, the Rights Agent will be deemed to have resigned automatically on the effective date of such termination. The Company may remove the Rights Agent or any successor Rights Agent (with or without cause), effective immediately or on a specified date, by written notice given to the Rights Agent or successor Rights Agent, as the case may be, and to each transfer agent of the Common Stock of the Company and Preferred Stock, and by giving notice to the holders of the Right Certificates by any means reasonably determined by the Company to inform such holders of such removal (including without limitation, by including such information in one or more of the Company’s reports to shareholders or reports or filings with the Securities and Exchange Commission). If the Rights Agent shall resign or be removed or shall otherwise become incapable of acting, the Company shall appoint a successor to the Rights Agent. If the Company shall fail to make such appointment within a period of thirty (30) days after giving notice of such removal or after it has been notified in writing of such resignation or incapacity by the resigning or incapacitated Rights Agent or by the holder of a Right Certificate (who shall, with such notice, submit his Right Certificate for inspection by the Company), then the incumbent Rights Agent or the registered holder of any Right Certificate may apply to any court of competent jurisdiction for the appointment of a new Rights Agent. Any successor Rights Agent, whether appointed by the Company or by such a court, shall be a corporation organized and doing business under the laws of the United States, the State of Delaware or the State of New York or of any other state of the United States, in good standing, which is authorized under such laws to exercise stock transfer or corporate trust or shareholder services powers and is subject to supervision or examination by federal or state authorities and is registered as a Transfer Agent in accordance with the applicable provisions of the Securities Exchange Act of 1934, as amended, and is qualified to act as a Transfer Agent under the rules of the New York Stock Exchange. After appointment, the successor Rights Agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named as Rights Agent without further act or deed; but the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any property at the time held by it hereunder, and execute and deliver any further assurance, conveyance, act or deed necessary for the purpose. Not later than the effective date of any such appointment, the Company shall file notice thereof in writing with the predecessor Rights Agent and each transfer agent of the Common Stock of the Company and the Preferred Stock, and give notice to the holders of the Right Certificates by any means reasonably determined by the Company to inform such holders of such appointment (including without limitation, by including such information in one or more of the Company’s reports to shareholders or reports or filings with the Securities and Exchange Commission). Failure to give any notice provided for in this Section 21, however, or any defect therein, shall not affect the legality or validity of the resignation or removal of the Rights Agent or the appointment of the successor Rights Agent, as the case may be.

 

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Section 22. Issuance of New Right Certificates . Notwithstanding any of the provisions of this Agreement or of the Rights to the contrary, the Company may, at its option, issue new Right Certificates evidencing Rights in such form as may be approved by the Board of Directors of the Company to reflect any adjustment or change in the Exercise Price per share and the number or kind or class of shares of stock or other securities or property purchasable under the Right Certificates made in accordance with the provisions of this Agreement. In addition, in connection with the issuance or sale of shares of Common Stock of the Company following the Distribution Date and prior to the redemption or expiration of the Rights, the Company (a) shall, with respect to shares of Common Stock of the Company so issued or sold pursuant to the exercise of stock options or under any employee plan or arrangement, or upon the exercise, conversion or exchange of securities hereafter issued by the Company, and (b) may, in any other case, if deemed necessary or appropriate by the Board of Directors of the Company, issue Right Certificates representing the appropriate number of Rights in connection with such issuance or sale; provided , however , that (i) no such Right Certificate shall be issued if, and to the extent that, the Company shall be advised by counsel that such issuance would create a significant risk of material adverse tax consequences to the Company or the person to whom such Right Certificate would be issued, and (ii) no such Right Certificate shall be issued if, and to the extent that, appropriate adjustments shall otherwise have been made in lieu of the issuance thereof.

 

Section 23. Redemption .

 

(a) The Board of Directors of the Company may, at its option and in its sole discretion, redeem all but not less than all of the then outstanding Rights at a redemption price of $0.01 per Right, appropriately adjusted to reflect any stock dividend declared or paid, any subdivision or combination of the outstanding shares of Common Stock of the Company or any similar event occurring after the date of this Agreement (such redemption price, as adjusted from time to time, being hereinafter referred to as the “ Redemption Price ”). The Rights may be redeemed only until the earlier to occur of (i) the time at which any Person becomes an Acquiring Person or (ii) the Final Expiration Date. The redemption of these Rights by the Board of Directors of the Company in accordance with this Section 23 may be made effective at such time, on such basis and with such conditions as the Board of Directors of the Company may establish, in its sole discretion.

 

(b) Immediately upon the action of the Board of Directors of the Company ordering the redemption of the Rights in accordance with Section 23 hereof (or such later time as the Board of Directors of the Company may establish for the effectiveness of such redemption), and without any further action and without any notice, the right to exercise the Rights will terminate and the only right thereafter of the holders of Rights shall be to receive the Redemption Price for each Right so held. Promptly after the action of the Board of Directors of the Company ordering the redemption of the Rights in accordance with Section 23 hereof, the Company shall give notice of such redemption to the Rights Agent and the holders of the then outstanding Rights by mailing such notice to the Rights Agent and to all such holders at their last addresses as they appear upon the registry books of the Rights Agent or, prior to the Distribution Date, on the registry books of the Transfer Agent for the Common Stock of the Company; provided , however , that the failure to give, or any defect in, any such notice shall not affect the validity of such redemption. Any notice which is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. The Company promptly shall mail a notice of any such exchange to all of the holders of such Rights at their last addresses as they appear upon the registry books of the Rights Agent. Any notice which is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. Each such notice of redemption will state the method by which the payment of the Redemption Price will be made. Neither the Company nor any of its Affiliates or Associates may redeem, acquire or purchase for value any Rights at any time in any manner other than that specifically set forth in this Section 23 or Section 24 hereof or in connection with the purchase of shares of Common Stock of the Company prior to the Distribution Date.

 

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(c) The Company may, at its option, pay the Redemption Price in cash, shares of Common Stock of the Company (based on the Fair Market Value of the Common Stock of the Company as of the time of redemption) or any other form of consideration deemed appropriate by the Board of Directors of the Company.

 

Section 24. Exchange .

 

(a) (i) The Board of Directors of the Company may, at its option, at any time on or after the occurrence of a Section 11(a)(ii) Event, exchange all or part of the then outstanding and exercisable Rights (which shall not include Rights that have become void pursuant to the provisions of Section 7(e) hereof) for shares of Common Stock of the Company at an exchange ratio of one share of Common Stock of the Company per Right, appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the date hereof (such exchange ratio being hereinafter referred to as the “ Section 24(a)(i) Exchange Ratio ”). Notwithstanding the foregoing, the Board of Directors of the Company shall not be empowered to effect such exchange at any time after any Person (other than an Exempt Person), together with all Affiliates and Associates of such Person, becomes the Beneficial Owner of 50% or more of the Common Stock of the Company.

 

(ii) Notwithstanding the foregoing, the Board of Directors of the Company may, at its option, at any time on or after the occurrence of a Section 11(a)(ii) Event, exchange all or part of the then outstanding and exercisable Rights (which shall not include Rights that have become null and void pursuant to the provisions of Section 7(e) hereof) for shares of Common Stock of the Company at an exchange ratio specified in the following sentence, as appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the date of this Agreement. Subject to the adjustment described in the foregoing sentence, each Right may be exchanged for that number of shares of Common Stock of the Company obtained by dividing the Spread (as defined in Section 11(a)(iii)) by the then Fair Market Value per one ten-thousandth of a share of Preferred Stock on the earlier of (x) the date on which any person becomes an Acquiring Person or (y) the date on which a tender or exchange offer by any Person (other than an Exempt Person) is first published or sent or given within the meaning of Rule 14d-4(a) of the Exchange Act or any successor rule, if upon consummation thereof such Person could become an Acquiring Person (such exchange ratio being referred to herein as the “ Section 24(a)(ii) Exchange Ratio ”). Notwithstanding the foregoing, the Board of Directors of the Company shall not be empowered to effect such exchange at any time after any Person (other than an Exempt Person), together with all Affiliates and Associates of such Person, becomes the Beneficial Owner of 50% or more of the Common Stock of the Company.

 

(b) The exchange of the Rights by the Board of Directors in accordance with this Section 24 may be made effective at such time, on such basis and with such conditions as the Board of Directors of the Company may establish, in its sole discretion. Immediately upon the action of the Board of Directors of the Company ordering the exchange of any Rights pursuant to subsection (a) of this Section 24 and without any further action and without any notice, the right to exercise such Rights pursuant to Section 11(a)(ii) shall terminate and the only right thereafter of a holder of such Rights shall be to receive that number of shares of Common Stock of the Company equal to the number of such Rights held by such holder multiplied by the Section 24(a)(i) Exchange Ratio or the Section 24(a)(ii) Exchange Ratio, as applicable; provided , however , that the holder of a Right exchanged pursuant to this Section 24 shall continue to have the right to purchase securities or other property of the Principal Party following a Section 13 Event that has occurred or may thereafter occur. The Company shall promptly give notice of any such exchange in accordance with Section 26 hereof and shall promptly mail a notice of any such exchange to all of the holders of such Rights at their last addresses as they appear upon the registry books of the Rights Agent; provided , however , that the failure to give, or any defect in, such notice shall not affect the validity of such exchange. Any notice which is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. Each such notice of exchange will state the method by which the exchange of the shares of Common Stock of the Company for Rights will be effected and, in the event of any partial exchange, the number of Rights which will be exchanged. Any partial exchange shall be effected pro rata based on the number of Rights (other than Rights which have become null and void pursuant to the provisions of Section 7(e) hereof) held by each holder of Rights.

 

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(c) In any exchange pursuant to this Section 24, the Company, at its option, may substitute Preferred Stock (or Preferred Stock Equivalent, as such term is defined in Section 11(b) hereof) for Common Stock of the Company exchangeable for Rights, at the initial rate of one ten-thousandth of a share of Preferred Stock (or Preferred Stock Equivalent) for each share of Common Stock of the Company, as appropriately adjusted to reflect adjustments in the voting rights of the Preferred Stock pursuant to the terms thereof, so that the fraction of a share of Preferred Stock delivered in lieu of each share of Common Stock of the Company shall have the same voting rights as one share of Common Stock of the Company.

 

(d) In the event that there shall not be sufficient shares of Common Stock of the Company or Preferred Stock (or Preferred Stock Equivalents) issued but not outstanding or authorized but unissued to permit any exchange of Rights as contemplated in accordance with this Section 24, the Company shall take all such action as may be necessary to authorize additional shares of Common Stock of the Company or Preferred Stock (or Preferred Stock Equivalent) for issuance upon exchange of the Rights.

 

(e) The Company shall not be required to issue fractions of Common Stock of the Company or to distribute certificates which evidence fractional shares of Common Stock of the Company. If the Company elects not to issue such fractional shares of Common Stock of the Company, the Company shall pay, in lieu of such fractional shares of Common Stock of the Company, to the registered holders of the Right Certificates with regard to which such fractional shares of Common Stock of the Company would otherwise be issuable, an amount in cash equal to the same fraction of the Fair Market Value of a whole share of Common Stock of the Company. For the purposes of this paragraph (e), the Fair Market Value of a whole share of Common Stock of the Company shall be the closing price of a share of Common Stock of the Company (as determined pursuant to the second sentence of Section 11(d)(i) hereof) for the Trading Day immediately prior to the date of exchange pursuant to this Section 24.

 

Section 25. Notice of Certain Events .

 

(a) In case the Company shall propose, at any time after the Distribution Date, (i) to pay any dividend payable in stock of any class to the holders of Preferred Stock or to make any other distribution to the holders of Preferred Stock (other than a regular periodic cash dividend out of earnings or retained earnings of the Company), or (ii) to offer to the holders of Preferred Stock rights or warrants to subscribe for or to purchase any additional shares of Preferred Stock or shares of stock of any class or any other securities, rights or options, or (iii) to effect any reclassification of its Preferred Stock (other than a reclassification involving only the subdivision of outstanding shares of Preferred Stock), or (iv) to effect any consolidation or merger into or with, or to effect any sale, mortgage or other transfer (or to permit one or more of its Subsidiaries to effect any sale, mortgage or other transfer), in one transaction or a series of related transactions, of 50% or more of the assets or earning power of the Company and its Subsidiaries (taken as a whole) to, any other Person (other than a Subsidiary of the Company in one or more transactions each of which is not prohibited by the proviso at the end of the first sentence of Section 11(n) hereof), or (v) to effect the liquidation, dissolution or winding up of the Company, or (vi) to declare or pay any dividend on the Common Stock of the Company payable in Common Stock of the Company or to effect a subdivision, combination or consolidation of the Common Stock of the Company (by reclassification or otherwise than by payment of dividends in Common Stock of the Company) then in each such case, the Company shall give to each holder of a Right Certificate and to the Rights Agent, in accordance with Section 26 hereof, a notice of such proposed action, which shall specify the record date for the purposes of such stock dividend, distribution of rights or warrants, or the date on which such reclassification, consolidation, merger, sale, transfer, liquidation, dissolution, or winding up is to take place and the date of participation therein by the holders of the shares of Common Stock of the Company and/or Preferred Stock, if any such date is to be fixed, and such notice shall be so given in the case of any action covered by clause (i) or (ii) above at least twenty (20) days prior to the record date for determining holders of the shares of Preferred Stock for purposes of such action, and in the case of any such other action, at least twenty (20) days prior to the date of the taking of such proposed action or the date of participation therein by the holders of the shares of Common Stock of the Company and/or Preferred Stock, whichever shall be the earlier; provided , however , no such notice shall be required pursuant to this Section 25 as a result of any Subsidiary of the Company effecting a consolidation or merger with or into, or effecting a sale or other transfer of assets or earnings power to, any other Subsidiary of the Company in a manner not inconsistent with the provisions of this Agreement.

 

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(b) In case any Section 11(a)(ii) Event shall occur, then, in any such case, the Company shall as soon as practicable thereafter give to each registered holder of a Right Certificate, to the extent feasible, and to the Rights Agent, in accordance with Section 26 hereof, a notice of the occurrence of such event, which shall specify the event and the consequences of the event to holders of Rights under Section 11(a)(ii) hereof.

 

Section 26. Notices . Notices or demands authorized by this Agreement to be given or made by the Rights Agent or by the holder of any Right Certificate to or on the Company shall be in writing (unless otherwise stated herein) and shall be sufficiently given or made if sent by first-class mail, postage prepaid, by facsimile transmission or by nationally-recognized overnight courier addressed (until another address is filed in writing with the Rights Agent) as follows:

 

Harvard Apparatus Regenerative Technology, Inc.

84 October Hill Road

Holliston, MA 01746

Facsimile No. (508) 429-5732

Attention: Chief Financial Officer

 

Subject to the provisions of Section 21, any notice or demand authorized by this Agreement to be given or made by the Company or by the holder of any Right Certificate to or on the Rights Agent shall be in writing (unless otherwise stated herein) and shall be sufficiently given or made if sent by first-class mail, postage prepaid, by facsimile transmission or by nationally-recognized overnight courier addressed (until another address is filed in writing with the Company) as follows:

 

Registrar and Transfer Company

10 Commerce Drive

Cranford, NJ 07016

Facsimile No. (908) 497-2310

Attention: Corporate Relations Department

 

Notices or demands authorized by this Agreement to be given or made by the Company or the Rights Agent to the holder of any Right Certificate (or, prior to the Distribution Date, to the holder of any certificate representing shares of Common Stock of the Company) shall be in writing (unless otherwise stated herein) and shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed to such holder at the address of such holder as shown on the registry books of the Company.

 

32
 

 

Section 27. Supplements and Amendments . Prior to the occurrence of a Section 11(a)(ii) Event, the Company and the Rights Agent shall, if the Board of Directors of the Company so directs, supplement or amend any provision of this Agreement as the Board of Directors of the Company may deem necessary or desirable without the approval of any holders of certificates representing shares of Common Stock of the Company. From and after the occurrence of a Section 11(a)(ii) Event, the Company and the Rights Agent shall, if the Board of Directors of the Company so directs, supplement or amend this Agreement without the approval of any holder of Right Certificates in order (i) to cure any ambiguity, (ii) to correct or supplement any provision contained herein which may be defective or inconsistent with any other provisions herein, (iii) to shorten or lengthen any time period hereunder, or (iv) to change or supplement the provisions hereof in any manner which the Board of Directors of the Company may deem necessary or desirable and which shall not adversely affect the interests of the holders of Right Certificates (other than an Acquiring Person or any Affiliate or Associate of an Acquiring Person); provided , however , that from and after the occurrence of a Section 11(a)(ii) Event this Agreement may not be supplemented or amended to lengthen, pursuant to clause (iii) of this sentence, (A) a time period relating to when the Rights may be redeemed at such time as the Rights are not then redeemable or (B) any other time period unless such lengthening is for the purpose of protecting, enhancing or clarifying the rights of, and the benefits to, the holders of Rights (other than an Acquiring Person or any Affiliate or Associate of an Acquiring Person). Without limiting the foregoing, the Company may at any time prior to the occurrence of a Section 11(a)(ii) Event amend this Agreement to lower the threshold set forth in Section 1(a) to not less than the greater of (i) the sum of .001% and the largest percentage of the outstanding Common Stock of the Company then known by the Company to be Beneficially Owned by any Person (other than the Company, any Subsidiary of the Company, any employee benefit plan of the Company or any Subsidiary of the Company, or any entity holding Common Stock of the Company for or pursuant to the terms of any such plan) and (ii) 10%. Upon the delivery of such certificate from an appropriate officer of the Company which states that the proposed supplement or amendment is in compliance with the terms of this Section 27, the Rights Agent shall execute such supplement or amendment, and any failure of the Rights Agent to so execute such supplement or amendment shall not affect the validity of the actions taken by the Board of Directors of the Company pursuant to this Section 27. Prior to the occurrence of a Section 11(a)(ii) Event, the interests of the holders of Rights shall be deemed coincident with the interests of the holders of Common Stock of the Company. Notwithstanding any other provision hereof, the Rights Agent’s consent must be obtained regarding any amendment or supplement pursuant to this Section 27 which alters the Rights Agent’s rights or duties.

 

Section 28. Successors . All the covenants and provisions of this Agreement by or for the benefit of the Company or the Rights Agent shall bind and inure to the benefit of their respective successors and assigns hereunder.

 

Section 29. Determinations and Actions by the Board of Directors . The Board of Directors of the Company shall have the exclusive power and authority to administer this Agreement and to exercise all rights and powers specifically granted to the Board of Directors or to the Company, or as may be necessary or advisable in the administration of this Agreement, including without limitation, the right and power to (i) interpret the provisions of this Agreement and (ii) make all determinations and computations deemed necessary or advisable for the administration of this Agreement (including, without limitation, a determination to redeem or not redeem the Rights or to amend the Agreement). All such actions, calculations, interpretations and determinations (including, for purposes of clause (y) below, all omissions with respect to the foregoing) which are done or made by the Board of Directors in good faith shall (x) be final, conclusive and binding on the Company, the Rights Agent, the holders of the Rights and all other parties, and (y) not subject the Board of Directors of the Company or any member of the Board of Directors to any liability to the holders of the Rights or to any other Person.

 

33
 

 

Section 30. Benefits of this Agreement . Nothing in this Agreement shall be construed to give to any Person other than the Company, the Rights Agent and the registered holders of the Right Certificates (and, prior to the Distribution Date, the Common Stock of the Company) any legal or equitable right, remedy or claim under this Agreement; but this Agreement shall be for the sole and exclusive benefit of the Company, the Rights Agent and the registered holders of the Right Certificates (and, prior to the Distribution Date, registered holders of the Common Stock of the Company).

 

Section 31. Severability . If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated; provided , however , that notwithstanding anything in this Agreement to the contrary, if any such term, provision, covenant or restriction is held by such court or authority to be invalid, void or unenforceable and the Board of Directors of the Company determines in its good faith judgment that severing the invalid language from the Agreement would adversely affect the purpose or effect of the Agreement, the right of redemption set forth in Section 23 hereof shall be reinstated and shall not expire until the Close of Business on the tenth day following the date of such determination by the Board of Directors.

 

Section 32. Governing Law . This Agreement, each Right and each Right Certificate issued hereunder shall be deemed to be a contract made under the laws of the State of Delaware and for all purposes shall be governed by and construed in accordance with the laws of such State applicable to contracts to be made and to be performed entirely within such State. The courts of the State of Delaware and of the United States of America located in the State of Delaware (the “ Delaware Courts ”) shall have exclusive jurisdiction over any litigation arising out of or relating to this Agreement and the transactions contemplated hereby, and any Person commencing or otherwise involved in any such litigation shall waive any objection to the laying of venue of such litigation in the Delaware Courts and shall not plead or claim in any Delaware Court that such litigation brought therein has been brought in an inconvenient forum.

 

Section 33. Counterparts . This Agreement may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.

 

Section 34. Descriptive Headings . Descriptive headings of the several Sections of this Agreement are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof.

 

Section 35. Force Majeure . Notwithstanding anything to the contrary contained herein, neither the Company nor the Rights Agent shall be liable for any delay or failure in performance resulting directly from any act or event beyond its reasonable control and without the fault or gross negligence of the delayed or non-performing party that causes a sudden, substantial or widespread disruption in business activities, including, without limitation, fire, flood, natural disaster or act of God, strike or other industrial disturbance, war (declared or undeclared), embargo, blockade, legal restriction, riot, insurrection, act of terrorism, disruption in transportation, communications, electric power or other utilities, or other vital infrastructure or any means of disrupting or damaging internet or other computer networks or facilities (each, a “ Force Majeure Condition ”); provided , that such delayed or non-performing party shall use reasonable commercial efforts to resume performance as soon as practicable. If any Force Majeure Condition occurs, the party delayed or unable to perform shall give immediate written notice to the other party, stating the nature of the Force Majeure Condition and any action being taken to avoid or minimize its effect.

 

[Remainder of page intentionally left blank]

 

34
 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as an instrument under seal and attested, all as of the day and year first above written.

 

ATTEST:   Harvard Apparatus Regenerative
    Technology, INC .
     
By: /s/   By: /s/
      Name:  
      Title:  
     
ATTEST:   Registrar and Transfer Company,
    as Rights Agent
     
By: /s/   By: /s/
      Name:  
      Title:  

 

 

 
 

 

Exhibit A

 

CERTIFICATE OF DESIGNATIONS

of

SERIES A JUNIOR PARTICIPATING CUMULATIVE

PREFERRED STOCK

of

Harvard Apparatus Regenerative Technology, Inc.

 

Section 1. Designation and Amount . The shares of such series shall be designated as “Series A Junior Participating Cumulative Preferred Stock” (the “Series A Preferred Stock”), and the number of shares initially constituting such series shall be 5,000; provided , however , that if more than a total of 5,000 shares of Series A Preferred Stock shall be issuable upon the exercise of Rights (the “Rights”) issued pursuant to the Shareholder Rights Agreement dated as of                    , between the Corporation and Registrar and Transfer Company, as Rights Agent (the “Rights Agreement”), the Board of Directors of the Corporation, pursuant to Section 151(g) of the General Corporation Law of the State of Delaware, may direct by resolution or resolutions that a certificate be properly executed, acknowledged, filed and recorded, in accordance with the provisions of Section 103 thereof, providing for the total number of shares of Series A Preferred Stock authorized to be issued to be increased (to the extent that the Certificate of Incorporation then permits) to the largest number of whole shares (rounded up to the nearest whole number) issuable upon exercise of such Rights.

 

Section 2. Dividends and Distributions .

 

(A)(i) Subject to the rights of the holders of any shares of any series of preferred stock (or any similar stock) ranking prior and superior to the Series A Preferred Stock with respect to dividends, the holders of shares of Series A Preferred Stock, in preference to the holders of shares of common stock and of any other junior stock, shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on the first day of March, June, September and December in each year (each such date being referred to herein as a “Quarterly Dividend Payment Date”), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series A Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (a) $1.00 or (b) subject to the provisions for adjustment hereinafter set forth, 10,000 times the aggregate per share amount of all cash dividends, and 10,000 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions other than a dividend payable in shares of common stock or a subdivision of the outstanding shares of common stock (by reclassification or otherwise), declared on the common stock since the immediately preceding Quarterly Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series A Preferred Stock. The multiple of cash and non-cash dividends declared on the common stock to which holders of the Series A Preferred Stock are entitled, which shall be 10,000 initially but which shall be adjusted from time to time as hereinafter provided, is hereinafter referred to as the “Dividend Multiple.” In the event the Corporation shall at any time after                  (the “Rights Declaration Date”) (i) declare or pay any dividend on common stock payable in shares of common stock, or (ii) effect a subdivision or combination or consolidation of the outstanding shares of common stock (by reclassification or otherwise than by payment of a dividend in shares of common stock) into a greater or lesser number of shares of common stock, then in each such case the Dividend Multiple thereafter applicable to the determination of the amount of dividends which holders of shares of Series A Preferred Stock shall be entitled to receive shall be the Dividend Multiple applicable immediately prior to such event multiplied by a fraction, the numerator of which is the number of shares of common stock outstanding immediately after such event and the denominator of which is the number of shares of common stock that were outstanding immediately prior to such event.

 

 
 

 

(ii) Notwithstanding anything else contained in this paragraph (A), the Corporation shall, out of funds legally available for that purpose, declare a dividend or distribution on the Series A Preferred Stock as provided in this paragraph (A) immediately after it declares a dividend or distribution on the common stock (other than a dividend payable in shares of common stock); provided that, in the event no dividend or distribution shall have been declared on the common stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per share on the Series A Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date.

 

(B) Dividends shall begin to accrue and be cumulative on outstanding shares of Series A Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares of Series A Preferred Stock, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series A Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series A Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix in accordance with applicable law a record date for the determination of holders of shares of Series A Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be not more than such number of days prior to the date fixed for the payment thereof as may be allowed by applicable law.

 

Section 3. Voting Rights . In addition to any other voting rights required by law, the holders of shares of Series A Preferred Stock shall have the following voting rights:

 

(A) Subject to the provision for adjustment hereinafter set forth, each share of Series A Preferred Stock shall entitle the holder thereof to 10,000 votes on all matters submitted to a vote of the stockholders of the Corporation. The number of votes which a holder of a share of Series A Preferred Stock is entitled to cast, which shall initially be 10,000 but which may be adjusted from time to time as hereinafter provided, is hereinafter referred to as the “Vote Multiple.” In the event the Corporation shall at any time after the Rights Declaration Date (i) declare or pay any dividend on common stock payable in shares of common stock, or (ii) effect a subdivision or combination or consolidation of the outstanding shares of common stock (by reclassification or otherwise than by payment of a dividend in shares of common stock) into a greater or lesser number of shares of common stock, then in each such case the Vote Multiple thereafter applicable to the determination of the number of votes per share to which holders of shares of Series A Preferred Stock shall be entitled shall be the Vote Multiple immediately prior to such event multiplied by a fraction, the numerator of which is the number of shares of common stock outstanding immediately after such event and the denominator of which is the number of shares of common stock that were outstanding immediately prior to such event.

 

(B) Except as otherwise provided herein or by law, the holders of shares of Series A Preferred Stock and the holders of shares of common stock and the holders of shares of any other capital stock of this Corporation having general voting rights, shall vote together as one class on all matters submitted to a vote of stockholders of the Corporation.

 

(C) Except as otherwise required by applicable law or as set forth herein, holders of Series A Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of common stock as set forth herein) for taking any corporate action.

 

 
 

 

Section 4. Certain Restrictions .

 

(A) Whenever dividends or distributions payable on the Series A Preferred Stock as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series A Preferred Stock outstanding shall have been paid in full, the Corporation shall not:

 

(i) declare or pay dividends on, make any other distributions on, or redeem or purchase or otherwise acquire for consideration any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock;

 

(ii) declare or pay dividends on or make any other distributions on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock, except dividends paid ratably on the Series A Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled;

 

(iii) except as permitted in subsection 4(A)(iv) below, redeem, purchase or otherwise acquire for consideration shares of any stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such parity stock in exchange for shares of any stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series A Preferred Stock; or

 

(iv) purchase or otherwise acquire for consideration any shares of Series A Preferred Stock, or any shares of any stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes.

 

(B) The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under subsection (A) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner.

 

Section 5. Reacquired Shares . Any shares of Series A Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and canceled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of preferred stock and may be reissued as part of a new series of preferred stock to be created by resolution or resolutions of the Board of Directors, subject to the conditions and restrictions on issuance set forth herein.

 

 
 

 

Section 6. Liquidation, Dissolution or Winding Up . Upon any liquidation (voluntary or otherwise), dissolution or winding up of the Corporation, no distribution shall be made (x) to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock unless, prior thereto, the holders of shares of Series A Preferred Stock shall have received an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment, plus an amount equal to the greater of (1) $10,000.00 per share or (2) an aggregate amount per share, subject to the provision for adjustment hereinafter set forth, equal to 10,000 times the aggregate amount to be distributed per share to holders of common stock, or (y) to the holders of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock, except distributions made ratably on the Series A Preferred Stock and all other such parity stock in proportion to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up. In the event the Corporation shall at any time after the Rights Declaration Date (i) declare or pay any dividend on common stock payable in shares of common stock, or (ii) effect a subdivision or combination or consolidation of the outstanding shares of common stock (by reclassification or otherwise than by payment of a dividend in shares of common stock) into a greater or lesser number of shares of common stock, then in each such case the aggregate amount per share to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event under clause (x) of the preceding sentence shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of common stock outstanding immediately after such event and the denominator of which is the number of shares of common stock that were outstanding immediately prior to such event.

 

Neither the consolidation of nor merging of the Corporation with or into any other corporation or corporations, nor the sale or other transfer of all or substantially all of the assets of the Corporation, shall be deemed to be a liquidation, dissolution or winding up of the Corporation within the meaning of this Section 6.

 

Section 7. Consolidation, Merger, etc . In case the Corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of common stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case the shares of Series A Preferred Stock shall at the same time be similarly exchanged or changed in an amount per share (subject to the provision for adjustment hereinafter set forth) equal to 10,000 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of common stock is changed or exchanged, plus accrued and unpaid dividends, if any, payable with respect to the Series A Preferred Stock. In the event the Corporation shall at any time after the Rights Declaration Date (i) declare or pay any dividend on common stock payable in shares of common stock, or (ii) effect a subdivision or combination or consolidation of the outstanding shares of common stock (by reclassification or otherwise than by payment of a dividend in shares of common stock) into a greater or lesser number of shares of common stock, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series A Preferred Stock shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of common stock outstanding immediately after such event and the denominator of which is the number of shares of common stock that were outstanding immediately prior to such event.

 

Section 8. Redemption . The shares of Series A Preferred Stock shall not be redeemable; provided , however , that the foregoing shall not limit the ability of the Corporation to purchase or otherwise deal in such shares to the extent otherwise permitted hereby and by law.

 

Section 9. Ranking . Unless otherwise expressly provided in the Certificate of Incorporation or a Certificate of Designations relating to any other series of preferred stock of the Corporation, the Series A Preferred Stock shall rank junior to every other series of the Corporation’s preferred stock previously or hereafter authorized, as to the payment of dividends and the distribution of assets on liquidation, dissolution or winding up and shall rank senior to the common stock.

 

Section 10. Amendment . The Certificate of Incorporation and this Certificate of Designations shall not be amended in any manner which would materially alter or change the powers, preferences or special rights of the Series A Preferred Stock so as to affect them adversely without the affirmative vote of the holders of two-thirds or more of the outstanding shares of Series A Preferred Stock, voting separately as a class.

 

 
 

 

Section 11. Fractional Shares . Series A Preferred Stock may be issued in whole shares or in any fraction of a share that is one ten-thousandth (1/10,000th) of a share or any integral multiple of such fraction, which shall entitle the holder, in proportion to such holder’s fractional shares, to exercise voting rights, receive dividends, participate in distributions and to have the benefit of all other rights of holders of Series A Preferred Stock. In lieu of fractional shares, the Corporation may elect to make a cash payment as provided in the Rights Agreement for fractions of a share other than one ten-thousandth (1/10,000th) of a share or any integral multiple thereof.

 

 
 

 

Exhibit B

 

FORM OF RIGHT CERTIFICATE

 

Certificate No. R-              Rights

 

NOT EXERCISABLE AFTER                     OR EARLIER IF NOTICE OF REDEMPTION IS GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF Harvard Apparatus Regenerative Technology, Inc ., AT $0.01 PER RIGHT, ON THE TERMS SET FORTH IN THE SHAREHOLDER RIGHTS AGREEMENT BETWEEN Harvard Apparatus Regenerative Technology, Inc . AND REGISTRAR AND TRANSFER COMPANY, AS RIGHTS AGENT, DATED AS OF                           (THE “RIGHTS AGREEMENT”). UNDER CERTAIN CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN ASSOCIATE OR AFFILIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID.

 

Right Certificate

 

Harvard Apparatus Regenerative Technology, Inc .

 

This certifies that              , or registered assigns, is the registered owner of the number of Rights set forth above, each of which entitles the owner thereof, subject to the terms, provisions and conditions of the Shareholder Rights Agreement dated as of                    (the “Rights Agreement”) between Harvard Apparatus Regenerative Technology, Inc. (the “Company”) and Registrar and Transfer Company, as Rights Agent (the “Rights Agent”), to purchase from the Company at any time after the Distribution Date (as such term is defined in the Rights Agreement) and prior to the close of business on                  , 2023 at the office or offices of the Rights Agent designated for such purpose, or its successors as Rights Agent, one ten-thousandth of a fully paid, non-assessable share of the Series A Junior Participating Cumulative Preferred Stock (the “Preferred Stock”) of the Company, at a purchase price of $             per one ten-thousandth of a share (the “Exercise Price”), upon presentation and surrender of this Right Certificate with the Form of Election to Purchase and the related Certificate duly executed. The number of Rights evidenced by this Right Certificate (and the number of shares which may be purchased upon exercise thereof) set forth above, and the Exercise Price per share set forth above, are the number and Exercise Price as of               , based on the Preferred Stock as constituted at such date.

 

Upon the occurrence of a Section 11(a)(ii) Event (as such term is defined in the Rights Agreement), if the Rights evidenced by this Right Certificate are beneficially owned by (i) an Acquiring Person or an Affiliate or Associate of any such Person (as such terms are defined in the Rights Agreement), (ii) a transferee of any such Acquiring Person or Associate or Affiliate thereof, or (iii) under certain circumstances specified in the Rights Agreement, a transferee of a Person who, after such transfer, became an Acquiring Person or an Affiliate or Associate of an Acquiring Person, such Rights shall become null and void and no holder hereof shall have any right with respect to such Rights from and after the occurrence of such Section 11(a)(ii) Event.

 

As provided in the Rights Agreement, the Exercise Price and the number of shares of Preferred Stock or other securities which may be purchased upon the exercise of the Rights evidenced by this Right Certificate are subject to modification and adjustment upon the happening of certain events.

 

 
 

 

This Right Certificate is subject to all of the terms, provisions and conditions of the Rights Agreement, which terms, provisions and conditions are hereby incorporated herein by reference and made a part hereof and to which Rights Agreement reference is hereby made for a full description of the rights, limitations of rights, obligations, duties and immunities hereunder of the Rights Agent, the Company and the holders of the Right Certificates, which limitations of rights include the temporary suspension of the exercisability of such Rights under the specific circumstances set forth in the Rights Agreement. Copies of the Rights Agreement are on file at the principal office of the Company and the designated office of the Rights Agent and are also available upon written request to the Company or the Rights Agent.

 

This Right Certificate, with or without other Right Certificates, upon surrender at the office or offices of the Rights Agent designated for such purpose, may be exchanged for another Right Certificate or Certificates of like tenor and date evidencing Rights entitling the holder to purchase a like aggregate number of shares of Preferred Stock as the Rights evidenced by the Right Certificate or Certificates surrendered shall have entitled such holder to purchase. If this Right Certificate shall be exercised in part, the holder shall be entitled to receive upon surrender hereof another Right Certificate or Certificates for the number of whole Rights not exercised. If this Right Certificate shall be exercised in whole or in part pursuant to Section 11(a)(ii) of the Rights Agreement, the holder shall be entitled to receive this Right Certificate duly marked to indicate that such exercise has occurred as set forth in the Rights Agreement.

 

Under certain circumstances, subject to the provisions of the Rights Agreement, the Board of Directors of the Company at its option may exchange all or any part of the Rights evidenced by this Certificate for shares of the Company’s Common Stock or Preferred Stock at an exchange ratio (subject to adjustment) specified in the Rights Agreement.

 

Subject to the provisions of the Rights Agreement, the Rights evidenced by this Certificate may be redeemed by the Board of Directors of the Company at its option at a redemption price of $0.01 per Right (payable in cash, Common Stock or other consideration deemed appropriate by the Board of Directors).

 

The Company is not obligated to issue fractional shares of stock upon the exercise of any Right or Rights evidenced hereby (other than fractions which are integral multiples of one ten-thousandth of a share of Preferred Stock, which may, at the election of the Company, be evidenced by depositary receipts). If the Company elects not to issue such fractional shares, in lieu thereof a cash payment will be made, as provided in the Rights Agreement.

 

No holder of this Right Certificate, as such, shall be entitled to vote or receive dividends or be deemed for any purpose the holder of shares of Preferred Stock, Common Stock or any  other securities of the Company which may at any time be issuable on the exercise hereof, nor shall anything contained in the Rights Agreement or herein be construed to confer upon the holder hereof, as such, any of the rights of a shareholder of the Company or any right to vote for the election of directors or upon any matter submitted to shareholders at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting shareholders (except as provided in the Rights Agreement), or to receive dividends or subscription rights, or otherwise, until the Right or Rights evidenced by this Right Certificate shall have been exercised as provided in the Rights Agreement.

 

This Right Certificate shall not be valid or obligatory for any purpose until it shall have been countersigned by an authorized signatory of the Rights Agent.

 

 
 

 

WITNESS the facsimile signature of the proper officers of the Company as a document under corporate seal.

 

Attested:   Harvard Apparatus Regenerative
    Technology, Inc .
     
By:   By:
    [Secretary or Assistant Secretary]
    Name:
    Title: [Chairman, Vice Chairman, President or Vice
    President]

 

Countersigned:  
   
[NAME]  
   
By:  
Name:  
Title:  

 

 

 
 

 

[Form of Reverse Side of Right Certificate]

 

FORM OF ASSIGNMENT

 

(To be executed by the registered holder if such

 

holder desires to transfer the Right Certificate.)

 

FOR VALUE RECEIVED                                                       hereby sells, assigns and transfers unto                                               (Please print name and address of transferee)                                               this Right Certificate, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint                                                   Attorney, to transfer the within Right Certificate on the books of the within-named Company, with full power of substitution.

 

Dated:              ,                                                                                

 

Signature

 

Signature Guaranteed:                                                                    

 

CERTIFICATE

 

The undersigned hereby certifies by checking the appropriate boxes that:

 

(1) the Rights evidenced by this Right Certificate              are              are not being transferred by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any such Person (as such terms are defined in the Rights Agreement); and

 

(2) after due inquiry and to the best knowledge of the undersigned, the undersigned              did              did not directly or indirectly acquire the Rights evidenced by this Right Certificate from any Person who is, was or became an Acquiring Person or an Affiliate or Associate of any such Person.

 

Dated:              ,                                                                              

 

Signature

 

NOTICE

 

The signature to the foregoing Assignment and Certificate must correspond to the name as written upon the face of this Right Certificate in every particular, without alteration or enlargement or any change whatsoever.

 

FORM OF ELECTION TO PURCHASE

 

(To be executed if holder desires to

 

exercise the Right Certificate.)

 

To: Harvard Apparatus Regenerative Technology, Inc .:

 

The undersigned hereby irrevocably elects to exercise              Rights represented by this Right Certificate to purchase the shares of Preferred Stock issuable upon the exercise of the Rights (or such other securities of the Company or of any other person which may be issuable upon the exercise of the Rights) and requests that certificates for such shares be issued in the name of:

 

 
 

 

Please insert social security or other identifying taxpayer number:                                                                                                                                

 

                                                                                                                                                                                                                                                    

 

                                                                                                                                                                                                                                                    

(Please print name and address)

 

If such number of Rights shall not be all the Rights evidenced by this Right Certificate or if the Rights are being exercised pursuant to Section 11(a)(ii) of the Rights Agreement, a new Right Certificate for the balance of such Rights shall be registered in the name of and delivered to:

 

Please insert social security or other identifying taxpayer number:                                                                                                                                

 

                                                                                                                                                                                                                                                    

 

                                                                                                                                                                                                                                                    

(Please print name and address)

 

Dated:              ,                                                                                                                     

 

Signature

 

Signature Guaranteed:                                                                                  

 

CERTIFICATE

 

The undersigned hereby certifies by checking the appropriate boxes that:

 

(1) the Rights evidenced by this Right Certificate              are              are not being exercised by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any such Person (as such terms are defined in the Rights Agreement); and

 

(2) after due inquiry and to the best knowledge of the undersigned, the undersigned              did              did not directly or indirectly acquire the Rights evidenced by this Right Certificate from any Person who is, was or became an Acquiring Person or an Affiliate or Associate of any such Person.

 

Dated:              ,                                                                                                

 

Signature

 

NOTICE

 

The signature to the foregoing Election to Purchase and Certificate must correspond to the name as written upon the face of this Right Certificate in every particular, without alteration or enlargement or any change whatsoever.

 

4842-1571-0994.4

 

45

 

EXHIBIT 10.1

 

TRANSITION SERVICES AGREEMENT

 

DATED AS OF [•], 2013

 

BY AND BETWEEN

 

HARVARD BIOSCIENCE, INC.

 

AND

 

HARVARD APPARATUS REGENERATIVE TECHNOLOGY, INC.

 

 
 

 

This TRANSITION SERVICES AGREEMENT, dated as of [ ], 2013 (this “ Agreement ”), is by and between HARVARD BIOSCIENCE, INC., a Delaware corporation (“ HBIO ”), and HARVARD APPARATUS REGENERATIVE TECHNOLOGY, INC., a Delaware corporation (“ HART ”).

 

RECITALS

 

WHEREAS, HBIO and HART have entered into a Separation and Distribution Agreement, dated as of the date hereof (as amended, modified or supplemented from time to time in accordance with its terms, the “ Separation Agreement ”);

 

WHEREAS, in connection with the Separation Agreement, the Parties (as defined below) agreed that (a) HBIO (and/or its Affiliates on the date of this Agreement immediately after giving effect to the Separation, collectively referred to as the “ HBIO Entities ”) shall provide or cause to be provided to HART (and/or its Affiliates on the date of this Agreement immediately after giving effect to the Separation (as defined in the Separation Agreement), collectively referred to as the “ HART Entities ”) certain services, use of facilities and other assistance on a transitional basis, and (b) the HART Entities shall provide or cause to be provided to the HBIO Entities certain services, use of facilities and other assistance on a transitional basis, each in accordance with the terms and subject to the conditions set forth in this Agreement; and

 

WHEREAS, the Separation Agreement requires execution and delivery of this Agreement by HBIO and HART on or prior to the Separation Date (as defined in the Separation Agreement).

 

NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained in this Agreement, the Parties hereby agree as follows:

 

ARTICLE I

DEFINITIONS

 

Section 1.01. Certain Defined Terms .

 

(a) Unless otherwise defined in this Agreement, all capitalized terms used in this Agreement shall have the same meaning as in the Separation Agreement.

 

(b) The following capitalized terms used in this Agreement shall have the meanings set forth below:

 

Additional Services ” shall have the meaning set forth in Section 2.03(a) .

 

Agreement ” shall have the meaning set forth in the Preamble.

 

Dispute ” shall have the meaning set forth in Section 9.01(a) .

 

Distribution Date ” shall have the meaning set forth in the Separation Agreement.

 

Force Majeure ” means, with respect to a Party, any acts of God, storms, floods, riots, fires, sabotage, civil commotion or civil unrest, interference by civil or military authorities, acts of war (declared or undeclared) or armed hostilities or other national or international calamity or one or more acts of terrorism or failure of energy sources or distribution facilities, that are beyond the control of such Party (or any Person acting on its behalf), which by its nature could not have been reasonably foreseen by such Party (or such Person), or, if it could have been reasonably foreseen, was unavoidable.

 

HART ” shall have the meaning set forth in the Preamble.

 

HART Entities ” shall have the meaning set forth in the Recitals.

 

HART Services ” shall have the meaning set forth in Section 2.01 .

 

HART Services Manager ” shall have the meaning set forth in Section 2.05(b) .

 

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HBIO ” shall have the meaning set forth in the Preamble.

 

HBIO Entities ” shall have the meaning set forth in the Recitals.

 

HBIO Materials ” shall have the meaning set forth in Section 3.01(a) .

 

HBIO Services ” shall have the meaning set forth in Section 2.01 .

 

HBIO Services Manager ” shall have the meaning set forth in Section 2.05(a) .

 

Interest Payment ” shall have the meaning set forth in Section 6.01(c) .

 

New Services ” shall have the meaning set forth in Section 2.04(a) .

 

Party ” means either HBIO or HART individually (as the case may be), and “ Parties ” means HBIO and HART collectively, and, in each case, their permitted successors and assigns.

 

Provider ” means the Party or its Subsidiary or Affiliate providing a Service under this Agreement.

 

Provider Indemnified Party ” shall have the meaning set forth in Section 8.05 .

 

Recipient ” means the Party or its Subsidiary or Affiliate to whom a Service under this Agreement is being provided.

 

Recipient Indemnified Party ” shall have the meaning set forth in Section 8.04 .

 

Representative ” of a Person means any director, officer, employee, agent, consultant, accountant, auditor, attorney or other representative of such person.

 

Schedule(s) ” shall have the meaning set forth in Section 2.02 .

 

Separation Agreement ” shall have the meaning set forth in the Preamble.

 

Service Charges ” shall have the meaning set forth in Section 6.01(a) .

 

Service Extension ” shall have the meaning set forth in Section 10.01(d) .

 

Service Increases ” shall have the meaning set forth in Section 2.03(b) .

 

Services ” shall have the meaning set forth in Section 2.01 .

 

ARTICLE II

SERVICES, DURATION AND SERVICES MANAGERS

 

Section 2.01. Services . Subject to the terms and conditions of this Agreement, (a) HBIO shall provide (or cause to be provided by the HBIO Entities or otherwise) to the HART Entities the services listed on Schedule A to this Agreement (the “ HBIO Services ”) and (b) HART shall provide (or cause to be provided by the HART Entities or otherwise) to the HBIO Entities the services listed on Schedule B to this Agreement (the “ HART Services, ” and, collectively with the HBIO Services, any Additional Services, any Service Increases and any New Services, the “ Services ”). All of the Services shall be for the sole use and benefit of the respective Recipient and its Party.

 

Section 2.02. Duration of Services . Subject to the terms of this Agreement, commencing on the Distribution Date, each of HBIO and HART shall provide or cause to be provided to the respective Recipients each Service until the earlier to occur of, with respect to each such Service, (i) the expiration of the period of the maximum duration for such Service as set forth on Schedule A or Schedule B (each, a “ Schedule ”, and collectively, the “ Schedules ”) or (ii) the date on which such Service is terminated under Section 10.01(b) ; provided, however , that each Recipient shall use its commercially reasonable efforts to transition itself to a stand-alone entity with respect to each Service during the period for such Service as set forth in the respective Schedules; and provided, further , to the extent that a Provider’s ability to provide a Service is dependent on the continuation of either a HBIO Service or a HART Service (and such dependence has been made known to the other Party), as the case may be, the Provider’s obligation to provide such dependent Service shall terminate automatically with the termination of such supporting HBIO Service or supporting HART Service, as the case may be.

 

2
 

 

Section 2.03. Additional Unspecified Services . (a) After the date of this Agreement, if HART or HBIO (i) identifies a service that (x) the HBIO Entities provided to the HART Business prior to the Distribution Date that HART reasonably needs in order for the HART Business to continue to operate in substantially the same manner in which the HART Business operated prior to the Distribution Date, and such service was not included on Schedule A (other than because the Parties agreed such service shall not be provided), or (y) the HART Entities provided to HBIO or its Affiliates prior to the Distribution Date that HBIO reasonably needs in order for the HBIO Business to continue to operate in substantially the same manner in which the HBIO Business operated prior to the Distribution Date, and such service was not included on Schedule B (other than because the Parties agreed such service shall not be provided), and (ii) provides written notice to the other Party within one hundred twenty (120) days following the Distribution Date requesting such additional services, then such other party shall use its commercially reasonable efforts to provide such requested additional services (such additional services, the “ Additional Services ”); provided, however , that no Party shall be obligated to provide any Additional Service if it does not, in its reasonable judgment, have adequate resources to provide such Additional Service or if the provision of such Additional Service would significantly disrupt the operation of its businesses. Notwithstanding the foregoing, the Provider shall promptly notify the Recipient if it deems itself unable to provide such Additional Service, and will use commercially reasonable efforts to cooperate with the Recipient to identify and engage a third party to provide comparable services to the Recipient, the payment for which will be negotiated directly between the Recipient and such third party. In connection with any request for Additional Services in accordance with this Section 2.03(a) , the HBIO Services Manager and the HART Services Manager shall in good faith negotiate the terms of a supplemental Schedule, which terms shall be consistent with the terms of, and the pricing methodology used for, similar Services provided under this Agreement. The Parties shall agree to the applicable Service Charge and the supplemental Schedule shall describe in reasonable detail the nature, scope, service period(s), termination provisions and other terms applicable to such Additional Services. Each supplemental Schedule, as agreed to in writing by the Parties, shall be deemed part of this Agreement as of the date of such agreement and the Additional Services set forth therein shall be deemed “Services” provided under this Agreement, in each case subject to the terms and conditions of this Agreement.

 

(b) After the date of this Agreement, if (i) (x) a Recipient requests or (y) a Provider reasonably determines that the Recipient’s business requires, the Provider to increase, relative to historical levels prior to the Distribution Date, the volume, amount, level or frequency, as applicable, of any Service provided by such Provider and (ii) such increase is reasonably determined by the Recipient as necessary for the Recipient to operate its businesses (such increases, the “ Service Increases ”), then such Provider shall use its commercially reasonable efforts to provide the Service Increases in accordance with such request; provided , however, that the Provider shall not be obligated to provide any Service Increase if it does not, in its reasonable judgment, have adequate resources to provide such Service Increase or if the provision of such Service Increase would significantly disrupt the operation of its businesses. Notwithstanding the foregoing, the Provider shall promptly notify the Recipient if it deems itself unable to provide such Service Increase, and will use commercially reasonable efforts to cooperate with the Recipient to identify and engage a third party to provide comparable services to the Recipient, the payment for which will be negotiated directly between the Recipient and such third party. In connection with any request for Service Increases in accordance with this Section 2.03(b) , the HBIO Services Manager and the HART Services Manager shall in good faith negotiate the terms of an amendment to the applicable Schedule, which amendment shall be consistent with the terms of, and the pricing methodology used for, the applicable Service. Each amended Schedule, as agreed to in writing by the Parties, shall be deemed part of this Agreement as of the date of such agreement and the Service Increases set forth therein shall be deemed a part of the “Services” provided under this Agreement, in each case subject to the terms and conditions of this Agreement.

 

Section 2.04. New Services . (a) From time to time during the term of this Agreement, either Party may request the other Party to provide additional or different services which such other Party is not expressly obligated to provide under this Agreement (the “ New Services ”). The Party receiving such request shall consider such request in good faith; provided, however, that no Party shall be obligated to provide any New Services, including because, after negotiations between the Parties pursuant to Section 2.04(b) , the Parties fail to reach an agreement with respect to the terms (including the Service Charges) applicable to the provision of such New Services.

 

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(b) In connection with any request for New Services in accordance with Section 2.04(a) , the HBIO Services Manager and the HART Services Manager shall in good faith (i) negotiate the applicable Service Charge and the terms of a supplemental Schedule, which supplemental Schedule shall describe in reasonable detail the nature, scope, Service period(s), termination provisions and other terms applicable to such New Services, and (ii) determine any costs and expenses, including any start-up costs and expenses, that would be incurred by the Provider in connection with the provision of such New Services, which costs and expenses shall be borne solely by the Recipient. Each supplemental Schedule, as agreed to in writing by the Parties, shall be deemed part of this Agreement as of the date of such agreement and the New Services set forth therein shall be deemed “Services” provided under this Agreement, in each case subject to the terms and conditions of this Agreement. The provision of New Services between the Parties may also be governed by a separate agreement if the Parties deem it necessary or desirable at such time.

 

Section 2.05. Transition Services Managers . (a) HBIO hereby appoints and designates the individual holding the HBIO position set forth on Exhibit I to act as its initial services manager (the “ HBIO Services Manager ”), who will be directly responsible for coordinating and managing the delivery of the HBIO Services and have authority to act on HBIO’s behalf with respect to matters relating to this Agreement. The HBIO Services Manager will work with the personnel of the HBIO Entities to periodically address issues and matters raised by HART relating to this Agreement. Notwithstanding the requirements of Section 11.05 , all communications from HART to HBIO pursuant to this Agreement regarding routine matters involving the Services set forth on the Schedules shall be made through the HBIO Services Manager, or such other individual as specified by the HBIO Services Manager in writing and delivered to HART by email or facsimile transmission with receipt confirmed. HBIO shall notify HART of the appointment of a different HBIO Services Manager, if necessary, in accordance with Section 11.05 .

 

(b) HART hereby appoints and designates the individual holding the HART position set forth on Exhibit I to act as its initial services manager (the “ HART Services Manager ”), who will be directly responsible for coordinating and managing the delivery of HART Services and have authority to act on HART’s behalf with respect to matters relating to this Agreement. The HART Services Manager will work with the personnel of the HART Entities to periodically address issues and matters raised by HBIO relating to this Agreement. Notwithstanding the requirements of Section 11.05 , all communications from HBIO to HART pursuant to this Agreement regarding routine matters involving the Services set forth on the Schedules shall be made through the HART Services Manager or such other individual as specified by the HART Services Manager in writing and delivered to HBIO by email or facsimile transmission with receipt confirmed. HART shall notify HBIO of the appointment of a different HART Services Manager, if necessary, in accordance with Section 11.05 .

 

Section 2.06. Personnel . (a) The Provider of any Service will make available to the Recipient of such Service such personnel as may be necessary to provide such Service (who shall be appropriately qualified for purposes of the provision of such Service by the Provider). The Provider will have the right, in its reasonable discretion, to (i) designate which personnel it will assign to perform such Service, and (ii) remove and replace such personnel at any time, so long as there is no resulting increase in costs or decrease in the level of service for the Recipient; provided, however , that the Provider will use its commercially reasonable efforts to limit the disruption to the Recipient in the transition of the Services to different personnel.

 

(b) In the event that the provision of any Service by the Provider requires, as set forth in the Schedules, the cooperation and services of the applicable personnel of the Recipient, the Recipient will make available to the Provider such personnel (who shall be appropriately qualified for purposes of the provision of such Service by the Provider) as may be necessary for the Provider to provide such Service. The Recipient will have the right, in its reasonable discretion, to (i) designate which personnel it will make available to the Provider in connection with the provision of such Service, and (ii) remove and replace such personnel at any time, so long as there is no resulting increase in costs to, or any adverse effect to the provision of such Service by, the Provider; provided, however, that the Recipient will use its commercially reasonable efforts to limit the disruption to the Provider in the transition of such personnel. The Provider may, in its reasonable discretion and following discussions with the Recipient, request the Recipient to remove and/or replace any such personnel from their roles in respect of the Services being provided by the Provider.

 

(c) No Provider shall be liable under this Agreement for any Liabilities incurred by the Recipient Indemnified Parties to the extent that they are attributable to or a consequence of any actions or inactions of the personnel of the Recipient, except for any such actions or inactions undertaken pursuant to the direction of the Provider.

 

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ARTICLE III

HBIO MATERIALS

 

Section 3.01. Corporate Policies . (a) HBIO shall provide HART copies of the corporate compliance policies and manuals published on the HBIO Intranet (the “ HBIO Materials ”). Subject to the terms and conditions of this Agreement, HBIO grants to HART a non-exclusive, royalty-free, fully paid-up, worldwide license to create or have created materials based on the HBIO Materials for distribution to employees and suppliers of HART and use such materials in the operation of the HART Business in substantially the same manner as the HBIO Materials were used by HBIO prior to the Distribution. It is understood and agreed that HBIO makes no representation or warranty, express or implied, as to the accuracy or completeness of any of the HBIO Materials, as to whether the HBIO Materials comply with Law, as to the non-infringement of any of the HBIO Materials or as to the suitability of any of the HBIO Materials for use by HART in respect of its business, or otherwise.

 

(b) Notwithstanding the foregoing and except as may be expressly provided for in the Intellectual Property Matters Agreement between the Parties, the text of any materials created by or for HART, and related to, or based upon, any of the HBIO Materials, may not contain any references to HBIO (or any of HBIO’s marks, names, trade dress, logos or other source or business identifiers, including the HBIO Name and HBIO Marks), HBIO’s publications, HBIO’s personnel (including senior management), HBIO’s management structures or any other indication that such materials are based upon any of the HBIO Materials.

 

Section 3.02. Limitation on Rights and Obligations with Respect to the HBIO Materials . (a) HBIO shall have no obligation to (i) notify HART of any changes or proposed changes to any of the HBIO Materials, (ii) include HART in any consideration of proposed changes to any of the HBIO Materials, (iii) provide draft changes of any of the HBIO Materials to HART for review and/or comment or (iv) provide HART with any updated materials relating to any of the HBIO Materials, except as such updated materials may be necessary in order to permit HART to comply with the requirements of any corporate policy that is contained in the HBIO Materials and with which HART is otherwise required to comply. HART acknowledges and agrees that, except as expressly set forth above, HBIO reserves all rights (including all Intellectual Property rights) in, to and under the HBIO Materials and no rights with respect to ownership or use, except as otherwise expressly provided in this Agreement or the Intellectual Property Matters Agreement, shall vest in HART. The Parties acknowledge and agree that the HBIO Materials are the confidential Information of HBIO. HART shall use at least the same degree of care to prevent and restrain the unauthorized use or disclosure of any materials created by or for HART that are based upon any of the HBIO Materials as it uses for its other confidential Information of a like nature, but in no event less than a reasonable degree of care. HART will allow HBIO reasonable access to personnel and information as reasonably necessary to determine HART’s compliance with the provisions set forth above; provided, however , such access shall not unreasonably interfere with any of the business or operations of HART. Subject to Section 9.01 , in the event that HBIO determines that HART has not materially complied with some or all of its obligations with respect to any or all of the HBIO Materials, and such failure to comply shall continue uncured for a period of thirty (30) days after receipt by HART of a written notice of such failure from HBIO, HBIO may terminate HART’s rights with respect to such HBIO Materials upon written notice to HART and, in such case, HBIO shall be entitled to require such HBIO Materials to be returned to HBIO or destroyed and any materials created by or for HART that are based upon such HBIO Materials to be destroyed (with such destruction certified by HART in writing to HBIO promptly after such termination).

 

(b) If HART determines to cease to avail itself of any of the HBIO Materials or upon expiration or termination of any period during which HART is permitted to use any of the HBIO Materials, HBIO and HART shall cooperate in good faith to take reasonable and appropriate actions to effectuate such determination, expiration or termination, to arrange for the return to HBIO or destruction of such HBIO Materials and to protect HBIO’s rights and interests in such HBIO Materials.

 

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ARTICLE IV

OTHER ARRANGEMENTS

 

Section 4.01. Software and Software Licenses .

 

(a) If and to the extent requested by HART, HBIO shall use commercially reasonable efforts to assist HART in its efforts to obtain licenses (or other appropriate rights) to use, duplicate and distribute, as necessary and applicable, certain computer software necessary for HBIO to provide, or HART to receive, HBIO Services (which shall include providing HART the opportunity to receive a copy of, or participate in, any communication between HBIO and the applicable third-party licensor in connection therewith); provided, however , that HBIO and HART shall identify the specific types and quantities of any such software licenses; provided, further , that HBIO shall not be required to pay any fees or other payments or incur any obligations or liabilities to enable HART to obtain any such license or rights; provided, further , that HBIO shall not be required to seek broader rights or more favorable terms for HART than those applicable to HBIO or HART, as the case may be, prior to the date of this Agreement or as may be applicable to HBIO from time to time hereafter; and, provided, further , that HART shall bear only those costs that relate solely and directly to obtaining such licenses (or other appropriation rights) in the ordinary course. The Parties acknowledge and agree that there can be no assurance that HBIO’s efforts will be successful or that HART will be able to obtain such licenses or rights on acceptable terms or at all and, where HBIO enjoys rights under any enterprise or site license or similar license, the Parties acknowledge that such license typically precludes partial transfers or assignments or operation of a service bureau on behalf of unaffiliated entities. In the event that HART is unable to obtain such software licenses, the Parties shall work together using commercially reasonable efforts to obtain an alternative software license to allow HBIO to provide, or HART to receive, such HBIO Services, and the Parties shall negotiate in good faith an amendment to the applicable Schedule to reflect any such new arrangement, which amended Schedule shall not require HART to pay for any fees, expenses or costs relating to the software license that HART was unable to obtain pursuant to the provisions of this Section 4.01(a) .

 

(b) If and to the extent requested by HBIO, HART shall use commercially reasonable efforts to assist HBIO in its efforts to obtain licenses (or other appropriate rights) to use, duplicate and distribute, as necessary and applicable, certain computer software necessary for HART to provide, or HBIO to receive, HART Services (which assistance shall include providing HBIO the opportunity to receive a copy of, or participate in, any communication between HART and the applicable third party licensor in connection therewith); provided, however , that HBIO and HART shall identify the specific types and quantities of any such software licenses; provided, further, that HART shall not be required to pay any fees or other payments or incur any obligations or liabilities to enable HBIO to obtain any such license or rights; provided, further , that HART shall not be required to seek broader rights or more favorable terms for HBIO than those applicable to HBIO or HART, as the case may be, prior to the date of this Agreement or as may be applicable to HART from time to time hereafter; and, provided, further , that HBIO shall bear only those costs that relate solely and directly to obtaining such licenses (or other appropriation rights) in the ordinary course. The Parties acknowledge and agree that there can be no assurance that HART’s efforts will be successful or that HBIO will be able to obtain such licenses or rights on acceptable terms or at all and, where HART enjoys rights under any enterprise or site license or similar license, the Parties acknowledge that such license typically precludes partial transfers or assignments or operation of a service bureau on behalf of unaffiliated entities. In the event that HBIO is unable to obtain such software licenses, the Parties shall work together using commercially reasonable efforts to obtain an alternative software license to allow HART to provide, or HBIO to receive, such HART Services, and the Parties shall negotiate in good faith an amendment to the applicable Schedule to reflect any such new arrangement, which amended Schedule shall not require HBIO to pay for any fees, expenses or costs relating to the software license that HBIO was unable to obtain pursuant to the provisions of this Section 4.01(b) .

 

(c) In the event that there are any costs associated with obtaining software licenses in accordance with Section 4.01 that (i) would not be payable in the ordinary course in connection with a third-party demand to resolve an issue that is unrelated to the Recipient or the license that the Recipient is seeking to obtain, and (ii) would not have been payable by the Recipient absent the need for a consent or waiver in connection with the license that the Recipient is seeking to obtain, such costs shall be split 50/50 between the Provider and the Recipient.

 

(d) For the avoidance of doubt, the terms of this Section 4.01 shall apply only to commercially available software obtained by the Parties in the ordinary course of business.

 

6
 

 

ARTICLE V

ADDITIONAL AGREEMENTS

 

Section 5.01. HBIO Computer-Based and Other Resources . From and after the date of this Agreement, HART and its Affiliates shall cause all of their personnel having access to the HBIO Intranet or such other computer software, networks, hardware, technology or computer based resources pursuant to the Separation Agreement, or any Ancillary Agreement, or in connection with performance, receipt or delivery of a Service, to comply with all security guidelines (including physical security, network access, internet security, confidentiality and personal data security guidelines) of HBIO and its Affiliates (of which HBIO provides HART notice). HART shall ensure that the access contemplated by this Section 5.01 shall be used by such personnel only for the purposes contemplated by, and subject to the terms of, this Agreement.

 

Section 5.02. Access to Facilities .

 

(a) HART shall, and shall cause its Subsidiaries to, allow HBIO and its Representatives reasonable access to the facilities of HART necessary for HBIO to fulfill its obligations under this Agreement.

 

(b) HBIO shall, and shall cause its Subsidiaries to, allow HART and its Representatives reasonable access to the facilities of HBIO necessary for HART to fulfill its obligations under this Agreement.

 

Notwithstanding the other rights of access of the Parties under this Agreement, each Party shall, and shall cause its Subsidiaries to, afford the other Party, its Subsidiaries and Representatives, following not less than five (5) business days’ prior written notice from the other Party, reasonable access during normal business hours to the facilities, information, systems, infrastructure, and personnel of the relevant Providers as reasonably necessary for the other Party to verify the adequacy of internal controls over information technology, reporting of financial data and related processes employed in connection with the Services, including in connection with verifying compliance with Section 404 of the Sarbanes-Oxley Act of 2002; provided, however , such access shall not unreasonably interfere with any of the business or operations of such Party or its Subsidiaries.

 

(c) Except as otherwise permitted by the other Party in writing, each Party shall permit only its authorized Representatives, contractors, invitees or licensees to access the other Party’s facilities.

 

5.03 Cooperation . It is understood that it will require the significant efforts of both Parties to implement this Agreement and to ensure performance of this Agreement by the Parties at the agreed upon levels in accordance with all of the terms and conditions of this Agreement. The Parties will cooperate, acting in good faith and using commercially reasonable efforts, to effect a smooth and orderly transition of the Services provided under this Agreement from the Provider to the Recipient (including repairs & maintenance Services and the assignment or transfer of the rights and obligations under any third-party contracts relating to the Services); provided, however , that this Section 5.03 shall not require either Party to incur any out-of-pocket costs or expenses unless and except as expressly provided in this Agreement or otherwise agreed to in writing by the Parties.

 

ARTICLE VI

COSTS AND DISBURSEMENTS

 

Section 6.01. Costs and Disbursements . (a)  Except as otherwise provided in this Agreement or in the Schedules to this Agreement, a Recipient of Services shall pay to the Provider of such Services a monthly fee for the Services (or category of Services, as applicable) (each fee constituting a “ Service Charge ” and, collectively, “ Service Charges ”), which Service Charges shall be agreed to by the Parties from time to time and generally determined in a manner consistent with the methodology used by HBIO for assessing fees with respect to the HART Business; provided further that to the extent the Service Charge for a particular Service is accrued on an hourly basis, such Service Charge shall be paid monthly by the Recipient and include the aggregate amount of the hourly charges for the immediate preceding month. During the term of this Agreement, the amount of a Service Charge for any Services (or category of Services, as applicable) may increase to the extent of: (i) any increases mutually agreed to by the Parties, (ii) any Service Charges applicable to any Additional Services or New Services, and (iii) any increase in the rates or charges imposed by any third-party provider that is providing Services. Together with any monthly invoice for Service Charges, the Provider shall provide the Recipient with documentation to support the calculation of such Service Charges.

 

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(b) Recipient shall reimburse Provider for all reasonable out-of-pocket costs and expenses incurred by Provider or its Affiliates in connection with providing the Services to the extent that such costs and expenses are not reflected in the Service Charge for such Services; provided, however , that any such cost or expense not consistent with historical practice between the Parties and exceeding $2,500 per month, for any Service (including business travel and related expenses) shall require advance approval of the Recipient. Any authorized travel-related expenses incurred in performing the Services shall be incurred and charged to Recipient in accordance with Provider’s then applicable business travel policies.

 

(c) The Recipient shall pay the amount of each such invoice by wire transfer (or such other method of payment as may be agreed between the Parties) to the Provider within thirty (30) days of the receipt of each such invoice, including appropriate documentation as described herein, as instructed by the Provider. In the absence of a timely notice of billing dispute in accordance with the provisions of Article IX of this Agreement, if the Recipient fails to pay such amount by the due date, the Recipient shall be obligated to pay to the Provider, in addition to the amount due, interest at an annual default interest rate of three percent (3%), or the maximum legal rate whichever is lower (the “ Interest Payment ”), accruing from the date the payment was due through the date of actual payment.

 

(d) Subject to the confidentiality provisions set forth in Section 11.03 , each Party shall, and shall cause their respective Affiliates to, provide, upon ten (10) days’ prior written notice from the other Party, any information within such Party’s or its Affiliates’ possession that the requesting Party reasonably requests in connection with any Services being provided to such requesting Party by an unaffiliated third-party provider, including any applicable invoices, agreements documenting the arrangements between such third-party provider and the Provider and other supporting documentation; provided, however , that each Party shall make no more than one such request during any fiscal quarter.

 

Section 6.02. Taxes . (a) Without limiting any provisions of this Agreement, the Recipient shall bear any and all sales, use, transaction and transfer taxes and other similar charges (and any related interest and penalties) imposed on, or payable with respect to, any fees or charges, including any Service Charges, payable by it pursuant to this Agreement; provided, however , that any applicable gross receipts taxes shall be borne by the Provider unless the Provider is required by law to obtain, or allowed to separately invoice for and obtain, reimbursement of such taxes from the Recipient.

 

(b) Notwithstanding anything to the contrary in this Section 6.02 , or elsewhere in this Agreement, the Recipient shall be entitled to withhold from any payments to the Provider any such taxes that Recipient is required by law to withhold and shall pay over such taxes to the applicable taxing authority.

 

ARTICLE VII 

STANDARD FOR SERVICE

 

Section 7.01. Standard for Service . Except where the Provider is restricted by an existing contract with a third party or by Law, the Provider agrees (i) to perform the Services with substantially the same nature, quality, standard of care and service levels at which the same or similar services were performed by or on behalf of the Provider prior to the Distribution Date or, if not so previously provided, then substantially similar to that which are applicable to similar services provided to the Provider’s Affiliates or other business components; (ii) upon receipt of written notice from the Recipient identifying any outage, interruption or other failure of any Service, to respond to such outage, interruption or other failure of any Service in a manner that is substantially similar to the manner in which such Provider or its Affiliates responded to any outage, interruption or other failure of the same or similar services prior to the Distribution Date. The Parties acknowledge that an outage, interruption or other failure of any Service shall not be deemed to be a breach of the provisions of this Section 7.01 so long as the applicable Provider complies with the foregoing clause (ii). As of, or following, the date of this Agreement, if the Provider is or becomes aware of any restriction on the Provider by an existing contract with a third-party that would restrict the nature, quality, standard of care or service levels applicable to delivery of the Services to be provided by the Provider to the Recipient, the Provider shall promptly notify the Recipient of any such restriction (which notice shall in any event precede any change to, or reduction in, the nature, quality, standard of care or service levels applicable to delivery of the Services resulting from such restriction) and use commercially reasonable efforts in good faith to provide such Services in a manner as closely as possible to the standards described in this Section 7.01 , and the Parties shall negotiate in good faith an amendment to the applicable Schedule to reflect any such new arrangement.

 

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Section 7.02. Disclaimer of Warranties . EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE PARTIES ACKNOWLEDGE AND AGREE THAT THE SERVICES ARE PROVIDED AS-IS, THAT THE RECIPIENTS ASSUME ALL RISKS AND LIABILITY ARISING FROM OR RELATING TO ITS USE OF AND RELIANCE UPON THE SERVICES AND EACH PROVIDER MAKES NO REPRESENTATION OR WARRANTY WITH RESPECT THERETO. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, PROVIDERS HEREBY EXPRESSLY DISCLAIM ALL REPRESENTATIONS AND WARRANTIES REGARDING THE SERVICES, WHETHER EXPRESS OR IMPLIED, INCLUDING ANY REPRESENTATION OR WARRANTY IN REGARD TO QUALITY, PERFORMANCE, NONINFRINGEMENT, COMMERCIAL UTILITY, MERCHANTABILITY OR FITNESS OF THE TRANSITION SERVICES FOR A PARTICULAR PURPOSE.

 

Section 7.03. Compliance with Laws and Regulations . Each Party shall be responsible for its own compliance with any and all Laws applicable to its performance under this Agreement. No Party will knowingly take any action in violation of any such applicable Law that results in Liability being imposed on the other Party.

 

ARTICLE VIII

LIMITED LIABILITY AND INDEMNIFICATION

 

Section 8.01. Consequential and Other Damages . Notwithstanding anything to the contrary contained in the Separation Agreement, any other Ancillary Agreement or this Agreement, except with respect to its obligations to provide indemnity under Section 8.04 , the Provider shall not be liable to the Recipient or any of its Affiliates or Representatives, whether in contract, tort (including negligence and strict liability) or otherwise, at law or equity, for any special, indirect, incidental, punitive or consequential damages whatsoever (including lost profits or damages calculated on multiples of earnings approaches), which in any way arise out of, relate to or are a consequence of, the performance or nonperformance by the Provider (including any Affiliates and Representatives of the Provider and any third-party providers, in each case, providing the applicable Services) under this Agreement or the provision of, or failure to provide, any Services under this Agreement, including with respect to loss of profits, business interruptions or claims of customers.

 

Section 8.02. Limitation of Liability . Except with respect to its obligations to provide indemnity under Section 8.04 , the Liabilities of each Provider and its Affiliates and Representatives, collectively, under this Agreement for any act or failure to act in connection herewith (including the performance or breach of this Agreement), or from the sale, delivery, provision or use of any Services provided under or contemplated by this Agreement, whether in contract, tort (including negligence and strict liability) or otherwise, shall not exceed the total aggregate Service Charges (excluding any third-party costs and expenses included in such Service Charges) actually paid to such Provider by the Recipient pursuant to this Agreement.

 

Section 8.03. Obligation To Reperform; Liabilities . In the event of any breach of this Agreement by any Provider with respect to the provision of any Services (with respect to which the Provider can reasonably be expected to re-perform in a commercially reasonable manner), the Provider shall (a) promptly correct in all material respects such error, defect or breach or re-perform in all material respects such Services at the request of the Recipient and at the sole cost and expense of the Provider and (b) subject to the limitations set forth in Sections 8.01 and 8.02 , reimburse the Recipient and its Affiliates and Representatives for Liabilities attributable to such breach by the Provider. The remedy set forth in this Section 8.03 shall be the sole and exclusive remedy of the Recipient for any such breach of this Agreement, except to the extent that Provider is also required to indemnify any Recipient Indemnified Party pursuant to Section 8.04 as a result of such breach. Any request for re-performance in accordance with this Section 8.03 by the Recipient must be in writing and specify in reasonable detail the particular error, defect or breach, and such request must be made no more than one (1) month from the date that Recipient became aware that such breach occurred.

 

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Section 8.04. Provider Indemnity . Each Provider hereby agrees to indemnify, defend and hold harmless each applicable Recipient and its Affiliates and Representatives (each a “ Recipient Indemnified Party ”), from and against any and all Liabilities from third-party claims brought against a Recipient Indemnified Party arising from, relating to, or in connection with the provision of any Services by such Provider or any of its Affiliates, Representatives or other Persons providing such Services pursuant to or contemplated by this Agreement, except to the extent that such Liabilities arise out of, relate to or are a consequence of the applicable Recipient’s bad faith, gross negligence or willful misconduct.

 

Section 8.05. Recipient Indemnity . Each Recipient hereby agrees to indemnify, defend and hold harmless each applicable Provider and its Affiliates and Representatives (each a “ Provider Indemnified Party ”), from and against any and all Liabilities from third-party claims brought against a Provider Indemnified Party arising from, relating to, or in connection with the negligence, or intentional or willful misconduct of Recipient or any of its Affiliates, Representatives or other Persons in their use of any Services pursuant to or contemplated by this Agreement, except to the extent that such Liabilities arise out of, relate to or are a consequence of the applicable Provider’s bad faith, gross negligence or willful misconduct.

 

Section 8.06. Indemnification Procedures . The applicable provisions of Article V of the Separation Agreement shall govern the procedure for claims for indemnification under this Agreement.

 

Section 8.07. Liability for Payment Obligations . Nothing in this Article VIII shall be deemed to eliminate or limit, in any respect, HBIO’s or HART’s express obligation in this Agreement to pay Termination Charges or Service Charges for Services rendered in accordance with this Agreement.

 

Section 8.08. Exclusion of Other Remedies . The provisions of Sections 8.03, 8.04 , and 8.05 of this Agreement shall be the sole and exclusive remedies of the Recipient Indemnified Parties and Provider Indemnified Parties, as applicable, for any claim, loss, damage, expense or liability, whether arising from statute, principle of common or civil law, principles of strict liability, tort, contract or otherwise under this Agreement.

 

ARTICLE IX

DISPUTE RESOLUTION

 

Section 9.01. Dispute Resolution .

 

(a) In the event of any dispute, controversy or claim arising out of or relating to the transactions contemplated by this Agreement, or the validity, interpretation, breach or termination of any provision of this Agreement, or calculation or allocation of the costs of any Service, including claims seeking redress or asserting rights under any Law (each, a “ Dispute ”), HBIO and HART agree that the HBIO Services Manager and the HART Services Manager (or such other persons as HBIO and HART may designate) shall negotiate in good faith in an attempt to resolve such Dispute amicably. If such Dispute has not been resolved to the mutual satisfaction of HBIO and HART within thirty (30) days after the initial written notice of the Dispute (or such longer period as the Parties may agree), then such Dispute shall be resolved in accordance with the dispute resolution process referred to in Article IX of the Separation Agreement; provided, however , that such dispute resolution process shall not modify or add to the remedies available to the Parties under this Agreement. Nothing in this Article IX will prevent either HBIO or HART from seeking injunctive relief if any delay resulting from the efforts to resolve the Dispute through the procedures set forth in Article IX of the Separation Agreement could result in serious and irreparable injury to either company.

 

(b) In any Dispute regarding the amount of a Service Charge, if such Dispute is finally resolved pursuant to the dispute resolution process set forth or referred to in Section 9.01(a) and it is determined that the Service Charge that the Provider has invoiced the Recipient, and that the Recipient has paid to the Provider, is greater or less than the amount that the Service Charge should have been, then (a) if it is determined that the Recipient has overpaid the Service Charge, the Provider shall within five (5) business days after such determination reimburse the Recipient an amount of cash equal to such overpayment, plus the Interest Payment, accruing from the date of payment by the Recipient to the time of reimbursement by the Provider; and (b) if it is determined that the Recipient has underpaid the Service Charge, the Recipient shall within five (5) business days after such determination reimburse the Provider an amount of cash equal to such underpayment, plus the Interest Payment, accruing from the date such payment originally should have been made by the Recipient to the time of payment by the Recipient.

 

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ARTICLE X

TERM AND TERMINATION

 

Section 10.01. Term and Termination . (a) This Agreement shall commence immediately upon the Distribution Date and shall terminate upon the earlier to occur of: (i) the last date on which either Party is obligated to provide any Service to the other Party in accordance with the terms of this Agreement or (ii) the mutual written agreement of the Parties to terminate this Agreement in its entirety.

 

(b) A Recipient may from time to time terminate this Agreement with respect to the entirety of any individual Service but not a portion thereof:

 

(i) for any reason or no reason, upon providing at least thirty (30) days’ prior written notice to the Provider; or

 

(ii) without prejudice to a Recipient’s rights with respect to a Force Majeure , if the Provider of such Service has failed to perform any of its material obligations under this Agreement with respect to such Service, and such failure shall continue to exist thirty (30) days after receipt by the Provider of written notice of such failure from the Recipient.

 

A Provider may terminate this Agreement with respect to one or more Services, in whole but not in part, at any time upon prior written notice to the Recipient if the Recipient has failed to perform any of its material obligations under this Agreement relating to such Services, including making payment of Service Charges when due, and such failure shall continue uncured for a period of thirty (30) days after receipt by the Recipient of a written notice of such failure from the Provider. The relevant Schedule shall be updated to reflect any terminated Service. In the event that any Service is terminated other than at the end of a month, the Service Charge associated with such Service shall be pro-rated appropriately. The Parties acknowledge that there may be interdependencies among the Services being provided under this Agreement that are not identified on the applicable Schedules and agree that, if the Provider’s ability to provide a particular Service in accordance with this Agreement is materially and adversely affected by the termination of another Service in accordance with Section 10.01(b)(i) prior to the expiration of the period of the maximum duration for such Service, then the Parties shall negotiate in good faith to amend the Schedule relating to such impacted continuing Service, which amendment shall be consistent with the terms of, and the pricing methodology used for, comparable Services.

 

(c) A Recipient may from time to time request a reduction in part of the scope or amount of any Service that is identified on the applicable Schedule as being subject to the provisions of this Section 10.01(c) . If requested to do so by Recipient, the Provider agrees to discuss in good faith appropriate reductions to the relevant Service Charges in light of all relevant factors including the costs and benefits to the Provider of any such reductions. If, after such discussions, the Recipient and the Provider do not agree to any requested reduction of the scope or amount of any Service and the relevant Service Charges in connection therewith, then there shall be no change to the scope or amount of any Services or Service Charges under this Agreement. In the event that a Recipient and a Provider agree to any reduction of a Service and the relevant Service Charges, the relevant Schedule shall be updated to reflect such reduced Service. Each amended Schedule, as agreed to in writing by the Parties, shall be deemed part of this Agreement as of the date of such agreement and any such reduced Service shall be deemed “Services” provided under this Agreement, in each case subject to the terms and conditions of this Agreement. In the event that any Service is reduced other than at the end of a month, the Service Charge associated with such Service for the month in which such Service is reduced shall be pro-rated appropriately.

 

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(d) In connection with the termination of any Service other than the Services identified on the Schedules as not being subject to the provisions of this Section 10.01(d) , if the Recipient reasonably determines that it will require such Service to continue beyond the date on which such Service is scheduled to terminate (either in accordance with any termination notice provided pursuant to Section 10.01(b)(i) or the termination date specified in the applicable Schedule), the Recipient may request the other Provider to extend such Service for a specified period beyond the scheduled termination of such Service (which period shall in no event be longer than ninety (90) days, a “ Service Extension ”) by written notice to the Provider no less than thirty (30) days prior to the date of such scheduled termination, and the Provider shall use commercially reasonable efforts to comply with such Service Extension; provided, however , that (i) there shall be no more than one (1) Service Extension with respect to each Service and (ii) the Provider shall not be obligated to provide such Service Extension if a third-party consent is required and cannot be obtained by the Provider following reasonable efforts to obtain the same. Within five (5) days following either Party’s receipt of a written notice requesting a Service Extension, the HBIO Services Manager and the HART Services Manager shall in good faith (x) negotiate the terms of an amendment to the applicable Schedule, which amendment shall be consistent with the terms of, and the pricing methodology used for, the applicable Service, and (y) determine the costs and expenses (which shall not include any Service Charges payable under this Agreement), if any, that would be incurred by the Provider or the Recipient, as the case may be, in connection with the provision of such Service Extension, which costs and expenses shall be borne solely by the Party requesting the Service Extension. Each amended Schedule, as agreed to in writing by the Parties, shall be deemed part of this Agreement as of the date of such agreement and any Services provided pursuant to such Service Extensions shall be deemed “Services” provided under this Agreement, in each case subject to the terms and conditions of this Agreement.

 

Section 10.02. Effect of Termination . Upon termination of any Service pursuant to this Agreement, the Provider of the terminated Service will have no further obligation to provide the terminated Service, and the relevant Recipient will have no obligation to pay any future Service Charges relating to any such Service; provided, however , that the Recipient shall remain obligated to the relevant Provider for the Service Charges owed and payable in respect of Services provided prior to the effective date of termination. In connection with termination of any Service, the provisions of this Agreement not relating solely to such terminated Service shall survive any such termination, and in connection with a termination of this Agreement, Article I , Article VIII (including liability in respect of any indemnifiable Liabilities under this Agreement arising or occurring on or prior to the date of termination), Article IX , Article X , Article XI , all confidentiality obligations under this Agreement and liability for all due and unpaid Service Charges, shall continue to survive indefinitely.

 

Section 10.03. Force Majeure . (a) Neither Party shall be deemed to be in default of this Agreement for failure to fulfill any obligation (other than a payment obligation) under this Agreement so long as and to the extent to which the fulfillment of such obligation is prevented, frustrated, hindered or delayed as a consequence of circumstances of Force Majeure ; provided, however , that (i) such Party (or Person acting on its behalf) shall have exercised commercially reasonable efforts to minimize the effect of Force Majeure on its obligations; and (ii) the nature, quality and standard of care that the Provider shall provide in delivering a Service after a Force Majeure shall be substantially the same as the nature, quality and standard of care that the Provider provides to its Affiliates and its other business components with respect to such Service. In the event of an occurrence of a Force Majeure , the Party whose performance is affected thereby shall give notice of suspension as soon as reasonably practicable to the other stating the date and extent of such suspension and the cause thereof, and such Party shall resume the performance of such obligations as soon as reasonably practicable after the removal of such cause.

 

(b) During the period of a Force Majeure , the Recipient shall be entitled to seek an alternative service provider with respect to such Service(s) and shall be entitled to permanently terminate such Service(s) (and shall be relieved of the obligation to pay Service Charges for such Services(s) throughout the duration of such Force Majeure ) if a Force Majeure shall continue to exist for more than fifteen (15) consecutive days, it being understood that Recipient shall not be required to provide any advance notice of such termination to Provider.

 

ARTICLE XI

GENERAL PROVISIONS

 

Section 11.01. No Agency . Nothing in this Agreement shall be deemed in any way or for any purpose to constitute any party an agent of another unaffiliated party in the conduct of such other party’s business. A Provider of any Service under this Agreement shall act as an independent contractor and not as the agent of the Recipient in performing such Service, maintaining control over its employees, its subcontractors and their employees and complying with all withholding of income at source requirements, whether federal, state, local or foreign.

 

Section 11.02. Subcontractors . A Provider may hire or engage one or more subcontractors to perform any or all of its obligations under this Agreement; provided, however , that (i) such Provider shall use the same degree of care in selecting any such subcontractor as it would if such contractor was being retained to provide similar services to the Provider and (ii) such Provider shall in all cases remain primarily responsible for all of its obligations under this Agreement with respect to the scope of the Services, the standard for services as set forth in Article VII and the content of the Services provided to the Recipient.

 

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Section 11.03. Treatment of Information .

 

(a) Each Party shall, and shall cause all other persons providing or receiving Services or having access to Information of the other Party to, (i) maintain the confidentiality of the disclosing Party’s Information in accordance with Article VII of the Separation Agreement, and (ii) comply with all other applicable provisions of Article VII of the Separation Agreement in the performance of its duties and obligations under this Agreement.

 

(b) Each Party shall comply with all applicable state, federal and foreign privacy and data protection Laws that are or that may in the future be applicable to the provision of Services under this Agreement.

 

Section 11.04. Further Assurances . Each Party covenants and agrees that, without any additional consideration, it shall execute and deliver any further legal instruments and perform any acts that are or may become necessary to effectuate this Agreement.

 

Section 11.05. Notices . Except with respect to routine communications by the HBIO Services Manager and HART Services Manager under Section 2.05 , all notices, requests, claims, demands and other communications under this Agreement 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 overnight courier service, by facsimile or electronic transmission with receipt confirmed (followed by delivery of an original via overnight courier service) 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 11.05 ):

 

  (i) if to HBIO:
     
    Harvard Bioscience, Inc.
84 October Hill Road
Holliston, Massachusetts 01746
Attention: Chief Financial Officer

 

  (ii) if to HART:
     
    Harvard Apparatus Regenerative Technology, Inc.
84 October Hill Road
Holliston, Massachusetts 01746
Attention: Chief Financial Officer

 

Section 11.06. Severability . If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced under any Law or as a matter of public policy, all other conditions 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 by this Agreement 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 shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated by this Agreement be consummated as originally contemplated to the greatest extent possible.

 

Section 11.07. Entire Agreement . Except as otherwise expressly provided in this Agreement, this Agreement, the Separation Agreement and the other Ancillary Agreements constitute the entire agreement of the Parties with respect to the subject matter of this Agreement and supersede all prior agreements and undertakings, both written and oral, between or on behalf of the Parties with respect to the subject matter of this Agreement.

 

Section 11.08. No Third-Party Beneficiaries . Except as provided in Article VIII with respect to Provider Indemnified Parties and Recipient Indemnified Parties, this Agreement is for the sole benefit of the Parties and their permitted successors and assigns and nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person, including any union or any employee or former employee of HBIO or HART, any legal or equitable right, benefit or remedy of any nature whatsoever, including any rights of employment for any specified period, under or by reason of this Agreement.

 

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Section 11.09. Governing Law . This Agreement (and any claims or disputes arising out of or related to this Agreement or to the transactions contemplated by this Agreement or to the inducement of any Party to enter into this Agreement or the transactions contemplated by this Agreement, whether for breach of contract, tortious conduct or otherwise and whether predicated on common law, statute or otherwise) shall in all respects be governed by, and construed in accordance with, the Laws of the Commonwealth of Massachusetts, including all matters of construction, validity and performance, in each case without reference to any conflict of Law rules that might lead to the application of the Laws of any other jurisdiction.

 

Section 11.10. Amendment . No provision of this Agreement, including any Schedules to this Agreement, may be amended, supplemented or modified except by a written instrument making specific reference to this Agreement or any such Schedules to this Agreement, as applicable, signed by all the Parties.

 

Section 11.11. Rules of Construction . Interpretation of this Agreement shall be governed by the following rules of construction: (a) words in the singular shall be held to include the plural and vice versa, and words of one gender shall be held to include the other gender as the context requires; (b) references to the terms Article, Section, paragraph and Schedule are references to the Articles, Sections, paragraphs and Schedules of this Agreement unless otherwise specified; (c) references to “$” shall mean U.S. dollars; (d) the word “including” and words of similar import when used in this Agreement shall mean “including without limitation,” unless otherwise specified; (e) the word “or” shall not be exclusive; (f) references to “written” or “in writing” include in electronic form; (g) provisions shall apply, when appropriate, to successive events and transactions; (h) the headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement; (i) HBIO and HART have each participated in the negotiation and drafting of this Agreement and if an ambiguity or question of interpretation should arise, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or burdening either Party by virtue of the authorship of any of the provisions in this Agreement or any interim drafts of this Agreement; (j) a reference to any Person includes such Person’s successors and permitted assigns; (k) any reference to “days” means calendar days unless business days are expressly specified; and (l) when calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded, if the last day of such period is not a business day, the period shall end on the next succeeding business day.

 

Section 11.12. Counterparts . This Agreement may be executed in one or more counterparts, and by each Party 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. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or portable document format (PDF) shall be as effective as delivery of a manually executed counterpart of this Agreement.

 

Section 11.13. Assignability . This Agreement shall be binding upon and inure to the benefit of the Parties hereto and thereto, respectively, and their respective successors and permitted assigns; provided, however, that no Party hereto or thereto may assign its respective rights or delegate its respective obligations under this Agreement without the express prior written consent of the other Party hereto (which consent may be withheld in such Party’s sole and absolute discretion) and any assignment or attempted assignment in violation of the foregoing will be null and void. Notwithstanding the preceding sentence, a Party may assign this Agreement in connection with a merger transaction in which such Party is not the surviving entity or the sale by such Party of all or substantially all of its Assets, and upon the effectiveness of such assignment the assigning Party shall be released from all of its obligations under this Agreement if the surviving entity of such merger or the transferee of such Assets shall agree in writing, in form and substance reasonably satisfactory to the other Party, to be bound by all terms of this Agreement as if named as a “Party” hereto. Any and all costs and expenses incurred by either Party in connection with such assignment referenced in the prior sentence shall be borne solely by the assigning Party

 

Section 11.14. Waiver of Jury Trial . EACH PARTY TO THIS AGREEMENT WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT. EACH PARTY (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER; AND (II) ACKNOWLEDGES THAT IT AND THE OTHER PARTY TO THIS AGREEMENT HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER TRANSACTION AGREEMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.14 .

 

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Section 11.15. Non-Recourse . No past, present or future director, officer, employee, incorporator, member, partner, stockholder, Affiliate, agent, attorney or representative of either HBIO or HART or their Affiliates shall have any liability for any obligations or liabilities of HBIO or HART, respectively, under this Agreement or for any claims based on, in respect of, or by reason of, the transactions contemplated by this Agreement.

 

[The remainder of this page is intentionally left blank.]

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed on the date first written above by their respective duly authorized officers.

  

  Harvard Bioscience, Inc.
     
  By:  
    Name:
    Title:
   
  Harvard Apparatus Regenerative Technology, Inc.
     
  By:  
    Name:
    Title:

 

 
 

 

Schedule A

HBIO Services

 

Unless otherwise specified below, upon the request of HART, for the periods commencing on the Distribution Date and ending on the respective end-dates specified below, Harvard Bioscience, Inc. (“ HBIO ”) will provide the following services to Harvard Apparatus Regenerative Technology, Inc. (“ HART ”), at the monthly Service Charge described in Article VI of this Agreement, with such increases or reductions thereto, or such additional fees and expenses, as may be agreed upon by the parties.

 

SERVICE   DESCRIPTION OF SERVICE   CHARGES AFTER
DISTRIBUTION DATE
  END DATE
             
Information Technology            
             
Network Access  

HBIO Intranet on HBIO Servers

 

  If HART continues to use HBIO systems and support, it will be charged for fully loaded staff time based on time spent and a percentage of license and maintenance fees reflective of the number of users.  Another fee for infrastructure allocation (servers, lines, IT room, etc.) will also have to be charged.   One Year After Distribution Date
Email  

HBIO Servers with Minecast Security, Annual Licenses & Maint. Fees

 

   
ERP  

Old Version of MK from Infor, Annual Licenses & Maint. Fees

 

   
CRM   Old Version of Goldmine, Annual Licenses & Maint. Fees        
             
Financial Reporting   Clarity, Annual License & Maint. Fees        
             
Desktop Support, Report Writing   Service Provided by HBIO Staff        
             
Paper, Toner, Copiers, Printers, Supplies, Laptops, Desktops   HART employees use various copiers, printers and computers and related supplies.  We will transfer all laptops, desktops, phones used by HART employees to HART.     HBIO will charge HART for all supplies requisitioned by HART employees and will pass on any rental/maintenance fees.   These will all be itemized on a monthly invoice.   One Year After Distribution Date
             
Phones            
             
Switchboard   All calls to main lines handled by receptionist.   If HART continues to use these services, the expenses will be itemized and charged on a monthly basis.   One Year After Distribution Date

 

 
 

 

Accounting            
             
G/L, Payables, A/R, Collection, Credit, Inventory Processing, Cash Management, Audit, Reporting, Tax   Accounting administration assistance.   Will charge fully loaded staff time.   One Year After Distribution Date
             
Payroll and Benefit Admin   HBIO’s subsidiary employees re: HART in Germany and Sweden will provide services for HART until hired by HART’s applicable subsidiaries   Will charge fully loaded staff time.   One Year After Distribution Date
             
Operations            
             
Shipping & Receiving   All handled by HBIO.   Will charge fully loaded cost based on time reported.   One Year After Distribution Date
             
Purchasing   HBIO employee purchasing all HART components.   Employee will become a HART employee or we will charge for time on a fully loaded basis.   One Year After Distribution Date
             
Engineering            
             
Electronics, Mechanical, Software, Documentation, Management   Employees hired for HART activities are charged to HART cost center.   Any shared HBIO employees will allocate their time and HART will be charged on a monthly basis their fully loaded cost.   One Year After Distribution Date
             
Equipment Use   Model Maker, Oscilliscope   Will charge for use on an hourly basis.   One Year After Distribution Date
             
Marketing            
             
Website Development & Maint.   Currently being handled by HBIO staff with content being provided by HART employees.   HART will be charged for all direct expenses and with a fully loaded cost for any HBIO staff time.   One Year After Distribution Date
             
Printed Materials, Mailings            
             
Electronic Marketing Campaigns            

 

 
 

 

Schedule B

 

HART Services

 

Unless otherwise specified below, upon the request of HBIO, for the periods commencing on the Distribution Date and ending on the respective end-dates specified below, HART will provide the following services to HBIO, at the monthly Service Charge described in Article VI of this Agreement, with such increases or reductions thereto, or such additional fees and expenses, as may be agreed upon by the parties.

 

SERVICE   DESCRIPTION OF SERVICE   CHARGES AFTER
DISTRIBUTION DATE
  END DATE
             
Management            
             
David Green and Tom McNaughton   Consulting services to assist HBIO in transition with respect to new chief executive officer and new chief financial officer   HBIO will be charged on a monthly basis for a fully loaded cost of such services.   On or before three (3) months from the Distribution Date.

 

 
 

 

Exhibit I

Services Managers

 

  1. Initial HART Services Manager :

Thomas McNaughton, Chief Financial Officer

 

  2. Initial HBIO Services Manager :

Walter DiGiusto, President - Harvard Apparatus

 

 

 

EXHIBIT 10.2

 

TAX SHARING AGREEMENT

 

DATED AS OF [                    ]

 

BY AND BETWEEN

 

HARVARD BIOSCIENCE, INC.

 

AND

 

HARVARD APPARATUS REGENERATIVE TECHNOLOGY, INC.

 

(for itself and on behalf of each member of the SpinCo Group)

 

 
 

 

EXHIBIT 10.2

 

TABLE OF CONTENTS

 

    Page
     
Section 1. Definition of Terms 1
     
Section 2. Allocation of Tax Liabilities 7
     
Section 2.01 Distributing Liability 7
     
Section 2.02 Allocation of United States Federal Income Tax and Federal Other Tax 7
     
Section 2.03 Allocation of State Income and State Other Taxes 8
     
Section 2.04 Allocation of Foreign Taxes 9
     
Section 2.05 Certain Transaction and Other Taxes 9
     
Section 2.06 SpinCo Group Attributes 10
     
Section 3. Proration of Taxes 10
     
Section 4. Preparation and Filing of Tax Returns 10
     
Section 4.01 General 10
     
Section 4.02 Distributing’s Responsibility 10
     
Section 4.03 SpinCo’s Responsibility 11
     
Section 4.04 Tax Accounting Practices 11
     
Section 4.05 Consolidated or Combined Tax Returns 11
     
Section 4.06 Right to Review Tax Returns 12
     
Section 4.07 SpinCo Carrybacks, Carryforwards and Claims for Refund 12
     
Section 4.08 Apportionment of Earnings and Profits and Tax Attributes 12
     
Section 5 . Tax Payments 12
     
Section 5.01 Payment of Separate Company Taxes 12
     
Section 5.02 Indemnification Payments 12
     
Section 6. Tax Benefits 13
     
Section 6.01 Tax Benefits 13
     
Section 6.02 Distributing and SpinCo Income Tax Deductions in Respect of Certain Equity Awards and Incentive Compensation 13
     
Section 7. Tax-Free Status 14
     
Section 7.01 Tax Opinions/Rulings and Representation Letters 14
     
Section 7.02 Restrictions on SpinCo 14
     
Section 7.03 Restrictions on Distributing 15
     
Section 7.04 Procedures Regarding Opinions and Rulings 15
     
Section 7.05 Liability for Tax-Related Losses 16
     
Section 8. Assistance and Cooperation 17
     
Section 8.01 Assistance and Cooperation 17
     
Section 8.02 Income Tax Return Information 17

 

 
 

 

EXHIBIT 10.2

 

Section 9. Tax Records 18
     
Section 9.01 Retention of Tax Records 18
     
Section 9.02 Access to Tax Records 18
     
Section 10. Tax Contests 18
     
Section 10.01 Notice 18
     
Section 10.02 Control of Tax Contests 18
     
Section 11. Effective Date; Termination of Prior Intercompany Tax Allocation Agreements 19
     
Section 12. Survival of Obligations 19
     
Section 13. Treatment of Payments; Tax Gross Up 19
     
Section 13.01 Treatment of Tax Indemnity and Tax Benefit Payments 19
     
Section 13.02 Tax Gross Up 20
     
Section 13.03 Interest Under This Agreement 20
     
Section 14. Disagreements 20
     
Section 15. Reserved 20
     
Section 16. Expenses 20
     
Section 17. General Provisions 20
     
Section 17.01 Addresses and Notices 20
     
Section 17.02 Binding Effect 21
     
Section 17.03 Waiver 21
     
Section 17.04 Severability 21
     
Section 17.05 Authority 21
     
Section 17.06 Further Action 21
     
Section 17.07 Integration 21
     
Section 17.08 Construction 21
     
Section 17.09 No Double Recovery 22
     
Section 17.10 Counterparts 22
     
Section 17.11 Governing Law 22
     
Section 17.12 Jurisdiction 22
     
Section 17.13 Amendment 22
     
Section 17.14 SpinCo Subsidiaries 22
     
Section 17.15 Successors 22
     
Section 17.16 Injunctions 22

 

 
 

 

EXHIBIT 10.2

 

TAX SHARING AGREEMENT

 

This TAX SHARING AGREEMENT (this “ Agreement ”) is entered into as of [            ], by and among HARVARD BIOSCIENCE, INC., a Delaware corporation (“ Distributing ”), and HARVARD APPARATUS REGENERATIVE TECHNOLOGY, INC., a Delaware corporation and a wholly owned subsidiary of Distributing (“ SpinCo ”), for itself and on behalf of each member of the SpinCo Group (as defined below).

 

RECITALS

 

WHEREAS, the Board of Directors of Distributing has determined that it would be appropriate and desirable to completely separate the regenerative medicine device business of Distributing from the life science tools research business of Distributing;

 

WHEREAS, as of the date hereof, Distributing is the common parent of an affiliated group of corporations, including SpinCo, which has elected to file consolidated Federal income tax returns;

 

WHEREAS, pursuant to the Separation and Distribution Agreement (as defined below), Distributing and SpinCo have agreed to separate the regenerative medicine device business from Distributing generally by means of the Distribution;

 

WHEREAS, prior to the Distribution, Distributing intends to cause it and its applicable Subsidiaries to contribute the HART Assets to SpinCo and its applicable Subsidiaries (and SpinCo and its applicable Subsidiaries will assume the HART Liabilities), each as defined in and more fully described in the Separation and Distribution Agreement;

 

WHEREAS, as a result of the Distribution, SpinCo and its subsidiaries will cease to be members of the affiliated group (as that term is defined in Section 1504 of the Code) of which Distributing is the common parent (the “ Deconsolidation ”); and

 

WHEREAS, the parties desire to provide for and agree upon the allocation between the parties of Liabilities for Taxes arising prior to, as a result of, and subsequent to the Distribution, and to provide for and agree upon other matters relating to Taxes;

 

NOW THEREFORE, in consideration of the mutual agreements contained herein, the parties hereby agree as follows:

 

Section 1. Definition of Terms. For purposes of this Agreement (including the recitals hereof), the following terms have the following meanings, and capitalized terms used but not otherwise defined herein shall have the meaning ascribed to them in the Separation and Distribution Agreement:

 

Accounting Cutoff Date ” means, with respect to SpinCo, any date as of the end of which there is a closing of the financial accounting records for such entity.

 

Active Trade or Business ” means the active conduct (as defined in Section 355(b)(2) of the Code and the regulations thereunder) by SpinCo and its “separate affiliated group” (as defined in Section 355(b)(3)(B) of the Code) of the HART Business as conducted immediately prior to the Distribution.

 

Adjustment Request ” means any formal or informal claim or request filed with any Tax Authority, or with any administrative agency or court, for the adjustment, refund, or credit of Taxes, including (a) any amended Tax return claiming adjustment to the Taxes as reported on a Tax Return or, if applicable, as previously adjusted, (b) any claim for equitable recoupment or other offset, and (c) any claim for refund or credit of Taxes previously paid.

 

Affiliate ” means any entity that is directly or indirectly “controlled” by either the person in question or an Affiliate of such person. “ Control ” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through ownership of voting securities, by contract or otherwise. The term Affiliate shall refer to Affiliates of a person as determined immediately after the Distribution.

 

Agreement ” shall have the meaning provided in the first sentence of this Agreement.

 

1
 

 

EXHIBIT 10.2

 

Board Certificate ” shall have the meaning set forth in Section 7.02(e) of this Agreement.

 

Business Day ” means a day (other than Saturday or Sunday) on which banks are generally open in the State of New York, USA for ordinary business.

 

Code ” means the U.S. Internal Revenue Code of 1986, as amended.

 

Company ” means Distributing or SpinCo.

 

Company Indemnifying Party ” shall have the meaning set forth in Section 5.02(b) of this Agreement.

 

Contribution ” means the contribution of assets, by Distributing itself directly to SpinCo itself pursuant to Section 2.1(a) of the Separation and Distribution Agreement.

 

Controlling Party ” shall have the meaning set forth in Section 10.02(c) of this Agreement.

 

Deconsolidation ” shall have the meaning provided in the Recitals.

 

Deconsolidation Date ” means the last date on which SpinCo qualifies as a member of the affiliated group (as defined in Section 1504 of the Code) of which Distributing is the common parent.

 

DGCL ” means the Delaware General Corporation Law.

 

Distributing ” shall have the meaning provided in the first sentence of this Agreement.

 

Distributing Affiliated Group ” shall have the meaning provided in the definition of “Distributing Federal Consolidated Income Tax Return.”

 

Distributing Federal Consolidated Income Tax Return ” means any United States federal Income Tax Return for the affiliated group (as that term is defined in Section 1504 of the Code and the regulations thereunder) of which Distributing is the common parent (the “ Distributing Affiliated Group ”).

 

Distributing Full Taxpayer ” means the assumption that the Distributing Affiliated Group (a) is subject to the highest marginal regular statutory income Tax rate, (b) has sufficient taxable income to permit the realization or receipt of the relevant Tax Benefit at the earliest possible time, and (c) is not subject to the alternative minimum tax.

 

Distributing Group ” means Distributing and its Affiliates, excluding any entity that is a member of the SpinCo Group.

 

Distributing Group Transaction Returns ” shall have the meaning set forth in Section 4.04(b) of this Agreement.

 

Distributing Separate Return ” means any Separate Return of Distributing or any member of the Distributing Group.

 

Distributing State Combined Income Tax Return ” means a consolidated, combined or unitary State Income Tax Return that actually includes, by election or otherwise, one or more members of the Distributing Group together with one or more members of the SpinCo Group.

 

Federal Income Tax ” means any Tax imposed by Subtitle A of the Code, and any interest, penalties, additions to tax, or additional amounts in respect of the foregoing.

 

Federal Other Tax ” means any Tax imposed by the federal government of the United States of America other than any Federal Income Taxes, and any interest, penalties, additions to tax, or additional amounts in respect of the foregoing.

 

Fifty-Percent or Greater Interest ” shall have the meaning ascribed to such term for purposes of Sections 355(d) and (e) of the Code.

 

Filing Date ” shall have the meaning set forth in Section 7.05(b) of this Agreement.

 

2
 

 

EXHIBIT 10.2

 

Final Determination ” means the final resolution of liability for Tax, which resolution may be for a specific issue or adjustment or for a taxable period, (a) by IRS Form 870 or 870-AD (or any successor forms thereto), on the date of acceptance by or on behalf of the taxpayer, or by a comparable form under the laws of a State, local, or foreign taxing jurisdiction, except that a Form 870 or 870-AD or comparable form shall not constitute a Final Determination to the extent that it reserves (whether by its terms or by operation of law) the right of the taxpayer to file a claim for refund or the right of the Tax Authority to assert a further deficiency in respect of such issue or adjustment or for such taxable period (as the case may be); (b) by any audit assessment of taxes or other examination by any taxing authorities, proceeding or appeal of such proceedings relating to taxes whether administrative or judicial including proceedings related to competent authority determinations, or by a decision, judgment, decree, or other order by a court of competent jurisdiction, which has become final and unappealable; (c) by a closing agreement or accepted offer in compromise under Sections 7121 or 7122 of the Code, or a comparable agreement under the laws of a State, local, or foreign taxing jurisdiction; (d) by any allowance of a refund or credit in respect of an overpayment of Tax, but only after the expiration of all periods during which such refund may be recovered (including by way of offset) by the jurisdiction imposing such Tax; (e) by a final settlement resulting from a treaty-based competent authority determination; or (f) by any other final disposition, including by reason of the expiration of the applicable statute of limitations or by mutual agreement of the parties.

 

Foreign Income Tax ” means any Tax imposed by any foreign country or any possession of the United States, or by any political subdivision of any foreign country or United States possession, which is an income tax as defined in Treasury Regulation Section 1.901-2, and any interest, penalties, additions to tax, or additional amounts in respect of the foregoing.

 

Foreign Other Tax ” means any Tax imposed by any foreign country or any possession of the United States, or by any political subdivision of any foreign country or United States possession, other than any Foreign Income Taxes, and any interest, penalties, additions to tax, or additional amounts in respect of the foregoing.

 

Foreign Tax ” means any Foreign Income Taxes or Foreign Other Taxes.

 

Group ” means the Distributing Group or the SpinCo Group, or both, as the context requires.

 

Income Tax ” means any Federal Income Tax, State Income Tax or Foreign Income Tax.

 

Indemnitee ” shall have the meaning set forth in Section 13.03 of this Agreement.

 

Indemnitor ” shall have the meaning set forth in Section 13.03 of this Agreement.

 

Internal Restructuring ” shall have the meaning set forth in Section 7.02(f) of this Agreement.

 

IRS ” means the United States Internal Revenue Service.

 

Joint Return ” shall mean any Return of a member of the Distributing Group or the SpinCo Group that is not a Separate Return.

 

Non-Controlling Party ” shall have the meaning set forth in Section 10.02(c) of this Agreement.

 

Notified Action ” shall have the meaning set forth in Section 7.04(a) of this Agreement.

 

Other Tax ” means any Federal Other Tax, State Other Tax, or Foreign Other Tax.

 

Past Practices ” shall have the meaning set forth in Section 4.04(a) of this Agreement.

 

Payment Date ” means (i) with respect to any Distributing Federal Consolidated Income Tax Return, the due date for any required installment of estimated taxes determined under Section 6655 of the Code, the due date (determined without regard to extensions) for filing the return determined under Section 6072 of the Code, and the date the return is filed, and (ii) with respect to any other Tax Return, the corresponding dates determined under the applicable Tax Law.

 

Payor ” shall have the meaning set forth in Section 5.02(a) of this Agreement.

 

3
 

 

EXHIBIT 10.2

 

Person ” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization or a governmental entity or any department, agency or political subdivision thereof, without regard to whether any entity is treated as disregarded for U.S. federal income tax purposes.

 

Post-Deconsolidation Period ” means any Tax Period beginning after the Deconsolidation Date, and, in the case of any Straddle Period, the portion of such Straddle Period beginning the day after the Deconsolidation Date.

 

Pre-Deconsolidation Period ” means any Tax Period ending on or before the Deconsolidation Date, and, in the case of any Straddle Period, the portion of such Straddle Period ending on the Deconsolidation Date.

 

Privilege ” means any privilege that may be asserted under applicable law, including, any privilege arising under or relating to the attorney-client relationship (including the attorney-client and work product privileges), the accountant-client privilege and any privilege relating to internal evaluation processes.

 

Proposed Acquisition Transaction ” means a transaction or series of transactions (or any agreement, understanding or arrangement, within the meaning of Section 355(e) of the Code and Treasury Regulation Section 1.355-7, or any other regulations promulgated thereunder, to enter into a transaction or series of transactions), whether such transaction is supported by SpinCo management or shareholders, is a hostile acquisition, or otherwise, as a result of which SpinCo would merge or consolidate with any other Person or as a result of which any Person or any group of related Persons would (directly or indirectly) acquire, or have the right to acquire, from SpinCo and/or one or more holders of outstanding shares of SpinCo Capital Stock, a number of shares of SpinCo Capital Stock that would, when combined with any other changes in ownership of SpinCo Capital Stock pertinent for purposes of Section 355(e) of the Code, comprise 40% or more of (A) the value of all outstanding shares of stock of SpinCo as of the date of such transaction, or in the case of a series of transactions, the date of the last transaction of such series, or (B) the total combined voting power of all outstanding shares of voting stock of SpinCo as of the date of such transaction, or in the case of a series of transactions, the date of the last transaction of such series. Notwithstanding the foregoing, a Proposed Acquisition Transaction shall not include (A) the adoption by SpinCo of a shareholder rights plan or (B) issuances by SpinCo that satisfy Safe Harbor VIII (relating to acquisitions in connection with a person’s performance of services) or Safe Harbor IX (relating to acquisitions by a retirement plan of an employer) of Treasury Regulation Section 1.355-7(d). For purposes of determining whether a transaction constitutes an indirect acquisition, any recapitalization resulting in a shift of voting power or any redemption of shares of stock shall be treated as an indirect acquisition of shares of stock by the exchanging or non-exchanging shareholders, as applicable. This definition and the application thereof are intended to monitor compliance with Section 355(e) of the Code and shall be interpreted accordingly. Any clarification of, or change in, the statute or regulations promulgated under Section 355(e) of the Code shall be incorporated in this definition and its interpretation.

 

Representation Letters ” means the representation letters and any other materials (including, without limitation, the Ruling Request) delivered or deliverable by Distributing and others in connection with the rendering by Tax Advisors, and/or the issuance by the IRS, of the Tax Opinions/Rulings.

 

Required Party ” shall have the meaning set forth in Section 5.02(a) of this Agreement.

 

Responsible Company ” means, with respect to any Tax Return, the Company having responsibility for preparing and filing such Tax Return under this Agreement.

 

Retention Date ” shall have the meaning set forth in Section 9.01 of this Agreement.

 

Ruling ” means any private letter ruling (and any supplemental private letter ruling, including without limitation, any Supplemental Ruling) issued by the IRS to Distributing in connection with the Transactions.

 

Ruling Documents ” means the Ruling and the Ruling Request.

 

Ruling Request ” means any letter filed by Distributing with the IRS requesting a ruling regarding certain tax consequences of the Transactions (including all attachments, exhibits, and other materials submitted with such ruling request letter) and any amendment or supplement to such ruling request letter.

 

4
 

 

EXHIBIT 10.2

 

Section 41 Credit ” means any credit allowed pursuant to Section 41 of the Code, pertaining to research for credit.

 

Section 45K Credit ” means any credit allowed pursuant to Section 45K of the Code, including any credit allowed pursuant to Section 29 of the Code prior to the redesignation of Section 29 as Section 45K.

 

Section 48B Credit ” means any credit allowed pursuant to Section 48B of the Code.

 

Section 199 Deduction ” means any deduction allowed pursuant to Section 199 of the Code.

 

Section 7.02(e) Acquisition Transaction ” means any transaction or series of transactions that is not a Proposed Acquisition Transaction but would be a Proposed Acquisition Transaction if the percentage reflected in the definition of Proposed Acquisition Transaction were 25% instead of 40%.

 

Separate Return ” means (a) in the case of any Tax Return of any member of the SpinCo Group (including any consolidated, combined or unitary return), any such Tax Return that does not include any member of the Distributing Group and (b) in the case of any Tax Return of any member of the Distributing Group (including any consolidated, combined or unitary return), any such Tax Return that does not include any member of the SpinCo Group.

 

Separation and Distribution Agreement ” means the Separation and Distribution Agreement, as amended from time to time, by and among Distributing and SpinCo dated as of the date hereof.

 

Specified Election ” means the election set forth in Section 4.04(c), but solely to the extent such election is claimed as being subject to the application of Section 168(k)(5) (or any similar provision of state income Tax law, if applicable).

 

Specified Excess Income Taxes ” means Income Taxes resulting from a reduction in SpinCo Federal Attributes that arose from a Specified Election in an amount equal to the excess of (x) the amount of such SpinCo Federal Attributes claimed as being subject to the application of Section 168(k)(5) (or any similar provision of state income Tax law, if applicable) over (y) the amount of such Tax Attributes not claimed as being subject to the application of Section 168(k)(5) (or any similar provision of state income Tax law, if applicable).

 

Specified Excess Tax Benefit ” means a Tax Benefit resulting from an adjustment pursuant to a Final Determination to a Tax Attribute that arose from a Specified Election in an amount equal to the excess of (x) the amount of such Tax Attribute claimed as being subject to the application of Section 168(k)(5) (or any similar provision of state income Tax law, if applicable) over (y) the amount of such Tax Attribute not claimed as being subject to the application of Section 168(k)(5) (or any similar provision of state income Tax law, if applicable).

 

SpinCo ” shall have the meaning provided in the first sentence of this Agreement.

 

SpinCo Capital Stock ” means all classes or series of capital stock of SpinCo, including (i) the SpinCo Common Stock, (ii) all options, warrants and other rights to acquire such capital stock and (iii) all instruments properly treated as stock in SpinCo for U.S. federal income tax purposes.

 

SpinCo Carried Item ” means any net operating loss, net capital loss, excess tax credit, or other similar Tax item of any member of the SpinCo Group which may or must be carried from one Tax Period to another prior Tax Period, or carried from one Tax Period to another subsequent Tax Period, under the Code or other applicable Tax Law.

 

SpinCo Common Stock ” has the meaning given to HART Common Stock in the Separation and Distribution Agreement.

 

SpinCo Federal Attribute ” shall have the meaning set forth in Section 2.02(a)(ii).

 

SpinCo Federal Consolidated Income Tax Return ” shall mean any United States federal Income Tax Return for the affiliated group (as that term is defined in Section 1504 of the Code) of which SpinCo is the common parent.

 

5
 

 

EXHIBIT 10.2

 

SpinCo Full Taxpayer ” means the assumption that the SpinCo Group (a) is subject to the highest marginal regular statutory income Tax rate that would be applicable to SpinCo if it filed Tax Returns on a standalone basis, (b) has sufficient taxable income to permit the realization or receipt of the relevant Tax Benefit at the earliest possible time, and (c) is not subject to the alternative minimum tax.

 

SpinCo Group ” means SpinCo and its Affiliates, as determined immediately after the Distribution.

 

SpinCo Group Attributes ” shall have the meaning set forth in Section 2.03(a)(ii).

 

SpinCo Separate Return ” means any Separate Return of SpinCo or any member of the SpinCo Group.

 

SpinCo State Attribute ” shall have the meaning set forth in Section 2.03(a)(ii).

 

State Income Tax ” means any Tax imposed by any State of the United States or the District of Columbia or by any political subdivision of any such State or the District of Columbia which is imposed on or measured by net income, including state and local franchise or similar Taxes measured by net income, and any interest, penalties, additions to tax, or additional amounts in respect of the foregoing.

 

State Other Tax ” means any Tax imposed by any State of the United States or the District of Columbia or by any political subdivision of any such State or the District of Columbia other than any State Income Taxes, and any interest, penalties, additions to tax, or additional amounts in respect of the foregoing.

 

State Tax ” means any State Income Taxes or State Other Taxes.

 

Straddle Period ” means any Tax Period that begins on or before and ends after the Deconsolidation Date.

 

Supplemental Ruling ” means any ruling issued by the IRS in connection with the spin-off other than a ruling in response to Distributing’s initial request for a private letter ruling.

 

Tax ” or “ Taxes ” means any income, gross income, gross receipts, profits, capital stock, franchise, withholding, payroll, social security, workers compensation, unemployment, disability, property, ad valorem , stamp, excise, severance, occupation, service, sales, use, license, lease, transfer, import, export, value added, alternative minimum, estimated or other tax (including any fee, assessment, or other charge in the nature of or in lieu of any tax) imposed by any governmental entity or political subdivision thereof, and any interest, penalties, additions to tax, or additional amounts in respect of the foregoing.

 

Tax Attribute ” shall mean a net operating loss, net capital loss, unused investment credit, unused foreign tax credit, excess charitable contribution, general business credit or any other Tax Item that could reduce a Tax.

 

Tax Authority ” means, with respect to any Tax, the governmental entity or political subdivision thereof that imposes such Tax, and the agency (if any) charged with the collection of such Tax for such entity or subdivision.

 

Tax Benefit ” means any refund, credit, or other reduction in otherwise required Tax payments.

 

Tax Contest ” means an audit, review, examination, or any other administrative or judicial proceeding with the purpose or effect of redetermining Taxes (including any administrative or judicial review of any claim for refund).

 

Tax Control ” means the definition of “control” set forth in Section 368(c) of the Code (or in any successor statute or provision), as such definition may be amended from time to time.

 

Tax Dispute ” shall have the meaning set forth in Section 14 of this Agreement.

 

Tax-Free Status ” means the qualification of the Contribution and Distribution, taken together, each (a) as a reorganization described in Sections 355(a) and 368(a)(1)(D) of the Code, (b) as a transaction in which the stock distributed thereby is “qualified property” for purposes of Sections 355(d), 355(e) and 361(c) of the Code and (c) as a transaction in which Distributing, SpinCo, and the shareholders of Distributing recognize no income or gain for U.S. federal income tax purposes pursuant to Sections 355, 361 and 1032 of the Code, other than, in the case of Distributing and SpinCo, intercompany items or excess loss accounts taken into account pursuant to the Treasury Regulations promulgated pursuant to Section 1502 of the Code.

 

6
 

 

EXHIBIT 10.2

 

Tax Item ” means any item of income, gain, loss, deduction, credit, recapture of credit or any other item which increases or decreases Taxes paid or payable.

 

Tax Law ” means the law of any governmental entity or political subdivision thereof relating to any Tax.

 

Tax Opinions/Rulings ” means the opinion or opinions of Tax Advisors deliverable to Distributing in connection with the Contribution and the Distribution and/or the Ruling or Rulings.

 

Tax Period ” means, with respect to any Tax, the period for which the Tax is reported as provided under the Code or other applicable Tax Law.

 

Tax Records ” means any Tax Returns, Tax Return workpapers, documentation relating to any Tax Contests, and any other books of account or records (whether or not in written, electronic or other tangible or intangible forms and whether or not stored on electronic or any other medium) required to be maintained under the Code or other applicable Tax Laws or under any record retention agreement with any Tax Authority.

 

Tax-Related Losses ” means (i) all federal, state and local Taxes (including interest and penalties thereon) imposed pursuant to any settlement, Final Determination, judgment or otherwise; (ii) all accounting, legal and other professional fees, and court costs incurred in connection with such Taxes; and (iii) all costs, expenses and damages associated with stockholder litigation or controversies and any amount paid by Distributing (or any Distributing Affiliate) or SpinCo (or any SpinCo Affiliate) in respect of the liability of shareholders, whether paid to shareholders or to the IRS or any other Tax Authority, in each case, resulting from the failure of the Contribution and the Distribution, taken together, to have Tax-Free Status.

 

Tax Return ” or “ Return ” means any report of Taxes due, any claim for refund of Taxes paid, any information return with respect to Taxes, or any other similar report, statement, declaration, or document required to be filed under the Code or other Tax Law, including any attachments, exhibits, or other materials submitted with any of the foregoing, and including any amendments or supplements to any of the foregoing.

 

Third Party Indemnifying Party ” shall have the meaning set forth in Section 5.02(b) of this Agreement.

 

Transactions ” means the Contribution, the Distribution and the other transactions contemplated by the Separation and Distribution Agreement.

 

Transition Services Agreement ” means the Transition Services Agreement, dated as of the date hereof, by and between Distributing and SpinCo.

 

Treasury Regulations ” means the regulations promulgated from time to time under the Code as in effect for the relevant Tax Period.

 

Unqualified Tax Opinion ” means an unqualified “will” opinion of a Tax Advisor, which Tax Advisor is acceptable to Distributing, on which Distributing may rely to the effect that a transaction will not affect the Tax-Free Status. Any such opinion must assume that the Contribution and Distribution, taken together, would have qualified for Tax-Free Status if the transaction in question did not occur.

 

Section 2. Allocation of Tax Liabilities.

 

Section 2.01 Distributing Liability .

 

(a) Distributing shall be liable for, and shall indemnify and hold harmless the SpinCo Group from and against any liability for, Taxes which are allocated to Distributing under this Section 2.

 

(b) SpinCo Liability . SpinCo shall be liable for, and shall indemnify and hold harmless the Distributing Group from and against any liability for, Taxes which are allocated to SpinCo under this Section 2.

 

Section 2.02 Allocation of United States Federal Income Tax and Federal Other Tax . Except as provided in Section 2.05, Federal Income Tax and Federal Other Tax shall be allocated as follows:

 

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EXHIBIT 10.2

 

(a) Allocation of Tax Relating to Distributing Federal Consolidated Income Tax Returns . For the Tax Periods ending on or before the Deconsolidation Date, Distributing shall be responsible for any and all Federal Income Taxes attributable to the Tax Items of the SpinCo Group (whether as a result of a Final Determination or otherwise) and attributable to the Tax Items of the Distributing Group (whether as a result of a Final Determination or otherwise).

 

(b) Allocation of Tax Relating to Federal Separate Income Tax Returns. (i) For the Tax Periods ending after the Deconsolidation Date, Distributing shall be responsible for any and all Federal Income Taxes due with respect to or required to be reported on any Distributing Separate Return (including any increase in such Tax as a result of a Final Determination)(ii) For the Tax Periods ending after the Deconsolidation Date, SpinCo shall be responsible for any and all Federal Income Taxes due with respect to or required to be reported on any SpinCo Separate Return (including any increase in such Tax as a result of a Final Determination).

 

(c) Allocation of Federal Other Tax .

 

(i) For the Tax Periods ending after the Deconsolidation Date, SpinCo shall be responsible for any and all Federal Other Taxes attributable to the Tax Items, or imposed on a member of, of the SpinCo Group.

 

(ii) For the Tax Periods ending after the Deconsolidation Date Distributing shall be responsible for any and all Federal Other Taxes attributable to the Tax Items of the Distributing Group.

 

Section 2.03 Allocation of State Income and State Other Taxes . Except as provided in Section 2.05, State Income Tax and State Other Tax shall be allocated as follows:

 

(a) Allocation of Tax Relating to Distributing State Combined Income Tax Returns .

 

(i) For the Tax Periods ending on or before the Deconsolidation Date, Distributing shall be responsible for any and all State Income Taxes, attributable to the Tax Items of the Distributing Group (whether as a result of a Final Determination or otherwise) and for any and all State Income Taxes, attributable to the Tax Items of the SpinCo Group (whether as a result of a Final Determination or otherwise). For the Tax Periods ending after the Deconsolidation Date, SpinCo shall be responsible for any and all State Income Taxes (calculated on the basis that SpinCo is a SpinCo Full Taxpayer) attributable to the Tax Items of the SpinCo Group (whether as a result of a Final Determination or otherwise). For the Tax Periods ending after the Deconsolidation Date, Distributing shall be responsible for any and all State Income Taxes, attributable to the Tax Items of the Distributing Group (whether as a result of a Final Determination or otherwise).

 

(ii) For the Tax Periods ending on or before the Deconsolidation Date, Distributing shall be responsible for any and all State Income Taxes (calculated on the basis that Distributing is a Distributing Full Taxpayer) attributable to any Tax Items of the Distributing Group which Taxes result from a reduction in any Tax Attributes of the SpinCo Group (any such Tax Attribute, a “ SpinCo State Attribute, ” and together with any SpinCo Federal Attribute, the “ SpinCo Group Attributes ”) relative to the amount of such Tax Attributes reflected on the original Tax Return in respect of such Tax Attributes (whether such reduction occurs as a result of a Final Determination or otherwise).

 

(b) Allocation of Tax Relating to State Separate Income Tax Returns. (i) For the Tax Periods ending after the Deconsolidation Date, Distributing shall be responsible for any and all State Income Taxes due with respect to or required to be reported on any Distributing Separate Return (including any increase in such Tax as a result of a Final Determination); (ii) For the Tax Periods ending after the Deconsolidation Date SpinCo shall be responsible for any and all State Income Taxes due with respect to or required to be reported on any SpinCo Separate Return (including any increase in such Tax as a result of a Final Determination).

 

(c) Allocation of State Other Tax .

 

(i) For the Tax Periods ending on or before the Deconsolidation Date, Distributing shall be responsible for any and all State Other Taxes attributable to the Tax Items of the Distributing Group and all State Other Taxes attributable to the Tax Items of the SpinCo Group.

 

(ii) For the Tax Periods ending after the Deconsolidation Date, SpinCo shall be responsible for any and all State Other Taxes attributable to the Tax Items of the SpinCo Group.

 

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EXHIBIT 10.2

 

(iii) For the Tax Periods ending after the Deconsolidation Date, Distributing shall be responsible for any and all State Other Taxes attributable to the Tax Items of the Distributing Group.

 

Section 2.04 Allocation of Foreign Taxes . Except as provided in Section 2.05, Foreign Income Tax and Foreign Other Tax shall be allocated as follows:

 

(a) Allocation of Tax Relating to Separate Returns. (i) Distributing shall be responsible for any and all Foreign Income Taxes due with respect to or required to be reported on any Distributing Separate Return, including Foreign Income Tax of Distributing or any member of the Distributing Group imposed by way of withholding by a member of the SpinCo Group (and including any increase in such Foreign Income Tax as a result of a Final Determination); (ii) For the Tax Periods ending after the Deconsolidation Date, SpinCo shall be responsible for any and all Foreign Income Taxes due with respect to or required to be reported on any SpinCo Separate Return, including Foreign Income Tax of SpinCo or any member of the SpinCo Group imposed by way of withholding by a member of the Distributing Group (and including any increase in such Foreign Income Tax as a result of a Final Determination).

 

(b) Allocation of Foreign Other Tax .

 

(i) For the Tax Periods ending on or before the Deconsolidation Date, Distributing shall be responsible for any and all Foreign Other Taxes attributable to the Tax Items of the Distributing Group and SpinCo Group.

 

(ii) For the Tax Periods ending after the Deconsolidation Date, SpinCo shall be responsible for any and all Foreign Other Taxes attributable to the Tax Items of the SpinCo Group.

 

(iii) For the Tax Periods ending after the Deconsolidation Date, Distributing shall be responsible for any and all Foreign Other Taxes attributable to the Tax Items of the Distributing Group.

 

Section 2.05 Certain Transaction and Other Taxes .

 

(a) SpinCo Liability . SpinCo shall be liable for, and shall indemnify and hold harmless the Distributing Group from and against any liability for:

 

(i) Any stamp, sales and use, gross receipts, value-added or other transfer Taxes imposed by any Tax Authority on any member of the SpinCo Group (if such member is primarily liable for such Tax) on the transfers occurring pursuant to the Transactions;

 

(ii) any Tax resulting from a breach by SpinCo of any covenant in this Agreement, the Separation and Distribution Agreement or any Ancillary Agreement; and

 

(iii) any Tax-Related Losses for which SpinCo is responsible pursuant to Section 7.05 of this Agreement.

 

(b) Distributing Liability . Distributing shall be liable for, and shall indemnify and hold harmless the SpinCo Group from and against any liability for:

 

(i) Any stamp, sales and use, gross receipts, value-added or other transfer Taxes imposed by any Tax Authority on any member of the Distributing Group (if such member is primarily liable for such Tax) on the transfers occurring pursuant to the Transactions; and

 

(ii) any Tax resulting from a breach by Distributing of any covenant in this Agreement, the Separation and Distribution Agreement or any Ancillary Agreement.

 

in the case of each of (i) and (ii), such amounts to be calculated on the basis that SpinCo is a SpinCo Full Taxpayer.

 

(c)Additional Restrictions . SpinCo agrees not to take any action after the Deconsolidation Date that would adversely impact the tax liability of Distributing prior to the Deconsolidation Date. Distributing agrees not to take any action after the Deconsolidation Date that would adversely impact the tax liability of SpinCo prior to the Deconsolidation Date.

 

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EXHIBIT 10.2

 

Section 2.06 SpinCo Group Attributes . For the avoidance of doubt (but without prejudice to the provisos set forth in Sections 2.02(a)(i) and (ii)), except as set forth in Section 6.01, SpinCo shall not be entitled to receive payment from Distributing in respect of any SpinCo Group Attributes or for any reduction of any Taxes (or increase in Tax Attributes) or any Tax Benefit (whether such Tax Attributes, Tax Benefits or reduction in Taxes are reported on an original Tax Return, arise pursuant to a Final Determination or otherwise).

 

Section 3. Proration of Taxes.

 

(a) General Method of Proration . Tax Items shall be apportioned between Pre-Deconsolidation Periods and Post-Deconsolidation Periods in accordance with the principles of Treasury Regulation Section 1.1502-76(b) as reasonably interpreted and applied by Distributing. If the Deconsolidation Date is not an Accounting Cutoff Date (and provided an election under Treasury Regulation Section 1.1502-76(b)(2)(ii)(D) is not made), the provisions of Treasury Regulation Section 1.1502-76(b)(2)(iii) will be applied to ratably allocate the items (other than extraordinary items) for the month which includes the Deconsolidation Date. At Distributing’s election, in its sole discretion, an election under Treasury Regulation Section 1.1502-76(b)(2)(ii)(D) (relating to ratable allocation of a year’s items) shall be made.

 

(b) Transaction Treated as Extraordinary Item . In determining the apportionment of Tax Items between Pre-Deconsolidation Periods and Post-Deconsolidation Periods, any Tax Items relating to the Transactions shall be treated as extraordinary items described in Treasury Regulation Section 1.1502-76(b)(2)(ii)(C) and shall (to the extent occurring on or prior to the Deconsolidation Date) be allocated to Pre-Deconsolidation Periods, and any Taxes related to such items shall be treated under Treasury Regulation Section 1.1502-76(b)(2)(iv) as relating to such extraordinary item and shall (to the extent occurring on or prior to the Deconsolidation Date) be allocated to Pre-Deconsolidation Periods.

 

Section 4. Preparation and Filing of Tax Returns.

 

Section 4.01 General . Except as otherwise provided in this Section 4, Tax Returns shall be prepared and filed when due (including extensions) by the person obligated to file such Tax Returns under the Code or applicable Tax Law. The Companies shall provide, and shall cause their Affiliates to provide, assistance and cooperation to one another in accordance with Section 8 with respect to the preparation and filing of Tax Returns, including providing information required to be provided in Section 8.

 

Section 4.02 Distributing’s Responsibility . Distributing has the exclusive obligation and right to prepare and file, or to cause to be prepared and filed:

 

(a) Distributing Federal Consolidated Income Tax Returns for any Tax Periods ending on, before or after the Deconsolidation Date;

 

(b) Distributing State Combined Income Tax Returns and any other Joint Returns which Distributing reasonably determines are required to be filed (or which Distributing chooses to be filed) by the Companies or any of their Affiliates for Tax Periods ending on, before or after the Deconsolidation Date; provided , however , that Distributing shall use commercially reasonable efforts to provide written notice to SpinCo of such determination to file a Distributing State Combined Income Tax Return or other Joint Return if such a Tax Return has never for such type of Tax in such jurisdiction been filed in a prior Tax Period; and

 

(c) SpinCo Separate Returns relating to Income Taxes and Distributing Separate Returns which Distributing reasonably determines are required to be filed by the Companies or any of their Affiliates (or which Distributing chooses to be filed) for Tax Periods ending on, before or after the Deconsolidation Date (limited, in the case of SpinCo Separate Returns relating to Income Taxes, to such Returns as are required to be filed (or which Distributing chooses to be filed) for Tax Periods beginning prior to the Deconsolidation Date);

 

provided , however , that to the extent any Tax Returns described in clauses (b), (c) or (d) relate to SpinCo, the preparation and filing of such Tax Returns by Distributing shall be treated as a Service pursuant to the Transition Services Agreement, and SpinCo shall pay to Distributing the applicable Service Charge as provided in the Transition Services Agreement.

 

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EXHIBIT 10.2

 

Section 4.03 SpinCo’s Responsibility . SpinCo shall prepare and file, or shall cause to be prepared and filed, all Tax Returns required to be filed by or with respect to members of the SpinCo Group other than those Tax Returns which Distributing is required, or chooses, to prepare and file under Section 4, provided that SpinCo shall not file any SpinCo Separate Returns for a Tax Period in a jurisdiction and for a type of Tax where Distributing files a Joint Return. The Tax Returns required to be prepared and filed by SpinCo under this Section 4.03 shall include (a) any SpinCo Federal Consolidated Income Tax Return for Tax Periods ending after the Deconsolidation Date, (b) SpinCo Separate Returns relating to Income Taxes required to be filed for Tax Periods beginning on or after the Deconsolidation Date, and (c) SpinCo Separate Returns relating to Other Taxes.

 

Section 4.04 Tax Accounting Practices .

 

(a) General Rule . With respect to any Tax Return that SpinCo has the obligation and right to prepare and file, or cause to be prepared and filed, under Section 4.03, for any Pre-Deconsolidation Period or any Straddle Period (or any taxable period beginning after the Deconsolidation Date to the extent items reported on such Tax Return might reasonably be expected to affect items reported on any Tax Return that Distributing has the obligation or right to prepare and file, or chooses to be prepared and filed, under Section 4.03), except as provided in Section 4.04(b) such Tax Return shall be prepared in accordance with past practices, accounting methods, elections or conventions (“ Past Practices ”) used with respect to the Tax Returns in question (unless there is no reasonable basis for the use of such Past Practices or unless there is no adverse effect to Distributing), and to the extent any items are not covered by Past Practices (or in the event that there is no reasonable basis for the use of such Past Practices or there is no adverse effect to Distributing), in accordance with reasonable Tax accounting practices selected by SpinCo. Except as provided in Section 4.04(b), Distributing shall prepare any Tax Return which it has the obligation and right to prepare and file, or cause to be prepared and filed, under Section 4.02, in accordance with reasonable Tax accounting practices selected by Distributing.

 

(b) Reporting of Transactions . The Tax treatment reported on any Tax Return relating to the Transactions shall be consistent with the treatment thereof in the Ruling Requests and the Tax Opinions/Rulings, unless there is no reasonable basis for such Tax treatment. The Tax treatment reported on any Tax Return for which SpinCo is the Responsible Party shall be consistent with that on any Tax Return filed or to be filed by Distributing or any member of the Distributing Group or caused to be filed by Distributing, in each case with respect to periods prior to the Distribution Date or with respect to Straddle Periods (“ Distributing Group Transaction Returns ”), unless there is no reasonable basis for such Tax treatment. To the extent there is a Tax treatment relating to the Transactions which is not covered by the Ruling Requests, the Tax Opinions/Rulings or Distributing Group Transaction Returns, the Companies shall agree on the Tax treatment to be reported on any Tax Return. For this purpose, the Tax treatment shall be determined by the Responsible Company with respect to such Tax Return and shall be agreed to by the other Company unless either (i) there is no reasonable basis for such Tax treatment, or (ii) such Tax treatment is inconsistent with the Tax treatment contemplated in the Ruling Requests, the Tax Opinions/Rulings and/or the Distributing Group Transaction Returns. Such Tax Return shall be submitted for review pursuant to Section 4.06(a), and any dispute regarding such proper Tax treatment shall be referred for resolution pursuant to Section 14, sufficiently in advance of the filing date of such Tax Return (including extensions) to permit timely filing of the Tax Return.

 

(c) Bonus Depreciation . Notwithstanding anything to the contrary herein, Distributing shall be entitled, in its sole discretion, to elect whether SpinCo shall take “bonus depreciation” described in Section 168(k) of the Code for any federal income tax purposes for any tax year of SpinCo that includes the Deconsolidation Date (or the day following the Deconsolidation Date), irrespective of whether Distributing is responsible for filing the Tax Return to which such election relates under this Agreement.

 

Section 4.05 Consolidated or Combined Tax Returns . At Distributing’s election, in its sole discretion, SpinCo will elect and join, and will cause its respective Affiliates to elect and join, in filing any Distributing State Combined Income Tax Returns and any Joint Returns that Distributing determines are required to be filed or that Distributing chooses to file pursuant to Section 4.02(b). With respect to any SpinCo Separate Returns relating to any Tax Period (or portion thereof) ending on or prior to the Deconsolidation Date, SpinCo will elect and join, and will cause its respective Affiliates to elect and join, in filing consolidated, unitary, combined, or other similar joint Tax Returns, to the extent reasonably determined by Distributing.

 

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EXHIBIT 10.2

 

Section 4.06 Right to Review Tax Returns . The Responsible Company with respect to any Tax Return shall make such Tax Return and related workpapers available for review by the other Company, if requested, to the extent (i) such Tax Return relates to Taxes for which the requesting party would reasonably be expected to be liable, (ii) such Tax Return relates to Taxes and the requesting party would reasonably be expected to be liable in whole or in part for any additional Taxes owing as a result of adjustments to the amount of such Taxes reported on such Tax Return, (iii) such Tax Return relates to Taxes for which the requesting party would reasonably be expected to have a claim for Tax Benefits under this Agreement, or (iv) the requesting party reasonably determines that it must inspect such Tax Return to confirm compliance with the terms of this Agreement. The Responsible Company shall use its reasonable best efforts to make such Tax Return available for review as required under this paragraph at least fifteen (15) days prior to the due date for filing of such Tax Return to provide the requesting party with a meaningful opportunity to analyze and comment on such Tax Return.

 

Section 4.07 SpinCo Carrybacks, Carryforwards and Claims for Refund . SpinCo hereby agrees that Distributing shall be entitled to determine in its sole discretion whether (x) any Adjustment Request with respect to any Joint Return shall be filed to claim in any Pre-Deconsolidation Period any SpinCo Carried Item, and (y) any available elections shall be made to waive the right to claim in any Pre-Deconsolidation Period with respect to any Joint Return any SpinCo Carried Item, and whether any affirmative election shall be made to claim any such SpinCo Carried Item.

 

Section 4.08 Apportionment of Earnings and Profits and Tax Attributes . Distributing shall in good faith advise SpinCo as soon as reasonably practicable in writing of the portion, if any, of any earnings and profits, Tax Attribute, overall foreign loss or other consolidated, combined or unitary attribute which Distributing determines shall be allocated or apportioned to the SpinCo Group under applicable Tax law. SpinCo and all members of the SpinCo Group shall prepare all Tax Returns in accordance with such written notice. In the event of an adjustment to the earnings and profits or any Tax Attributes determined by Distributing, Distributing shall promptly notify SpinCo in writing of such adjustment. For the absence of doubt, Distributing shall not be liable to SpinCo or any member of the SpinCo Group for any failure of any determination under this Section 4.08 to be accurate under applicable law and regulations and in good faith.

 

Section 5. Tax Payments.

 

Section 5.01 Payment of Separate Company Taxes . Each Company shall pay, or shall cause to be paid, to the applicable Tax Authority when due all Taxes owed by such Company or a member of such Company’s Group with respect to a Separate Return.

 

Section 5.02 Indemnification Payments .

 

(a) If any Company (the “ Payor ”) is required under applicable Tax Law to pay to a Tax Authority a Tax that another Company (the “ Required Party ”) is liable for under this Agreement, the Required Party shall reimburse the Payor within eight (8) days of delivery by the Payor to the Required Party of an invoice for the amount due, accompanied by evidence of payment and a statement detailing the Taxes paid and describing in reasonable detail the particulars relating thereto.

 

(b) If any Company (the “ Third Party Indemnifying Party ”) is required under the terms of an agreement to which it is a party (or with respect to which it has agreed to guarantee the obligations thereunder) to pay to a third party a Tax that another Company (the “ Company Indemnifying Party ”) is liable for under this Agreement, the Company Indemnifying Party shall reimburse the Third Party Indemnifying Party within eight (8) days of delivery by the Third Party Indemnifying Party to the Company Indemnifying Party of an invoice for the amount due, accompanied by evidence of payment and a statement detailing the Taxes paid and describing in reasonable detail the particulars relating thereto.

 

(c) All indemnification payments under this Agreement shall be made by Distributing directly to SpinCo and by SpinCo directly to Distributing; provided, however , that if the Companies mutually agree with respect to any such indemnification payment, any member of the Distributing Group, on the one hand, may make such indemnification payment to any member of the SpinCo Group, on the other hand, and vice versa.

 

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EXHIBIT 10.2

 

Section 6. Tax Benefits.

 

Section 6.01 Tax Benefits .

 

(a) Distributing shall be entitled to any refund (and any interest thereon received from the applicable Tax Authority) of Taxes received by any member of the Distributing Group or the SpinCo Group, other than any refund to which SpinCo is entitled pursuant to Section 6.01(d). SpinCo shall not be entitled to any refund (or any interest thereon received from the applicable Tax Authority), except as set forth in Section 6.01(d). A Company receiving a refund to which another Company is entitled hereunder shall pay over such refund to such other Company within five (5) Business Days after such refund is received.

 

(b) If a member of the SpinCo Group would be expected to realize a Tax Benefit as a result of an adjustment pursuant to a Final Determination to any Taxes for which a member of the Distributing Group would otherwise be liable hereunder (or an adjustment pursuant to a Final Determination to any Tax Attribute of a member of the Distributing Group) and such Tax Benefit would not have arisen but for such adjustment (determined on a “with and without” basis assuming the SpinCo Group is a SpinCo Full Taxpayer), SpinCo shall make a payment to Distributing within five (5) Business Days following such Final Determination, in an amount equal to the Taxes for which the Distributing Group would otherwise be, or would otherwise be reasonably expected to be, liable as a result of such adjustment provided, however , that to the extent the Tax Benefit resulting from the Final Determination would be expected to be realized in a Pre-Deconsolidation Period, SpinCo shall instead be responsible under this Section 6.01(b) for an amount equal to the excess of (x) the amount of Taxes for which a member of the Distributing Group is liable as a result of the adjustment (for the avoidance of doubt, including any interest payable in respect thereof) over (y) the amount of such Tax Benefit (for the avoidance of doubt, including any interest owed in respect thereof) (such amounts to be calculated on the basis that Distributing is a Distributing Full Taxpayer), and provided, further, however, that SpinCo shall not be required to make a payment to Distributing pursuant to this Section 6.01(b) to the extent of any Specified Excess Tax Benefit. For purposes of determining the amount of Taxes for which the Distributing Group is, or is reasonably be expected to be, liable as a result of an adjustment pursuant to a Final Determination, the Distributing Group shall be deemed (i) not to utilize any Tax Attributes available to the Distributing Group and (ii) to be a Distributing Full Taxpayer.

 

(c) No later than five (5) Business Days following a Final Determination described in Section 6.01(b), Distributing shall provide SpinCo with a written calculation of the amount payable to Distributing by SpinCo pursuant to this Section 6. In the event that SpinCo disagrees with any such calculation described in this Section 6.01(c), SpinCo shall so notify Distributing in writing within thirty (30) days of receiving the written calculation set forth above in this Section 6.01(c). Distributing and SpinCo shall endeavor in good faith to resolve such disagreement, and, failing that, the amount payable under Section 6.01(b) shall be determined in accordance with the disagreement resolution provisions of Section 14 as promptly as practicable.

 

(d) Without prejudice to Section 6.01(b), SpinCo shall be entitled to any refund (and any interest thereon received from the applicable Tax Authority) of Taxes reported on (i) a SpinCo Separate Return for a Post-Deconsolidation Period or (ii) a SpinCo Separate Return of Other Taxes for any Tax period that ends after the Deconsolidation Date. For the avoidance of doubt, Distributing, and not SpinCo, shall be entitled to any refund or Tax Benefit that results from a SpinCo Carried Item, other than any refund to which SpinCo is entitled pursuant to the first sentence of this Section 6.01(d).

 

Section 6.02 Distributing and SpinCo Income Tax Deductions in Respect of Certain Equity Awards and Incentive Compensation .

 

(a) Solely the member of the Group by which the relevant individual is currently employed at the time of the vesting, exercise, disqualifying disposition, payment or other relevant taxable event, as appropriate, in respect of the equity awards and other incentive compensation described in Article VIII of the Separation and Distribution Agreement, or, if such individual is not currently employed at such time by a member of the Group, the member of the Group by which the relevant individual was most recently employed, shall be entitled to claim, in a Post-Deconsolidation Period, any Income Tax deduction in respect of such equity awards and other incentive compensation on its respective Tax Return associated with such event.

 

(b) In the event that an employee of SpinCo exercises any Distributing stock option, SpinCo, and not Distributing, will be entitled to any tax deduction available in respect of such exercise.

 

(c) In the event that an employee of Distributing exercises any SpinCo stock option, Distributing, and not SpinCo, will be entitled to any tax deduction available in respect of such exercise.

 

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EXHIBIT 10.2

 

Section 7. Tax-Free Status.

 

Section 7.01 Tax Opinions/Rulings and Representation Letters . Each of SpinCo and Distributing hereby represents and agrees that (A) it has examined the Ruling Documents and the Representation Letters prior to the date hereof and (B) subject to any qualifications therein, all information contained in such Ruling Documents or Representation Letters that concerns or relates to such Company or any member of its Group is and, to the extent such information relates to future events or circumstances, will be, true, correct and complete.

 

Section 7.02 Restrictions on SpinCo .

 

(a) SpinCo agrees that it will not take or fail to take, or permit any SpinCo Affiliate to take or fail to take, any action where such action or failure to act would be inconsistent with or cause to be untrue any material, information, covenant or representation in any Representation Letters or Tax Opinions/Rulings. SpinCo agrees that it will not take or fail to take, or permit any SpinCo Affiliate to take or fail to take, any action which prevents or could reasonably be expected to prevent (A) the Tax-Free Status, or (B) any transaction contemplated by the Separation and Distribution Agreement which is intended by the parties to be tax-free from so qualifying, including, in the case of SpinCo, issuing any SpinCo Capital Stock that would prevent the Distribution from qualifying as a tax-free distribution within the meaning of Section 355 of the Code.

 

(b) Pre-Distribution Period. During the period from the date hereof until the completion of the Distribution, SpinCo shall not take any action (including the issuance of SpinCo Capital Stock) or permit any SpinCo Affiliate directly or indirectly controlled by SpinCo to take any action if, as a result of taking such action, SpinCo could have a number of shares of SpinCo Capital Stock (computed on a fully diluted basis or otherwise) issued and outstanding, including by way of the exercise of stock options (whether or not such stock options are currently exercisable) or the issuance of restricted stock, that could cause Distributing to cease to have Tax Control of SpinCo.

 

(c) SpinCo agrees that, from the date hereof until the first day after the two-year anniversary of the Distribution Date, it will (i) maintain its status as a company engaged in the Active Trade or Business for purposes of Section 355(b)(2) of the Code, and (ii) not engage in any transaction that would result in it ceasing to be a company engaged in the Active Trade or Business for purposes of Section 355(b)(2) of the Code, in each case, taking into account Section 355(b)(3) of the Code.

 

(d) SpinCo agrees that, from the date hereof until the first day after the two-year anniversary of the Distribution Date, it will not (i) enter into any Proposed Acquisition Transaction or, to the extent SpinCo has the right to prohibit any Proposed Acquisition Transaction, permit any Proposed Acquisition Transaction to occur (whether by (a) redeeming rights under a shareholder rights plan, (b) finding a tender offer to be a “permitted offer” under any such plan or otherwise causing any such plan to be inapplicable or neutralized with respect to any Proposed Acquisition Transaction, or (c) approving any Proposed Acquisition Transaction, whether for purposes of Section 203 of the DGCL or any similar corporate statute, any “fair price” or other provision of SpinCo’s charter or bylaws or otherwise), (ii) merge or consolidate with any other Person or liquidate or partially liquidate, (iii) in a single transaction or series of transactions sell or transfer (other than sales or transfers of inventory in the ordinary course of business) all or substantially all of the assets that were transferred to SpinCo pursuant to the Contribution or sell or transfer 60% or more of the gross assets of the Active Trade or Business or 60% or more of the consolidated gross assets of SpinCo and its Affiliates (such percentages to be measured based on fair market value as of the Distribution Date), (iv) redeem or otherwise repurchase (directly or through a SpinCo Affiliate) any SpinCo stock, or rights to acquire stock, except to the extent such repurchases satisfy Section 4.05(1)(b) of Revenue Procedure 96-30 (as in effect prior to the amendment of such Revenue Procedure by Revenue Procedure 2003-48), (v) amend its certificate of incorporation (or other organizational documents), or take any other action, whether through a stockholder vote or otherwise, affecting the voting rights of SpinCo Capital Stock (including, without limitation, through the conversion of one class of SpinCo Capital Stock into another class of SpinCo Capital Stock) or (vi) take any other action or actions (including any action or transaction that would be reasonably likely to be inconsistent with any representation made in the Representation Letters or the Tax Opinions/Rulings) which in the aggregate (and taking into account any other transactions described in this subparagraph (d) ) would be reasonably likely to have the effect of causing or permitting one or more persons (whether or not acting in concert) to acquire directly or indirectly stock representing a Fifty-Percent or Greater Interest in SpinCo or otherwise jeopardize the Tax-Free Status, unless prior to taking any such action set forth in the foregoing clauses (i) through (vi), (A) SpinCo shall have requested that Distributing obtain a Ruling in accordance with Section 7.04(b) and (d) of this Agreement to the effect that such transaction will not affect the Tax-Free Status and Distributing shall have received such a Ruling in form and substance satisfactory to Distributing in its sole and absolute discretion, which discretion shall be exercised in good faith solely to preserve the Tax-Free Status (and in determining whether a Ruling is satisfactory, Distributing may consider, among other factors, the appropriateness of any underlying assumptions and management’s representations made in connection with such Ruling), or (B) SpinCo shall provide Distributing with an Unqualified Tax Opinion in form and substance satisfactory to Distributing in its sole and absolute discretion, which discretion shall be exercised in good faith solely to preserve the Tax-Free Status (and in determining whether an opinion is satisfactory, Distributing may consider, among other factors, the appropriateness of any underlying assumptions and management’s representations if used as a basis for the opinion and Distributing may determine that no opinion would be acceptable to Distributing) or (C) Distributing shall have waived the requirement to obtain such Ruling or Unqualified Tax Opinion.

 

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EXHIBIT 10.2

 

(e) Certain Issuances of SpinCo Capital Stock . If SpinCo proposes to enter into any Section 7.02(e) Acquisition Transaction or, to the extent SpinCo has the right to prohibit any Section 7.02(e) Acquisition Transaction, proposes to permit any Section 7.02(e) Acquisition Transaction to occur, in each case, during the period from the date hereof until the first day after the two-year anniversary of the Distribution Date, SpinCo shall provide Distributing, no later than ten (10) days following the signing of any written agreement with respect to the Section 7.02(e) Acquisition Transaction, with a written description of such transaction (including the type and amount of SpinCo Capital Stock to be issued in such transaction) and a certificate of the Board of Directors of SpinCo to the effect that the Section 7.02(e) Acquisition Transaction is not a Proposed Acquisition Transaction or any other transaction to which the requirements of Section 7.02(d) apply (a “ Board Certificate ”).

 

(f) SpinCo Internal Restructuring. SpinCo shall not engage in, cause or permit any internal restructuring (including by making or revoking any election under Treasury Regulation Section 301.7701-3) involving SpinCo and/or any of its subsidiaries or any contribution, sale or other transfer of any of the assets directly or indirectly contributed to SpinCo as part of the Contribution to SpinCo or any of its subsidiaries (any such action, an “ Internal Restructuring ”) during or with respect to any Tax Period (or portion thereof) ending on or prior to the Distribution Date without obtaining the prior written consent of Distributing (such prior written consent not to be unreasonably withheld). SpinCo shall provide written notice to Distributing describing any Internal Restructuring proposed to be taken during or with respect to any Tax Period (or portion thereof) beginning after the Distribution Date and ending on or prior to the two-year anniversary of the Distribution Date and shall consult with Distributing regarding any such proposed actions reasonably in advance of taking any such proposed actions and shall consider in good faith any comments from Distributing relating thereto.

 

(g) Distributions by Foreign SpinCo Subsidiaries. Until January 1 st of the calendar year immediately following the calendar year in which the Distribution occurs, SpinCo shall neither cause nor permit any foreign subsidiary of SpinCo to enter into any transaction or take any action that would be considered under the Code to constitute the declaration or payment of a dividend (including pursuant to Section 304 of the Code) without obtaining the prior written consent of Distributing (such prior written consent not to be unreasonably withheld).

 

Section 7.03 Restrictions on Distributing . Distributing agrees that it will not take or fail to take, or permit any member of the Distributing Group to take or fail to take, any action where such action or failure to act would be inconsistent with or cause to be untrue any material, information, covenant or representation in any Representation Letters or Tax Opinions/Rulings. Distributing agrees that it will not take or fail to take, or permit any member of the Distributing Group to take or fail to take, any action which prevents or could reasonably be expected to prevent (A) the Tax-Free Status, or (B) any other transaction contemplated by the Separation and Distribution Agreement which is intended by the parties to be tax-free from so qualifying; provided , however , that this Section 7.03 shall not be construed as obligating Distributing to consummate the Distribution without the satisfaction or waiver of all conditions set forth in Section 4.3 of the Separation and Distribution Agreement nor shall it be construed as preventing Distributing from terminating the Separation and Distribution Agreement pursuant to Article XI thereof.

 

Section 7.04 Procedures Regarding Opinions and Rulings .

 

(a) If SpinCo notifies Distributing that it desires to take one of the actions described in clauses (i) through (vi) of Section 7.02(d) (a “ Notified Action ”), Distributing and SpinCo shall reasonably cooperate to attempt to obtain the Ruling or Unqualified Tax Opinion referred to in Section 7.02(d), unless Distributing shall have waived the requirement to obtain such Ruling or Unqualified Tax Opinion.

 

15
 

 

EXHIBIT 10.2

 

(b) Rulings or Unqualified Tax Opinions at SpinCo’s Request. Distributing agrees that at the reasonable request of SpinCo pursuant to Section 7.02(d), Distributing shall cooperate with SpinCo and use its reasonable best efforts to seek to obtain, as expeditiously as possible, a Ruling from the IRS or an Unqualified Tax Opinion for the purpose of permitting SpinCo to take the Notified Action. Further, in no event shall Distributing be required to file any Ruling Request under this Section 7.04(b) unless SpinCo represents that (A) it has read the Ruling Request, and (B) all information and representations, if any, relating to any member of the SpinCo Group, contained in the Ruling Request documents are (subject to any qualifications therein) true, correct and complete. SpinCo shall reimburse Distributing for all reasonable costs and expenses incurred by the Distributing Group in obtaining a Ruling or Unqualified Tax Opinion requested by SpinCo within ten (10) Business Days after receiving an invoice from Distributing therefor.

 

(c) Rulings or Unqualified Tax Opinions at Distributing’s Request . Distributing shall have the right to obtain a Ruling or an Unqualified Tax Opinion at any time in its sole and absolute discretion. If Distributing determines to obtain a Ruling or an Unqualified Tax Opinion, SpinCo shall (and shall cause each Affiliate of SpinCo to) cooperate with Distributing and take any and all actions reasonably requested by Distributing in connection with obtaining the Ruling or Unqualified Tax Opinion (including, without limitation, by making any representation or covenant or providing any materials or information requested by the IRS or Tax Advisor; provided that SpinCo shall not be required to make (or cause any Affiliate of SpinCo to make) any representation or covenant that is inconsistent with historical facts or as to future matters or events over which it has no control). Distributing and SpinCo shall each bear its own costs and expenses in obtaining a Ruling or an Unqualified Tax Opinion requested by Distributing.

 

(d) SpinCo hereby agrees that Distributing shall have sole and exclusive control over the process of obtaining any Ruling, and that only Distributing shall apply for a Ruling. In connection with obtaining a Ruling pursuant to Section 7.04(b), (A) Distributing shall keep SpinCo informed in a timely manner of all material actions taken or proposed to be taken by Distributing in connection therewith; (B) Distributing shall (1) reasonably in advance of the submission of any Ruling Request documents provide SpinCo with a draft copy thereof, (2) reasonably consider SpinCo’s comments on such draft copy, and (3) provide SpinCo with a final copy; and (C) Distributing shall provide SpinCo with notice reasonably in advance of, and SpinCo shall have the right to attend, any formally scheduled meetings with the IRS (subject to the approval of the IRS) that relate to such Ruling. Neither SpinCo nor any SpinCo Affiliate directly or indirectly controlled by SpinCo shall seek any guidance from the IRS or any other Tax Authority (whether written, verbal or otherwise) at any time concerning the Transactions (including the impact of any transaction on the Transactions) or any transaction listed on Schedule 7.02(a).

 

Section 7.05 Liability for Tax-Related Losses .

 

(a) Notwithstanding anything in this Agreement or the Separation and Distribution Agreement to the contrary, SpinCo shall be responsible for, and shall indemnify and hold harmless Distributing and its Affiliates and each of their respective officers, directors and employees from and against, one hundred percent (100%) of any Tax-Related Losses that are attributable to or result from any one or more of the following: (A) the direct or indirect acquisition (other than pursuant to the Contribution, or the Distribution) of all or a portion of SpinCo’s stock and/or its or its subsidiaries’ stock or assets by any means whatsoever by any Person, (B) any negotiations, understandings, agreements or arrangements by SpinCo with respect to transactions or events (including, without limitation, stock issuances, pursuant to the exercise of stock options or otherwise, option grants, capital contributions or acquisitions, or a series of such transactions or events) that cause the Distribution to be treated as part of a plan pursuant to which one or more Persons acquire directly or indirectly stock of SpinCo representing a Fifty-Percent or Greater Interest therein, (C) any action or failure to act by SpinCo after the Distribution (including, without limitation, any amendment to SpinCo’s certificate of incorporation (or other organizational documents), whether through a stockholder vote or otherwise) affecting the voting rights of SpinCo stock (including, without limitation, through the conversion of one class of SpinCo Capital Stock into another class of SpinCo Capital Stock), (D) any act or failure to act by SpinCo or any SpinCo Affiliate described in Section 7.02 (regardless whether such act or failure to act is covered by a Ruling, Unqualified Tax Opinion or waiver described in clause (A), (B) or (C) of Section 7.02(d), a Board Certificate described in Section 7.02(e) or a consent described in Section 7.02(f) or (g)) or (E) any breach by SpinCo of its agreement and representation set forth in Section 7.01(a).

 

16
 

 

EXHIBIT 10.2

 

(b) SpinCo shall pay Distributing the amount of any Tax-Related Losses for which SpinCo is responsible under this Section 7.05 (calculated on the basis that Distributing is a Distributing Full Taxpayer): (A) in the case of Tax-Related Losses described in clause (i) of the definition of Tax-Related Losses no later than two (2) Business Days after receipt by SpinCo of notice of the settlement, Final Determination, judgment or other action imposing the Taxes described in such clause (i) with respect to the Tax Return for the year of the Contribution or Distribution, as applicable ( provided that if such Tax-Related Losses arise pursuant to a Final Determination described in clause (a), (b) or (c) of the definition of “Final Determination,” then SpinCo shall pay Distributing no later than two (2) Business Days after receipt by SpinCo of notice of such Final Determination) and (B) in the case of Tax-Related Losses described in clause (ii) or (iii) of the definition of Tax-Related Losses, no later than two (2) Business Days after the date on which SpinCo receives notice from Distributing evidencing Distributing’s payment of such Tax-Related Losses.

 

Section 8. Assistance and Cooperation.

 

Section 8.01 Assistance and Cooperation .

 

(a) The Companies shall cooperate (and cause their respective Affiliates to cooperate) with each other and with each other’s agents, including accounting firms and legal counsel, in connection with Tax matters relating to the Companies and their Affiliates including (i) preparation and filing of Tax Returns, (ii) determining the liability for and amount of any Taxes due (including estimated Taxes) or the right to and amount of any refund of Taxes, (iii) examinations of Tax Returns, and (iv) any administrative or judicial proceeding in respect of Taxes assessed or proposed to be assessed. Such cooperation shall include making all information and documents in their possession relating to the other Company and its Affiliates available to such other Company as provided in Section 9. Each of the Companies shall also make available to the other, as reasonably requested and available, personnel (including officers, directors, employees and agents of the Companies or their respective Affiliates) responsible for preparing, maintaining, and interpreting information and documents relevant to Taxes, and personnel reasonably required as witnesses or for purposes of providing information or documents in connection with any administrative or judicial proceedings relating to Taxes.

 

(b) Any information or documents provided under this Section 8 shall be kept confidential by the Company receiving the information or documents, except as may otherwise be necessary in connection with the filing of Tax Returns or in connection with any administrative or judicial proceedings relating to Taxes. Notwithstanding any other provision of this Agreement or any other agreement, (i) neither Distributing nor any Distributing Affiliate shall be required to provide SpinCo or any SpinCo Affiliate or any other Person access to or copies of any information or procedures (including the proceedings of any Tax Contest) other than information or procedures that relate solely to SpinCo, the business or assets of SpinCo or any SpinCo Affiliate and (ii) in no event shall Distributing or any Distributing Affiliate be required to provide SpinCo, any SpinCo Affiliate or any other Person access to or copies of any information if such action could reasonably be expected to result in the waiver of any Privilege. In addition, in the event that Distributing determines that the provision of any information to SpinCo or any SpinCo Affiliate could be commercially detrimental, violate any law or agreement or waive any Privilege, the parties shall use reasonable best efforts to permit compliance with its obligations under this Section 8 in a manner that avoids any such harm or consequence.

 

Section 8.02 Income Tax Return Information .

 

(a) SpinCo and Distributing acknowledge that time is of the essence in relation to any request for information, assistance or cooperation made by Distributing or SpinCo pursuant to Section 8.01 or this Section 8.02. SpinCo and Distributing acknowledge that failure to conform to the deadlines set forth herein or reasonable deadlines otherwise set by Distributing or SpinCo could cause irreparable harm.

 

(b) Each Company shall provide to the other Company information and documents relating to its Group required by the other Company to prepare Tax Returns. Any information or documents the Responsible Company requires to prepare such Tax Returns shall be provided in such form as the Responsible Company reasonably requests and in sufficient time for the Responsible Company to file such Tax Returns on a timely basis.

 

17
 

 

EXHIBIT 10.2

 

Section 9. Tax Records.

 

Section 9.01 Retention of Tax Records . Each Company shall preserve and keep all Tax Records exclusively relating to the assets and activities of its Group for Pre-Deconsolidation Periods, and Distributing shall preserve and keep all other Tax Records relating to Taxes of the Groups for Pre-Deconsolidation Tax Periods, for so long as the contents thereof may become material in the administration of any matter under the Code or other applicable Tax Law, but in any event until the later of (i) the expiration of any applicable statutes of limitations, or (ii) seven years after the Deconsolidation Date (such later date, the “ Retention Date ”). After the Retention Date, each Company may dispose of such Tax Records upon ninety (90) days’ prior written notice to the other Company. If, prior to the Retention Date, (a) a Company reasonably determines that any Tax Records which it would otherwise be required to preserve and keep under this Section 9 are no longer material in the administration of any matter under the Code or other applicable Tax Law and the other Company agrees, then such first Company may dispose of such Tax Records upon ninety (90) days’ prior notice to the other Company. Any notice of an intent to dispose given pursuant to this Section 9.01 shall include a list of the Tax Records to be disposed of describing in reasonable detail each file, book, or other record accumulation being disposed. The notified Company shall have the opportunity, at its cost and expense, to copy or remove, within such 90-day period, all or any part of such Tax Records. If, at any time prior to the Retention Date, SpinCo determine to decommission or otherwise discontinue any computer program or information technology system used to access or store any Tax Records, then SpinCo may decommission or discontinue such program or system upon ninety (90) days’ prior notice to Distributing and Distributing shall have the opportunity, at its cost and expense, to copy, within such 90-day period, all or any part of the underlying data relating to the Tax Records accessed by or stored on such program or system.

 

Section 9.02 Access to Tax Records . The Companies and their respective Affiliates shall make available to each other for inspection and copying during normal business hours upon reasonable notice all Tax Records (and, for the avoidance of doubt, any pertinent underlying data accessed or stored on any computer program or information technology system) in their possession and shall permit the other Company and its Affiliates, authorized agents and representatives and any representative of a Taxing Authority or other Tax auditor direct access during normal business hours upon reasonable notice to any computer program or information technology system used to access or store any Tax Records, in each case to the extent reasonably required by the other Company in connection with the preparation of Tax Returns or financial accounting statements, audits, litigation, or the resolution of items under this Agreement.

 

Section 10. Tax Contests.

 

Section 10.01 Notice . Each of the Companies shall provide prompt notice to the other Company of any written communication from a Tax Authority regarding any pending or threatened Tax audit, assessment or proceeding or other Tax Contest of which it becomes aware related to Taxes for Tax Periods for which it is indemnified by the other Company hereunder, provided, however, that the indemnifying Company shall not be relieved of its obligations hereunder by reason of any failure by the indemnified Company to so notify except to the extent such failure materially prejudices the indemnifying Company. Such notice shall attach copies of the pertinent portion of any written communication from a Tax Authority and contain factual information (to the extent known) describing any asserted Tax liability in reasonable detail and shall be accompanied by copies of any notice and other documents received from any Tax Authority in respect of any such matters.

 

Section 10.02 Control of Tax Contests .

 

(a) Separate Company Taxes.

 

(i) In the case of any Tax Contest with respect to any Separate Return relating to Income Taxes for Tax Periods beginning prior to the Deconsolidation Date, Distributing shall have exclusive control over the Tax Contest, including exclusive authority with respect to any settlement of such Tax liability, subject to Sections 10.02(c) and (d) below. SpinCo shall bear reasonable, out of pocket expenses incurred by Distributing in connection with the control of any Tax Contest described in this Section 10.02(a)(i) provided that any outside counsel, accountants or other advisors shall be mutually selected by Distributing and SpinCo.

 

(ii) In the case of any Tax Contest with respect to any Separate Return (other than a Separate Return that is subject to Section 10.02(a)(i)), if any, the Company having liability for the Tax shall have exclusive control over the Tax Contest including exclusive authority with respect to any settlement of such Tax liability, subject to Sections 10.02(c) and (d) below.

 

(b) Joint Returns and Certain Other Returns. In the case of any Tax Contest with respect to any Distributing Federal Consolidated Income Tax Return or Distributing State Combined Income Tax Return, Distributing shall have exclusive control over the Tax Contest, including exclusive authority with respect to any settlement of such Tax liability, subject to Sections 10.02(c) and (d) below.

 

18
 

 

EXHIBIT 10.2

 

(c) Settlement Rights. The Controlling Party shall have the sole right to contest, litigate, compromise and settle any Tax Contest without obtaining the prior consent of the Non-Controlling Party. Unless waived by the parties in writing, in connection with any potential adjustment in a Tax Contest as a result of which adjustment the Non-Controlling Party may reasonably be expected to become liable to make any indemnification payment (or any payment under Section 6) to the Controlling Party under this Agreement: (i) the Controlling Party shall keep the Non-Controlling Party informed in a timely manner of all actions taken or proposed to be taken by the Controlling Party with respect to such potential adjustment in such Tax Contest; (ii) the Controlling Party shall provide the Non-Controlling Party copies of any written materials relating to such potential adjustment in such Tax Contest received from any Tax Authority; (iii) the Controlling Party shall timely provide the Non-Controlling Party with copies of any correspondence or filings submitted to any Tax Authority or judicial authority in connection with such potential adjustment in such Tax Contest; and (iv) the Controlling Party shall consult with the Non-Controlling Party and offer the Non-Controlling Party a reasonable opportunity to comment before submitting any written materials prepared or furnished in connection with such potential adjustment in such Tax Contest. The failure of the Controlling Party to take any action specified in the preceding sentence with respect to the Non-Controlling Party shall not relieve the Non-Controlling Party of any liability and/or obligation which it may have to the Controlling Party under this Agreement except to the extent that the Non-Controlling Party was actually harmed by such failure, and in no event shall such failure relieve the Non-Controlling Party from any other liability or obligation which it may have to the Controlling Party. In the case of any Tax Contest described in Section 10.02(a) or (b), “ Controlling Party ” means the Company entitled to control the Tax Contest under such Section and “ Non-Controlling Party ” means the other Company.

 

(d) Tax Contest Participation. Unless waived by the parties in writing, the Controlling Party shall provide the Non-Controlling Party with written notice reasonably in advance of, and the Non-Controlling Party shall have the right to request to attend, any formally scheduled meetings with Tax Authorities or hearings or proceedings before any judicial authorities in connection with any potential adjustment in a Tax Contest pursuant to which the Non-Controlling Party may reasonably be expected to become liable to make any indemnification payment (or any payment under Section 6) to the Controlling Party under this Agreement. The failure of the Controlling Party to provide any notice specified in this Section 10.02(d) to the Non-Controlling Party shall not relieve the Non-Controlling Party of any liability and/or obligation which it may have to the Controlling Party under this Agreement except to the extent that the Non-Controlling Party was actually harmed by such failure, and in no event shall such failure relieve the Non-Controlling Party from any other liability or obligation which it may have to the Controlling Party.

 

(e) Power of Attorney. Each member of the SpinCo Group shall execute and deliver to Distributing (or such member of the Distributing Group as Distributing shall designate) any power of attorney or other similar document reasonably requested by Distributing (or such designee) in connection with any Tax Contest (as to which Distributing is the Controlling Party) described in this Section 10.

 

Section 11. Effective Date; Termination of Prior Intercompany Tax Allocation Agreements . This Agreement shall be effective as of the date hereof. As of the date hereof, (i) all prior intercompany Tax allocation agreements or arrangements shall be terminated, and (ii) amounts due under or contemplated by such agreements or arrangements as of the date hereof shall be settled as of the date hereof. Upon such termination and settlement, no further payments by or to Distributing or by or to SpinCo, with respect to such agreements or arrangements shall be made, and all other rights and obligations resulting from such agreements or arrangements between the Companies and their Affiliates shall cease at such time. Any payments pursuant to such agreements or arrangements shall be disregarded for purposes of computing amounts due under this Agreement.

 

Section 12. Survival of Obligations. The representations, warranties, covenants and agreements set forth in this Agreement shall be unconditional and absolute and shall remain in effect without limitation as to time.

 

Section 13. Treatment of Payments; Tax Gross Up.

 

Section 13.01 Treatment of Tax Indemnity and Tax Benefit Payments . In the absence of any change in Tax treatment under the Code or other applicable Tax Law any payments made under this Agreement (and any deemed distributions or contributions relating to Taxes or Tax Attributes) shall be reported for Tax purposes by the payor and the recipient as occurring immediately before the Contribution.

 

19
 

 

EXHIBIT 10.2

 

Section 13.02 Tax Gross Up . If notwithstanding the manner in which Tax indemnity payments and Tax Benefit payments were reported, there is an adjustment to the Tax liability of a Company as a result of its receipt of a payment pursuant to this Agreement, such payment shall be appropriately adjusted so that the amount of such payment, reduced by the amount of all Income Taxes payable as a Full Taxpayer with respect to the receipt thereof (but taking into account all correlative Tax Benefits resulting from the payment of such Income Taxes), shall equal the amount of the payment which the Company receiving such payment would otherwise be entitled to receive pursuant to this Agreement.

 

Section 13.03 Interest Under This Agreement . Anything herein to the contrary notwithstanding, to the extent one Company (“ Indemnitor ”) makes a payment of interest to another Company (“ Indemnitee ”) under this Agreement with respect to the period from the date that the Indemnitee made a payment of Tax to a Tax Authority to the date that the Indemnitor reimbursed the Indemnitee for such Tax payment, the interest payment shall be treated as interest expense to the Indemnitor (deductible to the extent provided by law) and as interest income by the Indemnitee (includible in income to the extent provided by law). The amount of the payment shall not be adjusted under Section 2.02 to take into account any associated Tax Benefit to the Indemnitor or increase in Tax to the Indemnitee.

 

Section 14. Disagreements. The Companies mutually desire that friendly collaboration will continue between them. Accordingly, they will try, and they will cause their respective Group members to try, to resolve in an amicable manner all disagreements and misunderstandings connected with their respective rights and obligations under this Agreement, including any amendments hereto. In furtherance thereof, in the event of any dispute or disagreement (a “ Tax Dispute ”) between any member of the Distributing Group and any member of the SpinCo Group as to the interpretation of any provision of this Agreement or the performance of obligations hereunder, the Tax departments of the Companies shall negotiate in good faith to resolve the Tax Dispute. If such good faith negotiations do not resolve the Tax Dispute within thirty (30) days after the initial written notice of the Tax Dispute (or such longer period that the parties hereto agree to), then the matter shall be resolved pursuant to the procedures set forth in Article IX of the Separation and Distribution Agreement, provided, however , that upon the request of either Company, the arbitrator selected by each of the parties pursuant to Article IX shall be a recognized tax professional, such as a United States tax counsel or accountant of recognized national standing. Nothing in this Section 14 will prevent either Company from seeking injunctive relief if any delay resulting from the efforts to resolve the Tax Dispute through the procedures set forth in Article IX of the Separation and Distribution Agreement could result in serious and irreparable injury to either Company. Notwithstanding anything to the contrary in this Agreement, the Separation and Distribution Agreement or any Ancillary Agreement, Distributing and SpinCo are the only members of their respective Group entitled to commence a dispute resolution procedure under this Agreement, and each of Distributing and SpinCo will cause its respective Group members not to commence any dispute resolution procedure other than through such party as provided in this Section 14.

 

Section 15. Reserved.

 

Section 16. Expenses. Except as otherwise provided in this Agreement, each party and its Affiliates shall bear their own expenses incurred in connection with preparation of Tax Returns, Tax Contests, and other matters related to Taxes under the provisions of this Agreement.

 

Section 17. General Provisions.

 

Section 17.01 Addresses and Notices . Each party giving any notice required or permitted under this Agreement will give the notice in writing and use one of the following methods of delivery to the party to be notified, at the address set forth below or another address of which the sending party has been notified in accordance with this Section 17.01: (a) personal delivery; (b) facsimile or telecopy transmission with a reasonable method of confirming transmission; (c) commercial overnight courier with a reasonable method of confirming delivery; or (d) pre-paid, United States of America certified or registered mail, return receipt requested. Notice to a party is effective for purposes of this Agreement only if given as provided in this Section 17.01 and shall be deemed given on the date that the intended addressee actually receives the notice.

 

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EXHIBIT 10.2

 

If to Distributing:

 

Harvard Bioscience, Inc.

84 October Hill Road
Holliston, Massachusetts 01746

Attention: Chief Financial Officer

 

If to SpinCo:

 

Harvard Apparatus Regenerative Technology, Inc.

84 October Hill Road
Holliston, Massachusetts 01746

Attention: Chief Financial Officer

 

A party may change the address for receiving notices under this Agreement by providing written notice of the change of address to the other parties.

 

Section 17.02 Binding Effect . This Agreement shall be binding upon and inure to the benefit of the parties hereto and their successors and assigns.

 

Section 17.03 Waiver . The parties may waive a provision of this Agreement only by a writing signed by the party intended to be bound by the waiver. A party is not prevented from enforcing any right, remedy or condition in the party’s favor because of any failure or delay in exercising any right or remedy or in requiring satisfaction of any condition, except to the extent that the party specifically waives the same in writing. A written waiver given for one matter or occasion is effective only in that instance and only for the purpose stated. A waiver once given is not to be construed as a waiver for any other matter or occasion. Any enumeration of a party’s rights and remedies in this Agreement is not intended to be exclusive, and a party’s rights and remedies are intended to be cumulative to the extent permitted by law and include any rights and remedies authorized in law or in equity.

 

Section 17.04 Severability . If any provision of this Agreement is determined to be invalid, illegal or unenforceable, the remaining provisions of this Agreement remain in full force, if the essential terms and conditions of this Agreement for each party remain valid, binding and enforceable.

 

Section 17.05 Authority . Each of the parties represents to the other that (a) it has the corporate or other requisite power and authority to execute, deliver and perform this Agreement, (b) the execution, delivery and performance of this Agreement have been duly authorized by all necessary corporate or other action, (c) it has duly and validly executed and delivered this Agreement, and (d) this Agreement is a legal, valid and binding obligation, enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and general equity principles.

 

Section 17.06 Further Action . The parties shall execute and deliver all documents, provide all information, and take or refrain from taking action as may be necessary or appropriate to achieve the purposes of this Agreement, including the execution and delivery to the other parties and their Affiliates and representatives of such powers of attorney or other authorizing documentation as is reasonably necessary or appropriate in connection with Tax Contests (or portions thereof) under the control of such other parties in accordance with Section 10.

 

Section 17.07 Integration . This Agreement, together with each of the exhibits and schedules appended hereto, constitutes the final agreement between the parties, and is the complete and exclusive statement of the parties’ agreement on the matters contained herein. All prior and contemporaneous negotiations and agreements between the parties with respect to the matters contained herein are superseded by this Agreement, as applicable. In the event of any inconsistency between this Agreement and the Separation and Distribution Agreement, or any other agreements relating to the transactions contemplated by the Separation and Distribution Agreement, with respect to matters addressed herein, the provisions of this Agreement shall control.

 

Section 17.08 Construction . The language in all parts of this Agreement shall in all cases be construed according to its fair meaning and shall not be strictly construed for or against any party. The captions, titles and headings included in this Agreement are for convenience only, and do not affect this Agreement’s construction or interpretation. Unless otherwise indicated, all “Section” references in this Agreement are to sections of this Agreement.

 

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EXHIBIT 10.2

 

Section 17.09 No Double Recovery . No provision of this Agreement shall be construed to provide an indemnity or other recovery for any costs, damages, or other amounts for which the damaged party has been fully compensated under any other provision of this Agreement or under any other agreement or action at law or equity. Unless expressly required in this Agreement, a party shall not be required to exhaust all remedies available under other agreements or at law or equity before recovering under the remedies provided in this Agreement.

 

Section 17.10 Counterparts . The parties may execute this Agreement in multiple counterparts, each of which constitutes an original as against the party that signed it, and all of which together constitute one agreement. This Agreement is effective upon delivery of one executed counterpart from each party to the other party. The signatures of the parties need not appear on the same counterpart. The delivery of signed counterparts by facsimile or email transmission that includes a copy of the sending party’s signature is as effective as signing and delivering the counterpart in person.

 

Section 17.11 Governing Law . The internal laws of the Commonwealth of Massachusetts (without reference to its principles of conflicts of law) govern the construction, interpretation and other matters arising out of or in connection with this Agreement and each of the exhibits and schedules hereto and thereto (whether arising in contract, tort, equity or otherwise).

 

Section 17.12 Jurisdiction . If any dispute arises out of or in connection with this Agreement, except as expressly contemplated by another provision of this Agreement, the parties irrevocably (and the parties will cause each other member of their respective Group to irrevocably) (a) consent and submit to the exclusive jurisdiction of federal and state courts located in Commonwealth of Massachusetts, (b) waive any objection to that choice of forum based on venue or to the effect that the forum is not convenient, and (c) WAIVE TO THE FULLEST EXTENT PERMITTED BY LAW ANY RIGHT TO TRIAL OR ADJUDICATION BY JURY.

 

Section 17.13 Amendment. Except as otherwise expressly provided herein with respect to the Schedules hereto, the parties may amend this Agreement only by a written agreement signed by each party to be bound by the amendment and that identifies itself as an amendment to this Agreement.

 

Section 17.14 SpinCo Subsidiaries . If, at any time, SpinCo acquires or creates one or more subsidiaries that are includable in the SpinCo Group, they shall be subject to this Agreement and all references to the SpinCo Group herein shall thereafter include a reference to such subsidiaries.

 

Section 17.15 Successors . This Agreement shall be binding on and inure to the benefit of any successor by merger, acquisition of assets, or otherwise, to any of the parties hereto (including but not limited to any successor of Distributing or SpinCo succeeding to the Tax Attributes of either under Section 381 of the Code), to the same extent as if such successor had been an original party to this Agreement.

 

Section 17.16 Injunctions . The parties acknowledge that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with its specific terms or were otherwise breached. The parties hereto shall be entitled to an injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically the terms and provisions hereof in any court having jurisdiction, such remedy being in addition to any other remedy to which they may be entitled at law or in equity.

 

 

[signatures on following page]

 

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EXHIBIT 10.2

 

IN WITNESS WHEREOF, each party has caused this Agreement to be executed on its behalf by a duly authorized officer on the date first set forth above.

 

“Distributing” “SpinCo”
   
Harvard Bioscience, Inc., a Delaware corporation Harvard Apparatus Regenerative Technology, Inc., a Delaware corporation, for itself and on behalf of each member of the SpinCo Group

 

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

 

 

 

 

EXHIBIT 10.3

 

HARVARD APPARATUS REGENERATIVE TECHNOLOGY, INC.

EMPLOYMENT AGREEMENT

 

This EXECUTIVE EMPLOYMENT AGREEMENT (“Agreement”) is made as of the __ day of _______, 2013, to be effective as of the Commencement Date (as defined below), between Harvard Apparatus Regenerative Technology, Inc., a Delaware corporation (the “Company”), and David Green (“Executive”). For purposes of this Agreement the “Company” shall refer to the Company and any of its predecessors.

 

WHEREAS , the Company desires to employ Executive and Executive desires to be employed by the Company on the terms contained herein.

 

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

 

1. Employment. The term of this Agreement shall automatically, without the requirement of any further action or notice, commence on the date that Harvard Bioscience, Inc. no longer beneficially owns at least 50% of the total voting power of the Company’s outstanding capital stock (the “Commencement Date”) and shall extend until the second anniversary of the Commencement Date; provided, however, that the term of this Agreement shall automatically be extended for two additional years on each second anniversary of the Commencement Date unless, not less than 90 days prior to each such date, either party shall have given notice to the other that it does not wish to extend this Agreement; provided, further, that if a Change in Control occurs during the original or extended term of this Agreement, the term of this Agreement shall, notwithstanding anything in this sentence to the contrary, continue in effect for a period of not less than eighteen (18) months beyond the month in which the Change in Control occurred. The term of this Agreement shall be subject to termination as provided in Paragraph 6 and may be referred to herein as the “Period of Employment.”

 

2. Position and Duties.  During the Period of Employment, Executive shall serve as the President and Chief Executive Officer of the Company and shall have such powers and duties as may from time to time be prescribed by the Board of Directors (the “Board”) of the Company, provided that such duties are consistent with Executive’s position or other positions that he may hold from time to time. Executive shall devote his full working time and efforts to the business and affairs of the Company. Notwithstanding the foregoing, Executive may serve on other boards of directors, with the approval of the Board as long as such service does not materially interfere with Executive’s performance of his duties to the Company as provided in this Agreement.

 

3. Compensation and Related Matters.

 

(a)   Base Salary and Incentive Compensation. Executive’s initial annual base salary shall be five hundred four thousand seven hundred dollars ($504,700). Executive’s base salary shall be redetermined annually by the Board or a Committee thereof. The base salary in effect at any given time is referred to herein as “Base Salary.” The Base Salary shall be payable in substantially equal installments on a bi-weekly or more frequent basis. In addition to Base Salary, Executive shall be eligible to receive cash incentive compensation as determined by the Board or a Committee thereof from time to time, and shall also be eligible to participate in such incentive compensation plans as the Board or a Committee thereof shall determine from time to time for employees of the same status within the hierarchy of the Company.

 

(b) Expenses. Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by him in performing services hereunder during the Period of Employment, in accordance with the policies and procedures then in effect and established by the Company for its senior executive officers, provided that such reimbursement does not occur later than the end of the second calendar year after the calendar year in which such expense was incurred.

 

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(c) Other Benefits .   During the Period of Employment, Executive shall be entitled to continue to participate in or receive benefits under all of the Company’s Employee Benefit Plans in effect on the date hereof, or under plans or arrangements that provide no less favorable treatment to the Executive than the Employee Benefit Plans provided to other, similarly situated, members of the Company’s senior management. As used herein, the term “Employee Benefit Plans” includes, without limitation, each pension and retirement plan; supplemental pension, retirement and deferred compensation plan; savings and profit-sharing plan; stock ownership plan; stock purchase plan; stock option plan; life insurance plan; medical insurance plan; disability plan; and health and accident plan or arrangement established and maintained by the Company on the date hereof or anytime hereafter. During the Period of Employment, Executive shall be entitled to an automobile or to lease for an automobile (the “Company Car”) for up to $1,000.00 per month and the cost of automobile insurance for such Company Car. To the extent that the scope or nature of benefits described in this section is determined under the policies of the Company based in whole or in part on the seniority or tenure of an employee’s service, Executive shall be deemed to have a tenure with the Company equal to the actual time of Executive’s service with the Company. During the Period of Employment, Executive shall be entitled to participate in or receive benefits under any Employee Benefit Plans which may, in the future, be made available by the Company to its executives and key management employees, subject to and on a basis consistent with the terms, conditions and overall administration of such Employee Benefit Plans. Any payments or benefits payable to Executive under an Employee Benefit Plan referred to in this Subparagraph 3(c) in respect of any calendar year during which Executive is employed by the Company for less than the whole of such year shall, unless otherwise provided in the applicable Employee Benefit Plan, be prorated in accordance with the number of days in such calendar year during which he is so employed. Should any such payments or benefits accrue on a fiscal (rather than calendar) year, then the proration in the preceding sentence shall be on the basis of a fiscal year rather than calendar year.

 

(d) Vacations.  Executive shall be entitled to twenty (20) paid vacation days in each calendar year, which shall be accrued ratably during the calendar year. Executive shall also be entitled to all paid holidays given by the Company to its executives. To the extent that the scope or nature of benefits described in this section are determined under the policies of the Company based in whole or in part on the seniority or tenure of an employee’s service, Executive shall be deemed to have a tenure with the Company equal to the actual time of Executive’s service with Company. Notwithstanding anything herein to the contrary, Executive shall be paid any accrued and unused vacation upon his severance of employment with the Company, if and as protected by applicable law.

 

(e) Legal Rights. Nothing in this Agreement shall interfere with Executive’s legal rights relating to employment, including, but not limited to, his right to a COBRA notice upon his severance of employment with the Company.

 

4. Unauthorized Disclosure.

 

(a) Confidential Information. Executive acknowledges that in the course of his employment with the Company (and, if applicable, its predecessors), he has been allowed to become, and will continue to be allowed to become, acquainted with the Company’s business affairs, information, trade secrets, and other matters which are of a proprietary or confidential nature, including but not limited to the Company’s and its affiliates’ and predecessors’ operations, business opportunities, price and cost information, finance, customer information, business plans, various sales techniques, manuals, letters, notebooks, procedures, reports, products, processes, services, and other confidential information and knowledge (collectively the “Confidential Information”) concerning the Company’s and its affiliates’ and predecessors’ business. The Company agrees to provide on an ongoing basis such Confidential Information as the Company deems necessary or desirable to aid Executive in the performance of his duties. Executive understands and acknowledges that such Confidential Information is confidential, and he agrees not to disclose such Confidential Information to anyone outside the Company except to the extent that (i) Executive deems such disclosure or use reasonably necessary or appropriate in connection with performing his duties on behalf of the Company; (ii) Executive is required by order of a court of competent jurisdiction (by subpoena or similar process) to disclose or discuss any Confidential Information, provided that in such case, Executive shall promptly inform the Company of such event, shall cooperate with the Company in attempting to obtain a protective order or to otherwise restrict such disclosure, and shall only disclose Confidential Information to the minimum extent necessary to comply with any such court order; (iii) such Confidential Information becomes generally known to and available for use in the Company’s industry (the “regenerative medicine industry”), other than as a result of any action or inaction by Executive; or (iv) such information has been rightfully received by a member of the regenerative medicine industry or has been published in a form generally available to regenerative medicine industry prior to the date Executive proposes to disclose or use such information. Executive further agrees that he will not during employment and/or at any time thereafter use such Confidential Information in competing, directly or indirectly, with the Company. At such time as Executive shall cease to be employed by the Company, he will immediately turn over to the Company all Confidential Information, including papers, documents, writings, electronically stored information, other property, and all copies of them provided to or created by him during the course of his employment with the Company.

 

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(b) Heirs, successors, and legal representatives. The foregoing provisions of this Paragraph 4 shall be binding upon Executive’s heirs, successors, and legal representatives. The provisions of this Paragraph 4 shall survive the termination of this Agreement for any reason.

 

5. Covenant Not to Compete or Solicit or Hire. In consideration for Executive’s employment by the Company under the terms provided in this Agreement and as a means to aid in the performance and enforcement of the terms of the provisions of Paragraph 4, Executive agrees that

 

(a)  during the term of Executive’s employment with the Company and for a period of twelve (12) months thereafter, regardless of the reason for termination of employment, Executive will not, directly or indirectly, as an owner, director, principal, agent, officer, employee, partner, consultant, servant, or otherwise, carry on, operate, manage, control, or become involved in any manner with any business, operation, corporation, partnership, association, agency, or other person or entity which is engaged in a business that produces products that compete directly with any of the Company’s products which are produced by the Company or any affiliate of the Company or which the Company or any affiliate of the Company has active plans to produce as of the date of Executive’s termination of employment with the Company, in any area or territory in which the Company or any affiliate of the Company conducts or has active plans to conduct operations as of the date of the Executive’s termination of employment with the Company; provided, however, that the foregoing shall not prohibit Executive from owning up to one percent (1%) of the outstanding stock of a publicly held company engaged in the regenerative medicine industry; and

 

(b)  during the term of Executive’s employment with the Company and for a period of twelve (12) months thereafter, regardless of the reason for termination of employment, Executive will not directly or indirectly solicit or induce any present or future employee of the Company or any affiliate of the Company to accept employment with Executive or with any business, operation, corporation, partnership, association, agency, or other person or entity with which Executive may be associated, and Executive will not hire or employ or cause any business, operation, corporation, partnership, association, agency, or other person or entity with which Executive may be associated to hire or employ any present or future employee of the Company.

 

Should Executive violate any of the provisions of this Paragraph, then in addition to all other rights and remedies available to the Company at law or in equity, the duration of this covenant shall automatically be extended for the period of time from which Executive began such violation until he permanently ceases such violation.

 

5A.          Remedies. Executive acknowledges that full compliance with the terms of this Agreement is necessary to protect the significant value of the Confidential Information and the customer and business goodwill of the Company. Executive acknowledges that if he breaches Sections 4 or 5 of this Agreement, the Company will be irreparably harmed and money damages will not be an adequate remedy. As a result, Executive agrees that, in the event Executive breaches or threatens to breach any of the terms or provisions of Sections 4 or 5 of this Agreement, the Company shall be entitled to a preliminary or permanent injunction, without posting a bond or other security, in order to prevent the continuation of such harm. Executive acknowledges that nothing in this Agreement will prohibit the Company from also pursuing any other remedy and all remedies are cumulative.

 

6.  Termination .  Executive’s employment hereunder may be terminated without any breach of this Agreement under the following circumstances:

 

(a) Death.  Executive’s employment hereunder shall terminate upon his death.

 

(b) Disability. If, as a result of Executive’s incapacity due to physical or mental illness, Executive shall have been absent from his duties hereunder on a full-time basis for one hundred eighty (180) calendar days in the aggregate in any twelve (12) month period, the Company may terminate Executive’s employment hereunder.

 

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(c) Termination by Company For Cause. At any time during the Period of Employment, the Company may terminate Executive’s employment hereunder for Cause if such termination is approved by not less than a majority of the Board at a meeting of the Board called and held for such purpose. For purposes of this Agreement, “Cause” shall mean: (A) conduct by Executive constituting a material act of willful misconduct in connection with the performance of his duties, including, without limitation, misappropriation of funds or property of the Company or any of its affiliates other than the occasional, customary and de minimis use of Company property for personal purposes; (B) criminal or civil conviction of Executive, a plea of nolo contendere by Executive or conduct by Executive that would reasonably be expected to result in material injury to the reputation of the Company if he were retained in his position with the Company, including, without limitation, conviction of a felony involving moral turpitude; (C) continued, willful and deliberate non-performance by Executive of his duties hereunder (other than by reason of Executive’s physical or mental illness, incapacity or disability) which has continued for more than thirty (30) days following written notice of such non-performance from the Board; (D) a breach by Executive of any of the provisions contained in Paragraphs 4 and 5 of this Agreement; or (E) a violation by Executive of the Company’s employment policies which has continued following written notice of such violation from the Board.

 

(d) Termination Without Cause. At any time during the Period of Employment, the Company may terminate Executive’s employment hereunder without Cause if such termination is approved by a majority of the Board at a meeting of the Board called and held for such purpose. Any termination by the Company of Executive’s employment under this Agreement which does not constitute a termination for Cause under Subparagraph 6(c) or result from the death or disability of the Executive under Subparagraph 6(a) or (b) shall be deemed a termination without Cause. If the Company provides notice to Executive under Paragraph 1 that it does not wish to extend the Period of Employment, such action shall be deemed a termination without Cause.

 

(e) Termination by Executive. At any time during the Period of Employment, Executive may terminate his employment hereunder for any reason, including but not limited to Good Reason. If Executive provides notice to the Company under Paragraph 1 that he does not wish to extend the Period of Employment, such action shall be deemed a voluntary termination by Executive and one without Good Reason. For purposes of this Agreement, “Good Reason” shall mean that Executive has complied with the “Good Reason Process” (hereinafter defined) following the occurrence of any of the following events: (A) a substantial diminution or other substantive adverse change, not consented to by Executive, in the nature or scope of Executive’s responsibilities, authorities, powers, functions or duties; (B) any removal, during the Period of Employment, from Executive of his title of Chief Executive Officer; (C) an involuntary reduction in Executive’s Base Salary except for across-the-board reductions similarly affecting all or substantially all management employees; (D) a breach by the Company of any of its other material obligations under this Agreement and the failure of the Company to cure such breach within thirty (30) days after written notice thereof by Executive; (E) the involuntary relocation of the Company’s offices at which Executive is principally employed or the involuntary relocation of the offices of Executive’s primary workgroup to a location more than 30 miles from such offices, or the requirement by the Company that Executive be based anywhere other than the Company’s offices at such location on an extended basis, except for required travel on the Company’s business to an extent substantially consistent with Executive’s business travel obligations; or (F) the failure of the Company to obtain the agreement from any successor to the Company to assume and agree to perform this Agreement as required by Paragraph 11 (each of which is hereinafter referred to as a “Good Reason event”). “Good Reason Process” shall mean that (i) Executive reasonably determines in good faith that a “Good Reason” event has occurred; (ii) Executive notifies the Company in writing of the occurrence of the Good Reason event; (iii) Executive cooperates in good faith with the Company’s efforts, for a period not less than ninety (90) days following such notice, to modify Executive’s employment situation in a manner acceptable to Executive and Company; and (iv) notwithstanding such efforts, one or more of the Good Reason events continues to exist and has not been modified in a manner acceptable to Executive. If the Company cures the Good Reason event in a manner acceptable to Executive during the ninety (90) day period, Good Reason shall be deemed not to have occurred.

 

(f) Notice of Termination. Except for termination as specified in Subparagraph 6(a), any termination of Executive’s employment by the Company or any such termination by Executive shall be communicated by written Notice of Termination to the other party hereto and shall be effective on the Date of Termination (as defined below). For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon.

 

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(g) Date of Termination. “Date of Termination” shall mean: (A) if Executive’s employment is terminated by his death, the date of his death; (B) if Executive’s employment is terminated on account of disability under Subparagraph 6(b) or by the Company for Cause under Subparagraph 6(c), the date on which Notice of Termination is given or such later date as the Company may specify in the Notice of Termination; (C) if Executive’s employment is terminated by the Company under Subparagraph 6(d), sixty (60) days after the date on which a Notice of Termination is given or such later date as the Company may specify in the Notice of Termination (or, if such termination occurs as a result of the Company providing notice to Executive under Paragraph 1 that it does not wish to extend the Period of Employment, the date of the expiration of the current term of this Agreement); and (D) if Executive’s employment is terminated by Executive under Subparagraph 6(e), thirty (30) days after the date on which a Notice of Termination is given or, if such termination is without Good Reason, such later date up to sixty (60) days after the date on which such Notice of Termination is given as Executive may specify in the Notice of Termination (or, if such termination occurs as a result of the Company providing notice to Executive under Paragraph 1 that it does not wish to extend the Period of Employment, the date of the expiration of the current term of this Agreement).

 

(h) Separation from Service . Notwithstanding anything herein to the contrary, no event shall constitute a “termination of employment” in this Agreement, unless such event is also a “separation from service,” as that term is defined for purposes of Section 409A of the Internal Revenue Code of 1986, as amended (“Code”), and Treasury Regulation §1.409A-3(a)(1).

 

7. Compensation Upon Termination or During Disability.

 

(a) Death. If Executive’s employment terminates by reason of his death, the Company shall, within ninety (90) days of death, pay in a lump sum to such person as Executive shall designate in a notice filed with the Company or, if no such person is designated, to Executive’s estate, Executive’s accrued and unpaid Base Salary to the date of his death, plus his accrued and unpaid incentive compensation, if any, under Subparagraph 3(a). Upon the death of Executive, all unvested stock options shall immediately vest in Executive’s estate or other legal representatives and become exercisable. All other stock-based grants and awards held by Executive shall vest or be canceled upon the death of Executive in accordance with their terms. For a period of one (1) year following the Date of Termination, the Company shall pay such health insurance premiums as may be necessary to allow Executive’s spouse and dependents to receive health insurance coverage substantially similar to coverage they received prior to the Date of Termination. In addition to the foregoing, any payments to which Executive’s spouse, beneficiaries, or estate may be entitled under any employee benefit plan shall also be paid in accordance with the terms of such plan or arrangement. Such payments, in the aggregate, shall fully discharge the Company’s obligations hereunder.

 

(b) Disability. During any period that Executive fails to perform his duties hereunder as a result of incapacity due to physical or mental illness, Executive shall continue to receive his accrued and unpaid Base Salary and accrued and unpaid incentive compensation, if any, under Subparagraph 3(a), until Executive’s employment is terminated due to disability in accordance with Subparagraph 6(b) or until Executive terminates his employment in accordance with Subparagraph 6(e), whichever first occurs. Upon the Date of Termination by reason of Executive’s disability, all unvested stock options shall immediately vest and become exercisable. All other stock-based grants and awards held by Executive shall vest or be canceled upon the Date of Termination in accordance with their terms. For a period of one (1) year following the Date of Termination, the Company shall pay such health insurance premiums as may be necessary to allow Executive and Executive’s spouse and dependents to receive health insurance coverage substantially similar to coverage they received prior to the Date of Termination. Upon termination due to death prior to the termination first to occur as specified in the preceding sentence, Subparagraph 7(a) shall apply.

 

(c) Termination other than for Good Reason. If Executive’s employment is terminated by Executive other than for Good Reason as provided in Subparagraph 6(e), then the Company shall, through the Date of Termination, pay Executive in a lump sum his accrued and unpaid Base Salary at the rate in effect at the time Notice of Termination is given. Thereafter, the Company shall have no further obligations to Executive except as otherwise expressly provided under this Agreement, provided any such termination shall not adversely affect or alter Executive’s rights under any employee benefit plan of the Company in which Executive, at the Date of Termination, has a vested interest, unless otherwise provided in such employee benefit plan or any agreement or other instrument attendant thereto.

 

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(d) Termination by Executive for Good Reason or by the Company without Cause. Subject to the terms of section 19(a), and subject to the terms of this section, if the Executive’s employment is terminated for Good Reason as provided in Subparagraph 6(e) or without Cause as provided in Subparagraph 6(d), the Company shall, through the Date of Termination, pay Executive in a lump sum his accrued and unpaid Base Salary at the rate in effect at the time Notice of Termination is given and his accrued and unpaid incentive compensation, if any, under Subparagraph 3(a). In addition, subject to the Executive’s execution of a general release of claims in the form attached hereto as Exhibit A within 21 days after the Date of Termination and the expiration of the seven-day revocation period applicable thereto, commencing on the later of (i) the last day of the period for signing and revoking the general release of claims in the form set forth in Exhibit A hereof (“Release”), or (ii) ninety (90) days after the Executive’s employment is terminated for Good Reason as provided in Subparagraph 6(e) or without Cause as provided in Subparagraph 6(d),

 

(i) the Company shall pay Executive an amount equal to two (2) times the sum of (A) Executive’s Average Base Salary and (B) Executive’s Average Incentive Compensation (the “Severance Amount”). The Severance Amount shall be paid in cash in a single lump sum payment. For purposes of this Agreement, “Average Base Salary” shall mean the greater of (X) the average of the annual Base Salary received by Executive during the three (3) immediately preceding complete fiscal years or such fewer number of complete fiscal years as Executive may have been employed by the Company or (Y) the amount of Base Salary for the immediately prior fiscal year. For purposes of this Agreement, “Average Incentive Compensation” shall mean the average of the annual cash incentive compensation under Subparagraph 3(a) received by Executive for the three (3) immediately preceding fiscal years or such fewer number of complete fiscal years as Executive may have been employed by the Company or the amount of cash incentive compensation for the prior fiscal year, whichever is higher. In no event shall “Average Incentive Compensation” include any sign-on bonus, retention bonus or any other special bonus. Notwithstanding the foregoing, if the Executive breaches any of the provisions contained in Paragraphs 4 and 5 of this Agreement, all payments of the Severance Amount shall immediately cease and the entire Severance Amount shall be forfeited and become repayable to the Company to the extent paid. Furthermore, in the event Executive terminates his employment for Good Reason as provided in Subparagraph 6(e), he shall be entitled to the Severance Amount only if he provides the Notice of Termination provided for in Subparagraph 6(f) within thirty (30) days after he has complied with the Good Reason Process; and

 

(ii) upon the Date of Termination, each unvested stock option that would otherwise vest during the next twenty four (24) months shall accelerate and immediately vest. All other stock-based grants and awards held by Executive that would otherwise vest during the next twenty four (24) months shall accelerate and immediately vest upon the Date of Termination; and

 

(iii) in addition to any other benefits to which Executive may be entitled in accordance with the Company’s then existing severance policies, the Company shall, for a period of one (1) year commencing on the Date of Termination, pay such health insurance premiums as may be necessary to allow Executive and Executive’s spouse and dependents to continue to receive health insurance coverage.

 

(e) Termination for Cause. If Executive’s employment is terminated by the Company for Cause as provided in Subparagraph 6(c), then the Company shall, through the Date of Termination, pay Executive his accrued and unpaid Base Salary at the rate in effect at the time Notice of Termination is given. Thereafter, the Company shall have no further obligations to Executive except as otherwise expressly provided under this Agreement, provided any such termination shall not adversely affect or alter Executive’s rights under any employee benefit plan of the Company in which Executive, at the Date of Termination, has a vested interest, unless otherwise provided in such employee benefit plan or any agreement or other instrument attendant thereto. In addition, all stock options held by Executive as of the Date of Termination shall immediately terminate and be of no further force and effect, and all other stock-based grants and awards shall be canceled or terminated in accordance with their terms.

 

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Nothing contained in the foregoing Subparagraphs 7(a) through 7(e) shall be construed so as to affect Executive’s rights or the Company’s obligations relating to agreements or benefits which are unrelated to termination of employment.

 

8. Change in Control Payment. The provisions of this Paragraph 8 set forth certain terms of an agreement reached between Executive and the Company regarding Executive’s rights and obligations upon the occurrence of a Change in Control of the Company. These provisions are intended to assure and encourage in advance Executive’s continued attention and dedication to his assigned duties and his objectivity during the pendency and after the occurrence of any such event.

 

(a) Change in Control.  If within eighteen (18) months after the occurrence of the first event constituting a Change in Control, Executive’s employment is terminated by the Company without Cause as provided in Subparagraph 6(d) or Executive terminates his employment for Good Reason as provided in Subparagraph 6(e), then, subject to terms of section 19(a), and subject to the Executive’s executing a general release of claims in the form attached hereto as Exhibit A within 21 days after the Date of Termination and the expiration of the seven-day revocation period applicable thereto, commencing on the later of (i) the last day of the period for signing and revoking the general release of claims in the form set forth in Exhibit A hereof (“Release”), or (ii) ninety (90) days after the Executive’s employment is terminated as provided above in this Section 8(a):

 

(i) In lieu of any amounts otherwise payable pursuant to Subparagraph 7(d)(i), the Company shall pay Executive a single lump sum in cash equal to three times the sum of (A) Executive’s current or most recent annual Base Salary plus (B) Executive’s most recent annual cash incentive compensation under Subparagraph 3(a) for the most recent fiscal year, excluding any sign-on bonus, retention bonus or any other special bonus;

 

(ii) Notwithstanding anything to the contrary in any applicable option agreement or stock-based award agreement and in lieu of any acceleration of vesting that would otherwise occur pursuant to Subparagraph 7(d)(ii), upon a Change in Control, all stock options and other stock-based awards granted to Executive by the Company shall immediately accelerate and become exercisable or non-forfeitable as of the effective date of such Change in Control. Executive shall also be entitled to any other rights and benefits with respect to stock-related awards, to the extent and upon the terms provided in the employee stock option or incentive plan or any agreement or other instrument attendant thereto pursuant to which such options or awards were granted; and

 

(iii) In lieu of the Company’s obligations to pay health insurance premiums pursuant to Subparagraph 7(d)(iii), the Company shall, for a period of one (1) year commencing on the Date of Termination, pay such health insurance premiums as may be necessary to allow Executive, Executive’s spouse and dependents to continue to receive health insurance coverage substantially similar to the coverage they received prior to the Date of Termination.

 

(b) Gross Up Payment.

 

(i) Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any compensation, payment or distribution by the Company to or for the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (the “Severance Payments”), would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), or any interest or penalties are incurred by Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then Executive shall be entitled to receive an additional payment or payments (collectively, the “Gross-Up Payment”) such that the net amount retained by Executive, after deduction of (x) any Excise Tax on the Severance Payments, (y) any Federal, state, and local income tax, employment tax and Excise Tax, in each case resulting from the Gross-Up Payment provided by this Subparagraph 8(b)(i), and (z) any interest and/or penalties assessed with respect to such Excise Tax, but without deducting any other amounts that may be payable by Executive as a result of the Severance Payments, including, without limitation, any Federal, state, and local income tax or employment tax, other than those specifically described clauses (x), (y) and (z) above, due as a result of the Severance Payments, shall be equal to the Severance Payments.

 

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(ii) Subject to the provisions of Subparagraph 8(b)(iii), all determinations required to be made under this Subparagraph 8(b)(ii), including whether a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be made by KPMG LLP or any other nationally recognized accounting firm selected by the Company (the “Accounting Firm”), which shall provide detailed supporting calculations both to the Company and Executive within fifteen (15) business days of the Date of Termination, if applicable, or at such earlier time as is reasonably requested by the Company or Executive. For purposes of determining the amount of the Gross-Up Payment, Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation applicable to individuals for the calendar year in which the Gross-Up Payment is to be made, and state and local income taxes at the highest marginal rates of individual taxation in the state and locality of Executive’s residence on the Date of Termination, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes. The Gross-Up Payment, if any, as determined pursuant to this Subparagraph 8(b)(ii), shall be paid to the relevant tax authorities as withholding taxes on behalf of the Executive at such time or times as when each Excise Tax payment is due. Any determination by the Accounting Firm shall be binding upon the Company and Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (an “Underpayment”). In the event that the Company exhausts its remedies pursuant to Subparagraph 8(b)(iii) and Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred, consistent with the calculations required to be made hereunder, and any such Underpayment, and any interest and penalties imposed on the Underpayment and required to be paid by Executive in connection with the proceedings described in Subparagraph 8(b)(iii), shall be promptly paid by the Company to the relevant tax authorities as withholding taxes on behalf of the Executive.

 

(iii) Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after Executive knows of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which he gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies Executive in writing prior to the expiration of such period that it desires to contest such claim, provided that the Company has set aside adequate reserves to cover the Underpayment and any interest and penalties thereon that may accrue, Executive shall:

 

(A) give the Company any information reasonably requested by the Company relating to such claim,

 

(B) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney selected by the Company,

 

(C) cooperate with the Company in good faith in order to effectively contest such claim, and

 

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(D) permit the Company to participate in any proceedings relating to such claim; provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold Executive harmless, on an after-tax basis, for any Excise Tax or income tax, including interest and penalties with respect thereto, imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Subparagraph 8(b)(iii), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs Executive to pay such claim and sue for a refund, the Company shall pay such amount to the applicable tax authority on behalf of the Executive as an additional Gross-Up Payment and shall indemnify and hold Executive harmless, on an after-tax basis, from any Excise Tax or income tax, including interest or penalties imposed with respect thereto or with respect to any imputed income; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company’s control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and Executive shall be entitled to settle or contest, as the case may be, any other issues raised by the Internal Revenue Service or any other taxing authority.

 

(iv) If, after a Gross-Up Payment by the Company on behalf of the Executive pursuant to Subparagraph 8(b)(iii), Executive becomes entitled to receive any refund with respect to such claim, Executive shall (subject to the Company’s complying with the requirements of Subparagraph 8(b)(iii)) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto).

 

(c) Definitions. For purposes of this Paragraph 8, the following terms shall have the following meanings:

 

“Change in Control” shall mean any of the following:

 

(a) a change in effective control consistent with Regulation §1.409A-3(i)(vi) such that any “person,” as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Act”) (other than the Company, any of its subsidiaries, or any trustee, fiduciary or other person or entity holding securities under any employee benefit plan or trust of the Company or any of its subsidiaries), together with all “affiliates” and “associates” (as such terms are defined in Rule 12b-2 under the Act) of such person, shall become the “beneficial owner” (as such term is defined in Rule 13d-3 under the Act), directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the combined voting power of the Company’s then outstanding securities having the right to vote in an election of the Company’s Board (“Voting Securities”) (other than as a result of an acquisition of securities directly from the Company); or

 

(b) a change in effective control consistent with Regulation §1.409A-3(i)(vi) such that persons who, as of the Commencement Date, constitute the Company’s Board (the “Incumbent Directors”) cease for any reason, including, without limitation, as a result of a tender offer, proxy contest, merger or similar transaction, to constitute at least a majority of the Board, provided that any person becoming a director of the Company subsequent to the Commencement Date shall be considered an Incumbent Director if such person’s election was approved by or such person was nominated for election by a vote of at least a majority of the Incumbent Directors; but provided further, that any such person whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of members of the Board or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Board, including by reason of agreement intended to avoid or settle any such actual or threatened contest or solicitation, shall not be considered an Incumbent Director; or

 

(c) a change in ownership consistent with Regulation §1.409A-3(i)(v) and (vii) such that the stockholders of the Company shall approve (A) any consolidation or merger of the Company where the stockholders of the Company, immediately prior to the consolidation or merger, would not, immediately after the consolidation or merger, beneficially own (as such term is defined in Rule 13d-3 under the Act), directly or indirectly, shares representing in the aggregate more than fifty percent (50%) of the voting shares of the Company issuing cash or securities in the consolidation or merger (or of its ultimate parent corporation, if any), (B) any sale, lease, exchange or other transfer (in one transaction or a series of transactions contemplated or arranged by any party as a single plan) of all or substantially all of the assets of the Company or (C) any plan or proposal for the liquidation or dissolution of the Company.

 

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9. Stock Options Grant/Vesting . Subject to the terms and conditions of the Company’s 2013 Equity Incentive Plan (the “Plan”), and your timely execution of a stock option agreement evidencing the option grant as well as a certain termination and waiver agreement with Harvard Bioscience, Inc. (terminating your employment agreement with Harvard Bioscience effective as of the Commencement Date and waiving your rights under such employment agreement to terminate your employment with Harvard Bioscience for “good reason” due to a substantial diminution or other substantive adverse change in their responsibilities, powers, or duties arising from your new role at the Company and execution hereof), the Company will grant you (i) an option to purchase shares of Common Stock in an amount to be determined prior to the grant but which shall be equal to an amount that, assuming it was exercised at the time of an initial public offering by the Company following the Commencement Date that results in twenty five percent of the Company’s common stock being issued, would provide you with six percent (6%) of the ownership interests in the Company immediately following such offering (the “Initial Grant”) and (ii) an option to purchase up to one half of the shares subject to the Initial Grant (the “Milestone Grant”). With respect to the Initial Grant, the option shall vest annually in four equal annual installments on January 1 of each year for four consecutive years commencing with the January 1 immediately following the date of grant. With respect to the Milestone Grant, the option shall vest in one third increments subject to certain Company performance milestones to be determined by the Board of Directors. Subject to certain limitations, upon a Change in Control (as defined in Section 8 above), the Initial Grant and Milestone Grant shall become fully vested and fully exercisable. The options that comprise the Initial Grant shall be incentive stock options to the extent of the $100,000 threshold and the remainder shall be non-qualified stock options. The options that comprise the Milestone Grant shall be non-qualified stock options.

 

10. Notice. For purposes of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States certified mail, return receipt requested, postage prepaid, addressed as follows:

 

if to the Executive:

 

At his home address as shown

in the Company’s personnel records;

 

if to the Company:

 

Harvard Apparatus Regenerative Technology, Inc.

84 October Hill Road

Holliston, Massachusetts 01746

Attention: Board of Directors of Harvard Apparatus Regenerative Technology, Inc.

 

with a copy to:

 

Josef B. Volman

Burns & Levinson LLP

125 Summer Street

Boston, MA 02110

 

or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

 

11. Successor to Company. The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company expressly to assume and agree to perform this Agreement to the same extent that the Company would be required to perform it if no succession had taken place. Failure of the Company to obtain an assumption of this Agreement at or prior to the effectiveness of any succession shall be a breach of this Agreement and shall constitute Good Reason if the Executive elects to terminate employment.

 

12. Miscellaneous. No provisions of this Agreement may be modified, waived, or discharged unless such waiver, modification, or discharge is agreed to in writing and signed by Executive and such officer of the Company as may be specifically designated by the Board. No waiver by either party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, unless specifically referred to herein, with respect to the subject matter hereof have been made by either party which are not set forth expressly in this Agreement. The validity, interpretation, construction, and performance of this Agreement shall be governed by the laws of the Commonwealth of Massachusetts (without regard to principles of conflicts of laws).

 

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13. Validity. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. The invalid portion of this Agreement, if any, shall be modified by any court having jurisdiction to the extent necessary to render such portion enforceable.

 

14. Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

 

15. Arbitration; Other Disputes. In the event of any dispute or controversy arising under or in connection with this Agreement, the parties shall first promptly try in good faith to settle such dispute or controversy by mediation under the applicable rules of the American Arbitration Association before resorting to arbitration. In the event such dispute or controversy remains unresolved in whole or in part for a period of thirty (30) days after it arises, the parties will settle any remaining dispute or controversy exclusively by arbitration in Boston, Massachusetts, in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. Notwithstanding the above, the Company shall be entitled to seek a restraining order or injunction without the need to post a bond or provide other security in any court of competent jurisdiction to prevent any continuation of any violation of Paragraph 4 or 5 hereof. Furthermore, should a dispute occur concerning Executive’s mental or physical capacity as described in Subparagraph 6(b), 6(c) or 7(b), a doctor selected by Executive and a doctor selected by the Company shall be entitled to examine Executive. If the opinion of the Company’s doctor and Executive’s doctor conflict, the Company’s doctor and Executive’s doctor shall together agree upon a third doctor, whose opinion shall be binding.

 

16. Third-Party Agreements and Rights.  Executive represents to the Company that Executive’s execution of this Agreement, Executive’s employment with the Company and the performance of Executive’s proposed duties for the Company will not violate any obligations Executive may have to any employer or other party, and Executive will not bring to the premises of the Company any copies or other tangible embodiments of non-public information belonging to or obtained from any such previous employment or other party.

 

17. Litigation and Regulatory Cooperation. During and after Executive’s employment, Executive shall reasonably cooperate with the Company in the defense or prosecution of any claims or actions now in existence or which may be brought in the future against or on behalf of the Company which relate to events or occurrences that transpired while Executive was employed by the Company; provided, however, that such cooperation shall not materially and adversely affect Executive or expose Executive to an increased probability of civil or criminal litigation. Executive’s cooperation in connection with such claims or actions shall include, but not be limited to, being available to meet with counsel to prepare for discovery or trial and to act as a witness on behalf of the Company at mutually convenient times. During and after Executive’s employment, Executive also shall cooperate fully with the Company in connection with any investigation or review of any federal, state or local regulatory authority as any such investigation or review relates to events or occurrences that transpired while Executive was employed by the Company. The Company shall also provide Executive with compensation on an hourly basis at a rate equivalent to the hourly rate of the Executive’s last annual Base Salary calculated using a forty (40) hour week over fifty-two (52) weeks for requested litigation and regulatory cooperation that occurs after his termination of employment, and reimburse Executive for all costs and expenses incurred in connection with his performance under this Paragraph 17, including, but not limited to, reasonable attorneys’ fees and costs.

 

18. Section 409A of the Code .

 

(a) Anything in this Agreement to the contrary notwithstanding, if at the time of the Executive’s separation from service within the meaning of Section 409A of the Code, the Company determines that the Executive is a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code, then to the extent any payment or benefit that the Executive becomes entitled to under this Agreement on account of the Executive’s separation from service would be considered deferred compensation subject to the 20 percent additional tax imposed pursuant to Section 409A(a) of the Code as a result of the application of Section 409A(a)(2)(B)(i) of the Code, such payment shall not be payable and such benefit shall not be provided until the date that is the earlier of (A) six months and one day after the Executive’s separation from service, or (B) the Executive’s death.

 

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(b) The parties intend that this Agreement will be administered in accordance with Section 409A of the Code. To the extent that any provision of this Agreement is ambiguous as to its compliance with Section 409A of the Code, the provision shall be read in such a manner so that all payments hereunder comply with Section 409A of the Code. The parties agree that this Agreement may be amended, as reasonably requested by either party, and as may be necessary to fully comply with Section 409A of the Code and all related rules and regulations in order to preserve the payments and benefits provided hereunder without additional cost to either party.

 

(c) The determination of whether and when a separation from service has occurred shall be made in accordance with the presumptions set forth in Treasury Regulation Section 1.409A-1(h).

 

(d) The Company makes no representation or warranty and shall have no liability to the Executive or any other person if any provisions of this Agreement are determined to constitute deferred compensation subject to Section 409A of the Code but do not satisfy an exemption from, or the conditions of, such Section.

 

(e) Notwithstanding anything herein to the contrary, no event shall constitute a “termination of employment” in this Agreement, unless such event is also a “separation from service,” as that term is defined for purposes of Section 409A of the Internal Revenue Code of 1986, as amended (“Code”), and Treasury Regulation §1.409A-3(a)(1).

 

20. Recoupment . Notwithstanding anything herein to the contrary, Executive may be required to forfeit or repay any or all compensation received by Executive under this Agreement pursuant to the terms of any compensation recovery, recoupment or claw-back policy that may be adopted by or applicable to the Company with respect to or under the Dodd-Frank Wall Street Reform and Consumer Protection Act.

 

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IN WITNESS WHEREOF , the parties have executed this Agreement effective on the date and year first above written.

 

 

HARVARD APPARATUS

REGENERATIVE TECHNOLOGY, INC.

     
  By:  
    Name:
    Title:
     
  EXECUTIVE
     
     
    David Green

 

 
 

 

EXHIBIT A- FORM OF GENERAL RELEASE OF CLAIMS

 

This Release Agreement (the “ Release Agreement ”) is entered into between David Green (the “ Executive ”) and Harvard Apparatus Regenerative Technology, Inc. (the “ Company ”). This is the Release Agreement referenced in the Agreement between the Executive and the Company dated [_____________], 2013 (the “ Employment Agreement ”). The consideration for the Executive’s agreement to this Release Agreement consists of certain termination benefits as set forth in the Employment Agreement and the terms of this Release Agreement. The consideration for the Company’s agreement to this Release Agreement consists of the terms of this Release Agreement.

 

The Executive and the Company (together, the “ Parties ”) agree as follows:

 

Release . The Executive voluntarily releases and forever discharges the Company and each of its subsidiaries, affiliates, predecessors, successors, assigns, and current and former directors, officers, employees, representatives, attorneys, agents, and all persons acting by, through, under or in concert with any of the foregoing (any and all of whom or which are hereinafter referred to as “ Company Parties ”), from any and all charges, complaints, claims, liabilities, obligations, promises, agreements, controversies, damages, actions, causes of action, suits, rights, demands, costs, losses, debts and expenses (including attorney’s fees and costs actually incurred), of any nature whatsoever, known or unknown (collectively, “ Claims ”) that the Executive now has, owns or holds, or claims to have, own, or hold, or that he at any time had, owned, or held, or claimed to have had, owned, or held against any Company Party or Parties. This general release of Claims includes, without implication of limitation, the release of all Claims:

 

relating to the Executive’s employment by and termination from employment with the Company;

 

of wrongful discharge;

 

of breach of contract;

 

of retaliation or discrimination under federal, state or local law (including, without limitation, Claims of age discrimination or retaliation under the Age Discrimination in Employment Act, Claims of disability discrimination or retaliation under the Americans with Disabilities Act, Claims of discrimination or retaliation under Title VII of the Civil Rights Act of 1964 and Claims of discrimination or retaliation under Mass. Gen. Laws ch. 151B);

 

under the Massachusetts Weekly Payment of Wages Act, the Massachusetts Fair Employment Practice Act, and the Fair Labor Standards Act;

 

under any other federal or state statute, to the fullest extent that Claims may be released;

 

of defamation or other torts;

 

of violation of public policy;

 

for salary, bonuses, vacation pay or any other compensation or benefits; and

 

for damages or other remedies of any sort, including, without limitation, compensatory damages, punitive damages, injunctive relief and attorney’s fees.

 

1. Limitations on Release .

 

(a) Employment Agreement . Nothing in this Release Agreement limits either Party’s rights under the Employment Agreement.

 

(b) Benefit and Enforcement Rights . Nothing in this Release Agreement is intended to release or waive the Executive’s right to COBRA, unemployment insurance benefits or any accrued and vested retirement benefits, the right to seek enforcement of this Release Agreement or any rights referenced in this Section of this Release Agreement.

 

(c) Indemnification . It is further understood and agreed that the Executive’s rights to indemnification as provided in the Company’s certificate of incorporation, bylaws or any indemnification agreement between the Company and the Executive (it being acknowledged and agreed by the Executive that, as of the date of this Agreement, there are no amounts owing to the Executive pursuant to any such indemnification rights), remain fully binding and in full effect subsequent to the execution of this Release Agreement.

 

 
 

 

(d) Exceptions . This Release Agreement does not prohibit or restrict the Executive from communicating, providing relevant information to or otherwise cooperating with the EEOC or any other governmental authority with responsibility for the administration of fair employment practices laws regarding a possible violation of such laws or responding to any inquiry from such authority, including an inquiry about the existence of this Release Agreement or its underlying facts. This Release Agreement also does not preclude the Executive from benefiting from classwide injunctive relief awarded in any fair employment practices case brought by any governmental agency; provided that such relief does not result in the Executive’s receipt of any monetary benefit or substantial equivalent thereof.

 

2. No Assignment . Each Party represents that he or it has not assigned to any other person or entity any Claims against any other Party or, in the case of the Executive, any Claim against any Company Party.

 

3. No Disparagement . The Executive shall not make any disparaging statements about the Company, members of the Board of Directors, any officer of the Company or any other employee of the Company. The Executive shall direct his immediate family not to make any disparaging statements about any of the foregoing. Any statement by a member of his immediate family shall be deemed to be a statement by the Executive for purposes of this paragraph. The Executive shall be considered to represent that he has complied and shall continue to comply with he nondisparagement obligations under this paragraph from the Date of Termination (as defined in the Employment Agreement); provided that this representation shall have no effect if this Release Agreement does not become effective. Notwithstanding the foregoing, nothing in this paragraph shall be construed to apply to any statements made in the course of testimony in a legal proceeding or in any required written statements in any such proceeding.

 

4. Litigation and Regulatory Cooperation . The Executive shall reasonably cooperate with the Company in the defense or prosecution of any claims or actions now in existence or which may be brought in the future against or on behalf of the Company which relate to events or occurrences that transpired while Executive was employed by the Company; provided, however, that such cooperation shall not materially and adversely affect Executive or expose Executive to an increased probability of civil or criminal litigation. Executive’s cooperation in connection with such claims or actions shall include, but not be limited to, being available to meet with counsel to prepare for discovery or trial and to act as a witness on behalf of the Company at mutually convenient times. Executive also shall cooperate fully with the Company in connection with any investigation or review of any federal, state or local regulatory authority as any such investigation or review relates to events or occurrences that transpired while Executive was employed by the Company. The Company shall also provide Executive with compensation on an hourly basis at a rate equivalent to the hourly rate of the Executive’s last annual Base Salary (as defined in the Employment Agreement) calculated using a forty (40) hour week over fifty-two (52) weeks for requested litigation and regulatory cooperation that occurs after his termination of employment, and reimburse Executive for all costs and expenses incurred in connection with his performance under this Section 5, including, but not limited to, reasonable attorneys’ fees and costs.

 

5. Reaffirmation of Post-Employment Restrictive Covenants . The Executive reaffirms the restrictive covenants under the Employment Agreement to which he is subject as follows: [Insert as appropriate.]

 

6. Right to Consider and Revoke Release Agreement . This Release Agreement shall be considered to have been offered to both Parties on the Termination Date as defined in the Employment Agreement. Each Party acknowledges that he or it has been given the opportunity to consider this Release Agreement for a period ending twenty-one (21) days after the Termination Date. In the event that either Party has executed this Release Agreement within less than twenty-one (21) days of the Termination Date, such Party acknowledges that such decision was entirely voluntary and that he or it had the opportunity to consider this Release Agreement until the end of the twenty-one (21) day period. To accept this Release Agreement, the Executive shall deliver a signed Release Agreement to the Company’s Board of Directors within such twenty-one (21) day period. To accept this Release Agreement, the Company shall deliver a signed Release Agreement to the Executive within such twenty-one (21) day period. Both Parties acknowledge that for a period of seven (7) days from the date when the Executive executes this Release Agreement (the “ Revocation Period ”), he shall retain the right to revoke this Release Agreement by written notice that is received by the Board of Directors of the Company before the end of the Revocation Period. This Release Agreement shall take effect only if it is accepted by both Parties within the twenty-one (21) day period as set forth above and if it is not revoked pursuant to the preceding sentence. If those conditions are satisfied, this Release Agreement shall become effective and enforceable on the date immediately following the last day of the Revocation Period (the “ Effective Date ”).

 

 
 

 

7. Consideration Owed . Executive affirms and agrees that as of the date of this Release Agreement, you acknowledge that you will be or have been paid any and all wages (including all base compensation and, if applicable, any and all overtime, commissions, and bonuses) to which you are or were entitled as of the date of termination of employment, and that no other wages (including all base compensation and, if applicable, any and all incentive compensation and bonuses) are due to Executive. Executive acknowledges that Executive is unaware of any facts or circumstances indicating that Executive may have an outstanding claim for unpaid wages, improper deductions from pay, or any violation of the Massachusetts Weekly Payment of Wages Act (M.G.L. c. 149, s. 148) or the Fair Labor Standards Act or any other federal, state or local laws, rules, ordinances or regulations that are related to payment of wages.

 

8. Other Terms .

 

(a) Legal Representation; Review of Release Agreement . The Executive acknowledges that he has been advised to discuss all aspects of this Release Agreement with he attorney. Each Party represents that he or it has carefully read and fully understands all of the provisions of this Release Agreement and that he or it is voluntarily entering into this Release Agreement.

 

(b) Binding Nature of Release Agreement . This Release Agreement shall be binding upon each of the parties and upon their heirs, administrators, representatives, executors, successors and assigns, and shall inure to the benefit of both parties and to their heirs, administrators, representatives, executors, successors, and assigns.

 

(c) Modification of Release Agreement; Waiver . This Release Agreement may be amended, revoked, changed, or modified only upon a written agreement executed by both Parties. No modification waiver of any provision of this Release Agreement will be valid unless it is in writing and signed by the party against whom such waiver is charged. The failure of either Party to require the performance of any term or obligation of this Release Agreement, or the waiver by either Party of any breach of this Release Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a waiver of any subsequent breach.

 

(d) Severability . In the event that at any future time it is determined by a court of competent jurisdiction that any covenant, clause, provision or term of this Release Agreement is illegal, invalid or unenforceable, the remaining provisions and terms of this Release Agreement shall not be affected thereby and the illegal, invalid or unenforceable term or provision shall be severed from the remainder of this Release Agreement. In the event of such severance, the remaining covenants shall be binding and enforceable.

 

(e) Enforcement . Sections 4, 5 and 6 of this Release Agreement shall be subject to enforcement pursuant to the same procedures that apply to a breach of Paragraphs 4 or 5 of the Employment Agreement (as further detailed in Paragraph 15 of the Employment Agreement). Any other disputes concerning this Release Agreement shall be subject to resolution pursuant to Section 15 of the Employment Agreement.

 

(f) Governing Law and Interpretation . This Release Agreement shall be deemed to be made and entered into in the Commonwealth of Massachusetts, and shall in all respects be interpreted, enforced and governed under the laws of Massachusetts, without giving effect to the conflict of laws provisions of Massachusetts law. The language of all parts of this Release Agreement shall in all cases be construed as a whole, according to its fair meaning, and not strictly for or against either of the Parties.

 

(g) Counterparts . This Release Agreement may be executed in counterparts. Signed counterparts shall together be considered to be part of the same document.

 

(h) Entire Agreement; Absence of Reliance . This Release Agreement constitutes the entire agreement between the Executive and the Company concerning any subject matter of this Release Agreement and supersedes all prior agreements between the parties with respect to any related subject matter, except the Employment Agreement. The Executive acknowledges that he is not relying on any promises or representations by the Company or its agents, representatives or attorneys regarding any subject matter addressed in this Release Agreement.

 

 
 

 

So agreed by the Parties.

 

HARVARD APPARATUS REGENERATIVE

TECHNOLOGY, INC.

   
     
By:      
      Date
     
     
Executive     David Green     Date
       

 

 

 

 

EXHIBIT 10.4

 

HARVARD APPARATUS REGENERATIVE TECHNOLOGY, INC.

EMPLOYMENT AGREEMENT

 

This EXECUTIVE EMPLOYMENT AGREEMENT (“Agreement”) is made as of the __ day of _______, 2013, to be effective as of the Commencement Date (as defined below), between Harvard Apparatus Regenerative Technology, Inc., a Delaware corporation (the “Company”), and Thomas McNaughton (“Executive”). For purposes of this Agreement the “Company” shall refer to the Company and any of its predecessors.

 

WHEREAS , the Company desires to employ Executive and Executive desires to be employed by the Company on the terms contained herein.

 

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

 

1. Employment. The term of this Agreement shall automatically, without the requirement of any further action or notice, commence on the date that Harvard Bioscience, Inc. no longer beneficially owns at least 50% of the total voting power of the Company’s outstanding capital stock (the “Commencement Date”) and shall extend until the second anniversary of the Commencement Date; provided, however, that the term of this Agreement shall automatically be extended for two additional years on each second anniversary of the Commencement Date unless, not less than 90 days prior to each such date, either party shall have given notice to the other that it does not wish to extend this Agreement; provided, further, that if a Change in Control occurs during the original or extended term of this Agreement, the term of this Agreement shall, notwithstanding anything in this sentence to the contrary, continue in effect for a period of not less than twelve (12) months beyond the month in which the Change in Control occurred. The term of this Agreement shall be subject to termination as provided in Paragraph 6 and may be referred to herein as the “Period of Employment.”

 

2. Position and Duties.  During the Period of Employment, Executive shall serve as the Chief Financial Officer of the Company and shall have such powers and duties as may from time to time be prescribed by the Board of Directors (the “Board”) or the Chief Executive Officer of the Company, provided that such duties are consistent with Executive’s position or other positions that he may hold from time to time. Executive shall devote his full working time and efforts to the business and affairs of the Company. Notwithstanding the foregoing, Executive may serve on other boards of directors or may be employed by Harvard Bioscience, Inc. temporarily during a specified transition period as a common law employee who is not under an employment contract, with the approval of the Board as long as such service does not materially interfere with Executive’s performance of his duties to the Company as provided in this Agreement.

 

3. Compensation and Related Matters.

 

(a)   Base Salary and Incentive Compensation. Executive’s initial annual base salary shall be three hundred nine thousand dollars ($309,000). Executive’s base salary shall be redetermined annually by the Board or a Committee thereof. The base salary in effect at any given time is referred to herein as “Base Salary.” The Base Salary shall be payable in substantially equal installments on a bi-weekly or more frequent basis. In addition to Base Salary, Executive shall be eligible to receive cash incentive compensation as determined by the Board or a Committee thereof from time to time, and shall also be eligible to participate in such incentive compensation plans as the Board or a Committee thereof shall determine from time to time for employees of the same status within the hierarchy of the Company.

 

(b) Expenses. Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by him in performing services hereunder during the Period of Employment, in accordance with the policies and procedures then in effect and established by the Company for its senior executive officers, provided that such reimbursement does not occur later than the end of the second calendar year after the calendar year in which such expense was incurred.

 

 
 

 

(c) Other Benefits.  During the Period of Employment, Executive shall be entitled to continue to participate in or receive benefits under all of the Company’s Employee Benefit Plans in effect on the date hereof, or under plans or arrangements that provide no less favorable treatment to the Executive than the Employee Benefit Plans provided to other, similarly situated, members of the Company’s senior management. As used herein, the term “Employee Benefit Plans” includes, without limitation, each pension and retirement plan; supplemental pension, retirement and deferred compensation plan; savings and profit-sharing plan; stock ownership plan; stock purchase plan; stock option plan; life insurance plan; medical insurance plan; disability plan; and health and accident plan or arrangement established and maintained by the Company on the date hereof or anytime hereafter. To the extent that the scope or nature of benefits described in this section is determined under the policies of the Company based in whole or in part on the seniority or tenure of an employee’s service, Executive shall be deemed to have a tenure with the Company equal to the actual time of Executive’s service with the Company. During the Period of Employment, Executive shall be entitled to participate in or receive benefits under any Employee Benefit Plans which may, in the future, be made available by the Company to its executives and key management employees, subject to and on a basis consistent with the terms, conditions and overall administration of such Employee Benefit Plans. Any payments or benefits payable to Executive under an Employee Benefit Plan referred to in this Subparagraph 3(c) in respect of any calendar year during which Executive is employed by the Company for less than the whole of such year shall, unless otherwise provided in the applicable Employee Benefit Plan, be prorated in accordance with the number of days in such calendar year during which he is so employed. Should any such payments or benefits accrue on a fiscal (rather than calendar) year, then the proration in the preceding sentence shall be on the basis of a fiscal year rather than calendar year.

 

(d) Vacations.  Executive shall be entitled to twenty (20) paid vacation days in each calendar year, which shall be accrued ratably during the calendar year. Executive shall also be entitled to all paid holidays given by the Company to its executives. To the extent that the scope or nature of benefits described in this section are determined under the policies of the Company based in whole or in part on the seniority or tenure of an employee’s service, Executive shall be deemed to have a tenure with the Company equal to the actual time of Executive’s service with Company. Notwithstanding anything herein to the contrary, Executive shall be paid any accrued and unused vacation upon his severance of employment with the Company, if and as protected by applicable law.

 

(e) Legal Rights. Nothing in this Agreement shall interfere with Executive’s legal rights relating to employment, including, but not limited to, his right to a COBRA notice upon his severance of employment with the Company.

 

4. Unauthorized Disclosure.

 

(a) Confidential Information. Executive acknowledges that in the course of his employment with the Company (and, if applicable, its predecessors), he has been allowed to become, and will continue to be allowed to become, acquainted with the Company’s business affairs, information, trade secrets, and other matters which are of a proprietary or confidential nature, including but not limited to the Company’s and its affiliates’ and predecessors’ operations, business opportunities, price and cost information, finance, customer information, business plans, various sales techniques, manuals, letters, notebooks, procedures, reports, products, processes, services, and other confidential information and knowledge (collectively the “Confidential Information”) concerning the Company’s and its affiliates’ and predecessors’ business. The Company agrees to provide on an ongoing basis such Confidential Information as the Company deems necessary or desirable to aid Executive in the performance of his duties. Executive understands and acknowledges that such Confidential Information is confidential, and he agrees not to disclose such Confidential Information to anyone outside the Company except to the extent that (i) Executive deems such disclosure or use reasonably necessary or appropriate in connection with performing his duties on behalf of the Company; (ii) Executive is required by order of a court of competent jurisdiction (by subpoena or similar process) to disclose or discuss any Confidential Information, provided that in such case, Executive shall promptly inform the Company of such event, shall cooperate with the Company in attempting to obtain a protective order or to otherwise restrict such disclosure, and shall only disclose Confidential Information to the minimum extent necessary to comply with any such court order; (iii) such Confidential Information becomes generally known to and available for use in the Company’s industry (the “regenerative medicine industry”), other than as a result of any action or inaction by Executive; or (iv) such information has been rightfully received by a member of the regenerative medicine industry or has been published in a form generally available to the regenerative medicine industry prior to the date Executive proposes to disclose or use such information. Executive further agrees that he will not during employment and/or at any time thereafter use such Confidential Information in competing, directly or indirectly, with the Company. At such time as Executive shall cease to be employed by the Company, he will immediately turn over to the Company all Confidential Information, including papers, documents, writings, electronically stored information, other property, and all copies of them provided to or created by him during the course of his employment with the Company.

 

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(b) Heirs, successors, and legal representatives. The foregoing provisions of this Paragraph 4 shall be binding upon Executive’s heirs, successors, and legal representatives. The provisions of this Paragraph 4 shall survive the termination of this Agreement for any reason.

 

5. Covenant Not to Compete or Solicit or Hire. In consideration for Executive’s employment by the Company under the terms provided in this Agreement and as a means to aid in the performance and enforcement of the terms of the provisions of Paragraph 4, Executive agrees that

 

(a)  during the term of Executive’s employment with the Company and for a period of twelve (12) months thereafter, regardless of the reason for termination of employment, Executive will not, directly or indirectly, as an owner, director, principal, agent, officer, employee, partner, consultant, servant, or otherwise, carry on, operate, manage, control, or become involved in any manner with any business, operation, corporation, partnership, association, agency, or other person or entity which is engaged in a business that produces products that compete directly with any of the Company’s products which are produced by the Company or any affiliate of the Company or which the Company or any affiliate of the Company has active plans to produce as of the date of Executive’s termination of employment with the Company, in any area or territory in which the Company or any affiliate of the Company conducts or has active plans to conduct operations as of the date of the Executive’s termination of employment with the Company; provided, however, that the foregoing shall not prohibit Executive from owning up to one percent (1%) of the outstanding stock of a publicly held company engaged in the regenerative medicine industry; and

 

(b)  during the term of Executive’s employment with the Company and for a period of twelve (12) months thereafter, regardless of the reason for termination of employment, Executive will not directly or indirectly solicit or induce any present or future employee of the Company or any affiliate of the Company to accept employment with Executive or with any business, operation, corporation, partnership, association, agency, or other person or entity with which Executive may be associated, and Executive will not hire or employ or cause any business, operation, corporation, partnership, association, agency, or other person or entity with which Executive may be associated to hire or employ any present or future employee of the Company.

 

Should Executive violate any of the provisions of this Paragraph, then in addition to all other rights and remedies available to the Company at law or in equity, the duration of this covenant shall automatically be extended for the period of time from which Executive began such violation until he permanently ceases such violation.

 

5A.          Remedies. Executive acknowledges that full compliance with the terms of this Agreement is necessary to protect the significant value of the Confidential Information and the customer and business goodwill of the Company. Executive acknowledges that if he breaches Sections 4 or 5 of this Agreement, the Company will be irreparably harmed and money damages will not be an adequate remedy. As a result, Executive agrees that, in the event Executive breaches or threatens to breach any of the terms or provisions of Sections 4 or 5 of this Agreement, the Company shall be entitled to a preliminary or permanent injunction, without posting a bond or other security, in order to prevent the continuation of such harm. Executive acknowledges that nothing in this Agreement will prohibit the Company from also pursuing any other remedy and all remedies are cumulative.

 

6. Termination.  Executive’s employment hereunder may be terminated without any breach of this Agreement under the following circumstances:

 

(a) Death.  Executive’s employment hereunder shall terminate upon his death.

 

(b) Disability. If, as a result of Executive’s incapacity due to physical or mental illness, Executive shall have been absent from his duties hereunder on a full-time basis for one hundred eighty (180) calendar days in the aggregate in any twelve (12) month period, the Company may terminate Executive’s employment hereunder.

 

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(c) Termination by Company For Cause. At any time during the Period of Employment, the Company may terminate Executive’s employment hereunder for Cause if such termination is approved by not less than a majority of the Board at a meeting of the Board called and held for such purpose. For purposes of this Agreement, “Cause” shall mean: (A) conduct by Executive constituting a material act of willful misconduct in connection with the performance of his duties, including, without limitation, misappropriation of funds or property of the Company or any of its affiliates other than the occasional, customary and de minimis use of Company property for personal purposes; (B) criminal or civil conviction of Executive, a plea of nolo contendere by Executive or conduct by Executive that would reasonably be expected to result in material injury to the reputation of the Company if he were retained in his position with the Company, including, without limitation, conviction of a felony involving moral turpitude; (C) continued, willful and deliberate non-performance by Executive of his duties hereunder (other than by reason of Executive’s physical or mental illness, incapacity or disability) which has continued for more than thirty (30) days following written notice of such non-performance from the Board; (D) a breach by Executive of any of the provisions contained in Paragraphs 4 and 5 of this Agreement; or (E) a violation by Executive of the Company’s employment policies which has continued following written notice of such violation from the Board.

 

(d) Termination Without Cause. At any time during the Period of Employment, the Company may terminate Executive’s employment hereunder without Cause if such termination is approved by a majority of the Board at a meeting of the Board called and held for such purpose. Any termination by the Company of Executive’s employment under this Agreement which does not constitute a termination for Cause under Subparagraph 6(c) or result from the death or disability of the Executive under Subparagraph 6(a) or (b) shall be deemed a termination without Cause. If the Company provides notice to Executive under Paragraph 1 that it does not wish to extend the Period of Employment, such action shall be deemed a termination without Cause.

 

(e) Termination by Executive. At any time during the Period of Employment, Executive may terminate his employment hereunder for any reason, including but not limited to Good Reason. If Executive provides notice to the Company under Paragraph 1 that he does not wish to extend the Period of Employment, such action shall be deemed a voluntary termination by Executive and one without Good Reason. For purposes of this Agreement, “Good Reason” shall mean that Executive has complied with the “Good Reason Process” (hereinafter defined) following the occurrence of any of the following events: (A) a substantial diminution or other substantive adverse change, not consented to by Executive, in the nature or scope of Executive’s responsibilities, authorities, powers, functions or duties; (B) any removal, during the Period of Employment, from Executive of his title of Chief Financial Officer; (C) an involuntary reduction in Executive’s Base Salary except for across-the-board reductions similarly affecting all or substantially all management employees; (D) a breach by the Company of any of its other material obligations under this Agreement and the failure of the Company to cure such breach within thirty (30) days after written notice thereof by Executive; (E) the involuntary relocation of the Company’s offices at which Executive is principally employed or the involuntary relocation of the offices of Executive’s primary workgroup to a location more than 30 miles from such offices, or the requirement by the Company that Executive be based anywhere other than the Company’s offices at such location on an extended basis, except for required travel on the Company’s business to an extent substantially consistent with Executive’s business travel obligations; or (F) the failure of the Company to obtain the agreement from any successor to the Company to assume and agree to perform this Agreement as required by Paragraph 11 (each of which is hereinafter referred to as a “Good Reason event”). “Good Reason Process” shall mean that (i) Executive reasonably determines in good faith that a “Good Reason” event has occurred; (ii) Executive notifies the Company in writing of the occurrence of the Good Reason event; (iii) Executive cooperates in good faith with the Company’s efforts, for a period not less than ninety (90) days following such notice, to modify Executive’s employment situation in a manner acceptable to Executive and Company; and (iv) notwithstanding such efforts, one or more of the Good Reason events continues to exist and has not been modified in a manner acceptable to Executive. If the Company cures the Good Reason event in a manner acceptable to Executive during the ninety (90) day period, Good Reason shall be deemed not to have occurred.

 

(f) Notice of Termination. Except for termination as specified in Subparagraph 6(a), any termination of Executive’s employment by the Company or any such termination by Executive shall be communicated by written Notice of Termination to the other party hereto and shall be effective on the Date of Termination (as defined below). For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon.

 

(g) Date of Termination. “Date of Termination” shall mean: (A) if Executive’s employment is terminated by his death, the date of his death; (B) if Executive’s employment is terminated on account of disability under Subparagraph 6(b) or by the Company for Cause under Subparagraph 6(c), the date on which Notice of Termination is given or such later date as the Company may specify in the Notice of Termination; (C) if Executive’s employment is terminated by the Company under Subparagraph 6(d), sixty (60) days after the date on which a Notice of Termination is given or such later date as the Company may specify in the Notice of Termination (or, if such termination occurs as a result of the Company providing notice to Executive under Paragraph 1 that it does not wish to extend the Period of Employment, the date of the expiration of the current term of this Agreement); and (D) if Executive’s employment is terminated by Executive under Subparagraph 6(e), thirty (30) days after the date on which a Notice of Termination is given or, if such termination is without Good Reason, such later date up to sixty (60) days after the date on which such Notice of Termination is given as Executive may specify in the Notice of Termination (or, if such termination occurs as a result of the Company providing notice to Executive under Paragraph 1 that it does not wish to extend the Period of Employment, the date of the expiration of the current term of this Agreement).

 

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(h) Separation from Service . Notwithstanding anything herein to the contrary, no event shall constitute a “termination of employment” in this Agreement, unless such event is also a “separation from service,” as that term is defined for purposes of Section 409A of the Internal Revenue Code of 1986, as amended (“Code”), and Treasury Regulation §1.409A-3(a)(1).

 

7. Compensation Upon Termination or During Disability.

 

(a) Death. If Executive’s employment terminates by reason of his death, the Company shall, within ninety (90) days of death, pay in a lump sum to such person as Executive shall designate in a notice filed with the Company or, if no such person is designated, to Executive’s estate, Executive’s accrued and unpaid Base Salary to the date of his death, plus his accrued and unpaid incentive compensation, if any, under Subparagraph 3(a). Upon the death of Executive, all unvested stock options shall immediately vest in Executive’s estate or other legal representatives and become exercisable. All other stock-based grants and awards held by Executive shall vest or be canceled upon the death of Executive in accordance with their terms. For a period of one (1) year following the Date of Termination, the Company shall pay such health insurance premiums as may be necessary to allow Executive’s spouse and dependents to receive health insurance coverage substantially similar to coverage they received prior to the Date of Termination. In addition to the foregoing, any payments to which Executive’s spouse, beneficiaries, or estate may be entitled under any employee benefit plan shall also be paid in accordance with the terms of such plan or arrangement. Such payments, in the aggregate, shall fully discharge the Company’s obligations hereunder.

 

(b) Disability. During any period that Executive fails to perform his duties hereunder as a result of incapacity due to physical or mental illness, Executive shall continue to receive his accrued and unpaid Base Salary and accrued and unpaid incentive compensation, if any, under Subparagraph 3(a), until Executive’s employment is terminated due to disability in accordance with Subparagraph 6(b) or until Executive terminates his employment in accordance with Subparagraph 6(e), whichever first occurs. Upon the Date of Termination by reason of Executive’s disability, all unvested stock options shall immediately vest and become exercisable. All other stock-based grants and awards held by Executive shall vest or be canceled upon the Date of Termination in accordance with their terms. For a period of one (1) year following the Date of Termination, the Company shall pay such health insurance premiums as may be necessary to allow Executive and Executive’s spouse and dependents to receive health insurance coverage substantially similar to coverage they received prior to the Date of Termination. Upon termination due to death prior to the termination first to occur as specified in the preceding sentence, Subparagraph 7(a) shall apply.

 

(c) Termination other than for Good Reason. If Executive’s employment is terminated by Executive other than for Good Reason as provided in Subparagraph 6(e), then the Company shall, through the Date of Termination, pay Executive in a lump sum his accrued and unpaid Base Salary at the rate in effect at the time Notice of Termination is given. Thereafter, the Company shall have no further obligations to Executive except as otherwise expressly provided under this Agreement, provided any such termination shall not adversely affect or alter Executive’s rights under any employee benefit plan of the Company in which Executive, at the Date of Termination, has a vested interest, unless otherwise provided in such employee benefit plan or any agreement or other instrument attendant thereto.

 

(d) Termination by Executive for Good Reason or by the Company without Cause. Subject to the terms of section 19(a), and subject to the terms of this section, if the Executive’s employment is terminated for Good Reason as provided in Subparagraph 6(e) or without Cause as provided in Subparagraph 6(d), the Company shall, through the Date of Termination, pay Executive in a lump sum his accrued and unpaid Base Salary at the rate in effect at the time Notice of Termination is given and his accrued and unpaid incentive compensation, if any, under Subparagraph 3(a). In addition, subject to the Executive’s execution of a general release of claims in the form attached hereto as Exhibit A within 21 days after the Date of Termination and the expiration of the seven-day revocation period applicable thereto, commencing on the later of (i) the last day of the period for signing and revoking the general release of claims in the form set forth in Exhibit A hereof (“Release”), or (ii) ninety (90) days after the Executive’s employment is terminated for Good Reason as provided in Subparagraph 6(e) or without Cause as provided in Subparagraph 6(d),

 

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(i) the Company shall pay Executive an amount equal to the sum of (A) Executive’s Average Base Salary and (B) Executive’s Average Incentive Compensation (the “Severance Amount”). The Severance Amount shall be paid in cash in a single lump sum payment. For purposes of this Agreement, “Average Base Salary” shall mean the greater of (X) the average of the annual Base Salary received by Executive during the three (3) immediately preceding complete fiscal years or such fewer number of complete fiscal years as Executive may have been employed by the Company or (Y) the amount of Base Salary for the immediately prior fiscal year. For purposes of this Agreement, “Average Incentive Compensation” shall mean the average of the annual cash incentive compensation under Subparagraph 3(a) received by Executive for the three (3) immediately preceding fiscal years or such fewer number of complete fiscal years as Executive may have been employed by the Company or the amount of cash incentive compensation for the prior fiscal year, whichever is higher. In no event shall “Average Incentive Compensation” include any sign-on bonus, retention bonus or any other special bonus. Notwithstanding the foregoing, if the Executive breaches any of the provisions contained in Paragraphs 4 and 5 of this Agreement, all payments of the Severance Amount shall immediately cease and the entire Severance Amount shall be forfeited and become repayable to the Company to the extent paid. Furthermore, in the event Executive terminates his employment for Good Reason as provided in Subparagraph 6(e), he shall be entitled to the Severance Amount only if he provides the Notice of Termination provided for in Subparagraph 6(f) within thirty (30) days after he has complied with the Good Reason Process; and

 

(ii) upon the Date of Termination, each unvested stock option that would otherwise vest during the next twelve (12) months shall accelerate and immediately vest. All other stock-based grants and awards held by Executive that would otherwise vest during the next twelve (12) months shall accelerate and immediately vest upon the Date of Termination; and

 

(iii) in addition to any other benefits to which Executive may be entitled in accordance with the Company’s then existing severance policies, the Company shall, for a period of one (1) year commencing on the Date of Termination, pay such health insurance premiums as may be necessary to allow Executive and Executive’s spouse and dependents to continue to receive health insurance coverage.

 

(e) Termination for Cause. If Executive’s employment is terminated by the Company for Cause as provided in Subparagraph 6(c), then the Company shall, through the Date of Termination, pay Executive his accrued and unpaid Base Salary at the rate in effect at the time Notice of Termination is given. Thereafter, the Company shall have no further obligations to Executive except as otherwise expressly provided under this Agreement, provided any such termination shall not adversely affect or alter Executive’s rights under any employee benefit plan of the Company in which Executive, at the Date of Termination, has a vested interest, unless otherwise provided in such employee benefit plan or any agreement or other instrument attendant thereto. In addition, all stock options held by Executive as of the Date of Termination shall immediately terminate and be of no further force and effect, and all other stock-based grants and awards shall be canceled or terminated in accordance with their terms.

 

Nothing contained in the foregoing Subparagraphs 7(a) through 7(e) shall be construed so as to affect Executive’s rights or the Company’s obligations relating to agreements or benefits which are unrelated to termination of employment.

 

8. Change in Control Payment. The provisions of this Paragraph 8 set forth certain terms of an agreement reached between Executive and the Company regarding Executive’s rights and obligations upon the occurrence of a Change in Control of the Company. These provisions are intended to assure and encourage in advance Executive’s continued attention and dedication to his assigned duties and his objectivity during the pendency and after the occurrence of any such event.

 

(a) Change in Control.  If within eighteen (18) months after the occurrence of the first event constituting a Change in Control, Executive’s employment is terminated by the Company without Cause as provided in Subparagraph 6(d) or Executive terminates his employment for Good Reason as provided in Subparagraph 6(e), then, subject to the terms of section 19(a), and subject to the Executive’s executing a general release of claims in the form attached hereto as Exhibit A within 21 days after the Date of Termination and the expiration of the seven-day revocation period applicable thereto, commencing on the later of (i) the last day of the period for signing and revoking the general release of claims in the form set forth in Exhibit A hereof (“Release”), or (ii) ninety (90) days after the Executive’s employment is terminated as provided above in this Section 8(a):

 

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(i) In lieu of any amounts otherwise payable pursuant to Subparagraph 7(d)(i), the Company shall pay Executive a single lump sum in cash equal to the sum of (A) Executive’s current or most recent annual Base Salary plus (B) Executive’s most recent annual cash incentive compensation under Subparagraph 3(a) for the most recent fiscal year, excluding any sign-on bonus, retention bonus or any other special bonus;

 

(ii) Notwithstanding anything to the contrary in any applicable option agreement or stock-based award agreement and in lieu of any acceleration of vesting that would otherwise occur pursuant to Subparagraph 7(d)(ii), upon a Change in Control, all stock options and other stock-based awards granted to Executive by the Company shall immediately accelerate and become exercisable or non-forfeitable as of the effective date of such Change in Control. Executive shall also be entitled to any other rights and benefits with respect to stock-related awards, to the extent and upon the terms provided in the employee stock option or incentive plan or any agreement or other instrument attendant thereto pursuant to which such options or awards were granted; and

 

(iii) In lieu of the Company’s obligations to pay health insurance premiums pursuant to Subparagraph 7(d)(iii), the Company shall, for a period of one (1) year commencing on the Date of Termination, pay such health insurance premiums as may be necessary to allow Executive, Executive’s spouse and dependents to continue to receive health insurance coverage substantially similar to the coverage they received prior to the Date of Termination.

 

(b) Gross Up Payment.

 

(i) Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any compensation, payment or distribution by the Company to or for the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (the “Severance Payments”), would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), or any interest or penalties are incurred by Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then Executive shall be entitled to receive an additional payment or payments (collectively, the “Gross-Up Payment”) such that the net amount retained by Executive, after deduction of (x) any Excise Tax on the Severance Payments, (y) any Federal, state, and local income tax, employment tax and Excise Tax, in each case resulting from the Gross-Up Payment provided by this Subparagraph 8(b)(i), and (z) any interest and/or penalties assessed with respect to such Excise Tax, but without deducting any other amounts that may be payable by Executive as a result of the Severance Payments, including, without limitation, any Federal, state, and local income tax or employment tax, other than those specifically described clauses (x), (y) and (z) above, due as a result of the Severance Payments, shall be equal to the Severance Payments.

 

(ii) Subject to the provisions of Subparagraph 8(b)(iii), all determinations required to be made under this Subparagraph 8(b)(ii), including whether a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be made by KPMG LLP or any other nationally recognized accounting firm selected by the Company (the “Accounting Firm”), which shall provide detailed supporting calculations both to the Company and Executive within fifteen (15) business days of the Date of Termination, if applicable, or at such earlier time as is reasonably requested by the Company or Executive. For purposes of determining the amount of the Gross-Up Payment, Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation applicable to individuals for the calendar year in which the Gross-Up Payment is to be made, and state and local income taxes at the highest marginal rates of individual taxation in the state and locality of Executive’s residence on the Date of Termination, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes. The Gross-Up Payment, if any, as determined pursuant to this Subparagraph 8(b)(ii), shall be paid to the relevant tax authorities as withholding taxes on behalf of the Executive at such time or times as when each Excise Tax payment is due. Any determination by the Accounting Firm shall be binding upon the Company and Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (an “Underpayment”). In the event that the Company exhausts its remedies pursuant to Subparagraph 8(b)(iii) and Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred, consistent with the calculations required to be made hereunder, and any such Underpayment, and any interest and penalties imposed on the Underpayment and required to be paid by Executive in connection with the proceedings described in Subparagraph 8(b)(iii), shall be promptly paid by the Company to the relevant tax authorities as withholding taxes on behalf of the Executive.

 

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(iii) Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after Executive knows of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which he gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies Executive in writing prior to the expiration of such period that it desires to contest such claim, provided that the Company has set aside adequate reserves to cover the Underpayment and any interest and penalties thereon that may accrue, Executive shall:

 

(A) give the Company any information reasonably requested by the Company relating to such claim,

 

(B) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney selected by the Company,

 

(C) cooperate with the Company in good faith in order to effectively contest such claim, and

 

(D) permit the Company to participate in any proceedings relating to such claim; provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold Executive harmless, on an after-tax basis, for any Excise Tax or income tax, including interest and penalties with respect thereto, imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Subparagraph 8(b)(iii), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs Executive to pay such claim and sue for a refund, the Company shall pay such amount to the applicable tax authority on behalf of the Executive as an additional Gross-Up Payment and shall indemnify and hold Executive harmless, on an after-tax basis, from any Excise Tax or income tax, including interest or penalties imposed with respect thereto or with respect to any imputed income; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company’s control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and Executive shall be entitled to settle or contest, as the case may be, any other issues raised by the Internal Revenue Service or any other taxing authority.

 

(iv) If, after a Gross-Up Payment by the Company on behalf of the Executive pursuant to Subparagraph 8(b)(iii), Executive becomes entitled to receive any refund with respect to such claim, Executive shall (subject to the Company’s complying with the requirements of Subparagraph 8(b)(iii)) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto).

 

8
 

 

(c) Definitions. For purposes of this Paragraph 8, the following terms shall have the following meanings:

 

“Change in Control” shall mean any of the following:

 

(a) a change in effective control consistent with Regulation §1.409A-3(i)(vi) such that any “person,” as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Act”) (other than the Company, any of its subsidiaries, or any trustee, fiduciary or other person or entity holding securities under any employee benefit plan or trust of the Company or any of its subsidiaries), together with all “affiliates” and “associates” (as such terms are defined in Rule 12b-2 under the Act) of such person, shall become the “beneficial owner” (as such term is defined in Rule 13d-3 under the Act), directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the combined voting power of the Company’s then outstanding securities having the right to vote in an election of the Company’s Board (“Voting Securities”) (other than as a result of an acquisition of securities directly from the Company); or

 

(b) a change in effective control consistent with Regulation §1.409A-3(i)(vi) such that persons who, as of the Commencement Date, constitute the Company’s Board (the “Incumbent Directors”) cease for any reason, including, without limitation, as a result of a tender offer, proxy contest, merger or similar transaction, to constitute at least a majority of the Board, provided that any person becoming a director of the Company subsequent to the Commencement Date shall be considered an Incumbent Director if such person’s election was approved by or such person was nominated for election by a vote of at least a majority of the Incumbent Directors; but provided further, that any such person whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of members of the Board or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Board, including by reason of agreement intended to avoid or settle any such actual or threatened contest or solicitation, shall not be considered an Incumbent Director; or

 

(c) a change in ownership consistent with Regulation §1.409A-3(i)(v) and (vii) such that the stockholders of the Company shall approve (A) any consolidation or merger of the Company where the stockholders of the Company, immediately prior to the consolidation or merger, would not, immediately after the consolidation or merger, beneficially own (as such term is defined in Rule 13d-3 under the Act), directly or indirectly, shares representing in the aggregate more than fifty percent (50%) of the voting shares of the Company issuing cash or securities in the consolidation or merger (or of its ultimate parent corporation, if any), (B) any sale, lease, exchange or other transfer (in one transaction or a series of transactions contemplated or arranged by any party as a single plan) of all or substantially all of the assets of the Company or (C) any plan or proposal for the liquidation or dissolution of the Company.

 

9. Stock Options Grant/Vesting . Subject to the terms and conditions of the Company’s 2013 Equity Incentive Plan (the “Plan”), and your timely execution of a stock option agreement evidencing the option grant as well as a certain termination and waiver agreement with Harvard Bioscience, Inc. (terminating your employment agreement with Harvard Bioscience effective as of the Commencement Date and waiving your rights under such employment agreement to terminate your employment with Harvard Bioscience for “good reason” due to a substantial diminution or other substantive adverse change in their responsibilities, powers, or duties arising from your new role at the Company and execution hereof), the Company will grant you (i) an option to purchase shares of Common Stock in an amount to be determined prior to the grant but which shall be equal to an amount that, assuming it was exercised at the time of an initial public offering by the Company following the Commencement Date that results in twenty five percent of the Company’s common stock being issued, would provide you with one and one half of one percent (1.50%) of the ownership interests in the Company immediately following such offering (the “Initial Grant”) and (ii) an option to purchase up to one half of the shares subject to the Initial Grant (the “Milestone Grant”). With respect to the Initial Grant, the option shall vest annually in four equal annual installments on January 1of each year for four consecutive years commencing with the January 1 immediately following the date of grant. With respect to the Milestone Grant, the option shall vest in one third increments subject to certain Company performance milestones to be determined by the Board of Directors. Subject to certain limitations, upon a Change in Control (as defined in Section 8 above), the Initial Grant and Milestone Grant shall become fully vested and fully exercisable. The options that comprise the Initial Grant shall be incentive stock options to the extent of the $100,000 threshold and the remainder shall be non-qualified stock options. The options that comprise the Milestone Grant shall be non-qualified stock options.

 

9
 

 

10. Notice. For purposes of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States certified mail, return receipt requested, postage prepaid, addressed as follows:

 

if to the Executive:

 

At his home address as shown

in the Company’s personnel records;

 

if to the Company:

 

Harvard Apparatus Regenerative Technology, Inc.

84 October Hill Road

Holliston, Massachusetts 01746

Attention: Board of Directors of Harvard Apparatus Regenerative Technology, Inc.

 

with a copy to:

 

Josef B. Volman

Burns & Levinson LLP

125 Summer Street

Boston, MA 02110

 

or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

 

11. Successor to Company. The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company expressly to assume and agree to perform this Agreement to the same extent that the Company would be required to perform it if no succession had taken place. Failure of the Company to obtain an assumption of this Agreement at or prior to the effectiveness of any succession shall be a breach of this Agreement and shall constitute Good Reason if the Executive elects to terminate employment.

 

12. Miscellaneous. No provisions of this Agreement may be modified, waived, or discharged unless such waiver, modification, or discharge is agreed to in writing and signed by Executive and such officer of the Company as may be specifically designated by the Board. No waiver by either party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, unless specifically referred to herein, with respect to the subject matter hereof have been made by either party which are not set forth expressly in this Agreement. The validity, interpretation, construction, and performance of this Agreement shall be governed by the laws of the Commonwealth of Massachusetts (without regard to principles of conflicts of laws).

 

13. Validity. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. The invalid portion of this Agreement, if any, shall be modified by any court having jurisdiction to the extent necessary to render such portion enforceable.

 

14. Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

 

10
 

 

15. Arbitration; Other Disputes. In the event of any dispute or controversy arising under or in connection with this Agreement, the parties shall first promptly try in good faith to settle such dispute or controversy by mediation under the applicable rules of the American Arbitration Association before resorting to arbitration. In the event such dispute or controversy remains unresolved in whole or in part for a period of thirty (30) days after it arises, the parties will settle any remaining dispute or controversy exclusively by arbitration in Boston, Massachusetts, in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. Notwithstanding the above, the Company shall be entitled to seek a restraining order or injunction without the need to post a bond or provide other security in any court of competent jurisdiction to prevent any continuation of any violation of Paragraph 4 or 5 hereof. Furthermore, should a dispute occur concerning Executive’s mental or physical capacity as described in Subparagraph 6(b), 6(c) or 7(b), a doctor selected by Executive and a doctor selected by the Company shall be entitled to examine Executive. If the opinion of the Company’s doctor and Executive’s doctor conflict, the Company’s doctor and Executive’s doctor shall together agree upon a third doctor, whose opinion shall be binding.

 

16. Third-Party Agreements and Rights.  Executive represents to the Company that Executive’s execution of this Agreement, Executive’s employment with the Company and the performance of Executive’s proposed duties for the Company will not violate any obligations Executive may have to any employer or other party, and Executive will not bring to the premises of the Company any copies or other tangible embodiments of non-public information belonging to or obtained from any such previous employment or other party.

 

17. Litigation and Regulatory Cooperation. During and after Executive’s employment, Executive shall reasonably cooperate with the Company in the defense or prosecution of any claims or actions now in existence or which may be brought in the future against or on behalf of the Company which relate to events or occurrences that transpired while Executive was employed by the Company; provided, however, that such cooperation shall not materially and adversely affect Executive or expose Executive to an increased probability of civil or criminal litigation. Executive’s cooperation in connection with such claims or actions shall include, but not be limited to, being available to meet with counsel to prepare for discovery or trial and to act as a witness on behalf of the Company at mutually convenient times. During and after Executive’s employment, Executive also shall cooperate fully with the Company in connection with any investigation or review of any federal, state or local regulatory authority as any such investigation or review relates to events or occurrences that transpired while Executive was employed by the Company. The Company shall also provide Executive with compensation on an hourly basis at a rate equivalent to the hourly rate of the Executive’s last annual Base Salary calculated using a forty (40) hour week over fifty-two (52) weeks for requested litigation and regulatory cooperation that occurs after his termination of employment, and reimburse Executive for all costs and expenses incurred in connection with his performance under this Paragraph 16, including, but not limited to, reasonable attorneys’ fees and costs.

 

18. Section 409A of the Code.

 

(a) Anything in this Agreement to the contrary notwithstanding, if at the time of the Executive’s separation from service within the meaning of Section 409A of the Code, the Company determines that the Executive is a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code, then to the extent any payment or benefit that the Executive becomes entitled to under this Agreement on account of the Executive’s separation from service would be considered deferred compensation subject to the 20 percent additional tax imposed pursuant to Section 409A(a) of the Code as a result of the application of Section 409A(a)(2)(B)(i) of the Code, such payment shall not be payable and such benefit shall not be provided until the date that is the earlier of (A) six months and one day after the Executive’s separation from service, or (B) the Executive’s death.

 

(b) The parties intend that this Agreement will be administered in accordance with Section 409A of the Code. To the extent that any provision of this Agreement is ambiguous as to its compliance with Section 409A of the Code, the provision shall be read in such a manner so that all payments hereunder comply with Section 409A of the Code. The parties agree that this Agreement may be amended, as reasonably requested by either party, and as may be necessary to fully comply with Section 409A of the Code and all related rules and regulations in order to preserve the payments and benefits provided hereunder without additional cost to either party.

 

(c) The determination of whether and when a separation from service has occurred shall be made in accordance with the presumptions set forth in Treasury Regulation Section 1.409A-1(h).

 

(d) The Company makes no representation or warranty and shall have no liability to the Executive or any other person if any provisions of this Agreement are determined to constitute deferred compensation subject to Section 409A of the Code but do not satisfy an exemption from, or the conditions of, such Section.

 

11
 

 

(e) Notwithstanding anything herein to the contrary, no event shall constitute a “termination of employment” in this Agreement, unless such event is also a “separation from service,” as that term is defined for purposes of Section 409A of the Internal Revenue Code of 1986, as amended (“Code”), and Treasury Regulation §1.409A-3(a)(1).

 

20. Recoupment . Notwithstanding anything herein to the contrary, Executive may be required to forfeit or repay any or all compensation received by Executive under this Agreement pursuant to the terms of any compensation recovery, recoupment or claw-back policy that may be adopted by or applicable to the Company with respect to or under the Dodd-Frank Wall Street Reform and Consumer Protection Act.

 

12
 

 

 

IN WITNESS WHEREOF , the parties have executed this Agreement effective on the date and year first above written.

 

  HARVARD APPARATUS REGENERATIVE TECHNOLOGY, INC.
   
  By:  
    Name:
    Title:
   
  EXECUTIVE
     
    Thomas McNaughton

 

 
 

 

 

EXHIBIT A- FORM OF GENERAL RELEASE OF CLAIMS

 

This Release Agreement (the “ Release Agreement ”) is entered into between Thomas McNaughton (the “ Executive ”) and Harvard Apparatus Regenerative Technology, Inc. (the “ Company ”). This is the Release Agreement referenced in the Agreement between the Executive and the Company dated [______________], 2013 (the “ Employment Agreement ”). The consideration for the Executive’s agreement to this Release Agreement consists of certain termination benefits as set forth in the Employment Agreement and the terms of this Release Agreement. The consideration for the Company’s agreement to this Release Agreement consists of the terms of this Release Agreement.

 

The Executive and the Company (together, the “ Parties ”) agree as follows:

 

Release . The Executive voluntarily releases and forever discharges the Company and each of its subsidiaries, affiliates, predecessors, successors, assigns, and current and former directors, officers, employees, representatives, attorneys, agents, and all persons acting by, through, under or in concert with any of the foregoing (any and all of whom or which are hereinafter referred to as “ Company Parties ”), from any and all charges, complaints, claims, liabilities, obligations, promises, agreements, controversies, damages, actions, causes of action, suits, rights, demands, costs, losses, debts and expenses (including attorney’s fees and costs actually incurred), of any nature whatsoever, known or unknown (collectively, “ Claims ”) that the Executive now has, owns or holds, or claims to have, own, or hold, or that he at any time had, owned, or held, or claimed to have had, owned, or held against any Company Party or Parties. This general release of Claims includes, without implication of limitation, the release of all Claims:

 

 

  relating to the Executive’s employment by and termination from employment with the Company;

 

  of wrongful discharge;

 

  of breach of contract;

 

  of retaliation or discrimination under federal, state or local law (including, without limitation, Claims of age discrimination or retaliation under the Age Discrimination in Employment Act, Claims of disability discrimination or retaliation under the Americans with Disabilities Act, Claims of discrimination or retaliation under Title VII of the Civil Rights Act of 1964 and Claims of discrimination or retaliation under Mass. Gen. Laws ch. 151B);
     
  under the Massachusetts Weekly Payment of Wages Act, the Massachusetts Fair Employment Practice Act, and the Fair Labor Standards Act;

 

  under any other federal or state statute, to the fullest extent that Claims may be released;

 

  of defamation or other torts;

 

  of violation of public policy;

 

  for salary, bonuses, vacation pay or any other compensation or benefits; and

 

  for damages or other remedies of any sort, including, without limitation, compensatory damages, punitive damages, injunctive relief and attorney’s fees.

 

1. Limitations on Release .

 

(a) Employment Agreement . Nothing in this Release Agreement limits either Party’s rights under the Employment Agreement.

 

(b) Benefit and Enforcement Rights . Nothing in this Release Agreement is intended to release or waive the Executive’s right to COBRA, unemployment insurance benefits or any accrued and vested retirement benefits, the right to seek enforcement of this Release Agreement or any rights referenced in this Section of this Release Agreement.

 

(c) Indemnification . It is further understood and agreed that the Executive’s rights to indemnification as provided in the Company’s certificate of incorporation, bylaws or any indemnification agreement between the Company and the Executive (it being acknowledged and agreed by the Executive that, as of the date of this Agreement, there are no amounts owing to the Executive pursuant to any such indemnification rights), remain fully binding and in full effect subsequent to the execution of this Release Agreement.

 

 
 

 

(d) Exceptions . This Release Agreement does not prohibit or restrict the Executive from communicating, providing relevant information to or otherwise cooperating with the EEOC or any other governmental authority with responsibility for the administration of fair employment practices laws regarding a possible violation of such laws or responding to any inquiry from such authority, including an inquiry about the existence of this Release Agreement or its underlying facts. This Release Agreement also does not preclude the Executive from benefiting from classwide injunctive relief awarded in any fair employment practices case brought by any governmental agency; provided that such relief does not result in the Executive’s receipt of any monetary benefit or substantial equivalent thereof.

 

2. No Assignment . Each Party represents that he or it has not assigned to any other person or entity any Claims against any other Party or, in the case of the Executive, any Claim against any Company Party.

 

3. No Disparagement . The Executive shall not make any disparaging statements about the Company, members of the Board of Directors, any officer of the Company or any other employee of the Company. The Executive shall direct his immediate family not to make any disparaging statements about any of the foregoing. Any statement by a member of his immediate family shall be deemed to be a statement by the Executive for purposes of this paragraph. The Executive shall be considered to represent that he has complied and shall continue to comply with he nondisparagement obligations under this paragraph from the Date of Termination (as defined in the Employment Agreement); provided that this representation shall have no effect if this Release Agreement does not become effective. Notwithstanding the foregoing, nothing in this paragraph shall be construed to apply to any statements made in the course of testimony in a legal proceeding or in any required written statements in any such proceeding.

 

4. Litigation and Regulatory Cooperation . The Executive shall reasonably cooperate with the Company in the defense or prosecution of any claims or actions now in existence or which may be brought in the future against or on behalf of the Company which relate to events or occurrences that transpired while Executive was employed by the Company; provided, however, that such cooperation shall not materially and adversely affect Executive or expose Executive to an increased probability of civil or criminal litigation. Executive’s cooperation in connection with such claims or actions shall include, but not be limited to, being available to meet with counsel to prepare for discovery or trial and to act as a witness on behalf of the Company at mutually convenient times. Executive also shall cooperate fully with the Company in connection with any investigation or review of any federal, state or local regulatory authority as any such investigation or review relates to events or occurrences that transpired while Executive was employed by the Company. The Company shall also provide Executive with compensation on an hourly basis at a rate equivalent to the hourly rate of the Executive’s last annual Base Salary (as defined in the Employment Agreement) calculated using a forty (40) hour week over fifty-two (52) weeks for requested litigation and regulatory cooperation that occurs after his termination of employment, and reimburse Executive for all costs and expenses incurred in connection with his performance under this Section 5, including, but not limited to, reasonable attorneys’ fees and costs.

 

5. Reaffirmation of Post-Employment Restrictive Covenants . The Executive reaffirms the restrictive covenants under the Employment Agreement to which he is subject as follows: [Insert as appropriate.]

 

6. Right to Consider and Revoke Release Agreement . This Release Agreement shall be considered to have been offered to both Parties on the Termination Date as defined in the Employment Agreement. Each Party acknowledges that he or it has been given the opportunity to consider this Release Agreement for a period ending twenty-one (21) days after the Termination Date. In the event that either Party has executed this Release Agreement within less than twenty-one (21) days of the Termination Date, such Party acknowledges that such decision was entirely voluntary and that he or it had the opportunity to consider this Release Agreement until the end of the twenty-one (21) day period. To accept this Release Agreement, the Executive shall deliver a signed Release Agreement to the Company’s Board of Directors within such twenty-one (21) day period. To accept this Release Agreement, the Company shall deliver a signed Release Agreement to the Executive within such twenty-one (21) day period. Both Parties acknowledge that for a period of seven (7) days from the date when the Executive executes this Release Agreement (the “ Revocation Period ”), he shall retain the right to revoke this Release Agreement by written notice that is received by the Board of Directors of the Company before the end of the Revocation Period. This Release Agreement shall take effect only if it is accepted by both Parties within the twenty-one (21) day period as set forth above and if it is not revoked pursuant to the preceding sentence. If those conditions are satisfied, this Release Agreement shall become effective and enforceable on the date immediately following the last day of the Revocation Period (the “ Effective Date ”).

 

 
 

 

7. Consideration Owed . Executive affirms and agrees that as of the date of this Release Agreement, you acknowledge that you will be or have been paid any and all wages (including all base compensation and, if applicable, any and all overtime, commissions, and bonuses) to which you are or were entitled as of the date of termination of employment, and that no other wages (including all base compensation and, if applicable, any and all incentive compensation and bonuses) are due to Executive. Executive acknowledges that Executive is unaware of any facts or circumstances indicating that Executive may have an outstanding claim for unpaid wages, improper deductions from pay, or any violation of the Massachusetts Weekly Payment of Wages Act (M.G.L. c. 149, s. 148) or the Fair Labor Standards Act or any other federal, state or local laws, rules, ordinances or regulations that are related to payment of wages.

 

8. Other Terms .

 

(a) Legal Representation; Review of Release Agreement . The Executive acknowledges that he has been advised to discuss all aspects of this Release Agreement with he attorney. Each Party represents that he or it has carefully read and fully understands all of the provisions of this Release Agreement and that he or it is voluntarily entering into this Release Agreement.

 

(b) Binding Nature of Release Agreement . This Release Agreement shall be binding upon each of the parties and upon their heirs, administrators, representatives, executors, successors and assigns, and shall inure to the benefit of both parties and to their heirs, administrators, representatives, executors, successors, and assigns.

 

(c) Modification of Release Agreement; Waiver . This Release Agreement may be amended, revoked, changed, or modified only upon a written agreement executed by both Parties. No modification waiver of any provision of this Release Agreement will be valid unless it is in writing and signed by the party against whom such waiver is charged. The failure of either Party to require the performance of any term or obligation of this Release Agreement, or the waiver by either Party of any breach of this Release Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a waiver of any subsequent breach.

 

(d) Severability . In the event that at any future time it is determined by a court of competent jurisdiction that any covenant, clause, provision or term of this Release Agreement is illegal, invalid or unenforceable, the remaining provisions and terms of this Release Agreement shall not be affected thereby and the illegal, invalid or unenforceable term or provision shall be severed from the remainder of this Release Agreement. In the event of such severance, the remaining covenants shall be binding and enforceable.

 

(e) Enforcement . Sections 4, 5 and 6 of this Release Agreement shall be subject to enforcement pursuant to the same procedures that apply to a breach of Paragraphs 4 or 5 of the Employment Agreement (as further detailed in Paragraph 15 of the Employment Agreement). Any other disputes concerning this Release Agreement shall be subject to resolution pursuant to Section 15 of the Employment Agreement.

 

(f) Governing Law and Interpretation . This Release Agreement shall be deemed to be made and entered into in the Commonwealth of Massachusetts, and shall in all respects be interpreted, enforced and governed under the laws of Massachusetts, without giving effect to the conflict of laws provisions of Massachusetts law. The language of all parts of this Release Agreement shall in all cases be construed as a whole, according to its fair meaning, and not strictly for or against either of the Parties.

 

(g) Counterparts . This Release Agreement may be executed in counterparts. Signed counterparts shall together be considered to be part of the same document.

 

(h) Entire Agreement; Absence of Reliance . This Release Agreement constitutes the entire agreement between the Executive and the Company concerning any subject matter of this Release Agreement and supersedes all prior agreements between the parties with respect to any related subject matter, except the Employment Agreement. The Executive acknowledges that he is not relying on any promises or representations by the Company or its agents, representatives or attorneys regarding any subject matter addressed in this Release Agreement.

 

 
 

 

So agreed by the Parties.

 

HARVARD APPARATUS REGENERATIVE TECHNOLOGY, INC.    
     
By:    
    Date
     
     
Executive Thomas McNaughton   Date

 

 

EXHIBIT 10.5

 

PRODUCT DISTRIBUTION AGREEMENT

 

BY AND BETWEEN

 

HARVARD BIOSCIENCE, INC.

 

AND

 

HARVARD APPARATUS REGENERATIVE TECHNOLOGY, INC.

 

DATED AS OF [ ], 2013

 

1
 

 

PRODUCT DISTRIBUTION AGREEMENT

 

THIS PRODUCT DISTRIBUTION AGREEMENT dated as of [ ], 2013 (this “ Agreement ”), is entered into by and between HARVARD BIOSCIENCE, INC., a Delaware corporation (“ HBIO ”) and HARVARD APPARATUS REGENERATIVE TECHNOLOGY, INC ., a Delaware corporation (“ HART ”) (each, a “ Party ” and, collectively, the “ Parties ”).

 

RECITALS

 

WHEREAS, HBIO is a global developer, manufacturer and marketer of a broad range of specialized products, primarily apparatus and scientific instruments, used to advance life science research and regenerative medicine;

 

WHEREAS, among its various business activities, HBIO operates various lines of business related to the development, manufacturing and marketing of apparatus and scientific instruments, including the Harvard Apparatus Research Business (as defined below) and the HART Business (as defined below);

 

WHEREAS, pursuant to the Separation and Distribution Agreement to be entered into by and between HBIO and HART, (the “ Separation and Distribution Agreement ”), the Parties have agreed to separate the HART Business from HBIO;

 

WHEREAS, it is the intent of the Parties, after giving effect to the transactions contemplated by the Separation and Distribution Agreement, for the Parties to act as distributors of certain of each other’s products subject to the limitations and other terms and conditions hereof;

 

WHEREAS, the Parties desire to enter into this Agreement to codify the arrangements whereby the Parties shall act as distributors of each other’s products;

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements set forth below, and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereby agree as follows. Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Separation and Distribution Agreement.

 

1.           Appointment of Distributors.

 

1.1.           By Hart . HART hereby appoints HBIO, and HBIO accepts such appointment, to be HART’s exclusive, independent, worldwide distributor for the resale of HART’s products that relate to any of HBIO’s business activities it conducts from time to time for all applications outside the HART Business, subject to the terms of any Third Party distribution agreements in effect on the Separation Date (as defined in the Separation and Distribution Agreement), and subject further to the non-competition covenants contained in Article IX of the Intellectual Property Matters Agreement.

 

1.2.           By HBIO . HBIO appoints HART, and HART accepts such appointment, to be HBIO’s exclusive, independent, worldwide distributor for the resale of HBIO’s products from its Harvard Apparatus Research Business for use in the HART Business, subject to the terms of any Third Party distribution agreements in effect on the Separation Date, and subject further to the non-competition covenants contained in Article IX of the Intellectual Property Matters Agreement.

 

1.3.          For purposes of this Agreement, “ HART Business means the development, manufacture and sale of products for use in human regenerative medicine. This includes the development, manufacture and sale of pumps for human clinical injections and bioreactors and scaffolds for regenerating human organs and tissues and products for use on humans (or on human cells, tissue or organs) as part of a procedure that involves an injection, implant or transplant into a human. As used in this Agreement, the term “HART Business” includes any of the aforementioned activities plus any natural expansion of such business in the regenerative medicine field for use in humans by comparable companies in the regenerative medicine field for use in humans.

 

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For purposes of this Agreement, “ Harvard Apparatus Research Business ” shall mean the business conducted by HBIO through its Original Harvard Apparatus, Warner and Hugo Sachs business units, where the Original Harvard Apparatus business unit refers to pumps and ventilators used mainly for research applications, provided that such definition of Harvard Apparatus Research Business expressly excludes Coulbourn, Panlab, CMA, BTX, Sample Prep or other products acquired and folded in from acquisitions after the original purchase of Harvard Apparatus by HBIO. The products of the Harvard Apparatus Research Business include pumps and various physiology tools for animal, organ, tissue and cell biology used mainly in research and in a few human applications as described in Section 9.2(d) of the Intellectual Property Matters Agreement. References to the “Harvard Apparatus Research Business” in this Agreement shall include this business as currently conducted or conducted in the future.

 

1.4.           Limited Exclusive Manufacturer . Notwithstanding anything to the contrary contained herein or in the Separation and Distribution Agreement or other Ancillary Agreement, HBIO hereby agrees that with respect to the resale or other distribution by the HBIO Group, of bioreactors in any of HBIO’s business activities it conducts from time to time (except for the existing activities of its Hugo Sachs business units which shall not be subject to or limited in any manner by this Section 1.4), to the extent that any member of the HBIO Group desires to resell or distribute any bioreactor that is then manufactured by any member of the HART Group, the HART Group shall be the exclusive manufacturer of such bioreactor and such member of the HBIO Group shall be required to purchase and distribute such bioreactors from the applicable member of the HART Group in accordance with this Agreement, and no other party. To the extent that the HART Group is unable to provide any such bioreactor when reasonably required for a particular order by the HBIO Group, the HBIO Group shall be entitled, for such order only, to either manufacture the bioreactor itself or purchase it from a third party.

 

2               Distributor Obligations . In order to provide maximum protection and quality service to each of the Party’s customers, when acting as a distributor of the other party’s products (in each such instance, referred to herein as a “ Distributor ”) HBIO and HART each agree to comply with the following obligations. Failure to achieve and maintain such compliance shall constitute a material breach of this Agreement.

 

2.1           Distributor represents that: (a) the execution of this Agreement will not cause Distributor to breach any Agreement with any Third Party; and (b) so long as it continuing to act as Distributor to the other party hereunder for any particular product, with respect to such product, it has and shall use commercially reasonable efforts to maintain at all times the facilities, resources, personnel and experience to promote, advertise, market, and sell such product of the other Party and to otherwise perform its obligations under this Agreement. Distributor shall use commercially reasonable efforts to promote, market, distribute and sell the products and shall not perform any act which may hinder or interfere with the supply and/or marketing of the products. For purposes of this Agreement, “commercially reasonable efforts” means not less than the efforts used by HBIO immediately prior to the Separation Date (as defined in the Separation and Distribution Agreement) to support the research applications of isolated organ and tissue products (but for the avoidance of nay doubt, expressly not including efforts pertaining to the HART Business or employees that will be moving to the HART Business as conducted by and at HBIO prior to the date hereof or thereafter), e.g., maintaining the sales force, applications specialists and technical support in the US and Europe, maintaining demo and sales inventory plus periodic outbound marketing consistent with its past practices. Notwithstanding anything to the contrary contained in this Agreement, nothing in this Agreement shall require HBIO or HART to provide services to the other unless expressly required hereby.

 

2.2           The Parties acknowledge and agree that HART’s use of the mark “HARVARD APPARATUS’ is at all times subject to the terms, conditions and restriction set forth in the Sublicense Agreement, dated December 8, 2012, by and between HART and HBIO (the “ Sublicense Agreement ”). The rights and obligations of the Parties in this paragraph are at all times subject to the Sublicense Agreement. Distributor shall not delete or alter any of the other Party’s trade names, trademarks, logos, markings, colors or other insignia (the “ Marks ”) which are affixed to the Products and included in related promotional materials. Distributor may only use the Marks in conjunction with Distributor’s marketing and sale of the Products and in accordance with the other Party’s then-current guidelines on Mark usage, which will be provided to Distributor at Distributor’s request. Distributor shall refrain from any other direct or indirect use, reference to, registration of or application to register the Marks or those confusingly similar unless such trademarks are authorized in writing by the other Party. Upon expiration or termination of this Agreement, Distributor shall immediately cease to use any and all Marks. Distributor agrees to immediately notify the other Party of any infringement or potential infringement of any Mark of which Distributor becomes aware.

 

2.3           Distributor shall be solely responsible, at its own expense, for obtaining and maintaining any and all governmental approvals, permits and/or certifications necessary for Distributor to import, purchase, sell and distribute products.

 

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2.4           Distributor shall promptly advise the other Party of any complaints or claims brought or threatened against it or the other Party with respect to the sale or use of the products, or with respect to any alleged patent, copyright, trademark, or other intellectual property infringement or misappropriation.

 

2.5           Distributor shall take all reasonable, prompt and efficient actions to ensure customer satisfaction with the products and shall resolve all customer complaints in an expedited manner. In the event that a Party receives ten (10) or more complaints that do not relate to the design or manufacturing quality of a product from Distributor’s customers during any one (1) year period which indicate that Distributor has failed to satisfactorily resolve reasonable customer complaints in a timely fashion, such Party shall notify Distributor and Distributor shall be deemed to have breached this Agreement.

 

2.6           In no event shall Distributor make any representations or warranties regarding the products which are: (a) not included in, or which are inconsistent with information, materials or specification provided to Distributor; or (b) false, incomplete or otherwise misleading.

 

2.7           Distributor personnel shall participate in any training sessions regarding the products and their use as reasonably requested by the other Party.

 

2.8           With respect to any HBIO products that HART distributes in accordance herewith, HART agrees to represent and label clearly that such products are for research use only. With respect to any HART products that HBIO distributes in accordance herewith, HBIO agrees to represent and label clearly that such products are for research use only.

 

3               Prices and Payment.

 

3.1           During the term of this Agreement, Distributor shall purchase the applicable products (in accordance with 1.1 and 1.2) from the other Party at a thirty-five percent (35%) discount off of the then-current U.S. list price of the other Party for the applicable product, provided that if the product is sourced by the other Party from a third party prior to sale to Distributor, Distributor shall purchase such product from the other Party at a fifteen percent (15%) discount off of the then-current U.S. list price of the other Party for the applicable product. All prices are exclusive of all taxes and other charges, including but not limited to, shipping, handling, insurance, brokerage and other related charges, governmental sales, use, consumption, excise, privilege, occupational, value-added or other similar taxes, customs duties or assessments.

 

3.2           Both HART and HBIO shall be free to unilaterally establish the prices charged to customers for their respective products.

 

3.3           Distributor shall pay for all products in U.S. Dollars. All payments are due thirty (30) days from the invoice date. Non-receipt of payment from a customer shall not excuse or delay payment by Distributor. Overdue payments will be subject to finance charges computed at a rate equal to the lesser of one and a half percent (1.5%) per month or the maximum amount permissible under applicable law. Distributor is responsible for payment of all losses, costs, attorneys’ fees, or other expenses incurred by the other Party in the event that the other Party in its sole discretion, hires a Third Party collection agency in order to recover amounts owed by Distributor.

 

3.4           Except for taxes based on the other Party’s net income and the medical device tax under the Patient Protection and Affordable Care Act, Distributor shall pay any applicable sales, use, consumption, excise, privilege, occupational, value-added or other similar taxes, customs duties or assessments, or amounts levied in lieu of such taxes, now or later imposed under the authority of any national, state or local taxing authority based on or measured by (a) charges set forth in this Agreement, (b) upon sales of the products to Distributor, or (c) upon import or export of any products. Any claim for sales tax or duty exemption by Distributor shall be effective only after the other Party’s receipt of all proper exemption forms.

 

3.5           Distributor shall pay or reimburse the other Party for all shipping costs including transportation, brokerage, handling, and other costs incurred in delivering the products to Distributor.

 

4               Ordering and Delivery.

 

4.1           Shipments of products shall only be made against written purchase orders issued by Distributor and which reference this Agreement. At a minimum, each purchase order shall specify the following items: (a) the quantity of product ordered; (b) the price of each product and any additional charges and costs; (c) the billing address, the destination to which the products will be delivered, and the requested delivery date; and (d) the signature of Distributor’s employee or agent who possesses the authority to place such an order.

 

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4.2           All orders are subject to acceptance and assignment of delivery schedules in accordance with product availability. Neither Party shall have liability whatsoever for non-acceptance of, or failure or delay in filling any Distributor orders due to legitimate business considerations or acts or circumstances beyond its control, including without limitation, product shortages, production and delivery constraints, or government actions and acts of God. In no event shall any order be binding on HART or HBIO until the Parties are in agreement as to the items ordered, pricing, delivery dates, and all other material terms. Each Party shall use reasonable efforts to meet agreed-upon projected delivery dates for the products.

 

4.3           No purchase order, acknowledgment form, or other document or communication from either Party shall vary or supplement the terms and conditions of this Agreement. This Agreement may only be amended as provided in Section 14.11 hereof.

 

4.4           All deliveries of the products purchased pursuant to this Agreement will be made in a time, place and manner mutually agreed-upon by the Parties. Risk of loss and title to the products shall pass to Distributor upon delivery to the selected common carrier at the other Party’s manufacturing facility. Insurance coverage on all shipments is the responsibility of Distributor. All transportation and shipping costs shall be charged to Distributor’s account. Distributor must notify the other Party in writing within ten (10) days of receipt of products of any discrepancies in the shipment of such products.

 

4.5           All shipments shall be subject to a Party’s determination that such shipments are in compliance with all applicable export and import regulations. In no event shall either Party’s delay in shipping or refusal to ship due to export or import issues be deemed a material breach hereunder.

 

5               Records and Reports. Within forty-five (45) days after the end of each calendar quarter, Distributor shall promptly furnish written reports on sales, deliveries and returns of the products for the calendar quarter immediately preceding the report, including, without limitation, current inventory levels, a monthly breakdown of sales, and marketing efforts to prospective customers. Distributor shall maintain records identifying each product sold.

 

6               Product Warranty.

 

6.1            Product Warranty. Distributor shall pass along to its customers comparable product warranties as the other Party makes to its customers in the ordinary course of business.

 

6.2            Warranty Exclusions . This warranty does not extend to any products: (a) that have been subject to misuse, neglect, abuse, improper storage, accident (other than an accident caused by the product itself), or that have not been properly maintained; (b) that have been modified by any Third Party; or (c) that have been disassembled, serviced, or reassembled by any Third Party.

 

THE FOREGOING LIMITED WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES AND EXCEPT FOR ANY EXPRESS WARRANTIES STATED HEREIN, HART AND HBIO EXPRESSLY DISCLAIM ALL WARRANTIES, EITHER EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION, IMPLIED WARRANTIES OF QUALITY, CONDITION, MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

 

7               Exchange of Information and Confidentiality . Article VII of the Separation and Distribution Agreement is hereby incorporated herein by reference.

 

8               Intellectual Property Rights .

 

8.1           During the term of this Agreement, Distributor is authorized to use the other Party’s Marks, trade names and logos solely in connection with Distributor’s sale, advertisement and promotion of the products in accordance with Section 2.2 hereof.

 

8.2           Except as described in this Agreement or the Intellectual Property Matters Agreement, neither HBIO nor HART grants to the other Party any right, license, or interest in any of the Intellectual Property owned, used or claimed now or in the future by HBIO or HART, respectively. All applicable rights to such Intellectual Property are, and will remain, the exclusive property of HART and HBIO, respectively. Regardless of any provision to the contrary in this Agreement, no title to or ownership of the Intellectual Property contained in the products, or any part of the products is transferred to Distributor. However, HART and HBIO each grant the other Party a limited, revocable, worldwide, royalty-free right and license to conduct demonstrations on the use of its products solely for the purposes of promoting the sale of such products in performing its obligations under this Agreement.

 

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9               Indemnity and Insurance.

 

9.1           Distributor shall defend any claim, suit or proceeding, and indemnify and hold the other Party harmless from and against any Third Party Claims arising out of, or in connection with: (a) Distributor’s advertising, sales, marketing and promotional activities undertaken with respect to the products; (b) the failure of Distributor to comply in all material respects with all applicable laws, rules, and/or regulations regarding advertising, selling, licensing, importing or exporting the products; (c) Distributor’s attachment to the products of any trade name, trademark or logo that is challenged as an infringement of the proprietary rights of any Third Party; (d) any warranties granted by Distributor or any implied warranties claimed by any of Distributor’s customers, in excess of those warranties contained herein; (e) the failure of Distributor to comply with any material term of this Agreement; or (f) from any gross negligence or willful misconduct of Distributor in performing its obligations hereunder, except in each instance of (a)-(f) such Third-Party Claim is caused by the negligence or willful misconduct of the other non-Distributor Party. In addition, with respect to any Third-Party Claim pertaining to products manufactured or provided to one Party by the other Party hereunder, the Party that provided or manufactured such Product shall defend any claim, suit or proceeding, and indemnify and hold the other Party harmless from and against that portion of any Third Party Claims that arises out of, or is in connection with such product itself, including without limitation any injuries to or death of persons, or any damage to property, occurring as a result of, or in any way arising out of, defects of such products, except to the extent such Third Party Claims are caused by the other Party’s gross negligence of willful misconduct.

 

9.2           Any claims for indemnification pursuant to this Section 9 shall be made in accordance with the procedures set forth in Section 5.5 of the Separation and Distribution Agreement.

 

9.3            Insurance . Each Party agrees to maintain in full force and effect insurance coverage for the period of this Agreement pertaining to commercial general liability insurance coverage, including coverage for products liability and contractual indemnity. Said coverage will provide not less than commercially reasonable primary limits per occurrence in accordance with customary standards for the applicable industry. Each Party will cause its insurance carrier to designate the other Party as an “Additional Insured” on each applicable policy and any endorsement so naming such other Party will not limit its defense and coverage in favor of such Party to the negligence of the insured party.

 

9.4            Workers’ Compensation . The Parties agree to secure and keep in full force and effect during the life of this Agreement all forms of workers’ compensation and employers’ liability insurance coverage as is mandated by any state, territory or jurisdiction in which that Party does or may operate or send representatives. Each Party agrees that the other party is neither the actual nor statutory employer of any employee, consultant, representative, independent contractor or other person hired, retained, directed, utilized, consulted or engaged by such Party to carry out any of its duties under or arising from this Agreement.

 

10             Independent Contractor Status. Distributor shall conduct its business under this Agreement for its own account at its own expense and risk. The relationship between the parties is that of independent contractors. This Agreement creates no relationship of principal and agent, partner, joint venturer or any similar relationship between HART and HBIO. The grant of the distribution rights for the term hereof does not constitute a franchise or grant to Distributor of any continuing rights or interest in distributing the products beyond the term hereof. Distributor agrees that it does not have and will not have any authority to act on the other Party’s behalf.

 

11             Term and Termination .

 

11.1         This Agreement shall become effective as of the Separation Date and shall remain in effect for a period of ten (10) years after the Separation Date, unless earlier terminated as set forth in this Section 11.

 

11.2         Either Party may terminate this Agreement in the event a material breach of the Agreement by the other Party hereto, including, without limitation, failure to fulfill its obligations pursuant to Section 2 hereof, after written notice and a sixty (60) day cure period.

 

11.3         In addition, HART may terminate its obligations to act as Distributor with respect to a particular product under this Agreement, after written notice and a sixty (60) day cure period, should HART determine, in its sole discretion, that HBIO is unwilling or unable to supply such HBIO – Applicable HART Distributor Businesses product subject to this Agreement to HART. HBIO may terminate its obligations to act as Distributor with respect to a particular product under this Agreement, after written notice and a sixty (60) day cure period, should HBIO determine, in its sole discretion, that HART is unwilling or unable to supply such HART Business product subject to this Agreement to HBIO.

 

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11.4         The termination or expiration of this Agreement shall in no case relieve either Party from its obligation to pay to the other Party any sums accrued under this Agreement prior to such termination or expiration. If Distributor defaults on its payment obligations under this Agreement, the other Party shall have the right to take any or all of the following actions: (a) suspend delivery to Distributor until the default is cured by Distributor; or (b) terminate this Agreement after written notice and a thirty (30) day cure period. If the other Party continues to make shipments after Distributor’s default, such Party’s action shall not constitute a waiver of any rights or remedies, or affect such Party’s legal remedies under this Agreement.

 

11.5         Notwithstanding any other provision herein, this Agreement may be terminated immediately by either Party upon written notice in the event that the other Party: (a) becomes insolvent; (b) commits an act of bankruptcy; (c) seeks an arrangement or compromise with its creditors under any statute or otherwise; (d) is subject to a proceeding in bankruptcy, receivership, liquidation or insolvency and same is not dismissed within sixty (60) days; (e) makes an assignment for the benefit of the creditors; (f) admits in writing its inability to pay its debts as they mature; or (g) ceases to function as a going concern, or to conduct its operations in the normal course of business.

 

11.6         Within ten (10) days after termination or expiration of this Agreement, each Party shall return to the other Party all signs, literature, logos and other materials identifying the other Party’s products that remain in its possession.

 

12             Export Controls and Compliance with Law.

 

12.1         If an export license is required before Distributor can distribute or sell the Products, Distributor acknowledges and agrees that the other Party shall be under no obligation to affect such sale or transfer until the required export license is obtained. Each Party shall use reasonable efforts to expeditiously obtain such required export licenses or approvals.

 

12.2         Distributor acknowledges that the export of products and related technical data is subject to regulation by various rules and regulations of the United States which prohibit export or diversion to certain countries, entities and/or which restrict or prohibit use. Unless Distributor has first obtained permission to do so from all applicable United States Government agencies, Distributor shall not export or re-export, directly or indirectly, any products or related data into any of those countries listed at the time of any shipment in the applicable United States export regulations as “prohibited or restricted” countries, or any other country to which such exports or re-exports may be restricted (collectively, the “Prohibited Countries”). Distributor further agrees not to distribute or supply the products or any related technical data to any person if Distributor has reason to believe that such person intends to export, re-export or otherwise transfer the same to, or use the same in, any of the Prohibited Countries. Without limiting the foregoing, Distributor shall not commit any act which would, directly or indirectly, violate any United States or local law, regulation, treaty or agreement to which the United States adheres or complies relating to the export or re-export of the products or related technical data.

 

12.3         At its own expense, Distributor shall obtain any government consents, authorizations, approvals, filings, registrations, permits or licenses required for Distributor to exercise its rights and to discharge its obligations under this Agreement, provided further that, for the avoidance of any doubt, HART acknowledges and agrees that it, and not HBIO, shall be responsible for the efforts, cost and expense of obtaining any necessary regulatory approval for the manufacture and use of its products with humans, where regulatory approval means with respect to a regulatory jurisdiction, any and all approvals, product and/or establishment licenses, registrations or authorizations of any governmental authority, necessary for the commercial manufacture, use, storage, import, export, transport, or commercialization of a product in such regulatory jurisdiction, including, where applicable, (i) pricing and reimbursement approval in such regulatory jurisdiction, (ii) pre- and post-approval marketing authorizations (including any prerequisite manufacturing approval or authorization related thereto), (iii) labeling approval, and (iv) technical, medical and scientific licenses.

 

12.4         In conformity with the United States Foreign Corrupt Practices Act neither HART and its employees and agents nor HBIO and its employees and agents shall directly or indirectly make any offer, payment, or promise to pay; authorize payment; or offer a gift, promise to give, or authorize the giving of anything of value for the purpose of influencing any act or decision (including a decision not to act) of an official of any government or inducing such a person to use his or her influence to affect any such governmental act or decision in order to assist HBIO or HART in obtaining, retaining or directing any business.

 

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13             Limitation of Liability .

 

EXCEPT AS TO CLAIMS FOR BREACHES OF CONFIDENTIALITY, IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR INDIRECT, INCIDENTAL, SPECIAL, CONSEQUENTIAL, OR PUNITIVE DAMAGES, OR FOR DIRECT DAMAGES IN EXCESS OF THE AMOUNTS PAID BY HBIO OR HART FOR THE PRODUCT OR SUPPORT THAT GAVE RISE TO THE LIABILITY, WHETHER FORESEEABLE OR UNFORESEEABLE, OF ANY KIND WHATSOEVER (INCLUDING WITHOUT LIMITATION LOSS OF INCOME, DATA, GOODWILL, USE OF INFORMATION, DOWNTIME OR COSTS OF SUBSTITUTE PRODUCTS OR EQUIPMENT), WHETHER BASED ON WARRANTY, CONTRACT, TORT (INCLUDING NEGLIGENCE), PRODUCT LIABILITY OR OTHERWISE, EVEN IF THE OTHER HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGE.

 

14             General.

 

14.1          Counterparts; Entire Agreement; Corporate Power . This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each of the Parties and delivered (by facsimile, electronic transmission, or otherwise) to the other Party. This Agreement, together any exhibits hereto, and the Separation and Distribution Agreement (and Ancillary Agreements defined therein), contains the entire agreement between the Parties with respect to the subject matter hereof, supersede all previous agreements, negotiations, discussions, writings, understandings, commitments and conversations with respect to such subject matter and there are no agreements or understandings between the Parties other than those set forth or referred to herein or therein. HBIO and HART each represent as follows: (a) the person executing this Agreement has the requisite corporate or other power and authority and has taken all corporate or other action necessary in order to execute, deliver and perform each of this Agreement and to consummate the transactions contemplated hereby; and (b) this Agreement has been duly executed and delivered by it and constitutes a valid and binding agreement of it enforceable in accordance with the terms thereof. Each Party hereto acknowledges that it and each other Party hereto is executing this Agreement by facsimile, stamp or mechanical signature. Each Party hereto expressly adopts and confirms each such facsimile, stamp or mechanical signature made in its respective name as if it were a manual signature, agrees that it will not assert that any such signature is not adequate to bind such Party to the same extent as if it were signed manually and agrees that at the reasonable request of any other Party hereto at any time it will as promptly as reasonably practicable cause each such Agreement to be manually executed (any such execution to be as of the date of the initial date thereof).

 

14.2          Governing Law, Jurisdiction and Dispute Resolution . This Agreement (and any claims or disputes arising out of or related hereto or thereto or to the transactions contemplated hereby and thereby or to the inducement of any Party to enter herein and therein, whether for breach of contract, tortious conduct or otherwise and whether predicated on common law, statute or otherwise) shall be governed by and construed and interpreted in accordance with the laws of the Commonwealth of Massachusetts irrespective of the choice of laws principles of the Commonwealth of Massachusetts as to all matters, including matters of validity, construction, effect, enforceability, performance and remedies. If any dispute arises out of or in connection with this Agreement, the parties (a) consent and submit to the exclusive jurisdiction of federal and state courts located in Boston, Massachusetts, and (b) waive any objection to that choice of forum based on venue or to the effect that the forum is not convenient. Notwithstanding the foregoing, any dispute arising out of or related to this Agreement shall be resolved in accordance with the procedures set forth in Section 9.1 of the Separation and Distribution Agreement. The United Nations Convention on Contracts for the International Sale of Goods shall not apply to this Agreement.

 

14.3          Assignability . This Agreement shall be binding upon and inure to the benefit of the Parties hereto and thereto, respectively, and their respective successors and permitted assigns; provided, however, that no Party hereto or thereto may assign its respective rights or delegate its respective obligations under this Agreement without the express prior written consent of the other Party hereto or thereto (which consent may be withheld in such Party’s sole and absolute discretion) and any assignment or attempted assignment in violation of the foregoing will be null and void. Notwithstanding the preceding sentence, a Party may assign this Agreement in connection with a merger transaction in which such Party is not the surviving entity or the sale by such Party of all or substantially all of its Assets, and upon the effectiveness of such assignment the assigning Party shall be released from all of its obligations under this Agreement if the surviving entity of such merger or the transferee of such Assets shall agree in writing, in form and substance reasonably satisfactory to the other Party, to be bound by all terms of this Agreement as if named as a “Party” hereto.

 

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14.4          Third-Party Beneficiaries . The provisions of this Agreement are solely for the benefit of the Parties and are not intended to confer upon any Person except the Parties any rights or remedies hereunder, and there are no third-party beneficiaries of this Agreement and this Agreement shall not provide any Third Party with any remedy, claim, liability, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement.

 

14.5          Notices . All notices, requests, claims, demands or other communications under this Agreement 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 overnight courier service, by facsimile or electronic transmission with receipt confirmed (followed by delivery of an original via overnight courier service) 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 14.5). Any Party may, by written notice to the other Party, change the address to which such notices are to be given.

 

If to HBIO to:

 

Harvard Bioscience, Inc.

84 October Hill Road

Holliston, Massachusetts 01746

Attention: Chief Executive Officer

 

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

 

Burns & Levinson, LLP

125 Summer Street

Boston, Massachusetts 02110

Attention: Josef B. Volman

   Chad J. Porter

 

If to HART to:

 

Harvard Apparatus Regenerative Technology

84 October Hill Road

Holliston, Massachusetts 01746

Attention: Chief Executive Officer

 

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

 

Feinberg Hanson LLP

57 River Street, Suite 204

Wellesley, Massachusetts 02481

Attention: Harry A. Hanson, III

 

14.6          Severability . If any provision of this Agreement is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof or thereof shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby. Upon such determination, the Parties shall negotiate in good faith in an effort to agree upon such a suitable and equitable provision to affect the original intent of the Parties.

 

14.7          Headings . The article, section and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

 

14.8          Survival . Sections 6.2, 7, 9, 11.6, 13 and 14 shall survive the termination or expiration of this Agreement.

 

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14.9          Waivers of Default . Waiver by any Party of any default by the other Party of any provision of this Agreement shall not be deemed a waiver by the waiving Party of any subsequent or other default, nor shall it prejudice the rights of the other Party. No failure or delay by any Party in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof nor shall a single or partial exercise thereof prejudice any other or further exercise thereof or the exercise of any other right, power or privilege.

 

14.10          Specific Performance . Subject to the provisions of Section 14.2, in the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement, the Party or Parties who are, or are to be, thereby aggrieved shall have the right to specific performance and injunctive or other equitable relief in respect of its or their rights under this Agreement, in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative. The Parties agree that the remedies at law for any breach or threatened breach, including monetary damages, are inadequate compensation for any loss and that any defense in any action for specific performance that a remedy at law would be adequate is waived. Any requirements for the securing or posting of any bond with such remedy are waived by each of the Parties to this Agreement.

 

14.11          Amendments . No provisions of this Agreement shall be deemed waived, amended, supplemented or modified by any Party, unless such waiver, amendment, supplement or modification is in writing and (a) in the case of a waiver, signed by the authorized representative of the Party against whom it is sought to enforce such waiver, or (b) in the case of an amendment, supplement or modification to this Agreement, signed by the authorized representatives of both Parties.

 

14.12          Interpretation . In this Agreement, (a) words in the singular shall be held to include the plural and vice versa and words of one gender shall be held to include the other genders as the context requires; (b) the terms “hereof,” “herein,” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole (including any exhibits hereto) and not to any particular provision of this Agreement; (c) Article, Section, and exhibit references are to the sections and exhibits to this Agreement unless otherwise specified; (d) the word “including” and words of similar import when used in this Agreement shall mean “including, without limitation,” (e) the word “or” shall not be exclusive; (f) unless expressly stated to the contrary in this Agreement, all references to “the date hereof,” “the date of this Agreement,” “hereby” and “hereupon” and words of similar import shall all be references to [ ], 2013, regardless of any amendment or restatement hereof.

 

14.13          Force Majeure . No Party shall be deemed in default of this Agreement to the extent that any delay or failure in the performance of its obligations under this Agreement results from a Force Majeure (as defined in the Separation and Distribution Agreement). In the event of an occurrence of a Force Majeure, the Party whose performance is affected thereby shall give notice of suspension as soon as reasonably practicable to the other stating the date and extent of such suspension and the cause thereof, and such Party shall resume the performance of such obligations as soon as reasonably practicable after the removal of such cause.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Parties have caused this Product Distribution Agreement to be executed by their duly authorized representatives.

 

  HARVARD BIOSCIENCE, INC.
     
  By:  
    Name:
    Title:
     
  HARVARD APPARATUS REGENERATIVE TECHNOLOGY, INC.
     
  By:  
    Name:
    Title:

 

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EXHIBIT 10.6

INTELLECTUAL PROPERTY MATTERS AGREEMENT

BY AND BETWEEN

HARVARD BIOSCIENCE, INC.


and


HARVARD APPARATUS REGENERATIVE TECHNOLOGY, INC.

 

Dated as of [    •    ], 2013

 

 
 

 

INTELLECTUAL PROPERTY MATTERS AGREEMENT

 

THIS INTELLECTUAL PROPERTY MATTERS AGREEMENT (this “ Agreement ”) is dated as of [    •    ], 2013, by and between Harvard Bioscience, Inc., a Delaware corporation (“ HBIO ”), and Harvard Apparatus Regenerative Technology, a Delaware corporation and a wholly owned subsidiary of HBIO (“ HART ”). HBIO and HART are each referred to herein as a “ Party ” and collectively as the “ Parties .”

 

WITNESSETH:

 

WHEREAS, HBIO is a global developer, manufacturer and marketer of a broad range of specialized products, primarily apparatus and scientific instruments, used to advance life science research and regenerative medicine;

 

WHEREAS, among its various business activities, HBIO operates various lines of business related to the development, manufacturing and marketing of apparatus and scientific instruments, including the Harvard Apparatus Research Business (as defined below) and the HART Business (as defined below);

 

WHEREAS, pursuant to the Separation and Distribution Agreement to be entered into by and between HBIO and HART, (the “ Separation and Distribution Agreement ”), the Parties have agreed to separate the HART Business from HBIO;

 

WHEREAS, it is the intent of the Parties, in accordance with the Separation and Distribution Agreement and the other agreements and instruments provided for therein, that HBIO convey to HART all of the business and assets of the HART Business, including certain intellectual property rights;

 

WHEREAS, it is the intent of the Parties that HBIO convey and license certain intellectual property rights to HART and for HART to grant a license back to HBIO to certain transferred intellectual property rights subject to the terms and conditions set forth in this Agreement;

 

WHEREAS, the Parties also intend to license certain other intellectual property rights to each other for use in their respective businesses, subject to certain limitations on competitive uses as set forth herein;

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements set forth below, and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereby agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

1.1.           Definitions .

 

Capitalized terms used in this Agreement shall have the meanings ascribed to them in the Separation and Distribution Agreement or in this Article I. In the event of any conflict between the definitions in this Agreement and in the Separation and Distribution Agreement, the terms of this Agreement shall control.

 

The following terms, as used in this Agreement, have the following meanings:

 

HART Business ” means the development, manufacture and sale of products for use in human regenerative medicine. This includes the development, manufacture and sale of pumps for human clinical injections and bioreactors and scaffolds for regenerating human organs and tissues and products for use on humans (or on human cells, tissue or organs) as part of a procedure that involves an injection, implant or transplant into a human. As used in this Agreement, the term “HART Business” includes any of the aforementioned activities plus any natural expansion of such business in the regenerative medicine field for use in humans by comparable companies in the regenerative medicine field for use in humans.

 

HART Group ” shall have the meaning set forth in the Separation and Distribution Agreement.

 

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HART Indemnitees ” shall have the meaning set forth in the Separation and Distribution Agreement.

 

Harvard Apparatus Research Business ” shall mean the business conducted by HBIO through the Original Harvard Apparatus, Warner and Hugo Sachs business units, where the Original Harvard Apparatus business unit refers to pumps and ventilators used mainly for research applications, provided that such definition of Harvard Apparatus Research Business expressly excludes Coulbourn, Panlab, CMA, BTX, Sample Prep or other products acquired and folded in from acquisitions after the original purchase of Harvard Apparatus by HBIO. The products of the Harvard Apparatus Research Business include pumps and various physiology tools for animal, organ, tissue and cell biology used mainly in research and in a few human applications as described in Section 9.2(d) below. References to the Harvard Apparatus Research Business” in this Agreement shall include this business as currently conducted or conducted in the future.

 

HBIO Group ” shall have the meaning set forth in the Separation and Distribution Agreement.

 

HBIO Indemnitees ” shall have the meaning set forth in the Separation and Distribution Agreement.

 

Know-How ” means the expertise and knowledge related to a particular Technology or Intellectual Property.

 

 “ Improvement ” to any Intellectual Property or Technology means, in part, (a) with respect to Copyrights, any modifications, derivative works and translations of works of authorship in any medium, including, without limitation, any database that is created by extraction or re-utilization of another database; (b) with respect to Technology, any improvement or modification to the Trade Secrets that cover or are otherwise incorporated into Technology.

 

Information ” shall have the meaning set forth in the Separation and Distribution Agreement.

 

Insolvency Event ” arises when a Party: (a) becomes insolvent; (b) commits an act of bankruptcy; (c) seeks an arrangement or compromise with its creditors under any statute or otherwise; (d) is subject to a proceeding in bankruptcy, receivership, liquidation or insolvency and same is not dismissed within sixty (60) days; (e) makes an assignment for the benefit of the creditors; (f) admits in writing its inability to pay its debts as they mature; or (g) ceases to function as a going concern, or to conduct its operations in the normal course of business.

 

Intellectual Property ” means all of the following whether arising under the Laws of the United States or of any other foreign or multinational jurisdiction: (i) patents, patent applications (including patents issued thereon) and statutory invention registrations, including reissues, divisions, continuations, continuations in part, substitutions, renewals, extensions and reexaminations of any of the foregoing, and all rights in any of the foregoing provided by international treaties or conventions (“ Patents ”), (ii) trademarks, service marks, trade names, service names, trade dress, logos and other source or business identifiers, including all goodwill associated with any of the foregoing, and any and all common law rights in and to any of the foregoing, registrations and applications for registration of any of the foregoing, all rights in and to any of the foregoing provided by international treaties or conventions, and all reissues, extensions and renewals of any of the foregoing (“ Trademarks ”), (iii) Internet domain names, (iv) copyrightable works, copyrights, moral rights, mask work rights, database rights and design rights, in each case, other than Software, whether or not registered, and all registrations and applications for registration of any of the foregoing, and all rights in and to any of the foregoing provided by international treaties or conventions (“ Copyrights ”), (v) confidential and proprietary information, including trade secrets, invention disclosures, processes and Know-How, in each case, other than Software (“ Trade Secrets ”), (vi) intellectual property rights arising from or in respect of any Technology, and (vii) Software, other than commercially available “off-the-shelf” software.

 

Liabilities ” shall have the meaning set forth in the Separation and Distribution Agreement.

 

Laws ” shall have the meaning set forth in the Separation and Distribution Agreement.

 

New HART Technology shall have the meaning set forth in Section 4.2 hereof.

 

New HBIO Technology shall have the meaning set forth in Section 3.2 hereof.

 

Notifying Party ” shall have the meaning set forth in Section 5.7 hereof.

 

Person ” shall have the meaning set forth in the Separation and Distribution Agreement.

 

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Rejected New Hart Technology ” shall have the meaning set forth in Section 4.2 hereof.

 

Rejected New HBIO Technology ” shall have the meaning set forth in Section 3.2 hereof.

 

Separation Date ” shall have the meaning set forth in the Separation and Distribution Agreement.

 

Software ” means any and all (i) computer programs, including any and all software implementation of algorithms, models and methodologies, whether in source code, object code, human readable form or other form, (ii) databases and compilations, including any and all data and collections of data, whether machine readable or otherwise, (iii) descriptions, flow charts and other work products used to design, plan, organize and develop any of the foregoing, screens, user interfaces, report formats, firmware, development tools, templates, menus, buttons and icons, and (iv) documentation, including user manuals and other training documentation, relating to any of the foregoing.

 

Subsidiary ” shall have the meaning set forth in the Separation and Distribution Agreement.

 

Technology ” means tangible embodiments, whether in electronic, written or other media, of technology, including designs, design and manufacturing documentation (such as bill of materials, build instructions and test reports), schematics, algorithms, routines, software, databases, lab notebooks, development and lab equipment, processes, prototypes and devices. Technology does not include Intellectual Property in any of the foregoing.

 

Third Party ” means any Person other than a Party.

 

Third-Party Claims ” shall have the meaning set forth in the Separation and Distribution Agreement.

 

Transferred Intellectual Property ” means: (a) the Patents listed on Exhibit A hereto; (b) other inventions and Intellectual Property for which patent, trademark or copyright applications, as applicable, have not been filed that were originated in the HART Business prior to the Separation Date, including, without limitation, those inventions described on Exhibit A attached hereto; (c) the HART Software as defined in the Separation and Distribution Agreement); (d) trade secrets, know how or other Intellectual Property related to the HART Business owned or licensed by HBIO prior to the Separation Date, including any such Intellectual Property transferred to the HART Business by HBIO or its subsidiaries prior to the Separation Date; and (e) all Know-How related to the items listed in (a) through (d) above.

 

Transferred Licenses ” means the license agreements and other licensed Intellectual Property listed on Exhibit B hereto, and all Know-How related to the same.

 

ARTICLE II

 

TRANSFERRED INTELLECTUAL PROPERTY RIGHTS AND TECHNOLOGY

 

2.1.           Assignment of Intellectual Property .     HBIO hereby agrees to, and to cause its Affiliates and Subsidiaries to, grant, assign and convey to HART the Transferred Intellectual Property. For the avoidance of doubt, the Transferred Intellectual Property is transferred subject to the licenses granted to HBIO in Article IV below, and the competitive restrictions in Article IX below. The Transferred Intellectual Property include all of HBIO’s right, title and interest in and to any and all proceeds, causes of action and rights of recovery against Third Parties for past and future infringement or misappropriation of any of the Transferred Intellectual Property. The Parties shall execute an Intellectual Property Assignment in a form reasonably satisfactory to the Parties to document the transfer of the Transferred Intellectual Property. HART shall have the sole responsibility, at its sole cost and expense, to file the Intellectual Property Assignment and any other forms or documents as required to record the assignment of the Transferred Intellectual Property from HBIO to HART; provided however, that, upon request, HBIO shall provide reasonable assistance to HART to record the assignment, at HART's sole cost and expense. HART shall be responsible for the prosecution and maintenance of all Patents included within the Transferred Intellectual Property.


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2.2.           Assignment and Assumption of Intellectual Property Licenses .     HBIO hereby assigns and conveys to HART, and agrees to cause its Affiliates and Subsidiaries to assign and convey to HART, the Transferred Licenses, and HART hereby assumes from HBIO and its Affiliates and Subsidiaries the Transferred Licenses, in each case subject to the terms, conditions and restrictions of each such Transferred License. HBIO acknowledges and agrees that it shall have sole responsibility to seek and obtain the consent of any Third Party necessary for the transfer of any of the Transferred Licenses, and HART shall bear sole responsibility for any consideration necessary for their transfer. Upon request, HART will provide reasonable assistance in obtaining such consent, at HART’s sole expense. For the avoidance of doubt, and subject to the terms and conditions of the Transferred Licenses, HART hereby succeeds to all of the rights and responsibilities of HBIO under each such Transferred License, including any liabilities arising under the Transferred Licenses prior to the Separation Date, which liabilities shall be the responsibility of HART.

 

2.3.           Transfer of Business Technology and Know-How .     HBIO hereby agrees to, and to cause its Affiliates and Subsidiaries to, grant, assign and convey to HART all Technology and Know-How used in the HART Business. For the avoidance of doubt, the transfer of the Technology and Know-How used in the HART Business does not include the transfer of any Intellectual Property in any Technology used in the HART Business; such Intellectual Property is transferred to HART as Transferred Intellectual Property in Section 2.1 above.

 

ARTICLE III

 

LICENSES TO HART

 

3.1.           License to Existing Intellectual Property . HBIO hereby grants, and agrees to cause its Affiliates and Subsidiaries to grant, to HART an exclusive, worldwide, royalty free, sublicensable and transferable right and license to use, solely in the HART Business, all Intellectual Property, Technology and related Know-How that exists on the date hereof and was developed by HBIO in the Harvard Apparatus Research Business, including without limitation the Intellectual Property, Technology and related Know-How pertaining to Hugo-Sachs that are remaining with the HBIO Group following the Separation. The license granted by HBIO to HART under this Section 3.1 shall remain in effect with respect to each Patent included in the license under this Section 3.1, until the date on which such Patent shall expire. The foregoing exclusive license grant shall not exclude or limit any member of the HBIO Group from their continued use of such all Intellectual Property, Technology and related Know-How, subject to Article IX hereof.

 

3.2.           Other Intellectual Property Rights .   HBIO hereby grants, and agrees to cause its Affiliates and Subsidiaries to grant, to HART a perpetual, exclusive, worldwide, sublicensable and transferable right and license to use, solely in connection with the HART Business for the period described below in Section 3.3, all Intellectual Property, Technology and related Know-How developed by HBIO in the Harvard Apparatus Research Business during the five-year period following the Separation Date (collectively, the “ New HBIO Technology ”). For avoidance of any doubt, any Intellectual Property, Technology and related Know-How developed by HBIO in the Harvard Apparatus Research Business after such five-year period (the “Future HBIO Technology) will not be subject to this Section 3.2. The foregoing exclusive license grant shall not exclude or limit any member of the HBIO Group from their continued use of the New HBIO Technology , subject to Article IX hereof. HBIO and each other member of the HBIO Group, as applicable, shall retain any and all rights with respect to the New HBIO Technology other than the license granted to HART in this Section 3.2. During the term of such license, HBIO shall use commercially reasonable efforts to notify HART in writing promptly following the development of any New HBIO Technology (provided that the failure to provide any such notice shall not be deemed to be a breach of this Agreement or give rise to any claims or termination rights hereunder). Upon the receipt of such notice, HART shall have sixty (60) days to elect to either license such New HBIO Technology in accordance with the above provisions, after which such time, if HART fails to make such election, or elects not take such license, HBIO shall have no obligations to HART under this Article III with respect to such non-elected/rejected New HBIO Technology (the “ Rejected New HBIO Technology ”). Any disclosures made pursuant to this Section 3.2 shall be treated as “Information” for purposes of this Agreement. For the avoidance of any doubt, neither (i) the Future HBIO Technology nor (ii) any New HBIO Technology that the parties cannot mutually agree on a royalty fee with respect to in accordance with Section 3.3, shall be deemed Rejected New HBIO Technology. In addition, HBIO’s use of such items described in (i) and (ii) in the prior sentence shall continue to be subject to Section 9.1 in accordance with the terms hereof.

 

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3.3.           Term of License Grant and Assistance . The licenses granted by HBIO to HART to the New HBIO Technology under Section 3.2 shall remain in effect until the first to occur of: (a) the date on which HART ceases to actively use the New HBIO Technology in its HART Business, which date shall be no sooner than one year after disclosure; (b) with respect to each Patent included in the New HBIO Technology subject to the licenses, the date on which such Patent shall expire; or (c) an Insolvency Event occurs with respect to HART. For purposes of this Agreement, HART will be deemed to be actively using the New HBIO Technology if either: (i) any New HBIO Technology is incorporated into any products being developed, manufactured, marketed, distributed or sold by HART or any Third Party on behalf of HART; or (ii) HART is actively using, or has actively used within the previous six (6) month period, the New HBIO Technology as part of its research and development efforts for the HART Business.

 

During the term of the license granted to HART under Section 3.2, from time to time during the initial three (3) month period following the respective license grant, upon the reasonable request of HART, HBIO agrees to use its commercially reasonable efforts to provide assistance to HART to enable to HART to assess and setup the technology pertaining to such license, including such services as minor software changes or explaining manufacturing and testing procedures.  In connection with any request for such assistance, HBIO and HART shall in good faith negotiate the charge applicable to such assistance, which charge shall be borne solely by HART. Notwithstanding the above, until five years from the Separation Date, the licenses granted in accordance with Section 3.2 above shall be royalty-free, and should HART desire to continue the license of the New HBIO Technology thereafter, the Parties shall negotiate in good faith commercially reasonable payment terms of such continued license. The license shall continue during the period of such negotiations.

3.4.           Third Party Licenses .     With respect to Intellectual Property licensed to HBIO or its Affiliates or Subsidiaries by a Third Party, the license grants set forth in this Article III shall be subject to all of the conditions set forth in the relevant license agreement between HBIO (or its Affiliate or Subsidiary, as the case may be) and such Third Party, in addition to all of the terms, conditions and restrictions set forth herein. Licenses to HART under Sections 3.1 and 3.2 pertaining to Intellectual Property owned by a Third Party shall expire on the expiration of the term of the corresponding license agreement between such Third Party and HBIO (or its Subsidiary or its Affiliate), as the case may be. If such Third Party licenses do not permit a license or sublicense to by HBIO or its Affiliates or Subsidiaries to HART or its Affiliates or Subsidiaries, then the provisions of Sections 3.1 and 3.2 and related sections of this Article III shall not be applicable with respect to such licenses, provided that if HART requests that HBIO seek to obtain the consent of such Third Party to any such sublicense, HBIO will review such request in good faith and if it determines in it reasonable discretion that such consent request would not have any adverse impact in HBIO or its Affiliates or Subsidiaries, then HBIO shall use commercially reasonable efforts to make one attempt to obtain such consent, and if such consent is provided then the provisions of Sections 3.1 and 3.2 and related sections of this Article III shall apply.

 

3.5.           Software .     With respect to Software included within the New HBIO Technology, such licenses include the right to use, modify, and reproduce such software, in source code and object code form and Improvements thereof made by or on behalf of HART.

 

3.6.           Have Made Rights .     The licenses to HART in Sections 3.1 and 3.2 above shall include the right to have Third Parties manufacture or distribute products for HART, subject to the rights granted to HBIO in the Product Distribution Agreement.

 

3.7.             Improvements .     As between HBIO and its Affiliates and Subsidiaries on the one hand, and HART and its Affiliates and Subsidiaries on the other hand, HART hereby retains all right, title and interest, including all Intellectual Property, in and to any Improvements made by or on behalf of HART: (a) to any of the Transferred Intellectual Property, or (b) in the exercise of the licenses granted to it by HBIO and its Affiliates and Subsidiaries in this Article III, subject in each case only to the ownership interests of HBIO, its Affiliates and Subsidiaries in the underlying Intellectual Property improved thereby. Notwithstanding the foregoing, HART shall not file a patent application with respect to any Improvements on any New HBIO Technology without the prior written consent of HBIO.

 

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3.8.           No Restrictions on HBIO . Subject to Article IX hereof, the licenses granted in Section 3.1 and 3.2 hereof shall in no way limit the ability of HBIO to use the New HBIO Technology with respect to uses outside the HART Business. HBIO will bear sole responsibility and cost for prosecuting and maintaining Patents that it owns, and shall have the sole authority to make decisions regarding the prosecution of Patents included in the New HBIO Technology.

 

3.9.           Strategic Transactions . For the avoidance of any doubt, in the event that HBIO or the Harvard Apparatus Research Business is acquired by another non-affiliated entity (an “Acquiror”), such Acquiror shall only be subject to Section 3.2 with respect to New HBIO Technology developed with respect to its operation of the Harvard Apparatus Research Business, and shall expressly not be subject to Section 3.2 with respect to all Intellectual Property, Technology and related Know-How developed by the Acquiror in its other business operations outside of the Harvard Apparatus Research Business .

 

ARTICLE IV

 

LICENSES TO HBIO

 

4.1.           License to Existing Intellectual Property .      HART hereby grants, and agrees to cause its Affiliates and Subsidiaries to grant, to HBIO an exclusive (for use by HBIO, and its Affiliates and Subsidiaries, only with respect the Harvard Apparatus Research Business, and such term “exclusive” shall expressly not exclude or limit HART and its subsidiaries from their continued use of the related Transferred Intellectual Property in accordance herewith), worldwide, royalty free, sublicensable and transferable right and license to use the Transferred Intellectual Property solely in the Harvard Apparatus Research Business. Except for the license granted to HBIO in this Section 4.1, HART shall retain any and all rights with respect to such Transferred Intellectual Property. The license granted by HART to HBIO under this Section 4.1 shall remain in effect with respect to each patent included in the license under this Section 4.1, until the date on which such patent shall expire. The license granted by HART to HBIO under this Section 4.1 shall also be subject to Section 1.4 of the Product Distribution Agreement executed by HART and HBIO in connection herewith.

 

4.2.           Other Intellectual Property Rights . HART hereby grants, and agrees to cause its Affiliates and Subsidiaries to grant, to HBIO a perpetual, exclusive, worldwide, sublicensable and transferable right and license to use, solely in connection with the Harvard Apparatus Research Business for the period described below in Section 4.3, all Intellectual Property, Technology and related Know-How developed by HART in the HART Business during the five-year period following the Separation Date (collectively, the “ New HART Technology ”). For avoidance of any doubt, any Intellectual Property, Technology and related Know-How developed by HART in the HART Business after such five-year period (the “Future HART Technology) will not be subject to this Section 4.2. The foregoing exclusive license grant shall not exclude or limit any member of the HART Group from their continued use of the New HART Technology , subject to Article IX hereof. Should HBIO desire to license the New HART Technology for use outside the scope of the Harvard Apparatus Research Business, the Parties shall negotiate in good faith the terms and conditions, including the payment terms, of such license. HART and each other member of the HART Group, as applicable, shall retain any and all rights with respect to the New HART Technology other than the license granted to HBIO in this Section 4.2. During the term of such license, HART shall use commercially reasonable efforts to notify HBIO in writing promptly following the development of any New HART Technology (provided that the failure to provide any such notice shall not be deemed to be a breach of this Agreement or give rise to any claims or termination rights hereunder). Upon the receipt of such notice, HBIO shall have sixty (60) days to elect to either license such New HART Technology in accordance with the above provisions, after which such time, if HBIO fails to make such election, or elects not take such license, HART shall have no obligations to HBIO under this Article IV with respect to such non-elected/rejected New HART Technology (the “ Rejected New HART Technology ”). Any disclosures made pursuant to this Section 4.2 shall be treated as “Information” for purposes of this Agreement. For the avoidance of any doubt, neither (i) the Future HART Technology nor (ii) any New HART Technology that the parties cannot mutually agree on a royalty fee with respect to in accordance with Section 4.3, shall be deemed Rejected New HART Technology. In addition, HART’s use of such items described in (i) and (ii) in the prior sentence shall continue to be subject to Section 9.2 in accordance with the terms hereof.

 

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4.3.           Term of License Grant and Assistance. The licenses granted by HART to HBIO to the New HART Technology under Section 4.2 shall remain in effect until the earlier to occur of: (a) the date on which HBIO ceases to actively use the New HART Technology in its Harvard Apparatus Research Business, which date shall be no sooner than one year after disclosure; (b) with respect to each Patent included in the New HART Technology, the date on which such Patent shall expire, or (c) an Insolvency Event occurs with respect to HBIO. For purposes of this Agreement, HBIO will be deemed to be actively using the New HART Technology if either: (i) any New HART Technology is incorporated into any products being developed, manufactured, marketed, distributed or sold by HBIO or any Third Party on behalf of HBIO; or (ii) HBIO is actively using, or has actively used within the previous six (6) month period, the New HART Technology as part of its research and development efforts for the Harvard Apparatus Research Business.

 

During the term of the license granted to HBIO under Section 4.2, from time to time during the initial three (3) month period following the respective license grant, upon the reasonable request of HBIO, HART agrees to use its commercially reasonable efforts to provide assistance to HBIO to enable to HBIO to assess and setup the technology pertaining to such license, including such services as minor software changes or explaining manufacturing and testing procedures.  In connection with any request for such assistance, HBIO and HART shall in good faith negotiate the charge applicable to such assistance, which charge shall be borne solely by HBIO. Notwithstanding the above, until five years from the Separation Date, the licenses granted in accordance with Section 4.2 above shall be royalty-free, and should HBIO desire to continue the license of the New HART Technology thereafter, the Parties shall negotiate in good faith commercially reasonable payment terms of such continued license. The license shall continue during the period of such negotiations.

 

4.4.           Third Party Licenses .     With respect to Intellectual Property licensed to HART or its Affiliates or Subsidiaries by a Third Party, the license grants set forth in this Article IV shall be subject to all of the conditions set forth in the relevant license agreement between HART (or its Affiliate or Subsidiary, as the case may be) and such Third Party, in addition to all of the terms, conditions and restrictions set forth herein. Licenses to HBIO under this Article IV pertaining to Intellectual Property owned by a Third Party shall expire on the expiration of the term of the corresponding license agreement between such Third Party and HART (or its Subsidiary or its Affiliate), as the case may be.   If such Third Party licenses do not permit a license or sublicense by HART or its Affiliates or Subsidiaries to HBIO or its Affiliates or Subsidiaries, then the provisions of Sections 4.1 and 4.2 and related sections of this Article IV shall not be applicable with respect to such licenses, provided that if HBIO requests that HART seek to obtain the consent of such Third Party to any such sublicense, HART will review such request in good faith and if it determines in it reasonable discretion that such consent request would not have any adverse impact in HART or its Affiliates or Subsidiaries, then HART shall use commercially reasonable efforts to make one attempt to obtain such consent, and if such consent is provided then the provisions of Sections 4.1 and 4.2 and related sections of this Article IV shall apply.

 

4.5.           Software .     Without limiting the generality of the foregoing licenses granted in Sections 4.1 and 4.2, with respect to Software included within the New HART Technology, such licenses include the right to use, modify, and reproduce such software, in source code and object code form and Improvements thereof made by or on behalf of HBIO or its Subsidiaries.

 

4.6.           Have Made Rights .     The licenses granted to HBIO in Sections 4.1 and 4.2 above shall include the right to have Third Parties manufacture and distribute products of HBIO, subject to the distribution rights granted to HART under the Product Distribution Agreement.

 

4.7.           Improvements .     As between HBIO and its Affiliates and Subsidiaries on the one hand and HART and its Affiliates and Subsidiaries on the other hand, HBIO and its Affiliates and Subsidiaries hereby retain all right, title and interest, including all Intellectual Property, in and to any Improvements made by or on behalf of HBIO or its Affiliates or Subsidiaries in the exercise of the licenses granted to it by HART and its Affiliates and Subsidiaries, subject only to the ownership of HART in the underlying Intellectual Property improved thereby. Notwithstanding the foregoing, HBIO shall not file a patent application with respect to any Improvements on any New HART Technology without the prior written consent of HART.

 

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4.8.           No Restrictions on HART . Subject to Article IX hereof, the licenses granted in Section 4.1 and 4.2 hereof shall in no way limit the ability of HART to use the New HART Technology in the HART Business. HART will bear sole responsibility and cost for prosecuting and maintaining Patents that it owns, and shall have the sole authority to make decisions regarding the prosecution of Patents included in the New HART Technology.

 

4.9.           Strategic Transactions . For the avoidance of any doubt, in the event that HART or the HART Business is acquired by an Acquiror: (a) such acquisition shall not constitute a violation of Article IX, even if the Acquiror’s business is outside the scope of the HART Business; and (b) such Acquiror shall only be subject to Section 4.2 with respect to New HART Technology developed with respect to its operation of the HART Business, and shall expressly not be subject to Section 4.2 with respect to all Intellectual Property, Technology and related Know-How developed by the Acquiror in its other business operations outside of the HART Business.

 

ARTICLE V

 

ADDITIONAL INTELLECTUAL PROPERTY RELATED MATTERS

 

5.1.           Assignments and Licenses .     No Party may assign or grant a license under any of such Party's Intellectual Property Rights which it has licensed to the other Party in Article III or IV above, unless such assignment or grant is made subject to the licenses granted herein.

 

5.2.           Assistance by Employees .     Each Party agrees that its employees and contractors have a continuing duty to assist the other Party with the prosecution of the other Party's Patents and, accordingly, each agrees to make available to the other Party or its counsel inventors and other reasonably necessary persons employed by it for interviews and/or testimony to assist in good faith in further prosecution, maintenance or litigation of such Patents, including the signing of documents related thereto. Any actual and reasonable out-of-pocket expenses associated with such assistance shall be borne by the Party that owns the Patent, expressly excluding the value of the time of each Party's personnel.

 

5.3.           Assistance with Litigation .     In the case of assistance with Third Party litigation pertaining to any of the Intellectual Property transferred in Article II or licensed in Articles III or IV above, the Parties shall agree on a case by case basis on reasonable compensation, for the value of the non-litigating Party's employee's time as reasonably required in connection with any such litigation.

 

5.4.           No Implied Licenses .     Nothing contained in this Agreement shall be construed as conferring any rights by implication, estoppel or otherwise, under any Intellectual Property, other than as expressly granted in this Agreement.

 

5.5.           Obligation to Prosecute Patents .     Each Party shall use commercially reasonable efforts to protect, perfect and maintain its Intellectual Property, provided, however that nothing in this Agreement shall obligate either Party to file any patent application, to prosecute any Patent or secure any Patent rights or to maintain any Patent in force. Notwithstanding the foregoing, should HBIO decide to abandon or let lapse any Patents included within the New HBIO Technology, it shall so notify HART in writing at least thirty (30) days in advance of the next filing deadline applicable to such Patent, and give HART the option of taking over such Patent under reasonable conditions (including, for example, acknowledgement of prior Third Party rights, license back to HBIO , and similar conditions consistent with this Agreement) mutually agreed-upon by the Parties. Notwithstanding the foregoing, should HART decide to abandon or let lapse any Patents included within the Transferred Intellectual Property that is subject to license to HBIO in accordance with Section 4.1, or New HART Technology, it shall so notify HBIO in writing at least thirty (30) days in advance of the next filing deadline applicable to such Patent, and give HBIO the option of taking over such Patent under reasonable conditions (including, for example, acknowledgement of prior Third Party rights, license back to HART, and similar conditions consistent with this Agreement) mutually agreed-upon by the Parties.

 

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5.6.           Reconciliation .     The Parties acknowledge that, as part of the transfer of the Transferred Intellectual Property and the Transferred Licenses, members of the HBIO Group or their Affiliates may inadvertently retain Technology or Intellectual Property that should have been transferred to HART pursuant to Article II of this Agreement, and HART may inadvertently acquire Technology or Intellectual Property that should not have been transferred. Each Party agrees to negotiate, in good faith, the transfer to the other of any such later identified Technology or Intellectual Property, subject to the licenses set forth in Articles III and IV above, at the reasonable written request of the other Party.

 

5.7.           Third-Party Infringement .     No Party shall have any obligation hereunder to institute or maintain any action or suit against Third Parties for infringement or misappropriation of any Intellectual Property in or to any Technology licensed to the other Party hereunder, or to defend any action or suit brought by a Third Party which challenges or concerns the validity of any of such Intellectual Property or which claims that any Technology licensed to the other Party hereunder infringes or constitutes a misappropriation of any Intellectual Property of any Third Party. Each Party (the " Notifying Party ") has the continuing obligation to promptly notify the other Party in writing upon learning of a Third Party likely infringing upon or misappropriating any Intellectual Property of the other Party which is licensed to the Notifying Party in this Agreement. Such notification shall set forth in reasonable specificity the identity of the suspected infringing Third Party and the nature of the suspected infringement.

 

5.8.           Trademark License .     The parties acknowledge and agree that HBIO has granted HART a sublicense to use the mark “HARVARD APPARATUS” pursuant to the Sublicense Agreement and the terms, conditions and limitations set forth therein.

 

ARTICLE VI

 

AUDIT RIGHTS

 

6.1.           Audit Rights . From the Separation Dateuntil the expiration of the non-competition and non-solicitation covenants in accordance with Section 9.4 hereof, each of HBIO and HART or its appointed representatives shall have the right to audit the relevant books and records of the other Party to confirm the other Party’s compliance with the non-competition and non-solicitation requirements of Article IX of this Agreement. Audits will be conducted during regular business hours and in a manner that does not unreasonably interfere with the operation of the business of the Party being audited. Audits may be conducted by an employee of the auditing Party as well as by any attorney or accounting firm designated by an employee of the auditing Party who is subject to confidentiality obligations at least as protective of the disclosing Party’s Information as those contained in this Agreement. Any such audit will be conducted at the auditing Party’s expense.

 

ARTICLE VII

 

CONFIDENTIALITY

 

7.1.           Exchange of Information and Confidentiality .     Article VII of the Separation and Distribution Agreement is incorporated herein by this reference.

 

ARTICLE VIII

 

LIMITATION OF LIABILITY & WARRANTY DISCLAIMER

 

8.1.           Limitation of Liability .      IN NO EVENT SHALL ANY PARTY BE LIABLE TO THE OTHER PARTY FOR ANY SPECIAL, CONSEQUENTIAL, INDIRECT, INCIDENTAL OR PUNITIVE DAMAGES OR LOST PROFITS, HOWEVER CAUSED AND BASED ON ANY THEORY OF LIABILITY (INCLUDING NEGLIGENCE) ARISING IN ANY WAY OUT OF THIS AGREEMENT, WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. THE FOREGOING SHALL NOT, HOWEVER, LIMIT THE DAMAGES AVAILABLE TO A PARTY FOR INFRINGEMENT OR MISAPPROPRIATION OF ITS INTELLECTUAL PROPERTY BY THE OTHER PARTY.

 

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8.2.           Warranties Disclaimer .     EXCEPT AS OTHERWISE SET FORTH HEREIN, (A) EACH PARTY ACKNOWLEDGES AND AGREES THAT ALL INTELLECTUAL PROPERTY RIGHTS AND TECHNOLOGY LICENSED HEREUNDER ARE LICENSED WITHOUT ANY WARRANTIES WHATSOEVER, WHETHER EXPRESS, IMPLIED OR STATUTORY, WITH RESPECT THERETO, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE, ENFORCEABILITY OR NON-INFRINGEMENT, AND (b) no Party makes any warranty or representation that any manufacture, use, importation, offer for sale or sale of any product or service will be free from infringement of any Intellectual Property of any Third Party.

 

8.3.           Indemnification . HBIO shall, and shall cause the other members of the HBIO Group to, jointly and severally, indemnify, defend and hold harmless the HART Indemnitees from and against any and all Liabilities of the HART Indemnitees relating to Third-Party Claims that any of the Transferred Intellectual Property or the New HBIO Technology infringes upon or misappropriates the Intellectual Property of any Third Party. HART shall, and shall cause the other members of the HART Group to, jointly and severally, indemnify, defend and hold harmless the HBIO Indemnitees from and against any and all Liabilities of the HBIO Indemnitees relating to Third-Party Claims that any of the New HART Technology infringes upon or misappropriates the Intellectual Property of any Third Party. Any claims for indemnification pursuant to this Section 8.3 shall be made in accordance with the procedures set forth in Section 5.5 of the Separation and Distribution Agreement.

 

ARTICLE IX

 

COMPETITIVE RESTRICTIONS

 

9.1.           Non-Competition Covenants of HBIO . HBIO agrees that after the Separation Date it will not, either directly or through any of its Affiliates or Subsidiaries, knowingly make, sell or have made or sold, or market or distribute, any pumps, syringes, bioreactors, scaffolds, machines, software, devices or other products that compete with the HART Business, subject to the following exceptions: (a) HBIO shall be permitted to use any Rejected New HBIO Technology in its own business, or to license such Rejected New HBIO Technology to a Third Party, in either case for use outside the scope of its business; (b) the exceptions outlined in Section 3.9 hereof in the event of an acquisition of HBIO or the Harvard Apparatus Research Business; and (c) the foregoing shall not prevent HBIO from selling products from the Harvard Apparatus Research Business to hospitals, clinics and other customers who validate, solely for internal human use and not for commercial sale, a research-use only product through their internal regulatory processes, provided that HBIO further agrees that it shall not market these products for human use, nor perform clinical trials or seek FDA or other regulatory approval for human use of these products. The foregoing shall not prevent HBIO from selling products from its businesses outside of the Harvard Apparatus Research Business into hospitals, clinics and other customers for human use or perform clinical trials or seek FDA or other regulatory approval for human use outside the HART Business.

 

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9.2.           Non-Competition Covenants of HART . HART agrees that after the Separation Date it will not, either directly or through any of its Affiliates or Subsidiaries, knowingly make or sell, or have made or sold, or market or distribute any products that are outside the HART Business or compete in any manner with the HBIO Group’s business, subject to the following exceptions: (a) HART shall not be prohibited from any natural expansion of its business if undertaken by comparable companies in the regenerative medicine field for use in humans, other than expansion in to the Harvard Apparatus Research Business; (b) HART shall be permitted to use any Rejected New HART Technology by HART in its own business, or to license such Rejected New HART Technology to a Third Party, in either case for use outside the scope of the HART Business; (c) the exceptions outlined in Section 4.9 hereof in the event of an acquisition of HART; and (d) HART may place products for use outside the scope of the HART Business at research sites, but only if there is no charge to the user for such products. For clarity since HART will operate in the HART Business and HBIO will operate in the Harvard Apparatus Research Business, it is permissible for both companies to be simultaneously selling an identical product under their respective trademarks in their respective separate fields of use (i.e. HART Business for HART and Harvard Apparatus Research Business for HBIO) without violating Article IX of this Agreement. Notwithstanding the foregoing, in order for HART to promote collaborations with leading scientists in regenerative medicine, HBIO acknowledge and agrees that it shall not violate the non-competition provisions described above if HART places products for use in the Harvard Apparatus Research Business at research sites, as long as there is no charge to the customer for such products. If the product placed for such purpose is manufactured by HBIO, HART will be entitled to purchase it from HBIO at discount rate of thirty-five percent (35%) off of HBIO’s then current US list price for such product for a period of ten years from the Separation Date, provided thereafter the Parties shall negotiate in good faith a commercially reasonable payment term of such product if HART desires to continue such arrangement. However, nothing in this paragraph shall obligate HART to purchase such products from HBIO.

 

9.3.           Non-Solicitation Covenants . Without the prior written consent of the other Party and except for those employees that the Parties have agreed, on or prior to the date hereof, will be employed by the HART Business, each Party agrees that after the Separation Date it shall not, (A) hire any of the other Party’s (or its subsidiaries’ or affiliates') employees, or (B) solicit, for the purpose of hiring (other than in the ordinary course of a hiring solicitation program), any of the other Party’s (or its subsidiaries’ or affiliates') employees. Nothing herein shall preclude generalized searches by a Party for employees through the use of advertisement in the media or through engagement of firms to conduct searches that are not targeted or focused on the other Party’s (or its subsidiaries’ or affiliates') employees or hiring (i) any person who responds to such advertisement or (ii) any person that was not indirectly or directly contacted or solicited in violation of the above provisions and who contacts a Party on his or her own behalf, or (iii) negotiating with or hiring any such person whose employment was terminated by a Party or any of its subsidiaries or affiliates prior to commencement of employment discussions between the other Party and such person. In the event of a sale of HBIO or HART, this Section 9.3 shall not be construed to prohibit the acquiring entity from soliciting or hiring employees of the other Party hereto, so long as such employees are not solicited or hired by the acquired entity.

 

9.4.           Expiration of Obligations . The non-competition and non-solicitation covenants contained in this Article IX shall terminate and be of no further force and effect after the tenth anniversary of the Separation Date , provided that such covenants may be terminated immediately by either Party upon written notice in the event that an Insolvency Event occurs with respect to the other Party. However, in the event that either HART or HBIO abandons any particular product or products, it shall so notify the other Party in writing within sixty (60) days thereof, at which time the non-competition covenants of this Article IX shall expire, terminate and be of no further force and effect with respect to such abandon product or products. For purposes of this Agreement, a Party will be deemed to have abandoned a product or products if it is no longer actively involved in developing, marketing, selling or distributing such product or products.

 

9.5.           Impact on Certain Strategic Transactions by HBIO . The non-competition provisions in this Article IX shall not prevent the sale of HBIO to an entity that is engaged in business activities that are competitive with those of the HART Business, provided, however, that in the event of such a sale, while the acquiring entity may compete with the HART Business, it shall not directly or indirectly use any of HART’s Information, that is subject to confidentiality in accordance with Section 7.8 of the Separation and Distribution Agreement, in any manner that competes with the HART Business. In addition, in the event that HBIO, through its Harvard Apparatus Research Business, acquires a business that has products in the HART Business, it shall so notify HART in writing within ten (10) days of the effective date of such acquisition. Upon the receipt of such notice, HART shall have sixty (60) days to elect to either: (a) acquire that limited portion of the acquired business with the products in the HART Business, at a price determined by an independent, duly-qualified Third Party appraiser mutually selected by HART and HBIO; or (b) obtain an exclusive (only with respect to the HART Business) license to those products and/or become the exclusive (only with respect the HART Business) distributor for those products on terms and conditions mutually agreed-upon by the Parties.

 

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9.6.           Impact on Certain Strategic Transactions by HART . The non-competition provisions set forth in this Article IX shall not prevent the sale of HART to an entity that is engaged in business activities that are competitive with those of the HBIO Group , provided, however, that in the event of such a sale, while the acquiring entity may compete with the HBIO Group’s business, it shall not directly or indirectly use any of the HBIO Group’s Information, that is subject to confidentiality in accordance with Section 7.8 of the Separation and Distribution Agreement, in any manner that competes with the HBIO Group’s business. In addition, in the event that HART acquires a business that that has products outside of the HART Business, it shall so notify HBIO in writing within ten (10) days of the effective date of such acquisition. Upon the receipt of such notice, HBIO shall have sixty (60) days to elect to either: (a) acquire that limited portion of the acquired business with the products in the HBIO Group’s business, at a price determined by an independent, duly-qualified Third Party appraiser mutually selected by HBIO and HART; or (B) obtain an exclusive (only with respect to the HBIO Group’s business) license to those products and/or become the exclusive (only with respect to the HBIO Group’s business) distributor for those products on terms and conditions mutually agreed-upon by the Parties.

 

ARTICLE X

 

MISCELLANEOUS

 

10.1.           Term and Termination . The transfer of the Transferred Intellectual Property shall remain in effect in perpetuity. Unless otherwise explicated stated herein and subject to the termination rights with respect to specific license grants set forth herein, the licenses granted under this Agreement shall remain in effect in perpetuity. The Parties acknowledge that the licenses granted hereunder are intended to be licenses of “Intellectual Property” as such term is used in Section 365(n) of the United States Bankruptcy Code and for other similar laws and that the licenses herein are given and received for fair and adequate value. Accordingly, the Parties intend (a) each of the Parties will have the benefit of any applicable law related to insolvency or bankruptcy that protects a licensee from disclaimer or other challenge of the licenses granted to the licensee, and (b) the licenses granted hereunder will survive any bankruptcy of either Party.

 

10.2.           Counterparts; Entire Agreement; Corporate Power . This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each of the Parties and delivered (by facsimile, electronic transmission or otherwise) to the other Party. This Agreement, the exhibits, the schedules and appendices hereto and thereto, the Separation and Distribution Agreement (and Ancillary Agreements defined therein) contain the entire agreement between the Parties with respect to the subject matter hereof, supersede all previous agreements, negotiations, discussions, writings, understandings, commitments and conversations with respect to such subject matter and there are no agreements or understandings between the Parties other than those set forth or referred to herein or therein. Each Party hereto acknowledges that it and each other Party hereto is this Agreement by facsimile, stamp or mechanical signature. Each Party hereto expressly adopts and confirms each such facsimile, stamp or mechanical signature made in its respective name as if it were a manual signature, agrees that it will not assert that any such signature is not adequate to bind such Party to the same extent as if it were signed manually and agrees that at the reasonable request of any other Party hereto at any time it will as promptly as reasonably practicable the Agreement to be manually executed (any such execution to be as of the date of the initial date thereof).

 

10.3.           Governing Law, Jurisdiction and Dispute Resolution . This Agreement and any claims or disputes arising out of or related hereto or thereto or to the transactions contemplated hereby and thereby or to the inducement of any Party to enter herein and therein, whether for breach of contract, tortious conduct or otherwise and whether predicated on common law, statute or otherwise shall be governed by and construed and interpreted in accordance with the Laws of the Commonwealth of Massachusetts irrespective of the choice of laws principles of the Commonwealth of Massachusetts as to all matters, including matters of validity, construction, effect, enforceability, performance and remedies. If any dispute arises out of or in connection with this Agreement, except as expressly contemplated by another provision of this Agreement, the parties irrevocably (a) consent and submit to the exclusive jurisdiction of federal and state courts located in Boston, Massachusetts, and (b) waive any objection to that choice of forum based on venue or to the effect that the forum is not convenient. Notwithstanding the foregoing, any dispute arising out of or related to this Agreement shall be resolved in accordance with the procedures set forth in Section 9.1 of the Separation and Distribution Agreement. The United Nations Convention on Contracts for the International Sale of Goods shall not apply to this Agreement.

 

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10.4.           Assignability . This Agreement shall be binding upon and inure to the benefit of the Parties hereto and thereto, respectively, and their respective successors and permitted assigns; provided, however, that no Party hereto or thereto may assign its respective rights or delegate its respective obligations under this Agreement without the express prior written consent of the other Party hereto or thereto (which consent may be withheld in such Party's sole and absolute discretion) and any assignment or attempted assignment in violation of the foregoing will be null and void. Notwithstanding the preceding sentence, and subject to the restrictions contained in Sections 9.5 and 9.6 hereof, a Party may assign this Agreement in connection with a merger transaction in which such Party is not the surviving entity or the sale by such Party of all or substantially all of its Assets, and upon the effectiveness of such assignment the assigning Party shall be released from all of its obligations under this Agreement if the surviving entity of such merger or the transferee of such Assets shall agree in writing, in form and substance reasonably satisfactory to the other Party, to be bound by all terms of this Agreement as if named as a “Party” hereto.

 

10.5.           Third-Party Beneficiaries . Except for the indemnification rights under this Agreement of any HBIO Indemnitee or HART Indemnitee in their respective capacities as such, (i) the provisions of this Agreement are solely for the benefit of the Parties and are not intended to confer upon any Person except the Parties any rights or remedies hereunder, and (ii) there are no third-party beneficiaries of this Agreement and this Agreement shall not provide any third Person with any remedy, claim, liability, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement.

 

10.6.           Notices . All notices, requests, claims, demands or other communications under this Agreement 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 overnight courier service, by facsimile or electronic transmission with receipt confirmed (followed by delivery of an original via overnight courier service) 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 10.6:

 

If to HBIO to:
 
  Harvard Bioscience, Inc.
 

84 October Hill Road
Holliston, Massachusetts 01746

Attn: Chief Executive Officer

 
  with a copy (which copy will not constitute notice) to:
 
  Burns & Levinson LLP
  125 Summer Street
  Boston, MA 02110
  Attention:     Josef B. Volman
  Facsimile:    (617) 345-3299
 
If to HART to:
 
 

Harvard Apparatus Regenerative Technology, Inc.

84 October Hill Road
Holliston, Massachusetts 01746

Attn: Chief Executive Officer

  with a copy (which copy will not constitute notice) to:
   
  Feinberg Hanson LLP
  57 River Street, Suite 204
  Wellesley, Massachusetts 02481
  Attention:    Harry A. Hanson, III
  Facsimile:    (781) 283-5776

 

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Any Party may, by notice to the other Party, change the address to which such notices are to be given.

 

10.7.           Severability . If any provision of this Agreement is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof or thereof shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby. Upon such determination, the Parties shall negotiate in good faith in an effort to agree upon such a suitable and equitable provision to affect the original intent of the Parties.

 

10.8.           Force Majeure . No Party shall be deemed in default of this Agreement to the extent that any delay or failure in the performance of its obligations under this Agreement results from a Force Majeure. In the event of an occurrence of a Force Majeure, the Party whose performance is affected thereby shall give notice of suspension as soon as reasonably practicable to the other stating the date and extent of such suspension and the cause thereof, and such Party shall resume the performance of such obligations as soon as reasonably practicable after the removal of such cause.

 

10.9.           Expenses . Except as expressly set forth in this Agreement, all fees, costs and expenses incurred in connection with the preparation, execution, delivery and implementation of this Agreement, and with the consummation of the transactions contemplated hereby and thereby, will be borne by the Party incurring such fees, costs or expenses.

 

10.10.          Headings . The article, section and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

 

10.11.          Waivers of Default . Waiver by any Party of any default by the other Party of any provision of this Agreement shall not be deemed a waiver by the waiving Party of any subsequent or other default, nor shall it prejudice the rights of the other Party. No failure or delay by any Party in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof nor shall a single or partial exercise thereof prejudice any other or further exercise thereof or the exercise of any other right, power or privilege.

 

10.12.          Specific Performance . Subject to the provisions of Section 10.3, in the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement, the Party or Parties who are, or are to be, thereby aggrieved shall have the right to specific performance and injunctive or other equitable relief in respect of its or their rights under this Agreement, in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative. The Parties agree that the remedies at law for any breach or threatened breach, including monetary damages, are inadequate compensation for any loss and that any defense in any action for specific performance that a remedy at law would be adequate is waived. Any requirements for the securing or posting of any bond with such remedy are waived by each of the Parties to this Agreement.

 

10.13.          Amendments . No provisions of this Agreement shall be deemed waived, amended, supplemented or modified by any Party, unless such waiver, amendment, supplement or modification is in writing and signed by the authorized representative of the Party against whom it is sought to enforce such waiver, amendment, supplement or modification.

 

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10.14.          Interpretation . In this Agreement, (a) words in the singular shall be held to include the plural and vice versa and words of one gender shall be held to include the other genders as the context requires; (b) the terms “hereof,” “herein,” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole (including all of the Exhibits hereto) and not to any particular provision of this Agreement; (c) Article, Section, and Exhibit references are to the Articles, Sections, and Exhibits to this Agreement unless otherwise specified; (d) the word “including” and words of similar import when used in this Agreement shall mean “including, without limitation,” (e) the word “or” shall not be exclusive; (f) unless expressly stated to the contrary in this Agreement, all references to “the date hereof,” “the date of this Agreement,” “hereby” and “hereupon” and words of similar import shall all be references to [ ], 2013, regardless of any amendment or restatement hereof.

 

[Signatures on following page]

 

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IN WITNESS WHEREOF, the Parties have caused this Intellectual Property Matters Agreement to be duly executed as of the date first above written.

  

    HARVARD BIOSCIENCE, INC.
       
    By:  
      Name:
Title:

 

    HARVARD APPARATUS REGENERATIVE TECHNOLOGY, INC.
       
    By:  
      Name:
Title:

 

 
 

  

Exhibit A

 

Patent/Technology   Jurisdiction   Expiration
         
Patent application covering aspects of syringe devices and methods for delivering cells to tissues   Europe, U.S.   2030
         
Patent application covering aspects of clinical scale bioreactors and tissue engineering   Australia, Europe, Japan, Russia, U.S.   2030
         
Patent application covering aspects of liquid distribution in a rotating bioreactor   Germany   2031
         
Issued Patent covering aspects of liquid distribution in a rotating bioreactor   Germany   2021
         
Patent application covering aspects of liquid distribution in a rotating bioreactor   PCT – international stage   2032
         
Patent application covering aspects of synthetic scaffolds and organ and tissue transplantation   PCT – international stage   2032
         
Patent application covering aspects of synthetic scaffolds and organ and tissue transplantation   U.S.   2032
         
Patent applications relating to infrared-based methods for evaluating tissue health including methods for evaluating burns   PCT – international stage   2033
         
Provisional patent applications relating to methods and compositions for producing elastic scaffolds for use in tissue engineering   U.S.   N/A
         
Provisional patent application relating to support configurations for tubular tissue scaffolds, and airway scaffold configurations   U.S.   N/A
         
Provisional patent applications relating to methods and compositions for promoting the structural integrity of nanofiber-based scaffolds for tissue engineering   U.S.   N/A
         
Provisional patent application relating to synthetic airways   U.S.   N/A
         
Provisional patent applications relating to engineered hybrid organs   U.S.   N/A
         
Provisional patent application relating to bioreactor adaptors for tubular tissue scaffolds   U.S.   N/A

 

 
 

 

Exhibit B

 

Transferred Licenses

 

1. Exclusive License Agreement dated August 6, 2009 by and between Harvard Bioscience, Inc. and Sara Mantero and Maria Adelaide Asnaghi

 

2. IPR Assignment Agreement dated April 24, 2012 by between Harvard Bioscience Inc. and CMA Microdialysis AB

 

3. Intellectual Property Assignment, License and Services Agreement dated March 8, 2012 by and among Mammalian Cell Technologies, LP, Michael C. Riddle, and Harvard Bioscience, Inc.

 

4. Non-Exclusive Patent License Agreement dated April 9, 2012 by and between The General Hospital Corporation, d/b/a Massachusetts General Hospital, and Harvard Bioscience, Inc.

 

 

 

 

EXHIBIT 10.7

 

INDEMNIFICATION AGREEMENT

 

This Indemnification Agreement (“ Agreement ”) is made and entered into this ____ day of ______ 2013, by and between Harvard Apparatus Regenerative Technology, Inc., a Delaware corporation (the “ Company ,” which term shall include, where appropriate, any Entity (as hereinafter defined) controlled directly or indirectly by the Company) and ____________ (“ Indemnitee ”):

 

WHEREAS, the Board of Directors of the Company has determined that it is essential to the Company that it be able to retain and attract as directors and officers the most capable persons available and that, therefore, the Company should endeavor to assure such persons that indemnification and insurance coverage is available;

 

WHEREAS, increased corporate litigation has subjected directors and officers of public companies to litigation risks and expenses, and the limitations on the availability of directors and officers liability insurance have made it increasingly difficult for the Company to attract and retain such persons; and

 

WHEREAS, in recognition of the need to provide Indemnitee with substantial protection against personal liability, in order to procure Indemnitee’s [continued] service as a [director] [officer] of the Company and to enhance Indemnitee’s ability to serve the Company in an effective manner, and in order to provide such protection pursuant to express contract rights (intended to be enforceable irrespective of, among other things, any amendment to the Company’s Certificate of Incorporation (as amended and/or restated from time to time, the “ Certificate of Incorporation ”) or Bylaws (as amended and/or restated from time to time, the “ Bylaws ”)), any change in the composition of the Board or any change in control or business combination transaction relating to the Company), the Company wishes to provide in this Agreement for the indemnification of, and the advancement of Expenses (as defined below) to, Indemnitee as set forth in this Agreement and for the continued coverage of Indemnitee under the Company’s directors’ and officers’ liability insurance policies.

 

NOW, THEREFORE, in consideration of the promises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:

 

1. DEFINITIONS.

 

(a)          “ Corporate Status ” describes the status of a person who is serving or has served (i) as a director or officer of the Company, (ii) in any capacity with respect to any employee benefit plan of the Company, or (iii) as a director, partner, trustee, officer, employee, or agent of any other Entity at the request of the Company. For purposes of subsection (iii) of this Section 1(a), if Indemnitee is serving or has served as a director, partner, trustee, officer, employee or agent of a Subsidiary, Indemnitee shall be deemed to be serving at the request of the Company.

 

(b)          “ Entity ” shall mean any corporation, partnership, limited liability company, joint venture, trust, foundation, association, organization or other legal entity.

 

(c)          “ Expenses ” shall mean all fees, costs and expenses incurred by Indemnitee in connection with any Proceeding (as defined below), including, without limitation, attorneys’ fees, disbursements and retainers (including, without limitation, any such fees, disbursements and retainers incurred by Indemnitee pursuant to Sections 10 and 11(c) of this Agreement), fees and disbursements of expert witnesses, private investigators and professional advisors (including, without limitation, accountants and investment bankers), court costs, transcript costs, fees of experts, travel expenses, duplicating, printing and binding costs, telephone and fax transmission charges, postage, delivery services, secretarial services, and other disbursements and expenses.

 

 
 

 

(d)         “ Indemnifiable Expenses ,” “ Indemnifiable Liabilities ” and “ Indemnifiable Amounts ” shall have the meanings ascribed to those terms in Section 3(a) below.

 

(e)         “ Liabilities ” shall mean judgments, damages, liabilities, losses, penalties, excise taxes, fines and amounts paid in settlement.

 

(f)          “ Proceeding ” shall mean any threatened, pending or completed claim, action, suit, arbitration, alternate dispute resolution process, investigation, administrative hearing, appeal, or any other proceeding, whether civil, criminal, administrative, arbitrative or investigative, whether formal or informal, including a proceeding initiated by Indemnitee pursuant to Section 10 of this Agreement to enforce Indemnitee’s rights hereunder.

 

(g)         “ Subsidiary ” shall mean any corporation, partnership, limited liability company, joint venture, trust or other Entity of which the Company owns (either directly or through or together with another Subsidiary of the Company) either (i) a general partner, managing member or other similar interest or (ii) (A) 50% or more of the voting power of the voting capital equity interests of such corporation, partnership, limited liability company, joint venture or other Entity, or (B) 50% or more of the outstanding voting capital stock or other voting equity interests of such corporation, partnership, limited liability company, joint venture or other Entity.

 

2.          SERVICES OF INDEMNITEE. In consideration of the Company’s covenants and commitments hereunder, Indemnitee agrees to serve or continue to serve as a [director] [officer] of the Company for so long as Indemnitee is duly elected or appointed or until Indemnitee tenders [his] [her] resignation or is no longer serving in such capacity. However, this Agreement shall not impose any obligation on Indemnitee or the Company to continue Indemnitee’s service to the Company beyond any period otherwise required by law or by other agreements or commitments of the parties, if any.

 

3.          AGREEMENT TO INDEMNIFY. The Company agrees to indemnify Indemnitee as follows:

 

(a)       Subject to the exceptions contained in Section 4(a) and 4(c) below, if Indemnitee was or is a party or is threatened to be made a party to any Proceeding (other than an action by or in the right of the Company) by reason of Indemnitee’s Corporate Status, Indemnitee shall be indemnified by the Company against all Expenses and Liabilities incurred or paid by Indemnitee in connection with such Proceeding (referred to herein as “ Indemnifiable Expenses ” and “ Indemnifiable Liabilities ,” respectively, and collectively as “ Indemnifiable Amounts ”).

 

(b)      Subject to the exceptions contained in Section 4(b) below, if Indemnitee was or is a party or is threatened to be made a party to any Proceeding by or in the right of the Company to procure a judgment in its favor by reason of Indemnitee’s Corporate Status, Indemnitee shall be indemnified by the Company against all Indemnifiable Expenses.

 

4.          EXCEPTIONS TO INDEMNIFICATION. Indemnitee shall be entitled to indemnification under Sections 3(a) and 3(b) above in all circumstances, other than the following:

 

(a)      If indemnification is requested under Section 3(a) and it has been adjudicated finally by a court of competent jurisdiction that, in connection with the subject of the Proceeding out of which the claim for indemnification has arisen, Indemnitee failed to act (i) in good faith and (ii) in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, or, with respect to any criminal action or proceeding, Indemnitee had reasonable cause to believe that Indemnitee’s conduct was unlawful, Indemnitee shall not be entitled to payment of Indemnifiable Amounts hereunder.

 

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(b)      If indemnification is requested under Section 3(b) and:

 

(i) it has been adjudicated finally by a court of competent jurisdiction that, in connection with the subject of the Proceeding out of which the claim for indemnification has arisen, Indemnitee failed to act (A) in good faith and (B) in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, Indemnitee shall not be entitled to payment of Indemnifiable Expenses hereunder; or

 

(ii) it has been adjudicated finally by a court of competent jurisdiction that Indemnitee is liable to the Company with respect to any claim, issue or matter involved in the Proceeding out of which the claim for indemnification has arisen, including, without limitation, a claim that Indemnitee received an improper personal benefit, no Indemnifiable Expenses shall be paid with respect to such claim, issue or matter unless the Court of Chancery or another court in which such Proceeding was brought shall determine upon application that, despite the adjudication of liability, but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnity for such Indemnifiable Expenses which such court shall deem proper.

 

(c)      If indemnification is requested under Section 3(a) in connection with any claim against the Indemnitee for an accounting of profits arising from the purchase or sale by Indemnitee of securities of the Company in violation of Section 16(b) of the Securities and Exchange Act of 1934, as amended, or any similar successor statute or similar provisions of state statutory law or common law.

 

5.          PROCEDURE FOR APPLICATION AND PAYMENT OF INDEMNIFIABLE AMOUNTS. Indemnitee shall submit to the Company a written request specifying the Indemnifiable Amounts for which Indemnitee seeks payment under Section 3 of this Agreement and the basis for the claim. The Company shall pay such Indemnifiable Amounts to Indemnitee within sixty (60) calendar days of receipt of the request. At the request of the Company, Indemnitee shall furnish such documentation and information as are reasonably available to Indemnitee and necessary to establish that Indemnitee is entitled to indemnification hereunder

 

6.          INDEMNIFICATION FOR EXPENSES OF A PARTY WHO IS WHOLLY OR PARTLY SUCCESSFUL. Notwithstanding any other provision of this Agreement, and without limiting any such provision, to the extent that Indemnitee is, by reason of Indemnitee’s Corporate Status, a party to and is successful, on the merits or otherwise, in any Proceeding, Indemnitee shall be indemnified against all Expenses reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection therewith. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with each successfully resolved claim, issue or matter. For purposes of this Agreement, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

 

7.          EFFECT OF CERTAIN RESOLUTIONS. Neither the settlement nor termination of any Proceeding nor the failure of the Company to award indemnification or to determine that indemnification is payable shall create an adverse presumption that Indemnitee is not entitled to indemnification hereunder. In addition, the termination of any proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent shall not create a presumption that Indemnitee did not act in good faith and in a manner which Indemnitee reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal action or proceeding, had reasonable cause to believe that Indemnitee’s action was unlawful.

 

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8.          AGREEMENT TO ADVANCE EXPENSES; UNDERTAKING. The Company shall advance all Expenses incurred by or on behalf Indemnitee in connection with any Proceeding, including a Proceeding by or in the right of the Company, in which Indemnitee is involved by reason of such Indemnitee’s Corporate Status within thirty (30) days after the receipt by the Company of a written statement from Indemnitee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding. All advances shall be unsecured and interest free. To the extent required by Delaware law, Indemnitee hereby undertakes to repay the amount of Indemnifiable Expenses paid to Indemnitee if it is finally determined by a court of competent jurisdiction that Indemnitee is not entitled under this Agreement, the Bylaws, the Certificate of Incorporation, applicable law or otherwise, to indemnification with respect to such Expenses. This undertaking is an unlimited general obligation of Indemnitee. This Section 8 shall not apply to any claim made by Indemnitee which is excluded pursuant to Section 4.

 

9.          PROCEDURE FOR ADVANCE PAYMENT OF EXPENSES. Indemnitee shall submit to the Company a written request specifying the Indemnifiable Expenses for which Indemnitee seeks an advancement under Section 8 of this Agreement, together with documentation evidencing that Indemnitee has incurred such Indemnifiable Expenses. Payment of Indemnifiable Expenses under Section 8 shall be made no later than thirty (30) calendar days after the Company’s receipt of such request.

 

10.         REMEDIES OF INDEMNITEE.

 

(a)      RIGHT TO PETITION COURT. In the event that Indemnitee makes a request for payment of Indemnifiable Amounts under Sections 3 and 5 above or a request for an advancement of Indemnifiable Expenses under Sections 8 and 9 above and the Company fails to make such payment or advancement in a timely manner pursuant to the terms of this Agreement, Indemnitee may petition the Court of Chancery to enforce the Company’s obligations under this Agreement.

 

(b)      BURDEN OF PROOF. In any judicial proceeding brought under Section 10(a) above, the Company shall have the burden of proving that Indemnitee is not entitled to payment of Indemnifiable Amounts hereunder.

 

(c)      EXPENSES. If Indemnitee is successful in whole or in part in connection with any action brought by Indemnitee under Section 10(a) above, the Company agrees to reimburse Indemnitee in full for any Expenses incurred by Indemnitee in connection with investigating, preparing for, litigating, defending or settling any such action, or in connection with any claim or counterclaim brought by the Company in connection therewith.

 

(d)     VALIDITY OF AGREEMENT. The Company shall be precluded from asserting in any Proceeding, including, without limitation, an action under Section 10(a) above, that the provisions of this Agreement are not valid, binding and enforceable or that there is insufficient consideration for this Agreement and shall stipulate in court that the Company is bound by all the provisions of this Agreement.

 

(e)     FAILURE TO ACT NOT A DEFENSE. The failure of the Company (including its Board of Directors or any committee thereof, independent legal counsel, or stockholders) to make a determination concerning the permissibility of the payment of Indemnifiable Amounts or the advancement of Indemnifiable Expenses under this Agreement shall not be a defense in any action brought under Section 10(a) above, and shall not create a presumption that such payment or advancement is not permissible.

 

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11.         DEFENSE OF THE UNDERLYING PROCEEDING.

 

(a)      NOTICE BY INDEMNITEE. Indemnitee agrees to notify the Company promptly upon being served with any summons, citation, subpoena, complaint, indictment, information, or other document relating to any Proceeding which may result in the payment of Indemnifiable Amounts or the advancement of Indemnifiable Expenses hereunder; provided, however, that the failure to give any such notice shall not disqualify Indemnitee from the right to receive payments of Indemnifiable Amounts or advancements of Indemnifiable Expenses unless the Company’s ability to defend in such Proceeding is materially and adversely prejudiced thereby.

 

(b)      DEFENSE BY COMPANY. Subject to the provisions of the last sentence of this Section 11(b) and of Section 11(c) below, the Company shall have the right to defend Indemnitee in any Proceeding which may give rise to the payment of Indemnifiable Amounts hereunder; provided, however that the Company shall notify Indemnitee of any such decision to defend within ten (10) days of receipt of notice of any such Proceeding under Section 11(a) above. The Company shall not, without the prior written consent of Indemnitee, consent to the entry of any judgment against Indemnitee or enter into any settlement or compromise which (i) includes an admission of fault of Indemnitee or (ii) does not include, as an unconditional term thereof, the full release of Indemnitee from all liability in respect of such Proceeding, which release shall be in form and substance reasonably satisfactory to Indemnitee. This Section 11(b) shall not apply to a Proceeding brought by Indemnitee under Section 10(a), above, or pursuant to Section 20, below.

 

(c)       INDEMNITEE’S RIGHT TO COUNSEL. Notwithstanding the provisions of Section 11(b) above, if in a Proceeding to which Indemnitee is a party by reason of Indemnitee’s Corporate Status, Indemnitee reasonably concludes that it may have separate defenses or counterclaims to assert with respect to any issue which may not be consistent with the position of other defendants in such Proceeding, or if the Company fails to assume the defense of such proceeding in a timely manner, Indemnitee shall be entitled to be represented by separate legal counsel of Indemnitee’s choice at the expense of the Company. In addition, if the Company fails to comply with any of its obligations under this Agreement or in the event that the Company or any other person takes any action to declare this Agreement void or unenforceable, or institutes any action, suit or proceeding to deny or to recover from Indemnitee the benefits intended to be provided to Indemnitee hereunder, Indemnitee shall have the right to retain counsel of Indemnitee’s choice, at the expense of the Company, to represent Indemnitee in connection with any such matter.

 

12.         REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby represents and warrants to Indemnitee as follows:

 

(a)       AUTHORITY. The Company has all necessary power and authority to enter into, and be bound by the terms of, this Agreement, and the execution, delivery and performance of the undertakings contemplated by this Agreement have been duly authorized by the Company.

 

(b)      ENFORCEABILITY. This Agreement, when executed and delivered by the Company in accordance with the provisions hereof, shall be a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or similar laws affecting the enforcement of creditors’ rights generally.

 

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13.         INSURANCE. The Company shall, from time to time, make the good faith determination whether or not it is practicable for the Company to obtain and maintain a policy or policies of insurance with a reputable insurance company providing the Indemnitee with coverage for losses from wrongful acts, and to ensure the Company’s performance of its indemnification obligations under this Agreement. Among other considerations, the Company will weigh the costs of obtaining such insurance coverage against the protection afforded by such coverage. In all policies of director and officer liability insurance, Indemnitee shall be named as an insured in such a manner as to provide Indemnitee the same rights and benefits as are accorded to the most favorably insured of the Company’s officers and directors. Notwithstanding the foregoing, the Company shall have no obligation to obtain or maintain such insurance if the Company determines in good faith that such insurance is not reasonably available, if the premium costs for such insurance are disproportionate to the amount of coverage provided, or if the coverage provided by such insurance is limited by exclusions so as to provide an insufficient benefit. The Company shall promptly notify Indemnitee of any good faith determination not to provide such coverage.

 

14.         NO DUPLICATION OF PAYMENTS. The Company shall not be liable under this Agreement to make any payment to Indemnitee in respect of any Indemnifiable Liabilities to the extent Indemnitee has otherwise received payment under any insurance policy, the Company’s By-laws or Certificate of Incorporation, under Delaware law, any other contract or otherwise, of the amounts otherwise indemnifiable by the Company hereunder.

 

15.         CONTRACT RIGHTS NOT EXCLUSIVE. The rights to payment of Indemnifiable Amounts and advancement of Indemnifiable Expenses provided by this Agreement shall be in addition to, but not exclusive of, any other rights which Indemnitee may have at any time under applicable law, the Company’s By-laws or Certificate of Incorporation, or any other agreement, vote of stockholders or directors (or a committee of directors), or otherwise, both as to action in Indemnitee’s official capacity and as to action in any other capacity as a result of Indemnitee’s serving as a [director] [officer] of the Company.

 

16.         SUCCESSORS. This Agreement shall be (a) binding upon all successors and assigns of the Company (including any transferee of all or a substantial portion of the business, stock and/or assets of the Company and any direct or indirect successor by merger or consolidation or otherwise by operation of law) and (b) binding on and shall inure to the benefit of the heirs, personal representatives, executors and administrators of Indemnitee. This Agreement shall continue for the benefit of Indemnitee and such heirs, personal representatives, executors and administrators after Indemnitee has ceased to have Corporate Status.

 

17.         SUBROGATION. In the event of any payment of Indemnifiable Amounts under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of contribution or recovery of Indemnitee against other persons, and Indemnitee shall take, at the request of the Company, all reasonable action necessary to secure such rights, including the execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

 

18.         CHANGE IN LAW. To the extent that a change in Delaware law (whether by statute or judicial decision) shall permit broader indemnification or advancement of expenses than is provided under the terms of the by-laws of the Company and this Agreement, Indemnitee shall be entitled to such broader indemnification and advancements, and this Agreement shall be deemed to be amended to such extent.

 

19.         SEVERABILITY. Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement, or any clause thereof, shall be determined by a court of competent jurisdiction to be illegal, invalid or unenforceable, in whole or in part, such provision or clause shall be limited or modified in its application to the minimum extent necessary to make such provision or clause valid, legal and enforceable, and the remaining provisions and clauses of this Agreement shall remain fully enforceable and binding on the parties.

 

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20.         INDEMNITEE AS PLAINTIFF. Except as provided in Section 10(c) of this Agreement and in the next sentence, Indemnitee shall not be entitled to payment of Indemnifiable Amounts or advancement of Indemnifiable Expenses with respect to any Proceeding brought by Indemnitee against the Company, any Entity which it controls, any director or officer thereof, or any third party, unless the Board of Directors of the Company has consented to the initiation of such Proceeding. This Section shall not apply to counterclaims or affirmative defenses asserted by Indemnitee in an action brought against Indemnitee.

 

21.         MODIFICATIONS AND WAIVER. Except as provided in Section 18 above with respect to changes in Delaware law which broaden the right of Indemnitee to be indemnified by the Company, no supplement, modification or amendment of this Agreement shall be binding unless executed in writing by each of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions of this Agreement (whether or not similar), nor shall such waiver constitute a continuing waiver.

 

22.         GENERAL NOTICES. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given (a) when delivered by hand, (b) when transmitted by facsimile and receipt is acknowledged, or (c) if mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed:

 

(i)      If to Indemnitee, to:

 

[Name]

[Address]

Facsimile: [———-]

 

(ii)    If to the Company, to:

 

Harvard Apparatus Regenerative Technology, Inc.

84 October Hill Road

Holliston, Massachusetts 01746-1371

Facsimile: (508) 429-8478

Attention: President

 

With a copy to:

 

Burns & Levinson LLP

125 Summer Street

Boston, MA 02110

Facsimile: (617) 345-3299

Attention: Josef B. Volman, Esq.

 

or to such other address as may have been furnished in the same manner by any party to the others.

 

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23.         GOVERNING LAW; CONSENT TO JURISDICTION; SERVICE OF PROCESS. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without regard to its rules of conflict of laws. Each of the Company and the Indemnitee hereby irrevocably and unconditionally consents to submit to the exclusive jurisdiction of the Court of Chancery of the State of Delaware and the courts of the United States of America located in the State of Delaware (the “ Delaware Courts ”) for any litigation arising out of or relating to this Agreement and the transactions contemplated hereby (and agrees not to commence any litigation relating thereto except in such courts), waives any objection to the laying of venue of any such litigation in the Delaware Courts and agrees not to plead or claim in any Delaware Court that such litigation brought therein has been brought in an inconvenient forum. Each of the parties hereto agrees, (a) to the extent such party is not otherwise subject to service of process in the State of Delaware, to appoint and maintain an agent in the State of Delaware as such party’s agent for acceptance of legal process, and (b) that service of process may also be made on such party by prepaid certified mail with a proof of mailing receipt validated by the United States Postal Service constituting evidence of valid service. Service made pursuant to (a) or (b) above shall have the same legal force and effect as if served upon such party personally within the State of Delaware. For purposes of implementing the parties’ agreement to appoint and maintain an agent for service of process in the State of Delaware, each such party does hereby appoint [__________________________], as such agent and each such party hereby agrees to complete all actions necessary for such appointment.

 

24.         COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed an original, but all of which together shall constitute one and the same document.

 

[Remainder of page intentionally left blank.]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

 

  Harvard Apparatus Regenerative Technology , INC.
   
  By:  
     
  Name:
   
  Title:
   
  INDEMNITEE
   
   
  Name:  

 

 

 

 

 

EXHIBIT 10.8

 

Harvard Apparatus Regenerative Technology, Inc.

 

2013 EQUITY INCENTIVE PLAN

 

1.     GENERAL PURPOSE OF THE PLAN; DEFINITIONS

 

The name of the plan is the Harvard Apparatus Regenerative Technology, Inc. 2013 Equity Incentive Plan (the “ Plan ”). The purpose of the Plan is to encourage and enable the officers, employees, Non-Employee Directors, and other key persons (including consultants) of Harvard Apparatus Regenerative Technology, Inc. (the “ Company ”) and its Subsidiaries upon whose judgment, initiative and efforts the Company largely depends for the successful conduct of its business to acquire a proprietary interest in the Company. It is anticipated that providing such persons with a direct stake in the Company’s welfare will assure a closer identification of their interests with those of the Company, thereby stimulating their efforts on the Company’s behalf and strengthening their desire to remain with the Company. In addition, the issuance of Awards in partial substitution of equity awards that cover shares of the common stock of Harvard Bioscience, Inc. (“ HBIO ”) immediately prior to the spin-off of the Company by HBIO are authorized to be issued under this Plan.

 

The following terms shall be defined as set forth below:

 

Act ” means the Securities Act of 1933, as amended, and the rules and regulations thereunder.

 

Adjustment Awards ” is defined in Section 4.

 

Administrator ” is defined in Section 2(a).

 

Award ” or “ Awards, ” except where referring to a particular category of grant under the Plan, shall include Incentive Stock Options, Non-Qualified Stock Options, Stock Appreciation Rights, Deferred Stock Awards, Restricted Stock Awards, Unrestricted Stock Awards, Performance Share Awards and Dividend Equivalent Rights.

 

Board ” means the Board of Directors of the Company.

 

Cash-Based Award ” means an Award entitling the recipient to receive a cash-denominated payment.

 

Change of Control ” is defined in Section 19.

 

Code ” means the Internal Revenue Code of 1986, as amended, and any successor Code, and related rules, regulations and interpretations.

 

Committee ” means the Compensation Committee of the Board or a similar committee performing the functions of the Compensation Committee and that is comprised of not less than two Independent Directors.

 

Covered Employee ” means an employee who is a “Covered Employee” within the meaning of Section 162(m) of the Code.

 

Deferred Stock Award ” means Awards granted pursuant to Section 8.

 

 
 

 

" Distribution Date " means the date that HBIO distributes to holders of shares of its outstanding common stock, through a spin-off, at least 50% of the outstanding shares of the Company’s common stock (the “Spin-Off”).

 

Dividend Equivalent Right ” means Awards granted pursuant to Section 13.

 

Effective Date ” shall have the meaning specified in Section 21 hereof.

 

Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.

 

Fair Market Value ” of the Stock on any given date means the fair market value of the Stock determined in good faith by the Administrator; provided, however, that if the Stock is traded on a national securities exchange the Fair Market Value of the Stock will equal the closing sales price as reported on the principal exchange or market for the Stock on such date, provided further that with respect to the Separation Grants and the initial Non-Employee Director grants described in Section 5(b)(i)(1), the Fair Market Value on the date of grant for such grants shall mean the arithmetic average of the daily dollar volume-weighted average price of the Stock (during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time) for each of the ten (10) Trading Days immediately preceding the date of grant. If there is no trading on such date, the determination shall be made by reference to the last date preceding such date for which there was trading.

 

HBIO Award ” shall have the meaning specified in Section 4 hereof.

 

Incentive Stock Option ” means any Stock Option designated and qualified as an “incentive stock option” as defined in Section 422 of the Code.

 

Independent Director ” means a member of the Board who is not also an employee of the Company or any Subsidiary and who is independent.

 

Non-Employee Director ” means a member of the Board who is not also an employee of the Company or any Subsidiary.

 

Non-Qualified Stock Option ” means any Stock Option that is not an Incentive Stock Option.

 

Option ” or “ Stock Option ” means any option to purchase shares of Stock granted pursuant to Section 5.

 

Parent ” means Harvard Bioscience, Inc., a Delaware corporation that, as of the Effective Date is the parent of the Company. If at any time Harvard Bioscience, Inc. ceases to hold stock representing more than 50% of the Voting Securities of the Company, it shall no longer be treated as the Parent.

 

Performance Share Award ” means Awards granted pursuant to Section 11.

 

Performance Cycle ” means one or more periods of time, which may be of varying and overlapping durations, as the Administrator may select, over which the attainment of one or more performance criteria will be measured for the purpose of determining a grantee’s right to and the payment of a Performance Share Award, Restricted Stock Award or Deferred Stock Award. Each such period shall not be less than three months.

 

Restricted Stock Award ” means Awards granted pursuant to Section 7.

 

Section 409A ” means Section 409A of the Code and the regulations and other guidance promulgated thereunder.

 

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“Separation Grants” means the initial Stock Options granted by the Company to certain executives and employees of the Company in connection with the Spin-Off which shall be granted on the eleventh Trading Day after the Distribution Date (with the first Trading Day being the Trading Day immediately after the Distribution Date).

 

“Spin-Off” shall have the meaning specified in the definition of Distribution Date.

 

Stock ” means the Common Stock, par value $.01 per share, of the Company, subject to adjustments pursuant to Section 3.

 

Stock Appreciation Right ” means any Award granted pursuant to Section 6.

 

Subsidiary ” means any corporation or other entity (other than the Company) in any unbroken chain of corporations or other entities beginning with the Company if each of the corporations or entities (other than the last corporation or entity in the unbroken chain) owns stock or other interests possessing 50 percent or more of the economic interest or the total combined voting power of all classes of stock or other interests in one of the other corporations or entities in the chain.

 

“Trading Day” means any day on which the Stock is traded on a national securities exchange, or, if a national securities exchange is not the principal trading market for the Stock, then on the principal securities exchange or securities market on which the Stock is then traded, provided that “Trading Day” shall not include any day on which the Stock is scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Stock is suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York time).

 

Unrestricted Stock Award ” means any Award granted pursuant to Section 9.

 

2.     ADMINISTRATION OF PLAN; ADMINISTRATOR AUTHORITY TO SELECT GRANTEES AND DETERMINE AWARDS

 

(a) Committee. The Plan shall be administered by either the Board or the Committee (in either case, the “ Administrator ”).

 

(b) Powers of Administrator. The Administrator shall have the power and authority to grant Awards consistent with the terms of the Plan, including the power and authority:

 

(i) to select the individuals to whom Awards may from time to time be granted;

 

(ii) to determine the time or times of grant, and the extent, if any, of Incentive Stock Options, Non-Qualified Stock Options, Stock Appreciation Rights, Restricted Stock Awards, Deferred Stock Awards, Unrestricted Stock Awards, Performance Share Awards and Dividend Equivalent Rights, or any combination of the foregoing, granted to any one or more grantees;

 

(iii) to determine the number of shares of Stock to be covered by any Award;

 

(iv) to determine and modify from time to time the terms and conditions, including restrictions, not inconsistent with the terms of the Plan, of any Award, which terms and conditions may differ among individual Awards and grantees, and to approve the form of written instruments evidencing the Awards;

 

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(v) to accelerate at any time the exercisability or vesting of all or any portion of any Award; provided that, other than by reason of, or in connection with, any death, disability, retirement, employment termination (without cause or by the employee for good reason), Sale Event or Change of Control, the Administrator shall not accelerate or waive any restriction period applicable to any outstanding Restricted Stock Award, Deferred Stock Award or Performance Share Award granted to an employee beyond the minimum restriction periods set forth in Section 7(d), Section 8(a) and Section 11(a), respectively, or accelerate the exercisability or vesting of unvested Stock Options which in the aggregate, when combined with the aggregate number of shares of Stock issued pursuant to Section 9, exceed ten percent (10%) of the maximum number of shares of stock reserved and available for issuance under the Plan pursuant to Section 3(a);

 

(vi) subject to the provisions of Section 5(a)(ii), to extend at any time the period in which Stock Options may be exercised; and

 

(vii) at any time to adopt, alter and repeal such rules, guidelines and practices for administration of the Plan and for its own acts and proceedings as it shall deem advisable; to interpret the terms and provisions of the Plan and any Award (including related written instruments); to make all determinations it deems advisable for the administration of the Plan; to decide all disputes arising in connection with the Plan; and to otherwise supervise the administration of the Plan.

 

All decisions and interpretations of the Administrator shall be binding on all persons, including the Company and Plan grantees.

 

(c) Delegation of Authority to Grant Awards. The Administrator, in its discretion, may delegate to the Chief Executive Officer of the Company all or part of the Administrator’s authority and duties with respect to the granting of Awards at Fair Market Value, to individuals who are not subject to the reporting and other provisions of Section 16 of the Exchange Act or “covered employees” within the meaning of Section 162(m) of the Code. Any such delegation by the Administrator shall include a limitation as to the amount of Awards that may be granted during the period of the delegation and shall contain guidelines as to the determination of the exercise price of any Stock Option or Stock Appreciation Right, the conversion ratio or price of other Awards and the vesting criteria. The Administrator may revoke or amend the terms of a delegation at any time but such action shall not invalidate any prior actions of the Administrator’s delegate or delegates that were consistent with the terms of the Plan.

 

(d) Indemnification. Neither the Board nor the Committee, nor any member of either or any delegatee thereof, shall be liable for any act, omission, interpretation, construction or determination made in good faith in connection with the Plan, and the members of the Board and the Committee (and any delegatee thereof) shall be entitled in all cases to indemnification and reimbursement by the Company in respect of any claim, loss, damage or expense (including, without limitation, reasonable attorneys’ fees) arising or resulting therefrom to the fullest extent permitted by law and/or under the Company’s organizational documents or any directors’ and officers’ liability insurance coverage which may be in effect from time to time and/or any indemnification agreement between such individual and the Company.

 

3.     STOCK ISSUABLE UNDER THE PLAN; MERGERS; SUBSTITUTION

 

(a)(1) Stock Issuable. Subject to adjustment as provided in Section 3(b), the last paragraph of this Section 3(a) and any other applicable provisions hereof, the maximum number of shares of Stock reserved and available for issuance under the Plan shall be three million (3,000,000) shares of Stock. To the extent an Award (including any Adjustment Awards) expires or terminates or is surrendered or forfeited (other than by exercise), in whole or in part, the shares subject to such Award or portion thereof so forfeited, expired, terminated or surrendered again will become available for future grant or sale under the Plan. Should the exercise price of an Option be paid with shares underlying such Option, then the authorized reserve of shares under the Plan shall be reduced by the gross number of shares for which that Option is exercised, and not by the net number of shares issued under the exercised Option. If shares otherwise issuable under the Plan are withheld by the Company in satisfaction of the withholding taxes incurred in connection with an Award, then the number of shares available for issuance under the Plan shall be reduced by the gross number of shares issuable under the Award, calculated in each instance prior to any such share withholding. In addition, upon exercise of Stock Appreciation Rights, the gross number of shares exercised shall be deducted from the total number of shares remaining available for issuance under the Plan. Shares of Stock may be issued up to such maximum number pursuant to any type or types of Award; provided, however, that Stock Options or Stock Appreciation Rights with respect to no more than 1,000,000 shares of Stock may be granted to any one individual grantee during any one calendar year period. The shares available for issuance under the Plan may be authorized but unissued shares of Stock or shares of Stock reacquired by the Company and held in its treasury.

 

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(a)(2) Automatic Share Reserve Increase . The maximum number of shares of Stock available for grant and issuance under the Plan shall be increased on January 1, of each of the ten (10) calendar years during the term of the Plan, by four percent (4.0%) of the number of Shares issued and outstanding on the date of adoption of the Plan.

 

(a)(3) Adjustment Awards Increase. Additionally, the Board shall have the express authority, without any further approval required by the stockholders of the Company, to increase the maximum number of shares of Stock available for grant and issuance under the Plan in an amount equal to that number which enables the Company to issue the full, amount of Adjustment Awards described in Section 4 hereof, provided that in no event shall the maximum aggregate number of shares of Stock available for grant and issuance under the Plan, taking into account the total number of Adjustment Awards issued, exceed forty percent (40.0%) of the number of Shares issued and outstanding as of the date of adoption of the Plan.

 

(b) Changes in Stock . Subject to Section 3(c) hereof, if, as a result of any reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar change in the Company’s capital stock, the outstanding shares of Stock are increased or decreased or are exchanged for a different number or kind of shares or other securities of the Company, or additional shares or new or different shares or other securities of the Company or other non-cash assets are distributed with respect to such shares of Stock or other securities, or, if, as a result of any merger or consolidation, sale of all or substantially all of the assets of the Company, the outstanding shares of Stock are converted into or exchanged for a different number or kind of securities of the Company or any successor entity (or a parent or subsidiary thereof), the Administrator shall make an appropriate or proportionate adjustment in (i) the maximum number of shares reserved for issuance under the Plan, including the maximum number of shares that may be issued in the form of Unrestricted Stock Awards, Restricted Stock Awards or Performance Share Awards, (ii) the number of Stock Options or Stock Appreciation Rights that can be granted to any one individual grantee and the maximum number of shares that may be granted under a Performance-based Award, (iii) the number and kind of shares or other securities subject to any then outstanding Awards under the Plan, (iv) the repurchase price per share subject to each outstanding Restricted Stock Award, and (v) the price for each share subject to any then outstanding Stock Options and Stock Appreciation Rights under the Plan, without changing the aggregate exercise price (i.e., the exercise price multiplied by the number of Stock Options and Stock Appreciation Rights) as to which such Stock Options and Stock Appreciation Rights remain exercisable in a manner that will trigger tax under Section 409A. The adjustment by the Administrator shall be final, binding and conclusive. No fractional shares of Stock shall be issued under the Plan resulting from any such adjustment, but the Administrator in its discretion may make a cash payment in lieu of fractional shares.

 

The Administrator shall also adjust the number of shares subject to outstanding Awards and the exercise price and the terms of outstanding Awards to take into consideration material changes in accounting practices or principles, extraordinary dividends, acquisitions or dispositions of stock or property or any other event if it is determined by the Administrator that such adjustment is appropriate to avoid distortion in the operation of the Plan, provided that no such adjustment shall be made in the case of an Incentive Stock Option, without the consent of the grantee, if it would constitute a modification, extension or renewal of the Option within the meaning of Section 424(h) of the Code.

 

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(c) Mergers and Other Transactions . In the case of and subject to the consummation of (i) the dissolution or liquidation of the Company, (ii) the sale of all or substantially all of the assets of the Company on a consolidated basis to an unrelated person or entity, (iii) a merger, reorganization or consolidation in which the outstanding shares of Stock are converted into or exchanged for a different kind of securities of the successor entity and the holders of the Company’s outstanding voting power immediately prior to such transaction do not own a majority of the outstanding voting power of the successor entity immediately upon completion of such transaction, or (iv) the sale of all of the Stock of the Company to an unrelated person or entity (in each case, a “ Sale Event ”), all Options and Stock Appreciation Rights that are not exercisable immediately prior to the effective time of the Sale Event shall become fully exercisable as of the effective time of the Sale Event and all other Awards with conditions and restrictions relating solely to the passage of time and continued employment shall become fully vested and nonforfeitable as of the effective time of the Sale Event, except as the Administrator may otherwise specify with respect to particular Awards. Upon the effective time of the Sale Event, the Plan and all outstanding Awards granted hereunder shall terminate, unless provision is made in connection with the Sale Event in the sole discretion of the parties thereto for the assumption or continuation of Awards theretofore granted by the successor entity, or the substitution of such Awards with new Awards of the successor entity or parent thereof, with appropriate adjustment as to the number and kind of shares and, if appropriate, the per share exercise prices, as such parties shall agree (after taking into account any acceleration hereunder). In the event of such termination, each grantee shall be permitted, within a specified period of time prior to the consummation of the Sale Event as determined by the Administrator, to exercise all outstanding Options and Stock Appreciation Rights held by such grantee, including those that will become exercisable upon the consummation of the Sale Event; provided, however, that the exercise of Options and Stock Appreciation Rights not exercisable prior to the Sale Event shall be subject to the consummation of the Sale Event.

 

Notwithstanding anything to the contrary in this Section 3(c), in the event of a Sale Event pursuant to which holders of the Stock of the Company will receive upon consummation thereof a cash payment for each share surrendered in the Sale Event, the Company shall have the right, but not the obligation, to make or provide for a cash payment to the grantees holding Options and Stock Appreciation Rights, in exchange for the cancellation thereof, in an amount equal to the difference between (A) the value as determined by the Administrator of the consideration payable per share of Stock pursuant to the Sale Event (the “Sale Price”) times the number of shares of Stock subject to outstanding Options and Stock Appreciation Rights (to the extent then exercisable at prices not in excess of the Sale Price) and (B) the aggregate exercise price of all such outstanding Options and Stock Appreciation Rights.

 

(d) Substitute Awards. The Administrator may grant Awards under the Plan in substitution for stock and stock based awards held by employees, directors or other key persons of another corporation in connection with the merger or consolidation of the employing corporation with the Company or a Subsidiary or the acquisition by the Company or a Subsidiary of property or stock of the employing corporation. The Administrator may direct that the substitute awards be granted on such terms and conditions as the Administrator considers appropriate in the circumstances. Any substitute Awards granted under the Plan shall not count against the share limitation set forth in Section 3(a).

 

4.     ELIGIBILITY

 

Grantees under the Plan will be such full or part-time officers and other employees, Non-Employee Directors and key persons (including consultants and prospective employees) of the Company and its Subsidiaries as are selected from time to time by the Administrator in its sole discretion.

 

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Additionally, the Company is authorized to issue Awards (“Adjustment Awards”) under the Plan in connection with the equitable adjustment by HBIO of certain stock options, deferred stock awards, restricted stock awards, performance share awards and other equity-based awards previously granted by HBIO (collectively, the “HBIO Awards”) to reflect the Company stock dividend on HBIO Awards. Notwithstanding any other provision of the Plan to the contrary, the number of shares subject to an Adjustment Award and other terms and conditions relating thereto, including, but not limited to option exercise prices, shall be equitable and determined by the Committee (a) in accordance with the provisions and formulas for the equity adjustment of HBIO Awards that are set forth in the Separate and Distribution Agreement entered into by and between the Company and HBIO; and (b) in an amount that will not cause the aggregate number of shares of Stock available for grant and issuance under the Plan (as set forth in Section 3(a)(3) hereof) to be exceeded.

 

Notwithstanding anything to the contrary contained herein or in any Award (including any Adjustment Award), for purposes of exercisability, vesting and the post-termination exercise periods applicable to the Adjustment Awards, continued employment with, or service to, HBIO (or its subsidiaries) or the Company (or its subsidiaries) is considered to be continued employment with, and service to, the other, provided that the failure to exercise Incentive Stock Options within the applicable deadline following any separation from service from the Company shall cause such options to be treated thereafter as Non-Qualified Stock Options.

 

5.     STOCK OPTIONS

 

Any Stock Option granted under the Plan shall be in such form as the Administrator may from time to time approve.

 

Stock Options granted under the Plan may be either Incentive Stock Options or Non-Qualified Stock Options. Incentive Stock Options may be granted only to employees of the Company or any Subsidiary that is a “subsidiary corporation” within the meaning of Section 424(f) of the Code. To the extent that any Option does not qualify as an Incentive Stock Option, it shall be deemed a Non-Qualified Stock Option.

 

(a) Stock Options Granted to Employees and Key Persons. The Administrator in its discretion may grant Stock Options to eligible employees and key persons of the Company or any Subsidiary. Stock Options granted pursuant to this Section 5(a) shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Administrator shall deem desirable. If the Administrator so determines, Stock Options may be granted in lieu of cash compensation at the optionee’s election, subject to such terms and conditions as the Administrator may establish.

 

(i) Exercise Price. The exercise price per share for the Stock covered by a Stock Option granted pursuant to this Section 5(a) shall be determined by the Administrator at the time of grant but shall not be less than 100 percent of the Fair Market Value on the date of grant. If an employee owns or is deemed to own (by reason of the attribution rules of Section 424(d) of the Code) more than 10 percent of the combined voting power of all classes of stock of the Company or any parent or subsidiary corporation and an Incentive Stock Option is granted to such employee, the option price of such Incentive Stock Option shall be not less than 110 percent of the Fair Market Value on the grant date.

 

(ii) Option Term. The term of each Stock Option shall be fixed by the Administrator, but no Stock Option shall be exercisable more than 10 years after the date the Stock Option is granted. If an employee owns or is deemed to own (by reason of the attribution rules of Section 424(d) of the Code) more than 10 percent of the combined voting power of all classes of stock of the Company or any parent or subsidiary corporation and an Incentive Stock Option is granted to such employee, the term of such Stock Option shall be no more than five years from the date of grant.

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(iii) Exercisability; Rights of a Stockholder. Stock Options shall become exercisable at such time or times, whether or not in installments, as shall be determined by the Administrator at or after the grant date. Subject to Section 2(b)(v), the Administrator may at any time accelerate the exercisability of all or any portion of any Stock Option. An optionee shall have the rights of a stockholder only as to shares acquired upon the exercise of a Stock Option and not as to unexercised Stock Options.

 

(iv) Method of Exercise. Stock Options may be exercised in whole or in part, by giving written notice of exercise to the Company, specifying the number of shares to be purchased. Payment of the purchase price may be made by one or more of the following methods to the extent provided in the Option Award agreement:

 

(1) In cash, by certified or bank check or other instrument acceptable to the Administrator;

 

(2) Through the delivery (or attestation to the ownership) of shares of Stock that have been purchased by the optionee on the open market or that have been beneficially owned by the optionee for at least six months and are not then subject to restrictions under any Company plan. Such surrendered shares shall be valued at Fair Market Value on the exercise date; or

 

(3) By the optionee delivering to the Company a properly executed exercise notice together with irrevocable instructions to a broker to promptly deliver to the Company cash or a check payable and acceptable to the Company for the purchase price; provided that in the event the optionee chooses to pay the purchase price as so provided, the optionee and the broker shall comply with such procedures and enter into such agreements of indemnity and other agreements as the Administrator shall prescribe as a condition of such payment procedure.

 

Payment instruments will be received subject to collection. The transfer to the optionee on the records of the Company or of the transfer agent of delivery of certificates representing the shares of Stock to be purchased pursuant to the exercise of a Stock Option will be contingent upon receipt from the optionee (or a purchaser acting in his stead in accordance with the provisions of the Stock Option) by the Company of the full purchase price for such shares and the fulfillment of any other requirements contained in the Option Award agreement or applicable provisions of laws (including the satisfaction of any withholding taxes that the Company is obligated to withhold with respect to the optionee). In the event an optionee chooses to pay the purchase price by previously-owned shares of Stock through the attestation method, the number of shares of Stock transferred to the optionee upon the exercise of the Stock Option shall be net of the number of attested shares. In the event that the Company establishes, for itself or using the services of a third party, an automated system for the exercise of Stock Options, such as a system using an internet website or interactive voice response, then the paperless exercise of Stock Options may be permitted through the use of such an automated system.

 

(v) Annual Limit on Incentive Stock Options. To the extent required for “incentive stock option” treatment under Section 422 of the Code, the aggregate Fair Market Value (determined as of the time of grant) of the shares of Stock with respect to which Incentive Stock Options granted under this Plan and any other plan of the Company or its parent and subsidiary corporations become exercisable for the first time by an optionee during any calendar year shall not exceed $100,000. To the extent that any Stock Option exceeds this limit, it shall constitute a Non-Qualified Stock Option.

 

(b) Stock Options Granted to Non-Employee Directors.

 

(i) Automatic and Other Grant of Options.

 

(1) Each person who is a Non-Employee Director on the Distribution Date shall be granted, on the eleventh Trading Day after the Distribution Date (with the first Trading Day being the Trading Day immediately after the Distribution Date), a Non-Qualified Stock Option to acquire 25,000 shares of Stock.

 

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(2) Each Non-Employee Director who is first elected to serve as a Director after the Distribution Date, shall be granted, on the fifth business day after such election, a Non-Qualified Stock Option to acquire 25,000 shares of Stock (provided that if such election is made prior to the fifth Trading Day after the Distribution Date, then such grant date shall be the eleventh Trading Day after the Distribution Date).

 

(3) The exercise price per share for the Stock covered by a Stock Option granted under this Section 5(b) shall be equal to the Fair Market Value of the Stock on the date the Stock Option is granted.

 

(4) The Administrator, in its discretion, may also grant additional Non-Qualified Stock Options to Non-Employee Directors. Any such grant may vary among individual Non-Employee Directors.

 

(ii) Exercise; Termination.

 

(1) Unless otherwise determined by the Administrator, an Option granted under Section 5(b) shall vest and be exercisable as to all of the shares of Stock covered thereby as of the first anniversary of the grant date. An Option issued under this Section 5(b) shall not be exercisable after the expiration of ten years from the date of grant.

 

(2) Options granted under this Section 5(b) may be exercised only by written notice to the Company specifying the number of shares to be purchased. Payment of the full purchase price of the shares to be purchased may be made by one or more of the methods specified in Section 5(a)(iv). An optionee shall have the rights of a stockholder only as to shares acquired upon the exercise of a Stock Option and not as to unexercised Stock Options.

 

(c) Non-transferability of Options. No Stock Option shall be transferable by the optionee otherwise than by will or by the laws of descent and distribution and all Stock Options shall be exercisable, during the optionee’s lifetime, only by the optionee, or by the optionee’s legal representative or guardian in the event of the optionee’s incapacity. Notwithstanding the foregoing, the Administrator, in its sole discretion, may provide in the Award agreement regarding a given Option that the optionee may transfer his Non-Qualified Stock Options to members of his immediate family, to trusts for the benefit of such family members, or to partnerships in which such family members are the only partners; provided that the transferee agrees in writing with the Company to be bound by all of the terms and conditions of this Plan and the applicable Option.

 

6.     STOCK APPRECIATION RIGHTS.

 

(a) Nature of Stock Appreciation Rights. A Stock Appreciation Right is an Award entitling the recipient to receive shares of Stock having a value equal to the excess of the Fair Market Value of the Stock on the date of exercise over the exercise price Stock Appreciation Right, which price shall not be less than 100 percent of the Fair Market Value of the Stock on the date of grant multiplied by the number of shares of Stock with respect to which the Stock Appreciation Right shall have been exercised.

 

(b) Grant and Exercise of Stock Appreciation Rights. Stock Appreciation Rights may be granted by the Administrator independently of any Stock Option granted pursuant to Section 5 of the Plan.

 

(c) Terms and Conditions of Stock Appreciation Rights. Stock Appreciation Rights shall be subject to such terms and conditions as shall be determined from time to time by the Administrator; provided that during the grantee’s lifetime all Stock Appreciation Rights shall be exercisable only by the grantee or the grantee’s legal representative.

 

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(d) Stock Appreciation Rights Term.  The term of each Stock Appreciation Right shall be fixed by the Administrator, but no Stock Appreciation Right shall be exercisable more than ten years after the date the Stock Appreciation Right is granted.

 

7.     RESTRICTED STOCK AWARDS

 

(a) Nature of Restricted Stock Awards. A Restricted Stock Award is an Award entitling the recipient to acquire, at such purchase price as determined by the Administrator, shares of Stock subject to such restrictions and conditions as the Administrator may determine at the time of grant (“Restricted Stock”). Conditions may be based on continuing employment (or other service relationship) and/or achievement of pre-established performance goals and objectives. The grant of a Restricted Stock Award is contingent on the grantee executing the Restricted Stock Award agreement. The terms and conditions of each such agreement shall be determined by the Administrator, and such terms and conditions may differ among individual Awards and grantees.

 

(b) Rights as a Stockholder. Upon execution of a written instrument setting forth the Restricted Stock Award and payment of any applicable purchase price, a grantee shall have the rights of a stockholder with respect to the voting of the Restricted Stock, subject to such conditions contained in the written instrument evidencing the Restricted Stock Award. Unless the Administrator shall otherwise determine, (i) uncertificated Restricted Stock shall be accompanied by a notation on the records of the Company or the transfer agent to the effect that they are subject to forfeiture until such Restricted Stock are vested as provided in Section 7(d) below, and (ii) certificated Restricted Stock shall remain in the possession of the Company until such Restricted Stock is vested as provided in Section 7(d) below, and the grantee shall be required, as a condition of the grant, to deliver to the Company a stock power endorsed in blank.

 

(c) Restrictions. Restricted Stock may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed of except as specifically provided herein or in the Restricted Stock Award agreement. If a grantee’s employment (or other service relationship) with the Company and its Subsidiaries terminates for any reason, any Restricted Stock that has not vested at the time of termination shall automatically and without any requirement of notice to such grantee from or other action by or on behalf of, the Company be deemed to have been reacquired by the Company at its original purchase price (if any) from such grantee or such grantee’s legal representative simultaneously with such termination of employment (or other service relationship), and thereafter shall cease to represent any ownership of the Company by the grantee or rights of the grantee as a stockholder. Following such deemed reacquisition of unvested Restricted Stock that are represented by physical certificates, a grantee shall surrender such certificates to the Company upon request without consideration.

 

(d) Vesting of Restricted Stock. The Administrator at the time of grant shall specify the date or dates and/or the attainment of pre-established performance goals, objectives and other conditions on which the non-transferability of the Restricted Stock and the Company’s right of repurchase or forfeiture shall lapse. Notwithstanding the foregoing, in the event that any such Restricted Stock granted to an employee shall have a performance-based goal, the restriction period with respect to such shares shall not be less than one year, and in the event any such Restricted Stock granted to an employee shall have a time-based restriction, the restriction period with respect to such shares shall not be less than three years; provided, however, that Restricted Stock with a time-based restriction may become vested incrementally over such three-year period. The minimum vesting requirements set forth in the foregoing sentence will not apply to Restricted Stock granted to a Non-Employee Director. Subsequent to such date or dates and/or the attainment of such pre-established performance goals, objectives and other conditions, the shares on which all restrictions have lapsed shall no longer be Restricted Stock and shall be deemed “vested.” Except as may otherwise be provided by the Administrator either in the Award agreement or, subject to Section 17 below, in writing after the Award agreement is issued, a grantee’s rights in any shares of Restricted Stock that have not vested shall automatically terminate upon the grantee’s termination of employment (or other service relationship) with the Company and its Subsidiaries and such shares shall be subject to the Company’s right of repurchase as provided in Section 7(c) above.

 

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(e) Waiver, Deferral and Reinvestment of Dividends. The Restricted Stock Award agreement may require or permit the immediate payment, waiver, deferral or investment of dividends paid on the Restricted Stock.

 

8.     DEFERRED STOCK AWARDS

 

(a) Nature of Deferred Stock Awards. A Deferred Stock Award is an Award of phantom stock units to a grantee, subject to restrictions and conditions as the Administrator may determine at the time of grant. Conditions may be based on continuing employment (or other service relationship) and/or achievement of pre-established performance goals and objectives. The grant of a Deferred Stock Award is contingent on the grantee executing the Deferred Stock Award agreement. The terms and conditions of each such agreement shall be determined by the Administrator, and such terms and conditions may differ among individual Awards and grantees. Notwithstanding the foregoing, in the event that any such Deferred Stock Award granted to an employee shall have a performance-based goal, the restriction period with respect to such award shall not be less than one year, and in the event any such Deferred Stock Award granted to an employee shall have a time-based restriction, the restriction period with respect to such award shall not be less than three years; provided, however, that any such Deferred Stock Award with a time-based restriction may become vested incrementally over such three-year period. The minimum vesting requirements set forth in the foregoing sentence will not apply to Deferred Stock Awards granted to Non-Employee Directors. At the end of the deferral period, the Deferred Stock Award, to the extent vested, shall be paid to the grantee in the form of shares of Stock. To the extent that a Deferred Stock Award is subject to Section 409A, it may contain such additional terms and conditions as the Administrator shall determine in its sole discretion in order for such Award to comply with the requirements of Section 409A.

 

(b) Election to Receive Deferred Stock Awards in Lieu of Compensation. The Administrator may, in its sole discretion, permit a grantee to elect to receive a portion of the cash compensation or Restricted Stock Award otherwise due to such grantee in the form of a Deferred Stock Award. Any such election shall be made in writing and shall be delivered to the Company no later than the date specified by the Administrator and in accordance with Section 409A and such other rules and procedures established by the Administrator. Any such future cash compensation that the grantee elects to defer shall be converted to a fixed number of phantom stock units based on the Fair Market Value of Stock on the date the compensation would otherwise have been paid to the grantee if such payment had not been deferred as provided herein. The Administrator shall have the sole right to determine whether and under what circumstances to permit such elections and to impose such limitations and other terms and conditions thereon as the Administrator deems appropriate.

 

(c) Rights as a Stockholder. During the deferral period, a grantee shall have no rights as a stockholder; provided, however, that the grantee may be credited with Dividend Equivalent Rights with respect to the phantom stock units underlying his Deferred Stock Award, subject to such terms and conditions as the Administrator may determine.

 

(d) Restrictions. A Deferred Stock Award may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed of during the deferral period.

 

(e) Termination. Except as may otherwise be provided by the Administrator either in the Award agreement or, subject to Section 17 below, in writing after the Award agreement is issued, a grantee’s right in all Deferred Stock Awards that have not vested shall automatically terminate upon the grantee’s termination of employment (or cessation of service relationship) with the Company and its Subsidiaries for any reason.

 

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9.     UNRESTRICTED STOCK AWARDS

 

The Administrator may, in its sole discretion, grant (or sell at par value or such higher purchase price determined by the Administrator) an Unrestricted Stock Award to any grantee pursuant to which such grantee may receive shares of Stock free of any restrictions (“Unrestricted Stock”) under the Plan. Unrestricted Stock Awards may be granted in respect of past services or other valid consideration, or in lieu of cash compensation due to such grantee. The aggregate number of shares of Stock issuable pursuant to this Section 9, when combined with the number of shares of underlying unvested Stock Options accelerated pursuant to Section 2(b)(v) other than by reason of, or in connection with, any death, disability, retirement, employment termination (without cause or by the employee for good reason), Sale Event or Change of Control, is limited to ten percent (10%) of the maximum number of shares of Stock reserved and available for issuance under the Plan pursuant to Section 3(a).

 

10.     CASH-BASED AWARDS

 

The Administrator may, in its sole discretion, grant Cash-Based Awards to any grantee in such number or amount and upon such terms, and subject to such conditions, as the Administrator shall determine at the time of grant. The Administrator shall determine the maximum duration of the Cash-Based Award, the amount of cash to which the Cash-Based Award pertains, the conditions upon which the Cash-Based Award shall become vested or payable, and such other provisions as the Administrator shall determine. Each Cash-Based Award shall specify a cash-denominated payment amount, formula or payment ranges as determined by the Administrator. Payment, if any, with respect to a Cash-Based Award shall be made in accordance with the terms of the Award and, if such Award is deemed deferred compensation, Section 15 hereof, and may be made in cash or in shares of Stock, as the Administrator determines.

 

11.     PERFORMANCE SHARE AWARDS

 

(a) Nature of Performance Share Awards. A Performance Share Award is an Award entitling the recipient to acquire shares of Stock upon the attainment of specified performance goals. The Administrator may make Performance Share Awards independent of or in connection with the granting of any other Award under the Plan. The Administrator in its sole discretion shall determine whether and to whom Performance Share Awards shall be made, the performance goals, the periods during which performance is to be measured, and all other limitations and conditions. Notwithstanding the foregoing, any Performance Share Award granted to an employee shall have a restriction period of not less than one year. The minimum vesting requirements set forth in the foregoing sentence will not apply to Performance Share Awards granted to Non-Employee Directors.

 

(b) Rights as a Stockholder. A grantee receiving a Performance Share Award shall have the rights of a stockholder only as to shares actually received by the grantee under the Plan and not with respect to shares subject to the Award but not actually received by the grantee. A grantee shall be entitled to receive a stock certificate evidencing the acquisition of shares of Stock under a Performance Share Award only upon satisfaction of all conditions specified in the Performance Share Award agreement (or in a performance plan adopted by the Administrator).

 

(c) Termination. Except as may otherwise be provided by the Administrator either in the Award agreement or, subject to Section 17 below, in writing after the Award agreement is issued, a grantee’s rights in all Performance Share Awards shall automatically terminate upon the grantee’s termination of employment (or cessation of service relationship) with the Company and its Subsidiaries for any reason.

 

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12.     PERFORMANCE-BASED AWARDS TO COVERED EMPLOYEES

 

Notwithstanding anything to the contrary contained herein, if any Restricted Stock Award, Deferred Stock Award, Cash-Based Award or Performance Share Award granted to a Covered Employee is intended to qualify as “Performance-based Compensation” under Section 162(m) of the Code and the regulations promulgated thereunder (a “ Performance-Based Award ”), such Award shall comply with the provisions set forth below:

 

(a) Performance Criteria. The Administrator shall define in an objective fashion the manner of calculating the Performance Criteria it selects to use for any Performance Cycle. Depending on the Performance Criteria used to establish such Performance Goals, the Performance Goals may be expressed in terms of overall Company performance or the performance of a division, business unit, or an individual. The Administrator, in its discretion, may adjust or modify the calculation of Performance Goals for such Performance Cycle in order to prevent dilution or enlargement of the rights of an individual (x) in the event of, or in anticipation of, any unusual or extraordinary corporate item, transaction, event or development, (y) in recognition of, or in anticipation of, any either unusual or nonrecurring events affecting the Company, or the financial statements of the Company, or (z) in response to, or in anticipation of, changes in applicable laws, regulations, accounting principles, or business conditions provided however, that the Administrator may not exercise such discretion in a manner that would increase the Performance-Based Award granted to a Covered Employee. The performance criteria used in performance goals governing Performance-based Awards granted to Covered Employees may include any or all of the following: (i) return on equity, assets, capital or investment; (ii) pre-tax or after-tax profit levels; (iii) cash flow, funds from operations or similar measure; (iv) total shareholder return; (v) changes in the market price of the Stock; (vi) revenues, sales or market share; (vii) net income (loss) or earnings per share; (viii) expense margins or operating efficiency (including budgeted spending limits) or (ix) project development milestones, any of which may be measured either in absolute terms or as compared to any incremental increase or as compared to results of a peer group and, for financial measures, may be based on numbers calculated in accordance with U.S. generally accepted accounting principles or on an as adjusted basis.

 

(b) Grant of Performance-based Awards. With respect to each Performance-based Award granted to a Covered Employee, the Committee shall select, within the first 90 days of a Performance Cycle (or, if shorter, within the maximum period allowed under Section 162(m) of the Code) the performance criteria for such grant, and the achievement targets with respect to each performance criterion (including a threshold level of performance below which no amount will become payable with respect to such Award). Each Performance-based Award will specify the amount payable, or the formula for determining the amount payable, upon achievement of the various applicable performance targets. The performance criteria established by the Committee may be (but need not be) different for each Performance Cycle and different goals may be applicable to Performance-based Awards to different Covered Employees.

 

(c) Payment of Performance-based Awards. Following the completion of a Performance Cycle, the Committee shall meet to review and certify in writing whether, and to what extent, the performance criteria for the Performance Cycle have been achieved and, if so, to also calculate and certify in writing the amount of the Performance-based Awards earned for the Performance Cycle. The Committee shall then determine the actual size of each Covered Employee’s Performance-based Award, and, in doing so, may reduce or eliminate the amount of the Performance-based Award for a Covered Employee if, in its sole judgment, such reduction or elimination is appropriate.

 

(d) Maximum Award Payable. The maximum Performance-based Award payable to any one Covered Employee under the Plan for a Performance Cycle is 1,000,000 Shares (subject to adjustment as provided in Section 3(b) hereof) or $2,000,000 in the case of a Performance-based Award that is a Cash-Based Award; provided, however, that such limits shall not otherwise limit the Administrator’s ability to grant awards not intended to qualify as Performance-based Awards.

 

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13.     DIVIDEND EQUIVALENT RIGHTS

 

(a) Dividend Equivalent Rights. A Dividend Equivalent Right is an Award entitling the grantee to receive credits based on cash dividends that would have been paid on the shares of Stock specified in the Dividend Equivalent Right (or other award to which it relates) if such shares had been issued to and held by the grantee. A Dividend Equivalent Right may be granted hereunder to any grantee only as a component of Unrestricted Stock Awards, Restricted Stock Awards, Deferred Stock Awards or Performance Share Awards. The terms and conditions of Dividend Equivalent Rights shall be specified in the Award agreement. Dividend equivalents credited to the holder of a Dividend Equivalent Right may be paid currently or may be deemed to be reinvested in additional shares of Stock, which may thereafter accrue additional equivalents. Any such reinvestment shall be at Fair Market Value on the date of reinvestment or such other price as may then apply under a dividend reinvestment plan sponsored by the Company, if any. Dividend Equivalent Rights may be settled in cash or shares of Stock or a combination thereof, in a single installment or installments. A Dividend Equivalent Right granted as a component of another Award may provide that such Dividend Equivalent Right shall be settled upon exercise, settlement, or payment of, or lapse of restrictions on, such other award, and that such Dividend Equivalent Right shall expire or be forfeited or annulled under the same conditions as such other award. A Dividend Equivalent Right granted as a component of another Award may also contain terms and conditions different from such other award.

 

(b) Interest Equivalents. Any Award under this Plan that is settled in whole or in part in cash on a deferred basis may provide in the grant for interest equivalents to be credited with respect to such cash payment. Interest equivalents may be compounded and shall be paid upon such terms and conditions as may be specified by the grant.

 

(c) Termination. Except as may otherwise be provided by the Administrator either in the Award agreement or, subject to Section 17 below, in writing after the Award agreement is issued, a grantee’s rights in all Dividend Equivalent Rights or interest equivalents shall automatically terminate upon the grantee’s termination of employment (or cessation of service relationship) with the Company and its Subsidiaries for any reason.

 

14.     TAX WITHHOLDING

 

(a) Payment by Grantee. Each grantee shall, no later than the date as of which the value of an Award or of any Stock or other amounts received thereunder first becomes includable in the gross income of the grantee for Federal income tax purposes, pay to the Company, or make arrangements satisfactory to the Administrator regarding payment of, any Federal, state, or local taxes of any kind required by law to be withheld by the Company with respect to such income. The Company and its Subsidiaries shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the grantee. The Company’s obligation to deliver evidence of book entry (or stock certificates) to any grantee is subject to and conditioned on tax withholding obligations being satisfied by the grantee.

 

(b) Payment in Stock. Subject to approval by the Administrator, a grantee may elect to have the Company’s minimum required tax withholding obligation satisfied, in whole or in part, by (i) authorizing the Company to withhold from shares of Stock to be issued pursuant to any Award a number of shares with an aggregate Fair Market Value (as of the date the withholding is effected) that would satisfy the withholding amount due, or (ii) transferring to the Company shares of Stock owned by the grantee with an aggregate Fair Market Value (as of the date the withholding is effected) that would satisfy the withholding amount due.

 

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15.     SECTION 409A AWARDS.

 

To the extent that any Award is determined to constitute “nonqualified deferred compensation” within the meaning of Section 409A (a “ 409A Award ”), the Award shall be subject to such additional rules and requirements as specified by the Administrator from time to time in order to comply with Section 409A. In this regard, if any amount under a 409A Award is payable upon a “separation from service” (within the meaning of Section 409A) to a grantee who is then considered a “specified employee” (within the meaning of Section 409A), then no such payment shall be made prior to the date that is the earlier of (i) six months and one day after the grantee’s separation from service, or (ii) the grantee’s death, but only to the extent such delay is necessary to prevent such payment from being subject to interest, penalties and/or additional tax imposed pursuant to Section 409A. Further, the settlement of any such Award may not be accelerated except to the extent permitted by Section 409A.

 

16.     TRANSFER, LEAVE OF ABSENCE, ETC.

 

For purposes of the Plan, the following events shall not be deemed a termination of employment:

 

(a) a transfer to the employment of the Company from a Subsidiary or from the Company to a Subsidiary, or from one Subsidiary to another; or

 

(b) an approved leave of absence for military service or sickness, or for any other purpose approved by the Company, if the employee’s right to re-employment is guaranteed either by a statute or by contract or under the policy pursuant to which the leave of absence was granted or if the Administrator otherwise so provides in writing.

 

17.     AMENDMENTS AND TERMINATION

 

The Board may, at any time, amend or discontinue the Plan and the Administrator may, at any time, amend or cancel any outstanding Award for the purpose of satisfying changes in law or for any other lawful purpose, but no such action shall adversely affect rights under any outstanding Award without the holder’s consent. Except as provided in Section 3(b) or 3(c), in no event may the Administrator exercise its discretion to reduce the exercise price of outstanding Stock Options or Stock Appreciation Rights or effect repricing through cancellation and regrants or by exchanging a Stock Option or Stock Appreciation Right for any other Award, without stockholder approval. If and to the extent determined by the Administrator to be required by the Code to ensure that Incentive Stock Options granted under the Plan are qualified under Section 422 of the Code or to ensure that compensation earned under Awards qualifies as performance-based compensation under Section 162(m) of the Code, if and to the extent intended to so qualify, and to the extent required under the applicable rules of The NASDAQ Stock Market, or such other securities exchange or market system on which the Stock is then principally listed, Plan amendments shall be subject to approval by the Company stockholders entitled to vote at a meeting of stockholders. Nothing in this Section 17 shall limit the Administrator’s authority to take any action permitted pursuant to Section 3(c).

 

18.     STATUS OF PLAN

 

With respect to the portion of any Award that has not been exercised and any payments in cash, Stock or other consideration not received by a grantee, a grantee shall have no rights greater than those of a general creditor of the Company unless the Administrator shall otherwise expressly determine in connection with any Award or Awards. In its sole discretion, the Administrator may authorize the creation of trusts or other arrangements to meet the Company’s obligations to deliver Stock or make payments with respect to Awards hereunder, provided that the existence of such trusts or other arrangements is consistent with the foregoing sentence.

 

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19.     CHANGE OF CONTROL PROVISIONS

 

Upon the occurrence of a Change of Control as defined in this Section 19:

 

(a) Except as otherwise provided in the applicable Award agreement, each outstanding Stock Option and Stock Appreciation Right shall automatically become fully exercisable.

 

(b) Except as otherwise provided in the applicable Award Agreement, conditions and restrictions on each outstanding Restricted Stock Award, Deferred Stock Award and Performance Share Award which relate solely to the passage of time and continued employment will be removed. Performance or other conditions (other than conditions and restrictions relating solely to the passage of time and continued employment) will continue to apply unless otherwise provided in the applicable Award agreement.

 

(c) “ Change of Control ” shall mean the occurrence of any one of the following events:

 

(i) any “Person,” as such term is used in Sections 13(d) and 14(d) of the Act (other than the Parent, the Company, any of its Subsidiaries, or any trustee, fiduciary or other person or entity holding securities under any employee benefit plan or trust of the Company or any of its Subsidiaries), together with all “affiliates” and “associates” (as such terms are defined in Rule 12b-2 under the Exchange Act) of such person, shall become the “beneficial owner” (as such term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing twenty five percent (25%) or more of the combined voting power of the Company’s then outstanding securities having the right to vote in an election of the Company’s Board of Directors (“ Voting Securities ”) (in such case other than as a result of an acquisition of securities directly from the Company); or

 

(ii) persons who, as of the Effective Date, constitute the Company’s Board of Directors (the “ Incumbent Directors ”) cease for any reason, including, without limitation, as a result of a tender offer, proxy contest, merger or similar transaction, to constitute at least a majority of the Board; provided that any person becoming a director of the Company subsequent to the Effective Date shall be considered an Incumbent Director if such person’s election was approved by or such person was nominated for election by either (A) a vote of at least a majority of the Incumbent Directors or (B) a vote of at least a majority of the Incumbent Directors who are members of a nominating committee comprised, in the majority, of Incumbent Directors; but provided further, that any such person whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of members of the Board of Directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board, including by reason of agreement intended to avoid or settle any such actual or threatened contest or solicitation, shall not be considered an Incumbent Director; or

 

(iii) the consummation of a consolidation, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a “ Corporate Transaction ”); excluding, however, a Corporate Transaction in which the stockholders of the Company immediately prior to the Corporate Transaction, would, immediately after the Corporate Transaction, beneficially own (as such term is defined in Rule 13d-3 under the Act), directly or indirectly, shares representing in the aggregate more than 50 percent of the voting shares of the corporation issuing cash or securities in the Corporate Transaction (or of its ultimate parent corporation, if any); or

 

(iv) the approval by the stockholders of any plan or proposal for the liquidation or dissolution of the Company.

 

Notwithstanding the foregoing, a “Change of Control” shall not be deemed to have occurred for purposes of the foregoing clause (i) solely as the result of an acquisition of securities by the Company which, by reducing the number of shares of Voting Securities outstanding, increases the proportionate number of shares of Voting Securities beneficially owned by any person to 25 percent or more of the combined voting power of all then outstanding Voting Securities; provided, however, that if any person referred to in this sentence shall thereafter become the beneficial owner of any additional shares of Voting Securities (other than pursuant to a stock split, stock dividend, or similar transaction or as a result of an acquisition of securities directly from the Company) and immediately thereafter beneficially owns 25 percent or more of the combined voting power of all then outstanding Voting Securities, then a “Change of Control” shall be deemed to have occurred for purposes of the foregoing clause (i).

 

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20.     GENERAL PROVISIONS

 

(a) No Distribution; Compliance with Legal Requirements. The Administrator may require each person acquiring Stock pursuant to an Award to represent to and agree with the Company in writing that such person is acquiring the shares without a view to distribution thereof.

 

No shares of Stock shall be issued pursuant to an Award until all applicable securities law and other legal and stock exchange or similar requirements have been satisfied. The Administrator may require the placing of such stop-orders and restrictive legends on certificates for Stock and Awards as it deems appropriate.

 

The Plan, the granting and exercising of Awards hereunder, and any obligations of the Company under the Plan, shall be subject to all applicable federal, state and foreign country laws, rules and regulations, and to such approvals by any regulatory or governmental agency as may be required, and to any rules or regulations of any exchange on which the Stock is listed. The Company, in its discretion, may postpone the granting and exercising of Awards, the issuance or delivery of Stock under any Award or any other action permitted under the Plan to permit the Company, with reasonable diligence, to complete such stock exchange listing or registration or qualification of such Stock or other required action under any federal, state or foreign country law, rule or regulation and may require any grantee to make such representations and furnish such information as it may consider appropriate in connection with the issuance or delivery of Stock in compliance with applicable laws, rules and regulations. The Company shall not be obligated by virtue of any provision of the Plan to recognize the exercise of any Award or to otherwise sell or issue Stock in violation of any such laws, rules or regulations, and any postponement of the exercise or settlement of any Award under this provision shall not extend the term of such Awards. Neither the Company nor its directors or officers shall have any obligation or liability to a grantee with respect to any Award (or Stock issuable thereunder) that shall lapse because of such postponement.

 

(b) Delivery of Stock Certificates. Stock certificates to grantees under this Plan shall be deemed delivered for all purposes when the Company or a stock transfer agent of the Company shall have mailed such certificates in the United States mail, addressed to the grantee, at the grantee’s last known address on file with the Company. Uncertificated Stock shall be deemed delivered for all purposes when the Company or a Stock transfer agent of the Company shall have given to the grantee by electronic mail (with proof of receipt) or by United States mail, addressed to the grantee, at the grantee’s last known address on file with the Company, notice of issuance and recorded the issuance in its records (which may include electronic “book entry” records). Notwithstanding anything herein to the contrary, the Company shall not be required to issue or deliver any certificates evidencing shares of Stock pursuant to the exercise of any Award, unless and until the Administrator has determined, with advice of counsel (to the extent the Administrator deems such advice necessary or advisable), that the issuance and delivery of such certificates is in compliance with all applicable laws, regulations of governmental authorities and, if applicable, the requirements of any exchange on which the shares of Stock are listed, quoted or traded. All Stock certificates delivered pursuant to the Plan shall be subject to any stop-transfer orders and other restrictions as the Administrator deems necessary or advisable to comply with federal, state or foreign jurisdiction, securities or other laws, rules and quotation system on which the Stock is listed, quoted or traded. The Administrator may place legends on any Stock certificate to reference restrictions applicable to the Stock. In addition to the terms and conditions provided herein, the Administrator may require that an individual make such reasonable covenants, agreements, and representations as the Administrator, in its discretion, deems necessary or advisable in order to comply with any such laws, regulations, or requirements. The Administrator shall have the right to require any individual to comply with any timing or other restrictions with respect to the settlement or exercise of any Award, including a window-period limitation, as may be imposed in the discretion of the Administrator.

 

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(c) Stockholder Rights. Until Stock is deemed delivered in accordance with Section 20(b), and subject to the provisions of the applicable Award contained in the Plan and in an agreement evidencing such Award, no right to vote or receive dividends or any other rights of a stockholder will exist with respect to shares of Stock to be issued in connection with an Award, notwithstanding the exercise of a Stock Option or any other action by the grantee or any permitted transferee or designated beneficiary with respect to an Award.

 

(d) Other Compensation Arrangements; No Employment Rights. Nothing contained in this Plan shall prevent the Board from adopting other or additional compensation arrangements, including trusts, and such arrangements may be either generally applicable or applicable only in specific cases. The adoption of this Plan and the grant of Awards do not confer upon any employee any right to continued employment with the Company or any Subsidiary.

 

(e) Trading Policy Restrictions. Option exercises and other Awards under the Plan shall be subject to such Company’s insider trading policy, as in effect from time to time.

 

(f) Forfeiture of Awards under Sarbanes-Oxley Act. If the Company is required to prepare an accounting restatement due to the material noncompliance of the Company, as a result of misconduct, with any financial reporting requirement under the securities laws, then, to the extent required by law, any grantee who is one of the individuals subject to automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002 shall reimburse the Company for the amount of any Award received by such individual under the Plan during the 12-month period following the first public issuance or filing with the United States Securities and Exchange Commission, as the case may be, of the financial document embodying such financial reporting requirement.

 

(g) Designation of Beneficiary. Each grantee to whom an Award has been made under the Plan may designate a beneficiary or beneficiaries to exercise any Award or receive any payment under any Award payable on or after the grantee’s death. Any such designation shall be on a form provided for that purpose by the Administrator and shall not be effective until received by the Administrator. If no beneficiary has been designated by a deceased grantee, or if the designated beneficiaries have predeceased the grantee, the beneficiary shall be the grantee’s estate.

 

(h) No Constraint on Corporate Action . Nothing in this Plan shall be construed (i) to limit, impair or otherwise affect the Company’s right or power to make adjustments, reclassifications, reorganizations or changes of its capital or business structure, or to merge or consolidate, or dissolve, liquidate, sell or transfer all or any part of its business or assets, or (ii) to limit the right or power of the Company, or any Subsidiary, to take any action which such entity deems to be necessary or appropriate.

 

21.     EFFECTIVE DATE OF PLAN

 

This Plan shall become effective on the later of the approval by the holders of a majority of the votes cast at a meeting of stockholders at which a quorum is present or by written consent of the stockholders, or the Distribution Date immediately after the Distribution (the “Effective Date”). Subject to such approval by the stockholders and to the requirement that no Stock may be issued hereunder prior to such approval, Stock Options and other Awards may be granted hereunder on and after adoption of this Plan by the Board. No Incentive Stock Options may be granted under the Plan after the 10-year anniversary of the Effective Date or of the most recent prior date on which the Plan was approved by the Board (provided that the Plan was approved by stockholders within one year of such date) and no other Award may be granted under the Plan after the 10-year anniversary of the most recent prior date on which the Plan was approved by stockholders.  

 

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22.     GOVERNING LAW

 

This Plan and all Awards and actions taken hereunder shall be governed by, and construed in accordance with, the laws of the State of Delaware, applied without regard to conflict of law principles.

 

DATE APPROVED BY BOARD OF DIRECTORS:    

 

DATE APPROVED BY STOCKHOLDERS:    

 

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EXHIBIT 10.9

 

HARVARD APPARATUS REGENERATIVE TECHNOLOGY, INC.

EMPLOYEE STOCK PURCHASE PLAN

 

The purpose of the Harvard Apparatus Regenerative Technology, Inc. Employee Stock Purchase Plan (“the Plan”) is to provide Eligible Employees of Harvard Apparatus Regenerative Technology, Inc. (the “Company”) and any Designated Subsidiaries with opportunities to purchase shares of the Company’s common stock, par value $.01 per share (the “Common Stock”). An aggregate number of one hundred fifty thousand (150,000) shares of Common Stock have been approved and reserved under the Plan for this purpose. The Plan is intended to constitute an “employee stock purchase plan” within the meaning of Section 423(b) of the Internal Revenue Code of 1986, as amended (the “Code”), and shall be interpreted in accordance with that intent.

 

1.           ADMINISTRATION . The Plan will be administered by the person or committee (the “Administrator”) appointed by the Company’s Board of Directors (the “Board”) for such purpose. If the Administrator is a committee, its decisions shall be made by a vote of the majority. The Administrator has authority to make rules and regulations for the administration and operation of the Plan in accordance with the terms hereof, and its interpretations and decisions with regard thereto shall be final and conclusive. No member of the Board or individual exercising administrative authority with respect to the Plan shall be liable for any action or determination made in good faith with respect to the Plan or any Option granted hereunder.

 

2.           OFFERING PERIODS . The Company will make one or more offerings to Eligible Employees to purchase Common Stock under the Plan in accordance with this section. Unless otherwise determined by the Administrator, the initial Offering Period will begin on January 1, 2014 and will end on June 30, 2014 (the “Initial Offering”). Thereafter, unless otherwise determined by the Administrator, an Offering Period will begin on the first business day occurring on or after each January 1 and July 1 and will end on the last business day occurring on or before the next following June 30 and December 31, respectively. The Administrator may, in its discretion, designate a different Offering Period, provided that no Offering Period shall exceed six months in duration or overlap any other Offering Period.

 

3.           ELIGIBILITY . Any employee of the Company (including employees who are also directors of the Company) and any employee of a Designated Subsidiary is eligible to participate in any one or more Offering Periods under the Plan, provided that as of the first day of the applicable Offering Period each such employee is customarily employed by the Company or a Designated Subsidiary for more than 20 hours a week.

 

 
 

 

4.           PARTICIPATION . Participation in the Plan is completely voluntary. Participation in any one or more of the Offerings under the Plan shall neither limit, nor require, participation in any other Offering. An Eligible Employee may become a Participant and purchase stock during any Offering Period by executing and submitting an enrollment form to the Plan Administrator or its designee at least 15 business days before the Offering Date (or by such other deadline as the Administrator shall establish for such Offering Period). The form shall (a) designate the whole percentage to be deducted from the Participant’s Compensation per pay period, (b) authorize the purchase of Common Stock for such Participant during each Offering Period in accordance with the terms of the Plan, and (c) specify the exact name or names in which shares of Common Stock purchased for such Participant are to be issued pursuant to Section 10 hereof. An Eligible Employee who does not enroll in accordance with these procedures by the applicable deadline for an Offering Period will be deemed to have waived his or her right to participate in the Plan during that Offering Period. Except as otherwise provided in Section 6 hereof, unless an Eligible Employee files a new enrollment form or withdraws from the Plan, his or her prior elections of payroll deductions and stock purchases will continue in effect for future Offering Periods, provided he or she remains an Eligible Employee.

 

5.           PARTICIPANT CONTRIBUTIONS AND NON-INTEREST BEARING PLAN ACCOUNTS . Each Participant may authorize payroll deductions at a minimum of one percent (1%) up to a maximum of ten percent (10%) of his or her Compensation for each pay period. The Company shall maintain unfunded book accounts for each Participant showing the amount of payroll deductions made by such Participant during each Offering Period. All payroll deductions received or held by the Company under this Plan may be used by the Company for any corporate purpose, and the Company shall not be obligated to segregate such payroll deductions. No interest will accrue or be paid on payroll deductions or Plan account balances.

 

6.           DEDUCTION CHANGES . Except as may be permitted by the Administrator in advance of an Offering Period, a Participant may not increase or decrease his or her payroll deduction during any Offering Period, but may increase or decrease his or her payroll deduction for the next Offering Period (subject to the limitations of Section 5) by filing a new enrollment form at least 15 business days before the next Offering Date (or by such other deadline as the Administrator shall establish for such Offering Period). The Administrator may, in advance of any Offering Period, establish rules permitting a Participant to increase, decrease or terminate his or her payroll deduction during an Offering Period.

 

7.           WITHDRAWAL . A Participant may withdraw from participation in the Plan by delivering a written notice of withdrawal to the Plan Administrator or to such Participant’s designated payroll personnel. The Participant’s withdrawal shall be effective as of the next business day following delivery of such withdrawal notice. Following a Participant’s withdrawal from the Plan, the Company (or Designated Subsidiary) shall promptly refund to such Participant such Participant’s entire account balance under the Plan (after payment for any Common Stock purchased before the effective date of withdrawal). Partial withdrawals from a Participant’s Plan account shall not be permitted. The Participant, having withdrawn from an Offering Period, may not begin participation again during the remainder of such Offering Period, but may enroll in a subsequent Offering Period in accordance with Section 4. Notwithstanding anything herein to the contrary, unless a Participant withdraws from the Plan as described in this Section, such Participant and his or her elections shall continue to apply for future Offering Periods in accordance with the terms and conditions of the Plan.

 

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8.           GRANT OF OPTIONS . On each Offering Date, the Company will grant to each Plan Participant an option (“Option”) to purchase on the Exercise Date at the Option Price (defined below) the lesser of (a) a number of whole shares of Common Stock, which number shall not exceed the result of dividing $12,500 by the Option Price per share of Common Stock on the Offering Date, or (b) such other maximum number of shares as shall have been established by the Administrator in advance of the Offering. The term “Option Price” means 85% of the Fair Market Value of the Common Stock on the Offering Date or the Exercise Date, whichever is less.

 

Notwithstanding the foregoing, no Participant may be granted an Option to purchase Common Stock hereunder if such Participant would be treated as owning stock possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of the Company or any Parent or Subsidiary thereof immediately after such Option would have been granted. For purposes of the preceding sentence, the attribution rules of Section 424(d) of the Code shall apply in determining the stock ownership of a Participant, and all stock which the Participant has a contractual right to purchase shall be treated as stock owned by such Participant. In addition, no Participant may be granted an option to purchase stock hereunder or under any other employee stock purchase plan of the Company and its Parents and Subsidiaries, that accrues at a rate which exceeds $25,000 of the Fair Market Value of such stock (determined on any Offering Dates) for each calendar year in which such option is outstanding at any time. The purpose of the limitation in the preceding sentence is to comply with Section 423(b)(8) of the Code.

 

9.           EXERCISE OF OPTION AND PURCHASE OF SHARES . Each Eligible Employee who is or continues to be a Participant on an Exercise Date shall be deemed to have exercised an Option automatically on such Exercise Date and shall acquire from the Company such number of whole shares of Common Stock available under the Plan as the cash balance of such Participant’s accumulated payroll deduction account on such Exercise Date can purchase at the Option Price, subject to any other limitations contained in the Plan. Any cash amount remaining in such Participant’s account at the end of an Offering Period due solely to the inability to purchase a fractional share shall be carried forward to the next Offering Period; however, any other cash balance remaining in an Participant’s Plan account at the end of an Offering Period due to the imposition of other limits imposed by the Plan (including without limitation, Section 8 hereof) will be refunded to the Participant promptly.

 

10.          ISSUANCE OF CERTIFICATES . Certificates representing shares of Common Stock purchased under the Plan may be issued only in the name of the Participant, in the name of the Participant and another person of legal age as joint tenants with rights of survivorship, or in the name of a broker authorized by the Participant to be his, her or their, nominee for such purpose. No fractional shares of Common Stock will be issued under the Plan.

 

11.          DEFINITIONS .

 

The term “ Compensation ” means the amount of the Participant’s base pay from the Company (or applicable Designated Subsidiary) prior to any reduction for deferrals pursuant to either Section 125 or 401(k) of the Code, including commissions, but excluding overtime, incentive or bonus awards, allowances and reimbursements for expenses such as relocation allowances or travel expenses, income or gains on the exercise of Company stock options, and similar extraordinary items.

 

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The term “ Designated Subsidiary ” means any present or future Subsidiary (as defined below) that has been designated by the Board to participate in the Plan. The Board may so designate any Subsidiary, or revoke any such designation, at any time and from time to time, either before or after the Plan is approved by the stockholders.

 

The term “ Effective Date ” shall have the same meaning as that set forth under Section 26 hereof.

 

The term “ Eligible Employee ” means any common law employee or director of the Company or a Designated Subsidiary who, on an Offering Date meets the requirements described in Section 3 hereof.

 

The term “ Exercise Date ” shall mean the last day of the Offering Period described in Section 2 hereof or on the last business day occurring on or before June 30 or December 31.

 

The term “ Fair Market Value “ on any given date means the fair market value of the Common Stock determined in good faith by the Administrator; PROVIDED, HOWEVER, that if the Common Stock is admitted to quotation on the Nasdaq Global Market, Nasdaq Capital Market, New York Stock Exchange or other national securities exchange, the Fair Market Value will equal the closing sales price as reported on such exchange on such date. If there are no market quotations for such date, the determination shall be made by reference to the last date preceding such date for which there are market quotations.

 

The term “ Offering Period ” shall have the same meaning as that set forth in section 2 hereof and shall generally refer to a period beginning on January 1 or July 1 and ending on the last business day occurring on or before the next following June 30 or December 31.

 

The term “ Offering Date ”, which shall also refer to a date of grant, shall mean the Effective Date or the first day of the Offering Period described in Section 3 hereof or on the last business day occurring on or before January 1 or July 1.

 

The term “ Option ” shall have the same meaning as that set forth under Section 8 hereof.

 

The term “ Option Price ” shall have the same meaning as that set forth is Section 8 hereof.

 

The term “ Parent ” means a “parent corporation” with respect to the Company, as defined in Section 424(e) of the Code.

 

The term “ Participant ” means an Eligible Employee who participates in the Plan and executes and submits the enrollment form described in Section 4 hereof.

 

The term “ Subsidiary ” means a “subsidiary corporation” with respect to the Company, as defined in Section 424(f) of the Code.

 

4
 

 

12.          RIGHTS ON TERMINATION OF EMPLOYMENT . An individual’s right to participate in the Plan shall terminate on such individual’s termination employment for any reason or upon the date on which such individual is no longer an Eligible Employee. If a Participant’s employment with an employer sponsoring the Plan terminates for any reason before the Exercise Date for any Offering Period, no payroll deduction will be taken from such Participant’s Compensation, and the balance in his or her Plan account will be paid to him or her except that in the case of such Participant’s death, such balance shall be paid to his or her designated beneficiary as if such Participant had withdrawn from the Plan under Section 7. An Eligible Employee will be deemed to have terminated employment, for this purpose, if the corporation that employs him or her, having been a Designated Subsidiary, ceases to be a Subsidiary, or if such Employee is transferred to any corporation other than the Company or a Designated Subsidiary.

 

13.          SPECIAL RULES . Notwithstanding anything herein to the contrary, the Administrator may adopt special rules applicable to the employees of a particular Designated Subsidiary, whenever the Administrator determines that such rules are necessary or appropriate for the implementation of the Plan in a jurisdiction where such Designated Subsidiary has employees; provided that such rules are consistent with the requirements of Section 423(b) of the Code. Such special rules may include (by way of example, but not by way of limitation) the establishment of a method for employees of a given Designated Subsidiary to fund the purchase of shares other than by payroll deduction, if the payroll deduction method is prohibited by local law or is otherwise impracticable. Any special rules established pursuant to this Section 13 shall, to the extent possible, result in the employees subject to such rules having substantially the same rights as other participants in the Plan.

 

14.          OPTIONEES NOT STOCKHOLDERS . Neither the granting of an Option hereunder to a Participant nor the deductions from such Participant’s pay shall render such Participant a holder of the shares of Common Stock covered by an Option under the Plan until such shares have been purchased by, or on behalf of, and issued to such Participant.

 

15.          RIGHTS NOT TRANSFERABLE . Rights under the Plan are not transferable by a Participant other than by will or the laws of descent and distribution, and are exercisable during the Participant’s lifetime only by such Participant.

 

16.          APPLICATION OF FUNDS . All funds received or held by the Company under the Plan may be combined with other corporate funds and may be used for any corporate purpose, and this Plan shall be deemed an unfunded arrangement.

 

17.          ADJUSTMENT IN CASE OF CHANGES AFFECTING COMMON STOCK . In the event of an adjustment of the number of outstanding shares of Common Stock, or the payment of a dividend in Common Stock, the number of shares approved for the Plan, and the share limitation set forth in Section 8, shall be increased or decreased proportionately, and such other adjustments shall be made as may be deemed equitable by the Administrator. In the event of any other change affecting the Common Stock, such adjustment shall be made as may be deemed equitable by the Administrator to give proper effect to such event.

 

18.          AMENDMENT OF THE PLAN . The Board may at any time, and from time to time, amend the Plan in any respect, provided that no amendment shall be made increasing the number of shares approved for the Plan or making any other change that would require stockholder approval in accordance with applicable laws, without the approval of the stockholders within 12 months of such Board action, in accordance with the requirements of employee stock purchase plans under Section 423(b) of the Code.

 

5
 

 

19.          INSUFFICIENT SHARES . If the sum of (a) total number of shares of Common Stock that would otherwise be purchased by Participants on any Exercise Date, plus (b) the total number of such shares previously purchased by Participants exceeds the maximum number of shares reserved under the Plan, the remaining reserved shares then available for issuance under the Plan shall be allocated proportionately to Participants based on each Participant’s share of the aggregate amount of payroll deductions by all Participants who would otherwise purchase Common Stock on such Exercise Date.

 

20.          TERMINATION OF THE PLAN . The Plan may be terminated at any time by a vote of the Board. Upon termination of the Plan, all cash amounts and stock in the accounts of Participants shall be promptly refunded.

 

21.          GOVERNMENTAL REGULATIONS AND CHOICE OF LAW . The Company’s obligation to sell and deliver Common Stock under the Plan is subject to obtaining all governmental approvals required in connection with the authorization, issuance, or sale of such stock.

 

The Plan shall be governed by, and construed and enforced in accordance with, the provisions of Sections 423 and 424 of the Code and the substantive laws of the State of Delaware (except to the extent that such laws are preempted by federal law). In the event of any inconsistency between such provisions of the Code and any such laws, said provisions of the Code shall govern to the extent necessary to preserve favorable federal income tax treatment afforded employee stock purchase plans under Section 423 of the Code.

 

22.          ISSUANCE OF SHARES . Shares may be issued upon exercise of an Option from authorized but unissued Common Stock, from shares held in the treasury of the Company, or from any other proper source.

 

23.          TAX WITHHOLDING . Participation in the Plan is subject to any minimum required tax withholding on the Participant’s compensation from the Company. The Company and its Subsidiaries shall have the undivided right to deduct any withholding taxes required by law from any payment of any kind otherwise due to a Participant, including shares issuable under the Plan.

 

24.          NOTIFICATION UPON SALE OF SHARES . Each Participant shall give the Company prompt notice of any disposition of such Participant’s shares purchased under the Plan where such disposition occurs within two (2) years after the date of grant of the Option pursuant to which such shares were purchased.

  

6
 

 

25.          EFFECTIVE DATE AND APPROVAL OF SHAREHOLDERS . The Plan shall take effect on the date that Harvard Bioscience, Inc. no longer beneficially owns at least 50% of the total voting power of the Company’s outstanding capital stock or such other date as the Board shall establish (the “Effective Date”), subject to approval by the holders of a majority of the votes cast at a meeting of stockholders at which a quorum is present, or by written consent of the stockholders, provided that any necessary governmental approvals or qualifications of the purchase rights of the shares hereunder are obtained.

 

DATE APPROVED BY BOARD OF DIRECTORS: _______________

 

DATE APPROVED BY STOCKHOLDERS: _____________________

 

7

EXHIBIT 10.10

 

INCENTIVE STOCK OPTION AGREEMENT

TO PURCHASE SHARES OF COMMON STOCK UNDER THE

HARVARD APPARATUS REGENERATIVE TECHNOLOGY, INC.

2013 EQUITY INCENTIVE PLAN

   

Name of Optionee:                                                 

 

No. of Option Shares:                                             

 

Option Exercise Price per Share:                           

 

Grant Date:                                                             

 

Expiration Date:                                                     

 

Pursuant to the Harvard Apparatus Regenerative Technology, Inc. 2013 Equity Incentive Plan, as amended through the date hereof (the “Plan”), Harvard Apparatus Regenerative Technology, Inc., (the “Company”), hereby grants to the Optionee named above, an option (the “Option”) to purchase on or prior to the Expiration Date specified above, all or part of the number of shares of Common Stock, par value $.01 per share (the “Stock” or the “Shares”) of the Company specified above at the Option Exercise Price per Share specified above subject to the terms and conditions set forth herein and in the Plan. This Option is intended to be an Incentive Stock Option granted under the Plan.

 

1.        Vesting Schedule . No portion of this Option may be exercised until such portion shall have vested. Except as set forth below and subject to the terms and conditions set forth below, this Option shall be vested and exercisable with respect to the following number of Shares on the dates indicated:

 

Cumulative    
Number of    
Shares Exercisable   Vesting Date
     
__________   __________
     
__________   __________
     
__________   __________
     
__________   __________

 

Once vested, this Option shall continue to be exercisable at any time or times prior to the close of business on the Expiration Date, subject to the provisions hereof and of the Plan.

 

2.       Manner of Exercise . The Optionee may exercise the Option only in the following manner: from time to time on or prior to the Expiration Date, the Optionee may give written notice to the Company of any election to purchase some or all of the vested Shares purchasable at the time of such notice. Said notice shall specify the number of vested Shares to be purchased and shall be accompanied by payment therefor by one or more of the following methods:

 

(1) In cash, by certified or bank check or other instrument acceptable to the Administrator;

 

(2) Through the delivery (or attestation to the ownership) of shares of Stock that have been purchased by the Optionee on the open market or that have been beneficially owned by the Optionee for at least six months and are not then subject to restrictions under any Company plan. Such surrendered shares shall be valued at Fair Market Value on the exercise date; or

 

1
 

 

(3) By the Optionee delivering to the Company a properly executed exercise notice together with irrevocable instructions to a broker to promptly deliver to the Company cash or a check payable and acceptable to the Company for the purchase price; provided that in the event the Optionee chooses to pay the purchase price as so provided, the Optionee and the broker shall comply with such procedures and enter into such agreements of indemnity and other agreements as the Administrator shall prescribe as a condition of such payment procedure.

 

Payment instruments will be received subject to collection. The delivery of certificates representing the Shares will be contingent upon the Company’s receipt from the Optionee of full payment for the Shares, as set forth above and any agreement, statement or other evidence that the Company may require to satisfy itself that the issuance of Stock to be purchased pursuant to the exercise of Options under the Plan and any subsequent resale of the shares of Stock will be in compliance with applicable laws and regulations.

 

Certificates for the shares of Stock purchased upon exercise of this Option shall be issued and delivered to the Optionee upon compliance, to the satisfaction of the Administrator, with all requirements under applicable laws or regulations in connection with such issuance and with the requirements hereof and of the Plan. The determination of the Administrator as to such compliance shall be final and binding on the Optionee. The Optionee shall not be deemed to be the holder of, or to have any of the rights of a holder with respect to, any shares of Stock subject to this Option unless and until this Option shall have been exercised pursuant to the terms hereof, the Company shall have issued and delivered the shares to the Optionee, and the Optionee’s name shall have been entered as the stockholder of record on the books of the Company. Thereupon, the Optionee shall have full voting, dividend and other ownership rights with respect to such shares of Stock.

 

The minimum number of shares with respect to which this Option may be exercised at any one time shall be 100 shares, unless the number of shares with respect to which this Option is being exercised is the total number of shares subject to exercise under this Option at the time.

 

3.       Termination of Employment or Death of Optionee . The Option, as to any Shares not theretofore purchased, shall terminate on the earlier of the Expiration Date or 30 days after the Optionee is no longer employed by the Company or a Subsidiary (as defined in the Plan); provided, however, that if such termination of employment results from (i) the Optionee’s death or disability, the Option may be exercised as to vested Shares as of the date of such termination of employment within three (3) months thereafter (but in no event later than the Expiration Date) by the Optionee’s executors, administrators, personal representatives, or any person or persons to whom the Option may be transferred by will or by the laws of descent and distribution, but only to the extent that the Optionee was entitled to exercise the Option at the time of such termination of Optionee’s employment or (ii) the Optionee’s termination for Cause (as defined below), the Option (as to all vested and unvested Shares) shall immediately terminate and be of no further force or effect. Following the termination of the Optionee’s employment and prior to the termination of the Option, unless otherwise determined by the Administrator, the Option may only be exercised as to vested Shares as of the date of the termination of the Optionee’s employment. The Option does not confer upon the Optionee any right with respect to continuation of employment by the Company, nor shall it interfere with any right of the Company to terminate such employment at any time or any employee’s “employee-at-will” status.

 

Cause ” as such term relates to the termination of any person means the occurrence of one or more of the following: (i) such person is convicted of, pleads guilty to, or confesses to any felony or any act of fraud, misappropriation or embezzlement, (ii) such person engages in a fraudulent act to the material damage or prejudice of the Company or any Subsidiary or in conduct or activities materially damaging to the property, business or reputation of the Company or any Subsidiary, (iii) any material act or omission by such person involving malfeasance or negligence in the performance of such person’s duties to the Company or any Subsidiary to the material detriment of the Company or any Subsidiary, which has not been corrected by such person within 30 days after written notice from the Company of any such act or omission, (iv) failure by such person to comply in any material respect with the terms of his employment agreement, if any, or any written policies or directives of the Board, which has not been corrected by such person within 30 days after written notice from the Company of such failure, or (v) material breach by such person of his noncompetition agreement with the Company, if any.

 

2
 

 

4.       Shares . The Shares that are the subject of the Option are shares of the Common Stock, $.01 par value, of the Company as constituted on the date of the Option, subject to adjustment as provided in Section 3 of the Plan.

 

5.       Effect of Certain Transactions . If (i) the Company is merged into or consolidated with another corporation and the Company is not the surviving corporation, (ii) one or more corporations are merged into the Company which continues as the surviving corporation and the stockholders of the Company immediately prior to the transaction own less than a majority of its outstanding Common Stock immediately after the transaction, or shares of Common Stock of the Company are converted into cash, securities or property other than shares of Common Stock of the Company, or (iii) the Company is liquidated, dissolved, or sells or otherwise disposes of all or substantially all of its assets to another entity while any portion of the Option remains unexercised and unexpired, then in any of such transactions the Board may, in its sole discretion, take one or more of the following actions:

 

(a)       The Compensation Committee of the Board (the “Committee”) may cancel the Option as of the effective date of any such transaction, provided that notice of such cancellation shall be given to the Optionee at least 15 days prior to the effective date of such transaction, and the Optionee shall have the right to exercise so much of the Option as is exercisable during said 15-day period, including Options which become exercisable due to acceleration of vesting, if any, by the Board;

 

(b)       The Committee may (i) cancel the Option as to unvested Shares as of the effective date of the transaction and (ii) provide for the repurchase of unexercised Options as to vested Shares as of the effective date of such transaction by the Company on the effective date of such transaction for the same cash, securities or other property received with respect to each outstanding Share in the transaction by the stockholders of the Company, less the exercise price of the Option;

 

(c)       The Committee may provide for the voluntary exchange of the Option on the effective date of such transaction for an option or other rights granted by a successor corporation on terms reasonably acceptable to the Optionee; or

 

(d)      The Committee may provide that after the effective date of such transaction, the Optionee shall be entitled upon exercise of the Option as to any vested Shares to receive in lieu of each Share purchasable under the Option the same cash, securities or other property received with respect each outstanding Share in the transaction by the stockholders of the Company.

 

Upon the consummation of a Sale Event (as defined in the Plan) or occurrence of a Change of Control (as defined in the Plan), in either case, following the grant date of the Option, the Option shall become fully vested and exercisable with respect to all of the Shares as of the effective time of the Sale Event or the occurrence of the Change of Control, respectively.

 

6.       Status of the Option . This Option is intended to qualify as an “incentive stock option” under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), but the Company does not represent or warrant that this Option qualifies as such. The Optionee should consult with his or her own tax advisors regarding the tax effects of this Option and the requirements necessary to obtain favorable income tax treatment under Section 422 of the Code, including, but not limited to, holding period requirements. To the extent any portion of this Option does not so qualify as an “incentive stock option,” such portion shall be deemed to be a non-qualified stock option. If the Optionee intends to dispose or does dispose (whether by sale, gift, transfer or otherwise) of any Shares within the one year period beginning on the date after the transfer of such shares to him or her, or within the two year period beginning on the day after the grant of this Option, he or she will so notify the Company within 30 days after such disposition.

 

7.      Transferability.  This Option is personal to the Optionee, is non-assignable and is not transferable in any manner, by operation of law or otherwise, other than by will or the laws of descent and distribution. This Option is exercisable, during the Optionee’s lifetime, only by the Optionee, and thereafter, only by the Optionee’s legal representative or legatee.

 

3
 

 

8.       Miscellaneous . Notices hereunder shall be mailed or delivered to the Company’s principal place of business, 84 October Hill Road, Holliston, MA 01746 and shall be mailed or delivered to the Optionee at the address set forth below, or in either case at such other address as one party may subsequently furnish to the other party in writing.

 

9.       Incorporation of Plan . Notwithstanding anything herein to the contrary, this Option shall be subject to and governed by all the terms and conditions of the Plan, including the powers of the Administrator set forth in the Plan. Capitalized terms in this Option shall have the meaning specified in the Plan, unless a different meaning is specified herein. In the case of any conflict between the terms of this Option and the Plan, the provisions of the Plan shall control.

  

  HARVARD APPARATUS
  REGENERATIVE TECHNOLOGY, INC.
   
  By:  
  Name:  
  Title:  

 

4
 

 

The foregoing Option is hereby accepted and the terms and conditions thereof hereby agreed to by the undersigned.

 

Dated:      
      Optionee’s Signature
       
      Optionee’s name and address:
       
         
         
         
       
       
      Social Security Number

 

5

 

 

EXHIBIT 10.11

 

NONQUALIFIED STOCK OPTION AGREEMENT

TO PURCHASE SHARES OF COMMON STOCK UNDER THE

HARVARD APPARATUS REGENERATIVE TECHNOLOGY, INC.

2013 EQUITY INCENTIVE PLAN

 

Name of Optionee:    

 

No. of Option Shares:    

 

Option Exercise Price per Share:    

 

Grant Date:    

 

Expiration Date:    

 

Pursuant to the Harvard Apparatus Regenerative Technology, Inc. 2013 Equity Incentive Plan, as amended through the date hereof (the “Plan”), Harvard Apparatus Regenerative Technology, Inc., (the “Company”), hereby grants to the Optionee named above, an option (the “Option”) to purchase on or prior to the Expiration Date specified above, all or part of the number of shares of Common Stock, par value $.01 per share (the “Stock” or the “Shares”) of the Company specified above at the Option Exercise Price per Share specified above subject to the terms and conditions set forth herein and in the Plan. This Option is intended to be a Nonqualified Stock Option granted under the Plan.

 

1. Vesting Schedule . No portion of this Option may be exercised until such portion shall have vested. Except as set forth below and subject to the terms and conditions set forth below, this Option shall be vested and exercisable with respect to the following number of Shares on the dates indicated:

 

Cumulative    
Number of    
Shares Exercisable   Vesting Date
     
__________   __________
     
__________   __________
     
__________   __________
     
__________   __________

 

Once vested, this Option shall continue to be exercisable at any time or times prior to the close of business on the Expiration Date, subject to the provisions hereof and of the Plan.

 

1
 

 

2.       Manner of Exercise . The Optionee may exercise the Option only in the following manner: from time to time on or prior to the Expiration Date, the Optionee may give written notice to the Company of any election to purchase some or all of the vested Shares purchasable at the time of such notice. Said notice shall specify the number of vested Shares to be purchased and shall be accompanied by payment therefor by one or more of the following methods:

 

(1) In cash, by certified or bank check or other instrument acceptable to the Administrator;

 

(2) Through the delivery (or attestation to the ownership) of shares of Stock that have been purchased by the Optionee on the open market or that have been beneficially owned by the Optionee for at least six months and are not then subject to restrictions under any Company plan. Such surrendered shares shall be valued at Fair Market Value on the exercise date; or

 

(3) By the Optionee delivering to the Company a properly executed exercise notice together with irrevocable instructions to a broker to promptly deliver to the Company cash or a check payable and acceptable to the Company for the purchase price; provided that in the event the Optionee chooses to pay the purchase price as so provided, the Optionee and the broker shall comply with such procedures and enter into such agreements of indemnity and other agreements as the Administrator shall prescribe as a condition of such payment procedure.

 

Payment instruments will be received subject to collection. The delivery of certificates representing the Shares will be contingent upon the Company’s receipt from the Optionee of full payment for the Shares, as set forth above and any agreement, statement or other evidence that the Company may require to satisfy itself that the issuance of Stock to be purchased pursuant to the exercise of Options under the Plan and any subsequent resale of the shares of Stock will be in compliance with applicable laws and regulations.

 

Certificates for the shares of Stock purchased upon exercise of this Option shall be issued and delivered to the Optionee upon compliance, to the satisfaction of the Administrator, with all requirements under applicable laws or regulations in connection with such issuance and with the requirements hereof and of the Plan. The determination of the Administrator as to such compliance shall be final and binding on the Optionee. The Optionee shall not be deemed to be the holder of, or to have any of the rights of a holder with respect to, any shares of Stock subject to this Option unless and until this Option shall have been exercised pursuant to the terms hereof, the Company shall have issued and delivered the shares to the Optionee, and the Optionee’s name shall have been entered as the stockholder of record on the books of the Company. Thereupon, the Optionee shall have full voting, dividend and other ownership rights with respect to such shares of Stock.

 

The minimum number of shares with respect to which this Option may be exercised at any one time shall be 100 shares, unless the number of shares with respect to which this Option is being exercised is the total number of shares subject to exercise under this Option at the time.

 

3.       Termination of Employment or Death of Optionee . The Option, as to any Shares not theretofore purchased, shall terminate on the earlier of the Expiration Date or 30 days after the Optionee is no longer employed by the Company or a Subsidiary (as defined in the Plan); provided, however, that if such termination of employment results from (i) the Optionee’s death or disability, the Option may be exercised as to vested Shares as of the date of such termination of employment within three (3) months thereafter (but in no event later than the Expiration Date) by the Optionee’s executors, administrators, personal representatives, or any person or persons to whom the Option may be transferred by will or by the laws of descent and distribution, but only to the extent that the Optionee was entitled to exercise the Option at the time of such termination of Optionee’s employment or (ii) the Optionee’s termination for Cause (as defined below), the Option (as to all vested and unvested Shares) shall immediately terminate and be of no further force or effect. Following the termination of the Optionee’s employment and prior to the termination of the Option, unless otherwise determined by the Administrator, the Option may only be exercised as to vested Shares as of the date of the termination of the Optionee’s employment. The Option does not confer upon the Optionee any right with respect to continuation of employment by the Company, nor shall it interfere with any right of the Company to terminate such employment at any time or any employee’s “employee-at-will” status.

 

2
 

 

Cause ” as such term relates to the termination of any person means the occurrence of one or more of the following: (i) such person is convicted of, pleads guilty to, or confesses to any felony or any act of fraud, misappropriation or embezzlement, (ii) such person engages in a fraudulent act to the material damage or prejudice of the Company or any Subsidiary or in conduct or activities materially damaging to the property, business or reputation of the Company or any Subsidiary, (iii) any material act or omission by such person involving malfeasance or negligence in the performance of such person’s duties to the Company or any Subsidiary to the material detriment of the Company or any Subsidiary, which has not been corrected by such person within 30 days after written notice from the Company of any such act or omission, (iv) failure by such person to comply in any material respect with the terms of his employment agreement, if any, or any written policies or directives of the Board, which has not been corrected by such person within 30 days after written notice from the Company of such failure, or (v) material breach by such person of his noncompetition agreement with the Company, if any.

 

4.      Shares . The Shares that are the subject of the Option are shares of the Common Stock, $.01 par value, of the Company as constituted on the date of the Option, subject to adjustment as provided in Section 3 of the Plan.

 

5.      Effect of Certain Transactions . If (i) the Company is merged into or consolidated with another corporation and the Company is not the surviving corporation, (ii) one or more corporations are merged into the Company which continues as the surviving corporation and the stockholders of the Company immediately prior to the transaction own less than a majority of its outstanding Common Stock immediately after the transaction, or shares of Common Stock of the Company are converted into cash, securities or property other than shares of Common Stock of the Company, or (iii) the Company is liquidated, dissolved, or sells or otherwise disposes of all or substantially all of its assets to another entity while any portion of the Option remains unexercised and unexpired, then in any of such transactions the Board may, in its sole discretion, take one or more of the following actions:

 

(a)     The Compensation Committee of the Board (the “Committee”) may cancel the Option as of the effective date of any such transaction, provided that notice of such cancellation shall be given to the Optionee at least 15 days prior to the effective date of such transaction, and the Optionee shall have the right to exercise so much of the Option as is exercisable during said 15-day period, including Options which become exercisable due to acceleration of vesting, if any, by the Board;

 

(b)     The Committee may (i) cancel the Option as to unvested Shares as of the effective date of the transaction and (ii) provide for the repurchase of unexercised Options as to vested Shares as of the effective date of such transaction by the Company on the effective date of such transaction for the same cash, securities or other property received with respect to each outstanding Share in the transaction by the stockholders of the Company, less the exercise price of the Option;

 

(c)     The Committee may provide for the voluntary exchange of the Option on the effective date of such transaction for an option or other rights granted by a successor corporation on terms reasonably acceptable to the Optionee; or

 

(d)     The Committee may provide that after the effective date of such transaction, the Optionee shall be entitled upon exercise of the Option as to any vested Shares to receive in lieu of each Share purchasable under the Option the same cash, securities or other property received with respect each outstanding Share in the transaction by the stockholders of the Company.

 

Upon the consummation of a Sale Event (as defined in the Plan) or occurrence of a Change of Control (as defined in the Plan), in either case, following the grant date of the Option, the Option shall become fully vested and exercisable with respect to all of the Shares as of the effective time of the Sale Event or the occurrence of the Change of Control, respectively.

 

6.      Transferability .  This Option is personal to the Optionee, is non-assignable and is not transferable in any manner, by operation of law or otherwise, other than by will or the laws of descent and distribution. This Option is exercisable, during the Optionee’s lifetime, only by the Optionee, and thereafter, only by the Optionee’s legal representative or legatee.

 

3
 

 

7.      Miscellaneous . Notices hereunder shall be mailed or delivered to the Company’s principal place of business, 84 October Hill Rd., Holliston, MA 01746 and shall be mailed or delivered to the Optionee at the address set forth below, or in either case at such other address as one party may subsequently furnish to the other party in writing.

 

8.      Incorporation of Plan . Notwithstanding anything herein to the contrary, this Option shall be subject to and governed by all the terms and conditions of the Plan, including the powers of the Administrator set forth in the Plan. Capitalized terms in this Option shall have the meaning specified in the Plan, unless a different meaning is specified herein. In the case of any conflict between the terms of this Option and the Plan, the provisions of the Plan shall control.

 

  HARVARD APPARATUS
  REGENERATIVE TECHNOLOGY, INC.
   
  By:  
  Name:  
  Title:  

 

4
 

 

 

The foregoing Option is hereby accepted and the terms and conditions thereof hereby agreed to by the undersigned.

 

Dated:      

    Optionee’s Signature
     
    Optionee’s name and address:
     
       
       
       
       
     
    Social Security Number  

 

5

 

 

EXHIBIT 10.12

 

NONQUALIFIED STOCK OPTION AGREEMENT

FOR NON-EMPLOYEE DIRECTORS UNDER THE

HARVARD APPARATUS REGENERATIVE TECHNOLOGY, INC.

2013 EQUITY INCENTIVE PLAN

 

Name of Optionee:    

 

No. of Option Shares:    

 

Option Exercise Price per Share:    

 

Grant Date:    

 

Expiration Date:    

 

Pursuant to the Harvard Apparatus Regenerative Technology, Inc. 2013 Equity Incentive Plan, as amended through the date hereof (the “Plan”), Harvard Apparatus Regenerative Technology, Inc., (the “Company”) hereby grants to the Optionee named above, who is a Director of the Company but is not an employee of the Company, an option (the “Stock Option”) to purchase on or prior to the Expiration Date specified above, all or part of the number of shares of Common Stock, par value $.01 per share (the “Stock” or the “Shares”) of the Company specified above at the Option Exercise Price per Share specified above subject to the terms and conditions set forth herein and in the Plan.

 

1.       Vesting . No portion of the Stock Option may be exercised until such portion shall have vested. Except as set forth below and subject to the terms and conditions set forth below, this Stock Option shall be vested and exercisable with respect to the following number of Shares on the dates indicated:

 

Cumulative    
Number of    
Shares Exercisable   Vesting Date
     
__________   __________
     
__________   __________
     
__________   __________
     
__________   __________

 

In the event of the termination of the Optionee’s service as a director of the Company because of Disability (as defined below) or death, this Stock Option shall become immediately vested and exercisable in full, whether or not vested and exercisable at such time. Once vested, this Stock Option shall continue to be exercisable at any time or times prior to the close of business on the Expiration Date, subject to the provisions hereof and of the Plan. The term “Disability” shall mean that condition described in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the “Code”). In the event of a dispute, the determination of Disability will be made by the Administrator (as defined in Section 2(a) of the Plan) in good faith and with the advice of a physician competent in the area to which such Disability relates.

 

1
 

 

Upon the consummation of a Sale Event (as defined in the Plan) or occurrence of a Change of Control (as defined in the Plan), in either case, following the grant date of this Stock Option, this Stock Option shall become fully vested and exercisable with respect to all of the Option Shares as of the effective time of the Sale Event or the occurrence of the Change of Control, respectively.

 

2.       Exercise of Stock Option .

 

(a) The Optionee may exercise this Option only in the following manner: from time to time on or prior to the Expiration Date of this Option, the Optionee may give written notice to the Company of his or her election to purchase some or all of the vested Option Shares purchasable at the time of such notice. This notice shall specify the number of Option Shares to be purchased and shall be accompanied by payment therefor by one or more of the following methods:

 

(1) In cash, by certified or bank check or other instrument acceptable to the Administrator;

 

(2) Through the delivery (or attestation to the ownership) of shares of Stock that have been purchased by the Optionee on the open market or that have been beneficially owned by the Optionee for at least six months and are not then subject to restrictions under any Company plan. Such surrendered shares shall be valued at Fair Market Value on the exercise date; or

 

(3) By the Optionee delivering to the Company a properly executed exercise notice together with irrevocable instructions to a broker to promptly deliver to the Company cash or a check payable and acceptable to the Company for the purchase price; provided that in the event the Optionee chooses to pay the purchase price as so provided, the Optionee and the broker shall comply with such procedures and enter into such agreements of indemnity and other agreements as the Administrator shall prescribe as a condition of such payment procedure.

 

 Payment instruments will be received subject to collection. The delivery of certificates representing the Option Shares will be contingent upon the Company’s receipt from the Optionee of full payment for the Option Shares, as set forth above and any agreement, statement or other evidence that the Company may require to satisfy itself that the issuance of Stock to be purchased pursuant to the exercise of Options under the Plan and any subsequent resale of the shares of Stock will be in compliance with applicable laws and regulations.

 

(b) Certificates for shares of Stock purchased upon exercise of this Stock Option shall be issued and delivered to the Optionee upon compliance to the satisfaction of the Administrator with all requirements under applicable laws or regulations in connection with such issuance and with the requirements hereof and of the Plan. The determination of the Administrator as to such compliance shall be final and binding on the Optionee. The Optionee shall not be deemed to be the holder of the shares subject to this Stock Option, or to have any of the rights of a holder, unless and until this Stock Option shall have been exercised pursuant to the terms hereof, the Company shall have issued and delivered the shares to the Optionee, and the Optionee’s name shall have been entered as the stockholder of record on the books of the Company. Thereupon, the Optionee shall have full voting, dividend and other ownership rights with respect to such shares of Stock.

 

(c) Notwithstanding any other provision hereof or of the Plan, no portion of this Stock Option shall be exercisable after the Expiration Date hereof.

 

3.      Termination as Director . If the Optionee ceases to be a Director of the Company, the period within which to exercise the Stock Option may be subject to earlier termination as set forth below.

 

(a) Termination by Reason of Death . If the Optionee ceases to be a Director by reason of death, any Stock Option held by the Optionee may be exercised by his or her legal representative or legatee for a period of twelve (12) months from the date of death or until the Expiration Date, if earlier.

 

(b) Other Termination . If the Optionee ceases to be a Director for any reason other than death, any Stock Option held by the Optionee may be exercised to the extent exercisable on the date Optionee ceases to be a Director for a period of three (3) months from the date of termination or until the Expiration Date, if earlier.

 

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4.       Incorporation of Plan . Notwithstanding anything herein to the contrary, this Stock Option shall be subject to and governed by all the terms and conditions of the Plan, including the powers of the Administrator set forth in the Plan. Capitalized terms in this Stock Option shall have the meaning specified in the Plan, unless a different meaning is specified herein. In the case of any conflict between the terms of this Stock Option and the Plan, the provisions of the Plan shall control.

 

5.       Transferability . This Agreement is personal to the Optionee, is non-assignable and is not transferable in any manner, by operation of law or otherwise, other than by will or the laws of descent and distribution. This Stock Option is exercisable, during the Optionee’s lifetime, only by the Optionee, and thereafter, only by the Optionee’s legal representative or legatee.

 

6.       Miscellaneous

 

(a) Notice hereunder shall be given to the Company at its principal place of business, and shall be given to the Optionee at the address set forth below, or in either case at such other address as one party subsequently furnish to the other party in writing.

 

(b) This Stock Option does not confer upon the Optionee any rights with respect to continuance as a Director.

 

(c) Pursuant to Section 17 of the Plan, the Administrator may at any time amend or cancel any outstanding portion of this Stock Option, but no such action may be taken which adversely affects the Optionee’s rights under this Agreement without the Optionee’s consent.

 

  HARVARD APPARATUS
  REGENERATIVE TECHNOLOGY, INC.
   
  By:  
  Name:  
  Title:  

 

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The foregoing Stock Option is hereby accepted and the terms and conditions thereof hereby agreed to by the undersigned.

 

Dated:      

    Optionee’s Signature
     
    Optionee’s name and address:
     
       
       
       

  

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EXHIBIT 10.13

 

HARVARD APPARATUS REGENERATIVE TECHNOLOGY, INC.

 

2013 EQUITY INCENTIVE PLAN

 

DEFERRED STOCK AWARD AGREEMENT

  

Name of Grantee:   __________________
   
No. of Restricted Stock Units:   __________________
   
Grant Date:   __________________

 

Pursuant to the Harvard Apparatus Regenerative Technology, Inc. 2013 Equity Incentive Plan, as amended through the date hereof (the “Plan”), Harvard Apparatus Regenerative Technology, Inc. (the “Company”) hereby grants the number of Restricted Stock Units (“RSUs”) specified above (the “Award”) to the Grantee named above, subject to the terms of the Plan and this Award Agreement. The Award represents a promise to pay to the Grantee one share of Common Stock, par value $0.01 per share (the “Stock”) of the Company for each RSU, subject to the restrictions and conditions set forth herein and in the Plan.

 

1.     Restrictions .

 

(a)     No Voting Rights and Dividends . Until such time as the RSUs are paid to the Grantee in shares of Stock, the Grantee shall have no voting rights and no rights to any dividends or other distributions with respect to the RSUs.

 

(b)     Restrictions on Transfer . The RSUs granted pursuant to this Agreement may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed of prior to vesting.

 

2.     Vesting of Restricted Stock Units .

 

(a)     Form of Payment . Subject to the Grantee being [_employed by OR a director of_] the Company or its Subsidiaries on each vesting date, the restrictions and conditions in Paragraph 1 of this Agreement with respect to such RSU shall lapse, and such RSU shall become payable to the Grantee in the amount of the shares of Stock and on the relevant vesting date specified below:

 

  Vesting Date      Cumulative Vesting Amount  
         
  ________________   ________________  
         
  ________________   ________________  
         
  ________________   ________________  

 

(b)    The Grantee’s rights to all RSUs granted herein and not yet vested in accordance with the provisions of Paragraph 2(a) shall automatically terminate upon the Grantee’s [_termination of employment OR ceasing to be a Director_], voluntarily or involuntarily, [_with OR of_] the Company and its Subsidiaries for any reason (including death).

 

(c)    Notwithstanding anything to the contrary in this Agreement, to the extent the Grantee is a party to another agreement or arrangement with the Company that provides accelerated vesting of RSUs or all equity awards in general in the event of certain types of termination, a change of control of the Company or any other applicable vesting-related events, the accelerated terms of such other agreement or arrangement shall control.

 

1
 

 

3.     Receipt of Stock Upon Vesting . Upon the vesting of the RSUs as provided in Paragraph 2(a), the Grantee shall receive one share of Stock for each RSU vested. Shares of Stock acquired pursuant to this Award shall be issued and delivered to the Grantee either in actual stock certificates or by electronic book entry, subject to tax withholding as provided in Paragraph 6 below.

 

4.     Incorporation of Plan . Notwithstanding anything herein to the contrary, this Agreement shall be subject to and governed by all the terms and conditions of the Plan, including the powers of the Administrator set forth in the Plan. Capitalized terms in this Agreement shall have the meaning specified in the Plan, unless a different meaning is specified herein. In the case of any conflict between the terms of this Agreement and the Plan, the provisions of the Plan shall control.

 

5.     Transferability . This Agreement is personal to the Grantee, is non-assignable and is not transferable in any manner, by operation of law or otherwise, other than by will or the laws of descent and distribution.

 

6.     Tax Withholding . Unless the Grantee elects to satisfy the tax withholding obligation in a timely manner by making the payments or related arrangements in accordance with Section 14(a) of the Plan (including, without limitation, payments made from such Grantee’s compensation or other cash payments otherwise due him or her from the Company or by paying the Company directly by a separate check), the tax withholding obligation shall be satisfied by the Company withholding, from shares of Stock to be issued to the Grantee hereunder, such number of the Grantee’s shares having an aggregate fair market value equal to the required minimum amount of the tax withholding then due with respect to such Grantee.

 

7.     Dividend Equivalents .

 

(a)    If on any date the Company shall pay any cash dividend on shares of Stock of the Company, the number of RSUs credited to the Grantee shall, as of such date, be increased by an amount determined by the following formula:

 

W = (X multiplied by Y) divided by Z, where:

W = the number of additional RSUs to be credited to the Grantee on such dividend payment date;

X = the aggregate number of vested RSUs credited to the Grantee as of the record date of the dividend;

Y = the cash dividend per share amount; and

Z = the Fair Market Value per share of Stock (as determined under the Plan) on the dividend payment date.

 

(b)    In the case of a dividend paid on Stock in the form of Stock, including without limitation a distribution of Stock by reason of a stock dividend, stock split or otherwise, the number of RSUs credited to the Grantee shall be increased by a number equal to the product of (i) the aggregate number of RSUs that have been awarded to the Grantee through the related dividend record date, and (ii) the number of shares of Stock (including any fraction thereof) payable as dividend on one share of Stock. Any additional RSUs shall be subject to the vesting and restrictions of this Agreement in the same manner and for so long as the RSUs granted pursuant to this Agreement to which they relate remain subject to such vesting and restrictions, and shall be promptly forfeited to the Company if and when such RSUs are so forfeited.

 

8.     No Obligation to Continue Employment or Service . Neither the Company nor any Subsidiary is obligated by or as a result of the Plan or this Agreement to continue the Grantee in employment or other service with the Company or any Subsidiary and neither the Plan nor this Agreement shall interfere in any way with the right of the Company or any Subsidiary to terminate the employment or service of the Grantee at any time.

 

9.     Notices . Notices hereunder shall be mailed or delivered to the Company at its principal place of business and shall be mailed or delivered to the Grantee at the address on file with the Company or, in either case, at such other address as one party may subsequently furnish to the other party in writing.

 

  Harvard Apparatus Regenerative Technology, Inc.
     
  By:  
    Name:  
    Title:  

 

2
 

 

The foregoing Agreement is hereby accepted and the terms and conditions thereof hereby agreed to by the undersigned.

 

.

______________________________   ________________________________
     
Grantee’s Signature   Dated

 

Grantee’s name and address:

 

______________________________    
     
______________________________    
     
______________________________    

 

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EXHIBIT 10.14

 

Director Compensation Arrangements

 

Compensation of Non-Employee Directors upon Initial Election to the Board

 

Upon the completion of the distribution of our common stock by Harvard Bioscience to its shareholders (the “Distribution”), all of our non-employee directors will receive a non-qualified stock option to purchase 25,000 shares of our common stock vesting one year from the date of grant and granted on the eleventh trading day following the date of the Distribution. Each non-employee that is elected to the our board of directors following the Distribution is entitled to receive a non-qualified stock option to purchase 25,000 shares of our common stock vesting one year from the date of grant and granted on the fifth business day following his or her initial election to the board of directors.

 

Annual Compensation of Non-Employee Directors

 

Each non-employee director also receives an annual retainer of $30,000 paid in four equal quarterly installments. Each non-employee director is also entitled to receive a non-qualified stock option to purchase 25,000 shares of our common stock vesting one year from the date of grant and granted on the fifth business day following our annual meeting of stockholders.

 

Directors who are also our employees will receive no additional compensation for service as a director.

 

 

 

EXHIBIT 10.16

 

patent RIGHTS ASSIGNMENT

 

THIS PATENT RIGHTS ASSIGNMENT (“ Patent Assignment ”) is made, entered into and effective as of this 21st day of December, 2012, by PAOLO MACCHIARINI, an individual, c/o Karolinska Institutet, SE-171, 77 Stockholm, Sweden, (the “ Assignor ”) in favor of HARVARD APPARATUS REGENERATIVE TECHNOLOGY, INC. , a Delaware corporation (the “ Assignee ”).

 

recitals:

 

WHEREAS , the Assignor has agreed to assign to the Assignee all of its right, title and interest in, and to execute this Patent Assignment to enable Assignee to acquire all of his rights to certain inventions and the patent application and all divisions, reissues, reexaminations, substitutions, continuations, continuations-in-part, foreign counterparts and extensions of the patent applications listed on Schedule 1 (collectively, the “ Assigned Patent Rights ”).

 

NOW, THEREFORE , in consideration of the foregoing and the respective representations, warranties, covenants, agreements and conditions set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, each party hereto hereby agrees as follows:

 

1.           Assignment . The Assignor hereby irrevocably conveys, transfers and assigns to the Assignee, and the Assignee hereby accepts, all Assignor’s legal and beneficial right, title and interest, if any, of the Assignor in and to the Assigned Patent Rights, and the inventions claimed therein, to hold unto Assignee absolutely and in perpetuity (or for the longest period of time otherwise permitted by law), together with all related common-law rights associated therewith and any and all royalties, fees, income, payments and other proceeds now or hereafter due or payable with respect thereto and all causes of action and rights to sue, seek injunctive relief, and recover (for the sole use and benefit of the Assignee and its successors, assigns or other legal representatives) damages for past, present and future infringement, misappropriation or other violation thereof or damage thereto . The Assignee is to hold all right, title and interest in and to the Assigned Patent Rights as fully as it would have been held and enjoyed by the Assignor, to the end of the term or terms for which said Patent is or may be granted, reissued, renewed, restored, amended, converted, or extended, had the assignment in this Section 1 not been made.

 

2.           Authorization . The Assignor authorizes and requests the United States Patent and Trademark Office and the equivalent office in each country or international entity in which Assigned Patent Rights is registered to record the Assignee as the assignee of the rights of Assignor in the Assigned Patent Rights and to issue any patents which may be granted on any applications included in the Assigned Patent Rights to the Assignee as assignee of the entire right, title and interest therein and thereto.

 

 
 

 

3.           Further Assurances . Each party hereto shall, from time to time and at all times hereafter, upon the request of the other party hereto, do, execute, acknowledge and deliver or cause to be done, executed, acknowledged and delivered all such further acts, deeds, assignments, transfers, conveyances, powers of attorney and assurances as may be required to carry out the intent of this Patent Assignment. Without limiting the foregoing, the Assignor agrees, without additional consideration, to take such further actions and to execute any powers of attorney, applications, assignments, declarations, affidavits and other papers necessary or desirable to transfer, vest, record and perfect good, valid and marketable title in the Assigned Patent Rights to the Assignee.

 

4.           Entire Agreement . This Patent Assignment contains the entire agreement of the parties with regard to the subject matter hereof; provided , however , that this provision is not intended to abrogate any other written agreement between the parties executed with or after this Patent Assignment.

 

5.           Successors and Assigns . This Patent Assignment shall be binding upon each party hereto and its respective successors and assigns.

 

6.           Governing Law . This Patent Assignment shall be governed by and construed in accordance with the Laws of the State of Delaware without giving effect to any Law or rule that would cause the Laws of any jurisdiction other than the State of Delaware to be applied.

 

7.           Counterparts . This Patent Assignment may be executed in multiple counterparts, each of which shall for all purposes be deemed to be an original and all of which, when taken together, shall constitute one and the same instrument. Signatures of the parties transmitted by electronic transmission shall be deemed to be their original signatures for all purposes .

 

(Signature on following page)

 

2
 

 

IN WITNESS WHEREOF , the parties hereto have caused this Patent Assignment to be duly executed effective as of the date first above written.

 

  ASSIGNOR ”:
   
  PAOLO MACCHIARINI
   
  /s/ Paolo Macchiarini
   
  ASSIGNEE ”:
   
  HARVARD APPARATUS REGENERATIVE TECHNOLOGY, INC.
   
  By: /s/ David Green
       David Green, President and CEO

 

 
 

 

Schedule 1

 

assigned Patent APPLICATION

 

Country   Application Number   Status   Filing Date
             
United States   61/505,096   Provisional   July 6, 2011
             
United States   13/542,218   Pending   July 5, 2012
             
United States   13/542,202   Pending   July 5, 2012
             
PCT   PCT/IB2012/001696   Pending   July 6, 2012

 

 

 

  

EXHIBIT 10.17

 

SPONSORED RESEARCH AGREEMENT

 

This SPONSORED RESEARCH AGREEMENT (this " Agreement ") is entered into as of the last date below written (the " Effective Date "), by and between SARA MANTERO, Ph.D. (" Mantero "); MARIA ADELAIDE ASNAGHI (" Asnaghi "); HARVARD BIOSCIENCE, INC ., a Delaware corporation (the " Company "); and the DEPARTMENT OF BIOENGINEERING OF THE POLITECNICO DI MILANO (" PDM ").

 

Recitals:

 

A.           Mantero is a faculty member and Asnaghi is a PhD student at PDM.

 

B.           Mantero and Asnaghi are the inventors of certain processes and devices that allow for the migration of organic cells into tissue samples while being incubated under ideal conditions in a specialized bioreactor (the "Technology").

 

C.           The parties to this Agreement have executed as of even date as this Agreement an Exclusive License Agreement (the " ELA "), whereby Company has obtained the exclusive license rights to the Technology and improvements related to the Technology.

 

D.           PDM hereby expressly waives and renounces to all and any right relating to the authorship, paternity, ownership, intellectual property, use, economic and commercial interests or of whatever other nature, that it has or may have on the Technology and on improvements related to the Technology.

 

E.           Company desires that Mantero, Asnaghi and PDM continue to perform certain research work related to improving and expanding upon the Technology as described in this Agreement and Company is willing to sponsor such research in accordance with the terms of this Agreement.

 

F.           The parties have determined that it is in their mutual best interests to enter into this Agreement to describe their mutual rights and responsibilities and to provide for how new intellectual property resulting from the research described in this Agreement will be owned and licensed.

 

THEREFORE, for good and valuable consideration, the receipt and adequacy of which is hereby recognized by the parties, the parties agree as follows:

 

1.           Term . By providing the other party ninety (90) days prior written notice, either party may terminate this Agreement for any or no reason any time after one (1) year from the Effective Date.

 

Execution Version

Sponsored Research Agreement

  

1
 

 

2.           Agreement to Research . During the term of this Agreement, PDM will use its own facilities and its best efforts to conduct the research program described in Exhibit A (" Research Program ") under the principal direction of Mantero or her successor as mutually agreed upon between Company and PDM (the " Principal Researcher "). Mantero and Asnaghi agree not to accept sponsorship from any competitor of Company to perform research similar to the research to be performed in the Research Program, with the understanding that a government entity, a foundation or a charity will not be considered a competitor of Company. The parties acknowledge that the certain distributor agreement executed by and between SKE Srl and Company as of the date of this Agreement does not cause conflict with this Agreement.

 

3.           Consideration . As consideration the receipt and adequacy of which is hereby acknowledged by the parties, Company agrees to loan to PDM up to Thirty-Five Thousand and 00/100 ($35,000.00) United States Dollars worth of equipment (the " Equipment ") during the term of this Agreement to be used solely in association with the Research Program. Further, Company will provide engineering support to PDM to help realize novel bioreactor designs developed during the term of this Agreement as mutually agreed upon by the parties.

 

4.           Consultation . During the period of this Agreement, Company's representatives or agents will be provided with access to the Principal Researcher both personally, by E-mail, by telephone and other means to discuss the Research Program. Company's agents and representatives will be permitted to visit the laboratories involved in the conduct of the Research Program as may be reasonably requested by Company.

 

5.           Reports . The Principal Researcher will make a written report to Company at least once every month summarizing the work completed under the Research Program since the date of the last report. The Principal Researcher and Company will also meet once every three (3) months in person at PDM to discuss the work completed under the Research Program since the date of the last in person meeting. The Principal Researcher will also submit to Company a comprehensive final report detailing the efforts and results of the Research Program within sixty (60) days after the termination of the Research Program.

 

6.           Intellectual Property . With respect to any intellectual property resulting from the Research Program, the parties agree to the terms determining their relative intellectual property rights as described in Exhibit B .

 

7.           Publication and Other Academic Rights .

 

a.  To avoid the loss of patent rights as a result of premature disclosure of patentable information, Mantero, Asnaghi and PDM will submit any prepublication materials related to the Research Program to Company for review and comment at least thirty (30) days prior to the planned submission for publication, If Company determines that the proposed publication contains patentable subject matters that should be protected, Company may require the delay of the submission for a period of time not to exceed sixty (60) days after the date of the original planned submission date for publication for the purpose of allowing the pursuit of such protection.

 

b.  Mantero and Asnaghi may discuss the Research Program with other investigators and academics solely for scientific or research purposes but will not reveal information that is Confidential Information (as defined in the ELA) that belongs to Company. If any jointly owned intellectual property results from such discussions, then PDM, Mantero and Asnaghi will and hereby grant Company the rights set forth in Exhibit B if possible. In all cases, PDM will use its best efforts to obtain rights for Company in such joint intellectual property.

 

Execution Version

Sponsored Research Agreement

  

2
 

 

 

8.           Equipment Title . The Equipment will at all times during this Agreement be the sole and exclusive property of Company. PDM hereby acknowledges that Company is the owner of the Equipment and further acknowledges that PDM will acquire no ownership, title or other property rights in the Equipment by reason of this Agreement. Upon termination of this Agreement, PDM will return the Equipment to Company at an address to be specified by Company.

 

9.           Equipment Use . PDM will not use, maintain, or store the Equipment in violation of any applicable regulatory laws or regulations of any governmental agency.

 

10.          Equipment Repairs, Replacements and Modifications . PDM will, at its own expense, make all repairs and replacements to the Equipment during the continuance of this Agreement necessary to keep and maintain the Equipment in good mechanical condition and repair, including, but not limited to, all repairs occasioned by accident. All attachments, accessories and repairs at any time made to or placed upon the Equipment or any replacement thereof, will become part of the Equipment and will immediately become the property of Company for all purposes. All Equipment replacement parts and accessories, will immediately become the property of Company for all purposes,

 

11.          DISCLAIMER OF WARRANTIES AND WAIVER OF DEFENSES . COMPANY MAKES NO WARRANTY, EXPRESSED OR IMPLIED, TO ANYONE, AS TO THE FITNESS, MERCHANTABILITY, DESIGN, CONDITION, CAPACITY, PERFORMANCE, OR ANY OTHER ASPECT OF THE EQUIPMENT OR ITS MATERIAL OR WORKMANSHIP. COMPANY FURTHER DISCLAIMS ANY LIABILITY FOR LOSS, DAMAGE OR INJURY TO ANY PARTIES TO THIS AGREEMENT OR THIRD PARTIES AS A RESULT OF ANY DEFECTS, LATENT OR OTHERWISE, IN THE EQUIPMENT WHETHER ARISING FROM COMPANY'S NEGLIGENCE OR APPLICATION OF THE LAWS OF STRICT LIABILITY.

 

12.          Jurisdiction and Disputes; Choice of Law . The rights and obligations of the parties under this Agreement shall be governed by the laws of Italy. In the event of any dispute, controversy or claim arising out of or relating to this Agreement, or to the breach or termination hereof (a " Dispute "), the parties agree to resolve the same as follows:

 

(a)          The parties to the Dispute shall initially attempt to resolve it through consultations and negotiations.

 

Execution Version

Sponsored Research Agreement

 

 

3
 

 

 

(b)          If the Dispute has not been resolved amicably within thirty (30) days after any party provides notice thereof, unless the parties agree otherwise, the Dispute shall be resolved by a single arbitrator in a final and binding arbitration that will be conducted in Milan, Italy in accordance with the Arbitration Rules of the Chamber of Commerce of Milan, as in effect on the Effective Date (the "Milan Rules"). The International Centre for Dispute Resolution (" ICDR ") shall serve as the appointing authority. If the parties cannot agree on the arbitrator then an arbitrator experienced in matters similar to the Dispute will be chosen by ICDR. The language to be used in the arbitration proceeding shall be English, The arbitration shall be administered by the ICDR under the Milan Rules. The arbitrator shall render a written award stating the reasons for the decision. An arbitration award or decision may be entered by any court of competent jurisdiction, or application may be made to such a court for judicial acceptance of the award or decision and any appropriate order, including enforcement. All direct costs of an arbitration proceeding under this Section, including fees and expenses of arbitration, shall be borne equally by the parties hereto. All other costs, including counsel and witness fees, shall be borne by the party incurring them.

 

(c)          Each of the parties hereto consents to the submission of any Dispute for settlement by final and binding arbitration in accordance with paragraph (b) above, Such consent shall satisfy the requirements for an "agreement in writing" pursuant to Article II of the United Nations Convention on the Recognition and Enforcement of Foreign Arbitration Awards, done at New York on June 10, 1958.

 

(d)          Each of the parties hereby undertakes to carry out without delay the provisions of any arbitration award or decision.

 

13.          Integration . With respect to the subject matter of this Agreement, this Agreement constitutes the entire understanding between the parties and supersedes any prior discussions, negotiations, agreements and understandings.

 

14.          Notice . All notices and other communications required or permitted under this Agreement will be in writing and will be deemed given when delivered personally or by registered or certified mail, return receipt requested, addressed as follows (or any other address that is specified in writing by either party):

 

To Mantero:

 

Sara Mantero

Dipartimento di Bioingegneria

Politecnico di Milano

Via Golgi 39 (Ed.34 - piano IV)

20133 Milan
Italy

 

To Asnaghi:

 

Maria Adelaide Asnaghi
Via Piave 54
20036 Meda (MI)
Italy

 

Execution Version

Sponsored Research Agreement

 

4
 

 

To PDM:

 

Giancarlo Ferrigno
Dipartimento di Bioingegneria
Politecnico di Milano
Via Golgi 39 (Ec1.34 - piano IV)
20133 Milan
Italy

 

To Company:

 

Harvard Bioscience, Inc.
84 October Hill Road
Holliston, Massachusetts 01746
United States of America

 

With a copy to:

 

Jaffe, Raitt, Heuer & Weiss, P.C.
Attn: Sara M. Kruse, Esq.
27777 Franklin Rd., Suite 2500
Southfield, Michigan 48034
United States of America

 

15.          Severability . Whenever possible, each provision of this Agreement will be interpreted in such a way as to be effective and valid under applicable law. If a provision is prohibited by or invalid under applicable law, it will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

 

16.          Assignments . No assignment of this Agreement or of any right or obligation under this Agreement will be made by any party without the prior written consent of the other parties hereto, such consent not to be unreasonably withheld. Further, Company may assign its rights under the Agreement without the prior written consent of the other parties so long as Company remains responsible for any obligations in respect of this Agreement

 

17.          Waiver . Any party's failure to exercise a right or remedy will not operate as a waiver of any of such party's rights or remedies or the other parties' obligations under this Agreement and will not constitute a waiver of its right to declare an immediate or a subsequent default.

 

18.          Amendments . The terms of this Agreement may not be varied or modified in any manner, except in a subsequent writing executed by an authorized representative of each party.

 

19.          Independent Contractors . In their relationship under this Agreement, each party is an independent contractor. Nothing in this Agreement on its own will be construed such that either party will be considered an agent or partner of the other.

 

Execution Version

Sponsored Research Agreement

 

 

5
 

 

 

20.          Survival . The following Sections will survive the termination of this Agreement: 1, 6 - 9 and 11 - 25.

 

21.          Counterparts . This Agreement may be executed in one or more counterparts, each of which will be deemed an original agreement, but all of which will be considered one instrument and will become a binding agreement when one or more counterparts have been signed by each of the parties and delivered to the other. A facsimile of this document bearing a party's signature or a printed copy of the original, signed document scanned in .pdf or .tif format will have the same legal force and effect as an original of such signature and will be treated as an original document for evidentiary purposes.

 

22.          Force Majeure . No party will be deemed to be in default or otherwise responsible for delays or failures in performance resulting from acts of God, acts of war or civil disturbance, epidemics, governmental action or inaction, fires, earthquakes, unavailability of labor, materials, power or communication, or other causes beyond their reasonable control.

 

23.          No Third-Party Beneficiaries . This Agreement will not confer any rights or remedies upon any third-party, other than the parties to this Agreement and their respective successors and permitted assigns.

 

24.          Titles . Titles and headings to Sections in this Agreement are inserted for convenience of reference only and are not intended to affect the interpretation or construction of the Agreement.

 

25.          Ambiguity Not to Be Construed Against Drafter . Each party to this Agreement has been involved in its drafting and negotiation. No rule of law that ambiguity in an agreement will be construed against the drafter will be applied in interpreting this Agreement.

 

SIGNATURES ON NEXT PAGE

 

Execution Version

Sponsored Research Agreement

 

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Agreed as of the date last below written:

 

Mantero:   Company:
       
    HARVARD BIOSCIENCE, INC.,
    a Delaware corporation
       
By: /s/ Sara Mantero      
         
SARA MANTERO, Ph.D.    
     
Dated:     By: /s/ David Green
         
Asnaghi:     Print Name: David Green
         
      Its: President
         
By: /s/ Maria Adelaide Asnaghi   Dated: 5 th August, 2009

 

MARIA ADELAIDE ASNAGHI      
       
Dated:        
         
PDM:        

 

DEPARTMENT OF BIOENGINEERING of the      
POLITECNICO DI MILANO      
       
By: /s/ Giancarlo Ferrigno      
         
Print Name: Prof GIANCARLO FERRIGNO, Ph.D      
         
Its:        
         
Dated:        

 

Execution Version

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Exhibit A

 

Research Program

 

Mantero, Asnaghi and PDM will design and develop additional intellectual property relating to bioreactors, including other clinical applications, the scope of which will be determined by Mantero, Asnaghi, PDM and Company, from time-to-time.

 

Automation of the seeding process in both sides of the tubular structure.

 

Execution Version

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Exhibit B

 

Intellectual Property Rights

 

1.          " New Technology " means any intellectual property developed through the Research Program that is not already included within the Licensed Technology (as defined in and set forth in the ELA).

 

2.          The parties acknowledge that Improvements (as defined in the ELA) developed through the Research Program are already included in the Licensed Technology and will be and already are licensed to Company pursuant to the terms of the ELA.

 

3.          The parties will consult regarding preparation and filing of any patent applications for Licensed Technology not currently protected by patent and for any New Technology, The party designated to file an application will provide the other parties, on a confidential basis, a copy of any such application filed and any documents received or filed during prosecution thereof with the opportunity to comment thereon. The parties will cooperate in obtaining execution of any necessary documents required to prosecute such patent applications or related filings. The party responsible for tiling the patent application may choose its own patent counsel and will be responsible for all costs associated with the filing and maintaining the patent if issued.

 

4.          Title to all intellectual property developed by Mantero, Asnaghi or other PDM employees resulting from the Research Program will reside with Mantero and Asnaghi. Title to all intellectual property developed by Company resulting from the Research Program will reside in Company. Title to all inventions and discoveries made jointly by Mantero, Asnaghi or other PDM employees and Company resulting from the research performed hereunder will reside jointly in Mantero and Asnaghi and Company.

 

5.          Mantero, Asnaghi and PDM grant to Company an option for a worldwide, royalty-bearing exclusive license for all intellectual property rights related to any New Technology and right to disclose and use the names of Mantero and Asnaghi in connection with promoting, advertising, marketing, licensing and/or selling the New Technology, as long as such disclosure and usage accurately describes their involvement in the development of the New Technology. Such option will be exercisable in the following manner: Whenever Company believes that it has identified a commercially exploitable New Technology, it will notify PDM of its desire to enter into such a license agreement, and the parties shall enter into an exclusive license agreement upon the same terms and conditions, including economic terms, as the ELA.

 

6.          Mantero, Asnaghi and PDM grant Company a fully paid-up, nonexclusive license under
their copyrights to make and distribute copies and to make derivative works from any written report or software source code prepared and delivered to Company in accordance with this Agreement.

 

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EXHIBIT 10.19

 

   

NOVEL SURGERY AGREEMENT

 

  СОГЛАШЕНИЕ О ПРОВЕДЕНИИ РАНЕЕ НЕ ПРОВОДИВШЕЙСЯ ХИРУРГИЧЕСКОЙ ОПЕРАЦИИ
         
    This Novel Surgery Agreement (“Agreement”) is made, as of the last date set forth on the signature page below, between:   Настоящее Соглашение об проведении ранее не проводившейся хирургической операции («Соглашение») заключено на дату, указанную последней на странице с подписями, между:
         
    Harvard Apparatus Regenerative Technology, Inc. , a Delaware corporation having an office located at 84 October Hill Road, Holliston, Massachusetts 01746 Telephone: (508) 893-8999; Facsimile: (508) 892-6135 (“Manufacturer”),   Harvard Apparatus Regenerative Technology, Inc., корпорацией, зарегистрированной в штате Делавэр по адресу: 84 October Hill Road, Holliston, Massachusetts 01746, тел.: (508) 893-8999; факс: (508) 892-6135 («Изготовитель»),
         
    State Budget Institution of Public Health Department Regional Clinical Hospital #1 after Prof. S.V. Ochapovsky  located at 1st May 167, Krasnodar 350086 (“Hospital”), and   Государственное бюджетное учреждение здравоохранения «Краевая клиническая больница №1 имени профессора С.В. Очаповского расположенная по адресу: Краснодар 350086 ул. 1 мая, 167 («Больница»)), и
         
    [surgeon’s name], M.D., an employee of Hospital assigned to provide professional services at Hospital (“Principal Surgeon”).   [фамилия врача], врачом, сотрудником Больницы, назначенным для оказания профессиональных услуг в Больнице (далее – «Главный врач»).
         
   

WHEREAS, Principal Surgeon intends to employ a clinical protocol, entitled “Human Bioengineered Synthetic Tracheal Transplant Protocol”, as amended in writing from time to time and incorporated by reference herein (the “Clinical Protocol”), for the transplantation of the trachea, using a synthetic bioengineered scaffold seeded with autologous mononuclear cells (the “Surgery”), as an intraoperative solution for a patient (“Patient”);

 

  ПРИНИМАЯ ВО ВНИМАНИЕ, что Главный врач намерен использовать клинический протокол под названием «Протокол применения человеческого биоинженерного синтетического трансплантата трахеи», с вносимыми время от времени письменными изменениями, который включён в данное Соглашение путём ссылки («Клинический протокол»), для пересадки трахеи с использованием синтетического биоинженерного каркаса с всаженными аутогенными мононуклеарными клетками («Хирургическая операция») в качестве интраоперационного решения для пациента (далее – «Пациент»);
         
    WHEREAS, the Clinical Protocol contemplates the use of the In Breath® 3D Organ Bioreactor (the “Device”) in connection with the Surgery and Manufacturer owns the rights to and manufactures the Device;   ПРИНИМАЯ ВО ВНИМАНИЕ, что Клинический протокол включает применение устройства In Breath® 3D Organ Bioreactor («Устройство») в связи с Хирургической операцией, и Изготовитель владеет правами на Устройство и его изготовление;

  

 

 
 

 

    WHEREAS, Hospital has facilities and personnel with the requisite skills experience and knowledge to participate in the Surgery in accordance with the Clinical Protocol referenced above; and   ПРИНИМАЯ ВО ВНИМАНИЕ, что в Больнице имеются помещения и персонал, обладающий необходимыми навыками, опытом и знаниями для участия в Хирургической операции в соответствии с указанным выше Клиническим протоколом, а также,
         
    WHEREAS, the parties wish to collaborate on the Surgery in a manner beneficial to each of them.   ПРИНИМАЯ ВО ВНИМАНИЕ, что стороны выразили желание вести взаимовыгодное сотрудничество для проведения Хирургической операции,
         
    NOW, THEREFORE, in consideration of the premises and mutual promises and covenants expressed herein the parties agree as follows:   С УЧЁТОМ ВЫШЕИЗЛОЖЕННОГО, принимая во внимания исходные условия и взаимные обещания сторон, а также договорённости, изложенные в данном документе, стороны пришли к следующему соглашению:

 

1.   Surgery   Хирургическая операция
         
1.1.   Principal Surgeon will perform the Surgery at the Hospital (or at such other location agreed to by the parties) according to applicable Clinical Protocols, using his professional expertise and reasonable professional practices.   Главный врач проведёт Хирургическую операцию в Больнице (или в другом таком месте, согласованным сторонами) в соответствии с применимыми Клиническим протоколами, используя свой профессиональный опыт и разумную профессиональную практику.
         
1.2.   Hospital will provide qualified personnel, equipment, and materials (except as otherwise provided by Manufacturer), and facilities necessary to perform the Surgery in accordance with the Clinical Protocol and this Agreement. Hospital and Principal Surgeon shall at all times comply with all applicable laws and regulations relating to the use of such equipment and materials, and shall at all times comply with the requirements for obtaining prior, written informed consent of the Patient and/or Patient’s representatives (“Informed Consent”) in the form or similar acceptable form as set forth in Appendix 1.   Больница обеспечит квалифицированный персонал, оборудование и материалы (кроме тех которые иначе будут предоставлены Изготовителем), а также помещения, необходимые для проведения Хирургической операции в соответствии с Клиническим протоколом и данным Соглашением. Больница и Главный врач должны постоянно соблюдать требования всех применимых законов и постановлений, которые относятся к использованию такого оборудования и материалов, и должны во всё время выполнять требования получения предварительного, осведомлённого письменного согласия Пациента и/или представителей Пациента («Осведомлённое согласие») по форме или в похожей приемлемой форме в соответствии с Приложением №1.

 

 
 

 

2.   Principal Surgeon   Главный врач
         
2.1   The Surgery will be performed by and under the direction of Principal Surgeon.   Хирургическая операция будет произведена Главным врачом и под его руководством.
         
2.2   Hospital and Principal Surgeon represent and warrant that Principal Surgeon is not the subject of a proceeding by any Board of Medical Examiners or similar agency.   Больница и Главный врач заверяют и гарантируют, что Главный врач субъектом разбирательства со стороны Совета Медицинской Экспертизы (Board of Medical Examiners) или схожей инстанции.
         
3.   Institutional Approvals   Одобрения учреждениями
         
3.1   Hospital and Principal Surgeon shall not allow the Surgery nor any preparation for the Surgery until the Surgery has been unconditionally approved by any and all applicable authorities including all the terms and conditions of the Surgery, including without limitation the Informed Consent of the Patient, the Clinical Protocol and the participation of Hospital and Principal Surgeon in the Surgery.   Больница и Главный врач не должны разрешать, ни проведения Хирургической операции, ни какой-либо подготовки к Хирургической операции до тех пор, пока не будут получены безусловные одобрения проведения Хирургической операции от всех и любых соответствующих властей, включая все условия и положения Хирургической операции, включая без ограничений, Осведомлённое согласие Пациента, Клинический протокол и участие Больницы и Главного врача в проведении Хирургической операции.
         
4.   Supply of Surgery Materials   Поставка материалов для Хирургической операции
         
4.1   Manufacturer will provide the Device, and Principal Surgeon and Hospital shall provide all other devices, services, equipment and other supplies necessary for conduct of the Surgery. Neither Principal Surgeon nor Hospital may provide or demonstrate the Device to any other persons or entities not described in this Agreement without the prior express written consent of Manufacturer.   Изготовитель предоставит Устройство, а Главный врач и Больница должны предоставить все остальные приспособления, услуги, оборудование и прочие материалы, необходимые для проведения Хирургической операции. Ни Главный врач, ни Больница не могут предоставить или демонстрировать Устройство каким-либо прочим лицам или субъектам, не указанным в данном Соглашении, без предварительного, прямо выраженного письменного согласия Изготовителя.
         
5.   Access to Facilities and Personnel   Доступ к помещениям и персоналу
         
5.1   Hospital will allow Manufacturer (or its designees) reasonable access during business hours and at mutually convenient times to the Hospital (or such other location as the Surgery or any post-operative activities take place) and Principal Surgeon for the purpose of assisting Principal Surgeon and his team in use of the Device, monitoring the Surgery in accordance with the Clinical Protocol and/or the Informed Consent, reviewing documents and other matters related to the Surgery.   Больница разрешит Изготовителю (или указанным им лицам) доступ в Больницу в разумных пределах, в рабочее время и в часы, обоюдно выгодные как для Больницы (или подобного другого места, когда будет проводиться Хирургическая операция или любые после-операционные процедуры), так и для Главного врача, с целью помочь Главному врачу и его группе в использовании Устройства, ведении мониторинга Хирургической операции в соответствии с Клиническим протоколом и/или Осведомлённым согласием, для проверки документов и прочих вопросов, связанных с Хирургической операцией

 

 
 

 

6.   Access to Surgery Reports and Results   Доступ к отчетам и результатам Хирургической операции
         
6.1   Hospital and Principal Surgeon agree to disclose and make available to Manufacturer (or its designee) all pre- and post-operative records, follow-up reports and other records concerning the Surgery prepared by Hospital or Principal Surgeon, either alone or with others, in each case consistent with the scope of the Informed Consent and the confidentiality waiver authorization given by the Patient, for the purpose of Manufacturer’s use of such information to improve the Device or invent other devices for use in future procedures   Больница и Главный врач соглашаются раскрыть информацию и предоставить Изготовителю (или назначенным им лицам) доступ ко всем до- и после-операционным записям, последующим отчётам и прочим документам, связанным с Хирургической операцией, которые были подготовлены Больницей или Главным врачом, по отдельности или с другими лицами, в каждом отдельном случае в рамках Осведомлённого согласия и отказа от конфиденциальности данных Пациентом, в целях использования такой информации Изготовителем для усовершенствования данного Устройства или изобретения других устройств для использования в будущих процедурах.
         
7.   Inventions; Ownership of Intellectual Property   Изобретения; права на интеллектуальную собственность
         
7.1   It is recognized and understood that the existing inventions and technologies, including, but not limited to the Confidential Information of Manufacturer or Hospital are their separate property, respectively, and are not affected by this Agreement. Hospital shall not have any claims to or rights in such existing inventions and technologies of Manufacturer (including, without limitation, Manufacturer’s Confidential Information), and Manufacturer shall not have any claims to or rights in such existing inventions and technologies of Hospital (including, without limitation, Hospital’s Confidential Information). For purposes hereof, “Confidential Information” shall mean any and all information, materials and data that is disclosed by one party to the other pursuant to this Agreement and designated as “confidential” at the time of initial disclosure if disclosed in writing or, if initially disclosed orally, identified by the disclosing party as confidential at the time of disclosure and thereafter summarized in writing and designated as “confidential” within 30 days after the initial oral disclosure. Confidential Information shall not include any information, materials or data which: (i) at the time of disclosure hereunder is generally available to the public; (ii) after disclosure hereunder becomes generally available to the public, except through breach of this Agreement by the recipient; (iii) the recipient can demonstrate was in its possession prior to the time of disclosure by the disclosing party hereunder, and was not acquired directly or indirectly from the disclosing party under an obligation of confidentiality; (iv) becomes available to the recipient from a third party which is not legally prohibited from disclosing such Confidential Information, provided such Confidential Information was not acquired directly or indirectly from the disclosing party under an obligation of confidentiality; or (v) the recipient can demonstrate was developed by or for the recipient independently of the disclosure of Confidential Information by the disclosing party.   Признаётся и понимается, что существующие изобретения и технологии, включая, но не ограничиваясь Конфиденциальной информацией Изготовителя или Больницы соответственно, являются отдельными объектами собственности, и не попадают под действие данного Соглашения. Больница не должна предъявляет каких либо претензий или заявлять о правах на такие существующие изобретения и технологии Изготовителя (включая, без ограничений, Конфиденциальную информацию Изготовителя), и Изготовитель не должен предъявлять никаких претензий или заявлять о правах на такие существующие изобретения и технологии Больницы (включая, без ограничений, Конфиденциальную информацию Больницы). В рамках данного соглашения, «Конфиденциальная информация» означает всю без исключения информацию, материалы и данные, которые передаются одной стороной другой стороне согласно данному Соглашению и которые обозначены как «конфиденциальные» в момент их первоначального раскрытия, если они были раскрыты в письменной форме, или если они были первоначально раскрыты в устной форме, обозначены передающей стороной как конфиденциальные в момент раскрытия и впоследствии обобщены в письменной форме и указаны как «конфиденциальные» в течение 30 дней после первоначального устного раскрытия информации. Конфиденциальная информация не должна включать в себя никакой информации, материалов или данных, которые: (i) в момент раскрытия по данному Соглашению являются общедоступными; (ii) после раскрытия по данному Соглашению, они становятся общедоступными, за исключением случаев, когда это произошло в результате нарушения Соглашения получателем; (iii) получатель может доказать, что он владел этой информацией до её раскрытия передающей стороной согласно данному Соглашению, и она не была получена прямо или косвенно от передающей стороны в соответствии с обязательствами о конфиденциальности; (iv) могли попасть к получателю от третьей стороны, в отношении которой нет юридических оснований запрещающих раскрытие такой Конфиденциальной информации, при условии, что такая Конфиденциальная информация не была получена прямо или косвенно от передающей стороны в соответствии с обязательствами о конфиденциальности; или (v) получатель может продемонстрировать, что она была разработана получателем или для него, независимо от раскрытия Конфиденциальной информации передающей стороной.

 

 
 

 

7.2   All right, title and interest to any invention, whether or not patentable, resulting from the performance of this Agreement shall belong solely to Manufacturer if conceived, discovered or invented solely by Manufacturer or an employee or consultant of Manufacturer. All right, title and interest to any invention, whether or not patentable, which arises from Manufacturer’s Confidential Information or the Device shall also be owned solely by Manufacturer (both referred to as a “Manufacturer Invention”).   Все права, собственность и интерес в каком-либо изобретении, патентоспособном ли или нет, полученные в результате выполнения данного Соглашения, должны принадлежать исключительно Изготовителю, если изобретение было задумано, открыто или изобретено исключительно Изготовителем или сотрудником или консультантом Изготовителя. Всеми правами, собственностью и интересом в каком-либо изобретении, патентоспособном или нет, возникающими из Конфиденциальной информации или Устройства Изготовителя, также владеет исключительно Изготовитель (в обоих случаях они называются «Изобретение Изготовителя»).
         
7.3   All right, title and interest to any invention, whether or not patentable, resulting from the performance of this Agreement shall belong solely to Hospital if conceived, discovered or invented solely by Hospital or an employee or consultant of Hospital, without any access to Manufacturer’s Confidential Information or use of Manufacturer’s technology, resources or other property (including, without limitation, the Device) (a “Hospital Invention”).   Все права, собственность и интерес в каком-либо изобретении, патентоспособном ли или нет, возникающие в связи с выполнением данного Соглашения, принадлежат исключительно Больнице, если изобретение было задумано, открыто или изобретено исключительно Больницей или сотрудником или консультантом Больницы, без какого-либо доступа к Конфиденциальной информации Изготовителя или использования технологии, ресурсов или иной собственности Изготовителя (включая, помимо прочего, Устройство) («Изобретение Больницы»)
         
7.4   All right, title and interest to any invention, whether or not patentable, resulting from the performance of this Agreement and which is conceived, discovered or invented jointly by Manufacturer or an employee or consultant of Manufacturer and Hospital or an employee or consultant of Hospital shall be owned jointly by Manufacturer and Hospital (a “Joint Invention”).   Всеми правами, собственностью и интересами в каком-либо изобретении, патентоспособном ли или нет, возникающие в связи с выполнением данного Соглашения, если изобретение задумано, открыто или изобретено совместно Изготовителем или сотрудником или консультантом Изготовителя и Больницей или сотрудником или консультантом Больницы, совместно владеют Изготовитель и Больница («Совместное изобретение»)
         
7.5   Hospital hereby grants to Manufacturer an option to obtain a perpetual, worldwide license, to make, have made, use and sell products incorporating Hospital Inventions at a reasonable royalty rate and upon other reasonable terms, including exclusivity, to be negotiated by the parties. Manufacturer’s election to exercise its option must be in writing to Hospital. If, within ninety (90) days from the date Manufacturer is notified of a Hospital Invention, Hospital and Manufacturer do not execute a mutually agreeable license for such, Hospital may thereafter enter into a license with any third party with respect thereto.   Настоящим Больница предоставляет Изготовителю опцион на получение бессрочной лицензии действительной по всему миру, на изготовление, заказ на изготовление, использование и продажу продукции, содержащей Изобретения Больницы с уплатой роялти по разумной ставке и при выполнении других разумных условий, в том числе эксклюзивности, которые подлежат обсуждению сторонами. Решение Изготовителем о реализации данного опциона должно быть составлено в письменной форме и направлено Больнице. Если в течение девяноста (90) дней с даты уведомления, направленного Изготовителю в отношении Изобретения Больницы, Больница и Изготовитель не составят соглашение для получения взаимо согласованной лицензии, Больница может впоследствии в этих целях заключить соглашение о получении лицензии с любым третьим лицом.

 

 
 

 

7.6   Hospital shall have a royalty-free, non-exclusive licence to use any Manufacturer Inventions and/or Joint Inventions, solely for its internal educational and non-commercial research purposes and for the purpose of compliance with any applicable laws and regulations. With respect to all other uses, Manufacturer hereby grants to Hospital an option to obtain a perpetual, worldwide license, to Manufacturer Inventions at a reasonable royalty rate and upon other reasonable terms, including exclusivity, to be negotiated by the parties. Hospital’s election to exercise its option must be in writing to Manufacturer. If, within ninety (90) days from the date Hospital is notified of a Manufacturer Invention, Hospital and Manufacturer do not execute a mutually agreeable license for such, Manufacturer may thereafter enter into a license with any third party with respect thereto.   Больница должна иметь не эксклюзивную лицензию без уплаты роялти для использования любых Изобретений Изготовителя и/или Совместных Изобретений исключительно для своих внутренних образовательных и некоммерческих исследовательских целей, а также в целях выполнения требований любых применимых законов и нормативных актов. В отношении всех других видов применения, настоящим Изготовитель даёт Больнице опцион на получение бессрочной лицензии действующей по всему миру на Изобретения Изготовителя с уплатой роялти по разумной ставке и при выполнении других разумных условий, в том числе эксклюзивности, которые подлежат обсуждению сторонами. Решение Больницы о реализации данного опциона должно быть составлено в письменной форме и направлено Изготовителю. Если в течение девяноста (90) дней с даты уведомления, направленного Больнице в отношении Изобретения Изготовителя, Больница и Изготовитель не составят соглашение для получения взаимо согласованной лицензии, Изготовитель может впоследствии в этих целях заключить соглашение о получении лицензии с любым третьим лицом.
         
7.7   Each party shall have the unrestricted right to exploit any Joint Inventions.   Каждая из сторон имеет неограниченное право на использование любых Совместных Изобретений.
         
8.   Documentation Provided by Hospital   Документация, предоставляемая Больницей
         
8.1  

Hospital will submit the following documents to Manufacturer before commencing the Surgery:

 

(a)   a signed copy of any and all required approvals of the Surgery and Patient Informed Consent form, as required and approved by the appropriate authorities; and

 

(b)   a signed copy of the Clinical Protocol.

 

Больница представит Изготовителю следующие документы до начала Хирургической операции:

 

a)   подписанные копии всех и любых одобрений требуемых для проведения Хирургической операции и Осведомлённое согласие Пациента, как того требуют и одобряют соответствующие власти; и

 

b)   подписанную копию Клинического протокола

 

 
 

 

9.   Privacy   Конфиденциальность
         
9.1   Manufacturer hereby agrees to fully comply with all applicable laws relating to privacy of Patient health information and the regulations adopted pursuant thereto. Without any limitation to the foregoing, the parties understand that in connection with the Agreement, certain Patient data must be exchanged between Hospital and Manufacturer. Manufacturer agrees to fully comply with appropriate confidentiality requirements and regulations, and specifically agrees to:   Изготовитель выражает согласие полностью выполнять требования всех применимых законов, связанных с конфиденциальностью медицинской информации Пациента, и нормативными актами, принятыми в целях обеспечения оной. Без каких-либо ограничений на счёт вышеуказанного, стороны понимают, что в связи с данным Соглашением, определённые данные о Пациенте должны обмениваться между Больницей и Изготовителем. Изготовитель согласен полностью выполнять соответствующие требования по конфиденциальности, и в особенности соглашается:
         
   

(a)    not use or further disclose Patient health information and/or electronic protected health information other than as permitted or required by the Agreement or as required by law;

 

(b)    use appropriate safeguards to prevent use or disclosure of information other than as required for by the Agreement;

 

(c)    report to the Hospital any use or disclosure of the information not provided for by the Agreement of which it becomes aware,

 

(d)    ensure that any agents, including a subcontractor, to whom Manufacturer provides protected health information and/or electronic protected health information received from, or created, or received by Manufacturer on behalf of Hospital, agree to the Manufacturer’s restrictions and conditions that apply to Manufacturer as a business partner of Hospital with respect to such information;

 

(e)    make available protected health information and/or electronic protected health information for amendment and incorporate any amendments to protected health information and/or electronic protected health information as required by law;

 

(f)    make its internal practices, books and records related to the use and disclosure of protected health information and/or electronic protected health information received from, or created, or received by Manufacturer on behalf of Hospital available to the U.S. Secretary of Health and Human Services if so required;

 

(g)   return or destroy, at termination of this Agreement, if feasible, all protected health information and/or electronic protected health information received from, or created, or received by Manufacturer on behalf of Hospital that Manufacturer still maintains in any form and retain no copies of such information; or, if such return or destruction is not feasible, extend the protection of the Agreement to the information and limit further uses and disclosures to those purposes that make the return or destruction of the information infeasible.

 

a)   не использовать или в дальнейшем не раскрывать медицинскую информацию Пациента и/или медицинскую информацию защищённую средствами электронной защиты, кроме случаев, когда это разрешается или требуется Соглашением или требуется по закону;

 

b)   использовать соответствующие защитные меры для предотвращения использования или раскрытия информации, кроме того как это требуется Соглашением;

 

c)   сообщить Больнице, о любых случаях использования или раскрытия информации, которые не предусмотрены Соглашением о которых ему становится известно;

 

d)   обеспечить, чтобы любые посредники, включая подрядчиков, которым Изготовитель предоставляет защищённую медицинскую информацию и/или медицинскую информацию защищённую средствами электронной защиты, полученную или созданную, или полученную Изготовителем от имени Больницы, были согласны с ограничениями и условиями Изготовителя, которые применяются к Изготовителю в качестве делового партнёра Больницы в отношении такой информации;

 

e)   предоставлять доступ к защищённой медицинской информации и/или медицинской информации защищённой средствами электронной защиты для внесения поправок и включать любые поправки в защищенную медицинскую информацию и/или медицинскую информацию защищённую средствами электронной защиты в соответствии с требованиями законодательства;

 

f)   если необходимо, предоставлять доступ к информации о своей внутренней практике, журналам и записям, связанным с использованием и раскрытием защищённой медицинской информации и/или медицинской информации защищённой средствами электронной защиты, полученной от или созданной, или полученной Изготовителем по поручению Больницы, министру здравоохранения и социального обеспечения США;

 

g)   по прекращении действия данного Соглашения вернуть или уничтожить, если это осуществимо, всю защищённую медицинскую информацию и/или медицинскую информацию защищённую средствами электронной защиты, полученную от или созданную, или полученную Изготовителем по поручению Больницы, которую Изготовитель продолжает содержать в какой-либо форме, и не сохранять никаких копий такой информации; или, если такой возврат или уничтожение неосуществимо, продлить срок защиты информации данным Соглашением и ограничить её последующее использование и раскрытие такими целями, которые делают возврат или уничтожение информации невозможными.

 

 
 

 

9.2   A violation of this section shall be a material violation of this Agreement and cause for termination notwithstanding any provision in the Agreement to the contrary.   Нарушение условий данного раздела рассматривается как существенное нарушение данного Соглашения и является основанием для расторжения, невзирая на какие либо положения Соглашения об обратном.
         
9.3   Manufacturer also agrees that if it becomes necessary to amend this Agreement to fulfill the purposes of any applicable laws or regulations that Manufacturer agrees to do so without additional consideration.   Изготовитель также соглашается, что если возникнет необходимость внесения поправок в данное Соглашение для выполнения требований применимых законов или нормативных актов, Изготовитель соглашается на это без дополнительного рассмотрения вопроса.

 

 
 

 

10.   Device Offered for Single Use Not for Sale or Public Use   Устройство предлагается для одноразового использования и не подлежит продаже или общему пользованию
         
10.1   Without limiting the generality of any other confidentiality provisions under this Agreement, Hospital and Principal Surgeon acknowledge that the Device is investigational and agree (a) to use the Device solely in connection with the Surgery and not to use the Device again including, without limitation, in connection with any other procedure, and (b) not to offer the Device for commercial sale or use.   Без ограничений общего характера любых прочих условий по конфиденциальности, содержащихся в настоящем Соглашении, Больница и Главный врач признают, что Устройство является исследовательским и соглашаются, (a) использовать Устройство исключительно в целях проведения Хирургической операции и не использовать Устройство повторно, включая, без каких либо ограничений, для произведению любых других процедур, и (b) не предлагать Устройство для коммерческой продажи или использования.
         
11.   Insurance   Страхование
         
11.1   Hospital shall maintain, during the course of this Agreement and for a period of at least two (2) years thereafter, its program of self insurance against such risks in minimum amounts of 1,000,000.00 Rubles per occurrence and or in such other higher amounts as may be required by applicable laws and/or regulations. Upon request, Hospital shall provide certification of such insurance coverage to Manufacturer.   В течение срока действия настоящего Соглашения и в течение периода продолжительностью не менее 2 (двух) лет после завершения срока его действия, Больница обязана сохранять в силе свою программу само страхования от подобных рисков в размере минимум 1,000,000 рублей за каждый страховой случай и/или прочих более крупных сумм в зависимости от требований применимого законодательства и/или нормативных актов. По требованию Изготовителя Больница обязана предоставить документальные подтверждения такого страхового покрытия.
         
11.2   Manufacturer shall maintain, during the course of this Agreement and for a period of at least two (2) years thereafter, liability insurance in the amount of Two Million Dollars ($2,000,000) per occurrence and Four Million Dollars ($4,000,000) annual aggregate with financially sound and reputable insurance companies. Upon request, Manufacturer shall provide certification of such insurance coverage to Hospital.   В течение срока действия настоящего Соглашения и в течение периода длительностью не менее 2 (двух) лет после завершения срока его действия, Изготовитель обязан обеспечить страхование ответственности в размере 2 000 000 (двух миллионов) долларов США за каждый страховой случай и общей годовой суммы страховых выплат в 4 000 000 (четыре миллиона) долларов США у финансово стабильных и авторитетных страховых компаний. По требованию Изготовителя Больница обязана предоставить документальные подтверждения такого страхового покрытия.

 

 
 

 

12.   Indemnification and Responsibility   Возмещение ущерба и ответственность
         
12.1   By Manufacturer:   Со стороны Изготовителя:
         
   

(a)    Manufacturer hereby agrees to indemnify, defend and hold harmless Hospital and its directors, trustees, officers, shareholders, agents, and employees, including, but not limited to Principal Surgeon and assistants in the Surgery (hereafter collectively referred to as “Hospital Indemnitees”) from and against any and all claims, liabilities, losses, judgments, obligations, damages, costs and expenses (including reasonable attorneys’ fees) (collectively “Claims”) arising out of claims made or brought on behalf of Patient (or his representatives or dependents) for personal injury (including death) that arises from or is attributable to the design, production, manufacture of the Device.

 

(b)    The indemnification obligation set forth in this Section 12.1 shall not apply in the event and to the extent that such Claims arose as a result of (i) the wilful misconduct or negligence by Hospital Indemnitees or (ii) the “sole negligence” of one or any of the Hospital Indemnitees;

 

(c)    Hospital Indemnitees shall provide Manufacturer written notice of a Claim no later than fourteen (14) days after the Hospital Indemnitees have notice of such Claim for which indemnification is sought;

 

(d)    Manufacturer shall have sole control over the defense and settlement of a Claim for which indemnification is sought, and Hospital Indemnitees shall cooperate with the Manufacturer and its legal representatives in the investigation and defense of the Claim;

 

(e)    Manufacturer shall act reasonably and in good faith with respect to the defense or settlement of the Claim and will not reach any settlement which requires an admission of fault by a Hospital Indemnitee without that Hospital Indemnitee’s consent;

 

(f)    Hospital Indemnitees may, at their own expense, obtain separate legal counsel.

 

 

 

(a)   Настоящим Изготовитель соглашается индемнифицировать, защищать и ограждать Больницу и её директоров, попечителей, должностных лиц, акционеров, посредников и сотрудников, включая, но не ограничиваясь, Главного врача и ассистентов в Хирургическом отделении (в дальнейшем вместе именуемым "Индемнифицируемые лица") от и против любых и всех претензий, ответственности, убытков, судебных постановлений, обязательств, возмещения убытков, издержек и расходов (в том числе разумных гонораров адвокатов) (вместе "Претензий"), проистекающий из претензий, заявленных или поданных от имени Пациента (или его представителей или иждивенцев) в связи с причинением вреда здоровью (в том числе смертью), произошедшим от или могущими быть обусловленными проектированием, производством, изготовлением Устройства;

 

(b)   Обязательство по индемнификации, предусмотренное в настоящем пункте 12.1, не должны применяться в случае возникновения и в степени таких Претензий, если те возникли в результате (i) умышленного нарушения или халатности со стороны Индемнифицируемых лиц Больницы или (ii) "единоличной халатности" одного или любого из Индемнифицируемых лиц Больницы;

 

(c)   Индемнифицируемые лица Больницы должны направить Изготовителю письменное уведомление о Претензии не позднее 14 (четырнадцати) дней после получения Индемнифицируемыми лицами Больницы уведомления о такой Претензии, по которой подаётся требование о индемнификации;

 

(d)   Изготовитель должен имеет единоличный контроль в отношении защиты и урегулирования Претензии, по которой подаётся требование о индемнификации, а Индемнифицируемые лица Больницы должны содействовать Изготовителю и его юридическим представителям в расследовании и защите по Претензии;

 

(e)   Изготовитель обязан действовать разумно и добросовестно в отношении защиты или урегулирования Претензии и не будет добиваться какого либо урегулирования, которое потребует признания нарушения со стороны Индемнифицируемого лица Больницы без согласия такого Индемнифицируемого лица Больницы;

 

(f)   Индемнифицируемые лица Больницы могут за свой собственный счёт обратиться за отдельной юридической консультацией.

 

 
 

 

12.2   By Hospital and Principal Surgeon:   Со стороны Больницы и Главного врача:
         
   

(a)    Hospital and Principal Surgeon hereby agree to indemnify, defend and hold harmless Manufacturer and its directors, officers, shareholders, agents, and employees (hereafter collectively referred to as “Manufacturer Indemnitees”) from and against any and all Claims arising out of claims made or brought on behalf of Patient (or his dependents) for personal injury (including death) that arises from or is attributable to the services provided by Hospital and Principal Surgeon in connection with the Surgery.

 

(b)    The indemnification obligation set forth in this Section 12.2 shall not apply in the event and to the extent that such Claims arose as a result of (i) the wilful misconduct or negligence by Manufacturer Indemnitees; (ii) the “sole negligence” of one or any of the Manufacturer Indemnitees; or (iii) the design, production or manufacture of the Device by any of the Manufacturer Indemnitees.

 

(c)    Manufacturer Indemnitees shall provide the Hospital written notice of a Claim no later than fourteen (14) days after the Manufacturer Indemnitees have notice of such Claim for which indemnification is sought.

 

(d)    Hospital and Principal Surgeon shall have sole control of the defense and settlement of a Claim for which indemnification is sought, and Manufacturer Indemnitees shall cooperate with the Hospital, Principal Surgeon and their legal representatives in the investigation and defense of the Claim.

 

(e)    Hospital and Principal Surgeon shall act reasonably and in good faith with respect to the defense or settlement of the Claim and will not reach any settlement which requires an admission of fault by a Manufacturer Indemnitee without that Manufacturer Indemnitee’s consent.

 

(f)    Manufacturer Indemnitees may, at their own expense, obtain separate legal counsel.

 

(a)   Настоящим Больница и Главный врач соглашаются индемнифицировать, защищать и ограждать Изготовителя и его директоров, должностных лиц, акционеров, посредников и сотрудников, (в дальнейшем именуемым в совокупности "Индемнифицируемые лица Изготовителя") от и против любых и всех претензий, заявленных или поданных от имени Пациента (или его иждивенцев) в связи с причинением вреда здоровью (в том числе смертью), произошедшим от или могущими быть обусловленными услугами, оказанными Больницей и Главным врачом в связи с Хирургической операцией.

 

(b)   Обязательство по возмещению ущерба, изложенные в настоящем пункте 12.2, не должны применяться в случае возникновения и в степени таких Претензий, если те возникли в результате (i) умышленного нарушения или халатности со стороны Индемнифицируемых лиц Изготовителя или (ii) "единоличной халатности" одного или любого из Индемнифицируемых лиц Изготовителя; или (iii) проектирования, производства или изготовления Устройства любым из Индемнифицируемых лиц Изготовителя.

 

(c)   Индемнифицируемые лица Изготовителя должны направить Больнице письменное уведомление о Претензии не позднее 14 (четырнадцати) дней после получения Индемнифицируемыми лицами Изготовителя уведомления о такой Претензии, по которой подаётся требование о индемнификации.

 

(d)   Больница и Главный врач должны имеет единоличный контроль в отношении защиты и урегулирования Претензии, по которой подаётся требование о индемнификации, а Индемнифицируемые лица Изготовителя обязаны содействовать Больнице, Главному врачу и их юридическим представителям в расследовании и защите по Претензии.

 

(e)   Больница и Главный врач обязаны действовать разумно и добросовестно в отношении защиты или урегулирования Претензии и не не будет добиваться какого либо урегулирования, которое потребует признания нарушения со стороны Индемнифицируемого лица Изготовителя без согласия такого Индемнифицируемого лица Изготовителя.

 

(f)   Индемнифицируемые лица Изготовителя могут за свой собственный счёт обратиться за отдельной юридической консультацией.

         
    The obligations of the parties under this Section 12 shall survive the termination of the Agreement.   Обязательства сторон, предусмотренные в настоящем разделе 12, не должны прекращаться после прекращения действия Соглашения.

 

 
 

 

13.   Fees   Гонорары
         
13.1   Manufacturer waives its fees for the use of the Device and Manufacturer’s involvement in the Surgery.   Изготовитель отказывается от своих гонораров за использование Устройства и участие Изготовителя в Хирургической операции.
         
14.   Notices   Уведомления
         
14.1   All notices or consents required or permitted by this Agreement shall be in writing in the English language, and shall be deemed given when delivered in person or deposited in first class registered or certified mail, return receipt requested, postage prepaid, or by recognized international, commercial, overnight courier, or given by facsimile with a confirmation copy, by regular mail addressed to such party at the address set forth below, unless such address is changed from time to time by written notice hereunder:   Все уведомления или согласия, требуемые или разрешённые настоящим Соглашением, должны подаваться в письменном виде на английском языке и считаются поданными при их личной доставке или отправке заказным почтовым отправлением первого класса или почтовым отправлением с объявленной ценностью с уведомлением о получении, оплаченным почтовым сбором, либо признанной международной коммерческой курьерской службой, обеспечивающей доставку в течение одного дня, либо при их отправке по факсу с подтверждением получения, либо обычной почтой на нижеуказанный адрес соответствующей стороны, если такой адрес не будет изменён время от времени путём подачи письменного уведомления, как предусмотрено в настоящем Соглашении:
         
14.2  

If to Manufacturer:

Thomas W. McNaughton, Chief Financial Officer

 

Harvard Apparatus Regenerative Technology, Inc.

 

84 October Hill Road

 

Holliston, MA 01746

 

Tel: 1+ (508) 893-8999

 

Fax: 1+ (508) 892-6135

 

Изготовителю:

 

Томасу У. МакНотону, директору по финансам (Thomas W. McNaughton, Chief Financial Officer)

 

Harvard Apparatus Regenerative Technology, Inc.

 

84 October Hill Road

 

Holliston, MA 01746

 

Тел.: 1+ (508) 893-8999

 

Факс: 1+ (508) 892-6135

 

   

If to Hospital:

 

State Budget Institution of Public Health Department  Regional Clinical Hospital # 1 after Prof. S.V. Ochapovsky 

 

1st May Street 167,

 

Krasnodar 350086

 

Tel: (861) 252 85 91, 252 73 02

 

Fax: (861) 252 82 17, 215 35 12

 

If to Principal Surgeon:

[——————]

 

В Больницу:

 

Государственное бюджетное учреждение общественного здравоохранения "Региональная клиническая больница № 1 имени проф. С.В. Очаповского

 

Ул. 1 мая, 167,

 

Краснодар 350086

 

Тел.: (861) 252 85 91, 252 73 02

 

Факс: (861) 252 82 17, 215 35 12

 

Главному врачу:

[——————]

 

 
 

 

15.   Legal proceeding reimbursement   Возмещение затрат на судебно-процессуальные действия
         
15.1   In the event that Hospital is requested or authorized by Manufacturer or required by government regulation, subpoena, or other legal process to produce documents or any Hospital personnel in any legal proceeding with respect to the Surgery, or Manufacturer’s use of the results of the Surgery, or pursuant to this Agreement, Manufacturer will, so long as Hospital is not a party to the proceeding in which the information is sought, reimburse Hospital for its time and expense, as well as the fees and expenses of its counsel incurred in responding to such a request.   В случае, если Изготовитель запрашивает или уполномочивает Больницу, либо если от нее по государственным нормативным актам, повесткам о вызове в суд или иначе в судебном порядке требуется предоставление документов или любых из сотрудников Больницы для участия в любых судебно-процессуальных действиях в отношении Хирургической операции, использования Изготовителем результатов Хирургической операции либо согласно настоящему Соглашению, Изготовитель, при условии, что Больница не является одной из сторон судебного процесса, для которого требуется информация, должен компенсировать Больнице потраченное время и расходы, а также гонорары и расходы её юридических советников, понесённые в ходе предоставления ответа на такой запрос.
         
16.   Miscellaneous   Прочие положения
         
16.1  

This Agreement will be governed by and construed in accordance with the following:

 

(a)  as to any matter or matters which relate to the performance of the Surgery and/or the medical care or treatment of the Patient, the laws of the Russian Federation;

 

(b)  as to any matter or matters which relate to the existence, validity, entitlement to use or the ownership of any intellectual property (including but without limitation the Device, the Clinical Protocol, Confidential Information, the Manufacturer Invention, the Hospital Invention and any Joint Invention), the federal laws of the USA and the laws of the Commonwealth of Massachusetts (and as between them without regard to conflicts of laws principles); and

 

(c)  as to all other matters relating to or otherwise connected with this Agreement including its existence and validity, the laws of the Russian Federation

 

without regard to conflicts of laws principles and so that where any matter contains a number of elements which do not all fall within one only of (a), (b) or (c) above such separate elements will be governed by the different laws as set out in (a), (b) or (c) notwithstanding that they together form part of the same matter.

 

 

 

Настоящее Соглашение регулируется и толкуется в соответствии с:

 

(a)    законами Российской Федерации по любому вопросу или вопросам, относящихся к выполнению Хирургической операции и/или медицинской помощи или лечению пациента;

 

(b)    федеральными законами США и законами штата Массачусетс (а также в отношениях между ними без учёта принципов коллизионного права) по любому вопросу или вопросам, относящимся к наличию, действительности, прав на использование или на владение в отношении интеллектуальной собственности (включая, но без ограничений в отношении Устройства, Клинического протокола, Конфиденциальной Информации, Изобретения Изготовителя, Изобретения Больницы и любого Совместного изобретения); и

 

(c)    законами Российской Федерации по прочим вопросам, связанным или иным образом относящимся к данному Соглашению, в том числе по его наличию и действительности

 

без учёта принципов коллизионного права и по любому вопросу, содержащему ряд элементов, не все из которых попадают только в один из вышеуказанных подпунктов (а), (b) или (с) выше, такие отдельные элементы будут регулироваться различными законами, указанными в подпунктах (а), (b) или (с), несмотря на то, что они вместе являются частью одного и того же вопроса.

 

 
 

 

16.2  

Each party hereto unconditionally and irrevocably:

 

(a)  agrees that the execution, delivery and performance by it of this Agreement and all other agreements, contracts, documents and writings relating to this Agreement constitute private and commercial acts and not public or governmental acts;

 

(b)  agrees that should any proceedings be brought against it or its assets, other than the assets protected by the diplomatic and consular privileges under the US Foreign Sovereign Immunities Act or any analogous legislation (“Exempted Assets”) in any jurisdiction, in relation to this Agreement or any transaction contemplated by this Agreement, no immunity, sovereign or otherwise, from such proceedings, executions, attachment or other legal process shall be claimed by or on behalf of itself or with respect to any of its assets (other than the Exempted Assets);

 

(c)  consents generally in respect of the enforcement of any judgment against it in any proceedings in any jurisdiction to the giving of any relief or the issue of any process in connection with such proceedings including without limitation the making, enforcement or execution against or in respect of any property irrespective of its use or intended use subject to sub-clause (b) above .

 

 

Каждая сторона к настоящему Соглашению, безусловно и бесповоротно:

 

(a)  соглашается, что исполнение, поставка и выполнение ею данного Соглашения, и всех прочих договоров, контрактов, документов и письменных материалов, относящихся к данному Соглашению являются частными и коммерческими действиями, а не государственными или правительственными актами;

 

(b)  соглашается, что если будет начато какое-либо разбирательство, против неё или её активов, за вычетом активов, защищенных дипломатическими и консульскими привилегиями по Закону США о Иностранном Суверенном Иммунитете или любому аналогичному законодательству (“Исключённые активы") в любой юрисдикции, в отношении данного Соглашения или любых сделок, предусмотренными данным Соглашением, то никакого иммунитета суверенного ли или иначе, от таких разбирательств, исполнения, наложения ареста или иного судопроизводства не может быть затребовано напрямую или от своего имени или в отношении к любым своим активам, (за вычетом Исключённых активов);

 

(c)  в общем соглашается относительно исполнения против себя любого судебного решения, по любому судопроизводству в любой юрисдикции об удовлетворении требований или начале любых процессов в связи с такими разбирательствами, включая, без ограничения, вынесение, принудительное выполнение или исполнения решения против или в отношении любого имущества независимо от его использования или предполагаемого использования обусловленного действием подпункта (b) выше.

 

 
 

 

16.3   Any dispute arising out of or in connection with this Agreement, or the breach, termination or invalidity thereof, shall be finally settled by arbitration under the Rules of the International Centre for Dispute Resolution. The place of arbitration shall be Moscow, Russia Federation, and the English language shall be used in the proceedings. Any arbitration award shall be final and binding and may, if necessary, be enforced by any court or authority having competent jurisdiction. The parties undertake and agree that all arbitral proceedings conducted hereunder shall be kept strictly confidential, and all information, documentation, materials in whatever form disclosed in the course of the proceedings shall be used solely for the purpose of those proceedings. Notwithstanding the aforesaid, nothing in this Section 16.1 shall prevent a party from seeking injunctive or equitable relief by a court of competent jurisdiction.   Любой спор, вытекающий из настоящего Соглашения или возникающий в связи с ним, или с его нарушением, расторжением или недействительностью, окончательно решается путём арбитража, согласно Правилам Международного центра разрешения споров. Местом арбитражного разбирательства должна быть Москва, Российская Федерация, и судопроизводство должно будет производится на английском языке. Любое решение арбитражного суда является окончательным и обязательным для исполнения и при необходимости может быть принудительно исполнено любым судом или органом, имеющим соответствующую юрисдикцию. Стороны обязуются и соглашаются с тем, что все арбитражные процессы, которые будут проходить по настоящему Соглашению, должны оставаться строго конфиденциальными и что вся информация, документация и все материалы в любой форме, предоставленные в ходе процесса, должны использоваться исключительно для целей такого процесса. Невзирая на изложенное выше, ничто содержащееся в настоящем пункте 16.1 не запрещает стороне обращаться за принятием обеспечительных мер или средств судебной защиты по праву справедливости в суд соответствующей юрисдикции.
         
16.4   If any provision of this Agreement is held to be invalid, void or illegal, it will be severed from this Agreement and will not affect, impair or invalidate any other provision, and it will be replaced by a provision which comes closest to such severed provision in language and intent without being invalid, void or illegal. The parties hereby agree to waive trial by jury.   Если какое-либо положение настоящего Соглашения будет признано недействительным, не имеющим юридической силы или незаконным, то оно будет выделено из настоящего Соглашения и не будет влиять, ухудшать или делать недействительными любые другие положения, и оно будет заменено положением, наиболее близким по формулировке и смыслу к такому выделенному положению, но при этом не являющимся недействительным, не имеющим юридической силы или незаконным. Тем самым стороны соглашаются на отказ от рассмотрения дела с участием присяжных.

 

 
 

 

16.5   Neither this Agreement nor any of the rights or obligations hereunder may be transferred or assigned by any party without the prior express written consent of the other party, except that Manufacturer may assign this Agreement to an acquirer of a majority of the voting power of Manufacturer’s then outstanding capital securities or to a purchaser of all or substantially all of Manufacturer’s business or assets. Any purported transfer or assignment in violation of this section is void.   Ни настоящее Соглашение, ни какие либо права или обязанности, по нему, не могут передаваться или переуступаться ни одной из сторон без предварительного письменного согласия другой стороны, за исключением случаев, когда Изготовитель может переуступить данное Соглашение приобретателю большинства прав голоса по акционерному капиталу Изготовителя или покупателю всех или фактически всех активов или деятельности Изготовителя. Любая предполагаемая передача или любая предполагаемая переуступка в нарушение данного раздела не имеет юридической силы.
         
16.6   This Agreement will be binding upon and inure to the benefit of each of the parties and their respective permitted successors and permitted assigns. No right under this Agreement or breach hereof may be waived except in writing signed by the parties hereto. The failure of any party to require performance of any provision of this Agreement will not be construed as a waiver of such party’s rights to insist on performance of such provision or any other provision at some other time.   Настоящее Соглашение обязательно для исполнения и действительно в интересах каждой из сторон и их соответствующих разрешённых наследников и разрешенных правоприёмников. Никакого отказа от любого из прав, предусмотренных настоящим Соглашением или возникающих в случае его нарушения, не может произойти, если такой отказ не оформлен в письменной форме и не подписан сторонами данного Соглашения. Отсутствие требования о выполнении любого положения данного Соглашения одной из сторон, не будет истолковано как отказ данной стороной от прав настаивать на выполнении такого положения или любого другого положения в какое-либо другое время.
         
16.7   This Agreement, together with all documents referenced herein, constitutes the entire agreement and understanding among the parties regarding the subject matter addressed herein and supersedes and replaces all prior negotiations, understandings and agreements, proposed or otherwise, whether written or oral, concerning the subject matter hereof.   Настоящее Соглашение вместе со всеми документами, ссылки на которые содержатся в нем, составляет полное соглашение и взаимопонимание между сторонами в отношении предмета соглашения, рассматриваемого в данном Соглашении, и лишает силы и заменяет все предыдущие переговоры, взаимопонимания и соглашения, предполагаемые ли или нет, в письменной или устной форме, в отношении предмета данного Соглашения.
         
16.8   This Agreement may not be modified or varied except by a written document signed by all of the parties to this Agreement. This Agreement may be executed in counterparts, each of which will be deemed an original, but all of which taken together will constitute one and the same instrument.   Данное соглашение не может быть изменено или исправлено, кроме как посредством письменного документа, подписанного всеми сторонами данного Соглашения. Данное Соглашение может быть подписано в нескольких экземплярах, каждый из которых будет считаться оригиналом, но которые вместе взятые будут составлять один и тот же инструмент.

 

[Signature page follows.]

 

[Подписи - на следующей странице.]

 

 
 

 

IN WITNESS WHEREOF, Manufacturer, Hospital and Principal Surgeon have caused this Agreement to be executed as of the date set forth below.

 

В СВИДЕТЕЛЬСТВО ИЗЛОЖЕННОГО ВЫШЕ Изготовитель, Больница и Главный врач подписали настоящее Соглашение на дату, указанную ниже.

 

HOSPITAL/ БОЛЬНИЦА:   MANUFACTURER/ ИЗГОТОВИТЕЛЬ:
     
State Budget Institution of Public Health Department Regional Clinical Hospital #1/ Государственное бюджетное учреждение здравоохранения «Краевая клиническая больница №1 имени профессора С.В. Очаповского   Harvard Apparatus Regenerative Technology, Inc.
Signature/ Подпись:   Signature/ Подпись:
     
/s/ Vladimir Alekseevich Porhanov   /s/ Thomas W. McNaughton
     
Printed Name/ Ф.И.О. прописью:   Printed Name/ Ф.И.О. прописью:
     
Vladimir Alekseevich Porhanov   Thomas W. McNaughton
     
Title/ Должность:   Title/ Должность:
     
Principal Surgeon   Chief Financial Officer
     
Date Signed/ Дата подписания:   Date Signed/ Дата подписания:
     
21.05.2012   21 May 2012
     
PRINCIPAL SURGEON/ ГЛАВНЫЙ ВРАЧ:    
     
Signature/ Подпись:    
     
/s/ Vladimir Alekseevich Porhanov    
     
Printed Name/ Ф.И.О. прописью:    
     
Vladimir Alekseevich Porhanov    
     
Title/ Должность:    
     
Principal Surgeon    
     
Date Signed/ Дата подписания:    
     
21.05.2012    

 

 

 

 

EXHIBIT 10.20

Execution Copy

 

 

NOVEL SURGERY AGREEMENT

 

This Novel Surgery Agreement (“Agreement”) is made, as of the last date set forth on the signature page below, between Harvard Apparatus Regenerative Technology, Inc., a Delaware corporation having an office located at 84 October Hill Road, Holliston, Massachusetts 01746 Telephone: (508) 893-8999; Facsimile: (508) 892-6135 (“Manufacturer”), OSF Healthcare System, an Illinois not-for-profit corporation, owner and operator of Saint Francis Medical Center and Children’s Hospital of Illinois (“Hospital”), located at 530 N.E. Glen Oak Ave, Peoria, Illinois, 61637, and Mark Holterman, M.D., an employee of Hospital assigned to provide professional services at Hospital (“Principal Surgeon”).

 

WHEREAS, Principal Surgeon intends to employ a clinical protocol, entitled “Human Bioengineered Synthetic Tracheal Transplant Protocol”, as amended in writing from time to time and incorporated by reference herein (the “Clinical Protocol”), for the transplantation of the trachea, using a synthetic bioengineered scaffold seeded with autologous mononuclear cells (the “Surgery”), as an intraoperative solution for a patient (“Patient”);

 

WHEREAS, the Clinical Protocol contemplates the use of the In Breath® 3D Organ Bioreactor (the “Device”) in connection with the Surgery and Manufacturer owns the rights to and manufactures the Device;

 

WHEREAS, Hospital has facilities and personnel with the requisite skills experience and knowledge to participate in the Surgery in accordance with the Clinical Protocol referenced above; and

 

WHEREAS, the parties wish to collaborate on the Surgery in a manner beneficial to each of them.

 

NOW, THEREFORE, in consideration of the premises and mutual promises and covenants expressed herein the parties agree as follows:

 

Section 1 Surgery

 

1.1.          Principal Surgeon will perform the Surgery at the Hospital (or at such other location agreed to by the parties) according to the Clinical Protocol, the investigational plan (as defined in 21 C.F.R. §812.25), and the conditions of approval imposed by the reviewing Institutional Review Board (“IRB”) and/or the Food and Drug Administration (“FDA”), using his professional expertise and reasonable professional practices.

 

1.2.          Hospital will provide qualified personnel, equipment, and materials (except as otherwise provided by Manufacturer), and facilities necessary to perform the Surgery in accordance with the Clinical Protocol and this Agreement. Hospital and Principal Surgeon shall at all times comply with all applicable local, state and federal laws and regulations relating to the use of such equipment and materials, and shall at all times comply with the requirements for obtaining prior, written informed consent of the Patient and/or Patient’s representatives (“Informed Consent”) in accordance with the requirements of the FDA, the Department of Health and Human Services (“HHS”), any other applicable regulatory agencies, and the IRB reviewing the Surgery.

 

 
 

 

Section 2  Principal Surgeon

 

2.1.          The Surgery will be performed by and under the direction of Principal Surgeon.

 

2.2.           Hospital and Principal Surgeon represent and warrant that Principal Surgeon is not the subject of a proceeding by the Board of Medical Examiners or similar agency.

 

Section 3  IRB Approval

 

Hospital and Principal Surgeon shall not allow the Surgery nor any preparation for the Surgery until the IRB has unconditionally approved all the terms and conditions of the Surgery, including without limitation the Informed Consent of the Patient, the Clinical Protocol and the participation of Hospital and Principal Surgeon in the Surgery.

 

Section 4  Supply of Surgery Materials

 

Manufacturer will provide the Device, and Principal Surgeon and Hospital shall provide all other devices, services, equipment and other supplies necessary for conduct of the Surgery. Neither Principal Surgeon nor Hospital may provide or demonstrate the Device to any other persons or entities not described in this Agreement without the prior express written consent of Manufacturer.

 

Section 5 Access to Facilities and Personnel

 

5.1.          Hospital will allow Manufacturer (or its designees) reasonable access during business hours and at mutually convenient times to the Hospital (or such other location as the Surgery or any post-operative activities take place) and Principal Surgeon for the purpose of assisting Principal Surgeon and his team in use of the Device, monitoring the Surgery in accordance with the Clinical Protocol and/or the Informed Consent, reviewing documents and other matters related to the Surgery.

 

Section 6 Access to Surgery Reports and Results

 

6.1.          Hospital and Principal Surgeon agree to disclose and make available to Manufacturer (or its designee) all pre- and post-operative records, follow-up reports and other records concerning the Surgery prepared by Hospital or Principal Surgeon, either alone or with others, in each case consistent with the scope of the Informed Consent and the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) authorization given by the Patient, for the purpose of Manufacturer’s use of such information to improve the Device or invent other devices for use in future procedures.

 

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Section 7 Inventions; Ownership of Intellectual Property

 

7.1.          It is recognized and understood that the existing inventions and technologies, including, but not limited to the Confidential Information of Manufacturer or Hospital are their separate property, respectively, and are not affected by this Agreement. Hospital shall not have any claims to or rights in such existing inventions and technologies of Manufacturer (including, without limitation, Manufacturer’s Confidential Information), and Manufacturer shall not have any claims to or rights in such existing inventions and technologies of Hospital (including, without limitation, Hospital’s Confidential Information). For purposes hereof, “Confidential Information” shall mean any and all information, materials and data that is disclosed by one party to the other pursuant to this Agreement and designated as “confidential” at the time of initial disclosure if disclosed in writing or, if initially disclosed orally, identified by the disclosing party as confidential at the time of disclosure and thereafter summarized in writing and designated as “confidential” within 30 days after the initial oral disclosure. Confidential Information shall not include any information, materials or data which: (i) at the time of disclosure hereunder is generally available to the public; (ii) after disclosure hereunder becomes generally available to the public, except through breach of this Agreement by the recipient; (iii) the recipient can demonstrate was in its possession prior to the time of disclosure by the disclosing party hereunder, and was not acquired directly or indirectly from the disclosing party under an obligation of confidentiality; (iv) becomes available to the recipient from a third party which is not legally prohibited from disclosing such Confidential Information, provided such Confidential Information was not acquired directly or indirectly from the disclosing party under an obligation of confidentiality; or (v) the recipient can demonstrate was developed by or for the recipient independently of the disclosure of Confidential Information by the disclosing party.

 

7.2.          All right, title and interest to any invention, whether or not patentable, resulting from the performance of this Agreement shall belong solely to Manufacturer if conceived, discovered or invented solely by Manufacturer or an employee or consultant of Manufacturer. All right, title and interest to any invention, whether or not patentable, which arises from Manufacturer’s Confidential Information or the Device shall also be owned solely by Manufacturer (both referred to as a “Manufacturer Invention”).

 

7.3.          All right, title and interest to any invention, whether or not patentable, resulting from the performance of this Agreement shall belong solely to Hospital if conceived, discovered or invented solely by Hospital or an employee or consultant of Hospital, without any access to Manufacturer’s Confidential Information or use of Manufacturer’s technology, resources or other property (including, without limitation, the Device) (a “Hospital Invention”).

 

7.4.          All right, title and interest to any invention, whether or not patentable, resulting from the performance of this Agreement and which is conceived, discovered or invented jointly by Manufacturer or an employee or consultant of Manufacturer and Hospital or an employee or consultant of Hospital shall be owned jointly by Manufacturer and Hospital (a “Joint Invention”).

 

7.5.          Hospital hereby grants to Manufacturer an option to obtain a perpetual, worldwide license, to make, have made, use and sell products incorporating Hospital Inventions at a reasonable royalty rate and upon other reasonable terms, including exclusivity, to be negotiated by the parties. Manufacturer’s election to exercise its option must be in writing to Hospital. If, within ninety (90) days from the date Manufacturer is notified of a Hospital Invention, Hospital and Manufacturer do not execute a mutually agreeable license for such, Hospital may thereafter enter into a license with any third party with respect thereto.

 

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7.6.          Hospital shall have a royalty-free, non-exclusive license to use any Manufacturer Inventions and/or Joint Inventions, solely for its internal educational and non-commercial research purposes and for the purpose of compliance with any applicable laws and regulations. With respect to all other uses, Manufacturer hereby grants to Hospital an option to obtain a perpetual, worldwide license, to Manufacturer Inventions at a reasonable royalty rate and upon other reasonable terms, including exclusivity, to be negotiated by the parties. Hospital’s election to exercise its option must be in writing to Manufacturer. If, within ninety (90) days from the date Hospital is notified of a Manufacturer Invention, Hospital and Manufacturer do not execute a mutually agreeable license for such, Manufacturer may thereafter enter into a license with any third party with respect thereto.

 

7.7.          Each party shall have the unrestricted right to exploit any Joint Inventions.

 

Section 8 Documentation Provided by Hospital.

 

Hospital will submit the following documents to Manufacturer before commencing the Surgery:

 

(a)          a signed copy of IRB approval of the Surgery and Patient Informed Consent form, as approved by the IRB; and

 

(b)          a signed copy of the Clinical Protocol.

 

Section 9 Privacy

 

9.1.          Manufacturer hereby agrees to fully comply with all Federal laws relating to privacy of Patient health information, including but not limited to HIPAA and the regulations adopted pursuant thereto. Without any limitation to the foregoing, the parties understand that in connection with the Agreement, certain Patient data must be exchanged between Hospital and Manufacturer. Manufacturer agrees to fully comply with HIPAA and regulations, and specifically agrees to:

 

(a)          not use or further disclose Patient health information and/or electronic protected health information other than as permitted or required by the Agreement or as required by law;

 

(b)          use appropriate safeguards to prevent use or disclosure of information other than as required for by the Agreement;

 

(c)          report to the Hospital any use or disclosure of the information not provided for by the Agreement of which it becomes aware,

 

(d)          ensure that any agents, including a subcontractor, to whom Manufacturer provides protected health information and/or electronic protected health information received from, or created, or received by Manufacturer on behalf of Hospital, agree to the Manufacturer’s restrictions and conditions that apply to Manufacturer as a business partner of Hospital under HIPAA with respect to such information;

 

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(e)          make available protected health information and/or electronic protected health information for amendment and incorporate any amendments to protected health information and/or electronic protected health information in accordance with 45 C.F.R. §164.526.

 

(f)          make its internal practices, books and records related to the use and disclosure of protected health information and/or electronic protected health information received from, or created, or received by Manufacturer on behalf of Hospital available to the Secretary of Health and Human Services for the purpose of determining Hospital’s compliance with this subpart;

 

(g)          return or destroy, at termination of this Agreement, if feasible, all protected health information and/or electronic protected health information received from, or created, or received by Manufacturer on behalf of Hospital that Manufacturer still maintains in any form and retain no copies of such information; or, if such return or destruction is not feasible, extend the protection of the Agreement to the information and limit further uses and disclosures to those purposes that make the return or destruction of the information infeasible.

 

9.2.          A violation of this section shall be a material violation of this Agreement and cause for termination notwithstanding any provision in the Agreement to the contrary.

 

9.3.          Manufacturer also agrees that if it becomes necessary to amend this Agreement to fulfill the purposes of the HIPAA law and regulations that Manufacturer agrees to do so without additional consideration.

 

Section 10  Device Not Offered for Sale or Public Use

 

Without limiting the generality of any other confidentiality provisions under this Agreement, Hospital and Principal Surgeon acknowledge that the Device is investigational and agree not to offer the Device for commercial sale or use.

 

Section 11 Insurance

 

11.1.          Principal Surgeon shall maintain, during the course of this Agreement and for a period of at least two (2) years thereafter, professional liability insurance in the amount of One Million Dollars ($1,000,000) per occurrence and Three Million Dollars ($3,000,000 annual aggregate, through Principal Surgeon’s employer (Hospital) or otherwise, either through Hospital’s self-insurance plan, or with financially sound and reputable insurance companies or as may be required by applicable laws and/or regulations. Upon request, Principal Surgeon shall provide certification of such insurance coverage to Manufacturer.

 

11.2.          Hospital shall maintain, during the course of this Agreement and for a period of at least two (2) years thereafter, its program of self insurance against such risks in minimum amounts of Two Million Dollars ($2,000,000) per occurrence and Four Million Dollars ($4,000,000) annual aggregate or in such other amounts as may be required by applicable laws and/or regulations. Upon request, Hospital shall provide certification of such insurance coverage to Manufacturer.

 

11.3.          Manufacturer shall maintain, during the course of this Agreement and for a period of at least two (2) years thereafter, liability insurance in the amount of Two Million Dollars ($2,000,000) per occurrence and Four Million Dollars ($4,000,000) annual aggregate with financially sound and reputable insurance companies. Upon request, Manufacturer shall provide certification of such insurance coverage to Hospital.

 

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Section 12 Indemnification and Responsibility

 

12.1.      By Manufacturer:

 

(a)          Manufacturer hereby agrees to indemnify, defend and hold harmless Hospital and its directors, trustees, officers, shareholders, agents, and employees, including, but not limited to Principal Surgeon and assistants in the Surgery (hereafter collectively referred to as “Hospital Indemnitees”) from and against any and all claims, liabilities, losses, judgments, obligations, damages, costs and expenses (including reasonable attorneys’ fees) (collectively “Claims”) arising out of claims made or brought on behalf of Patient (or his representatives or dependents) for personal injury (including death) that arises from or is attributable to the design, production, manufacture of the Device.

 

(b)          The indemnification obligation set forth in this Section 12.1 shall not apply in the event and to the extent that such Claims arose as a result of (i) the willful misconduct or negligence by Hospital Indemnitees or (ii) the “sole negligence” of one or any of the Hospital Indemnitees.

 

(c)          Hospital Indemnitees shall provide Manufacturer written notice of a Claim no later than fourteen (14) days after the Hospital Indemnitees have notice of such Claim for which indemnification is sought.

 

(d)          Manufacturer shall have sole control over the defense and settlement of a Claim for which indemnification is sought, and Hospital Indemnitees shall cooperate with the Manufacturer and its legal representatives in the investigation and defense of the Claim.

 

(e)          Manufacturer shall act reasonably and in good faith with respect to the defense or settlement of the Claim and will not reach any settlement which requires an admission of fault by a Hospital Indemnitee without that Hospital Indemnitee’s consent.

 

(f)          Hospital Indemnitees may, at their own expense, obtain separate legal counsel.

 

12.2.      By Hospital and Principal Surgeon:

 

(a)          Hospital and Principal Surgeon hereby agree to indemnify, defend and hold harmless Manufacturer and its directors, officers, shareholders, agents, and employees (hereafter collectively referred to as “Manufacturer Indemnitees”) from and against any and all Claims arising out of claims made or brought on behalf of Patient (or his dependents) for personal injury (including death) that arises from or is attributable to the services provided by Hospital and Principal Surgeon in connection with the Surgery.

 

(b)          The indemnification obligation set forth in this Section 12.2 shall not apply in the event and to the extent that such Claims arose as a result of (i) the willful misconduct or negligence by Manufacturer Indemnitees; (ii) the “sole negligence” of one or any of the Manufacturer Indemnitees; or (iii) the design, production or manufacture of the Device by any of the Manufacturer Indemnitees.

 

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(c)          Manufacturer Indemnitees shall provide Manufacturer written notice of a Claim no later than fourteen (14) days after the Manufacturer Indemnitees have notice of such Claim for which indemnification is sought.

 

(d)          Hospital and Principal Surgeon shall have sole control of the defense and settlement of a Claim for which indemnification is sought, and Manufacturer Indemnitees shall cooperate with the Hospital, Principal Surgeon and their legal representatives in the investigation and defense of the Claim.

 

(e)          Hospital and Principal Surgeon shall act reasonably and in good faith with respect to the defense or settlement of the Claim and will not reach any settlement which requires an admission of fault by a Manufacturer Indemnitee without that Manufacturer Indemnitee’s consent.

 

(f)          Manufacturer Indemnitees may, at their own expense, obtain separate legal counsel.

 

12.3.       The obligations of the parties under this Section 12 shall survive the termination of the Agreement.

 

Section 13 Fees

 

13.1.       Manufacturer waives its fees for the use of the Device and Manufacturer’s involvement in the Surgery.

 

Section 14 Notices

 

All notices or consents required or permitted by this Agreement shall be in writing in the English language, and shall be deemed given when delivered in person or deposited in first class registered or certified mail, return receipt requested, postage prepaid, or by recognized international, commercial, overnight courier, or given by facsimile with a confirmation copy, by regular mail addressed to such party at the address set forth below, unless such address is changed from time to time by written notice hereunder:

 

If to Manufacturer:

 

Thomas W. McNaughton, Chief Financial Officer

Harvard Apparatus Regenerative Technology, Inc.

84 October Hill Road

Holliston, MA 01746

Tel: 508-893-8999

Fax: 508-892-6135

 

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If to Hospital:

 

OSF Saint Francis Medical Center

 

530 NE Glen Oak Ave.

 

Peoria, IL 61637

 

Attn: Stephanie Madrigal, Director Clinical Research

 

If to Principal Surgeon:

 

OSF Saint Francis Medical Center

530 NE Glen Oak Ave.

Peoria, IL 61637

Attn: Mark Holterman, MD

(Research #80114)

 

Section 15 Legal proceeding reimbursement

 

In the event that Hospital is requested or authorized by Manufacturer or required by government regulation, subpoena, or other legal process to produce documents or any Hospital personnel in any legal proceeding with respect to the Surgery, or Manufacturer’s use of the results of the Surgery, or pursuant to this Agreement, Manufacturer will, so long as Hospital is not a party to the proceeding in which the information is sought, reimburse Hospital for its time and expense, as well as the fees and expenses of its counsel incurred in responding to such a request.

 

Section 16 Miscellaneous

 

16.1.          If any provision of this Agreement is held to be invalid, void or illegal, it will be severed from this Agreement and will not affect, impair or invalidate any other provision, and it will be replaced by a provision which comes closest to such severed provision in language and intent without being invalid, void or illegal. The parties hereby agree to waive trial by jury.

 

16.2.          Neither this Agreement nor any of the rights or obligations hereunder may be transferred or assigned by any party without the prior express written consent of the other party, except that Manufacturer may assign this Agreement to an acquirer of a majority of the voting power of Manufacturer’s then outstanding capital securities or to a purchaser of all or substantially all of Manufacturer’s business or assets. Any purported transfer or assignment in violation of this section is void.

 

16.3.          This Agreement will be binding upon and inure to the benefit of each of the parties and their respective permitted successors and permitted assigns. No right under this Agreement or breach hereof may be waived except in writing signed by the parties hereto. The failure of any party to require performance of any provision of this Agreement will not be construed as a waiver of such party’s rights to insist on performance of such provision or any other provision at some other time.

 

16.4.          This Agreement, together with all documents referenced herein, constitutes the entire agreement and understanding among the parties regarding the subject matter addressed herein and supersedes and replaces all prior negotiations, understandings and agreements, proposed or otherwise, whether written or oral, concerning the subject matter hereof.

 

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16.5.          This Agreement may not be modified or varied except by a written document signed by all of the parties to this Agreement. This Agreement may be executed in counterparts, each of which will be deemed an original, but all of which taken together will constitute one and the same instrument.

 

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IN WITNESS WHEREOF, Manufacturer, Hospital and Principal Surgeon have caused this Agreement to be executed as of the date set forth below.

 

HOSPITAL:   MANUFACTURER:
     
OSF Healthcare System, Saint Francis Medical   Harvard Apparatus Regenerative
Center and Children’s Hospital of Illinois   Technology, Inc.

 

Signature: /s/ Tim Miller   Signature: /s/ Thomas McNaughton
         
Printed Name: Tim Miller, MD   Printed Name: Thomas McNaughton
         
Title: VP, CMO   Title: CFO
         
Date Signed: 5/3/12   Date signed: 5/24/12
         
PRINCIPAL SURGEON:      
         
Signature: /s/ Mark J. Holterman      
         
Printed Name: Mark J. Holterman      
         
Title: M.D.      
         
Date signed: 5/7/12      

 

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EXHIBIT 10.21

 

AMENDMENT TO NOVEL SURGERY AGREEMENT

 

This Amendment to Novel Surgery Agreement (“Amendment”) is made, as of the last date set forth on the signature page below, between Harvard Apparatus Regenerative Technology, Inc., a Delaware corporation having an office located at 84 October Hill Road, Holliston, Massachusetts 01746 Telephone: (508) 893-8999; Facsimile: (508) 892-6135 (“Manufacturer”), OSF Healthcare System, an Illinois not-for-profit corporation, owner and operator of Saint Francis Medical Center and Children’s Hospital of Illinois (“Hospital”), located at 530 N.E. Glen Oak Ave, Peoria, Illinois, 61637, and Mark Holterman, M.D., an employee of Hospital assigned to provide professional services at Hospital (“Principal Surgeon”). Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Agreement (defined below).

 

WHEREAS, the Manufacturer, Hospital and Principal Surgeon have entered into that certain Novel Surgery Agreement dated as of May 24, 2012 (the “Agreement”) relating to the Surgery,

 

WHEREAS, the Agreement contemplated the Manufacturer providing an In Breath® 3D Organ Bioreactor (the “Original Device”) in connection with the Surgery;

 

WHEREAS, since the date of the Agreement, the Manufacturer has developed and owns the rights to and manufactures a scaffold (the “Scaffold”) that the Hospital and Principal Surgeon desire to use in connection with the Surgery;

 

WHEREAS, the FDA has approved the use of the Scaffold in the Surgery and the Manufacturer has agreed to provide the Scaffold to the Hospital and Principal Surgeon to use in connection with the Surgery;

 

WHEREAS, the parties hereto desire to enter into this Amendment to amend the Agreement for the purpose of ensuring that the definition of Device in the Agreement includes both the Original Device and the Scaffold;

 

NOW, THEREFORE, in consideration of the premises and mutual promises and covenants expressed herein the parties agree as follows:

 

Section 1.          Amendment . The Agreement is hereby amended as of the date hereof as follows:

 

(a)           Preamble . The second WHEREAS clause in the Agreement is hereby amended and restated as follows:

 

“WHEREAS, the Clinical Protocol contemplates the use of an In Breath® 3D Organ Bioreactor and a synthetic bioengineered scaffold (each individually a “Device” and collectively the “Devices”) in connection with the Surgery, and Manufacturer owns the rights to and manufactures the Devices;

 

(b)          References . The initial reference in Section 4, and the references in Sections 5, 6, 7.2, 7.3, 13.1, to “Device” shall each refer to “Devices”.

 

 
 

 

Section 2.         Miscellaneous .

 

(a)         This Amendment may be executed in one or more counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same agreement. Delivery of an executed counterpart of a signature page to this Amendment by email or telecopier shall be effective as delivery of a manually executed counterpart of this Amendment.

 

(b)         Except as expressly provided in this Amendment, the execution and delivery of this Amendment does not and will not amend, modify or supplement any provision of, or constitute a consent to or a waiver of any noncompliance with the provisions of the Agreement, and, except as specifically provided in this Amendment, the Agreement shall remain in full force and effect in accordance with the terms thereof.

 

[signatures on following page]

 

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EXHIBIT 10.21

 

IN WITNESS WHEREOF, Manufacturer, Hospital and Principal Surgeon have caused this Amendment to be executed as of the date set forth below.

 

HOSPITAL:   MANUFACTURER:
     
OSF Healthcare System, Saint Francis Medical   Harvard Apparatus Regenerative
Center and Children’s Hospital of Illinois   Technology, Inc.

 

Signature: /s/ Keith Steffen   Signature: /s/ Thomas McNaughton

 

Printed Name: Keith Steffen   Printed Name: Thomas McNaughton

 

Title: CEO, Saint Francis Medical Center   Title: CFO

 

Date Signed: April 4, 2013   Date signed: April 5, 2013

 

PRINCIPAL SURGEON:    
     
Signature: /s/ Mark J. Holterman    
       

 

Printed Name: Mark J. Holterman    

 

Title: M.D.    

 

Date signed: April 5, 2013    

 

 

 

EXHIBIT 10.22

 

AMENDMENT TO NOVEL SURGERY AGREEMENT  

ДОПОЛНИТЕЛЬНОЕ СОГЛАШЕНИЕ К СОГЛАШЕНИЮ о проведении ранее не проводившейся хирургической операции

 

This Amendment to Novel Surgery Agreement ("Amendment") is made, as of the last date set forth on the signature page below, between Harvard Apparatus Regenerative Technology, Inc., a Delaware corporation having an office located at 84 October Hill Road, Holliston, Massachusetts 01746 Telephone: (508) 893-8999; Facsimile: (508) 892-6135 ("Manufacturer''), State Budget Institution of Public Health Department Regional Clinical Hospital #1 named after Prof. S.V. Ochapovsky located at 1st May 167, Krasnodar 350086 (“Hospital”), and [surgeon’s name], M.D., an employee of Hospital assigned to provide professional services at Hospital (“Principal Surgeon”). Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Agreement (defined below).

 

 

Настоящее Дополнительное Соглашение к Соглашению о проведении ранее не проводившейся хирургической операции («Дополнительное соглашение») заключено от даты, указанной на последней странице с подписями, между Harvard Apparatus Regenerative Technology, Inc., корпорацией, зарегистрированной в штате Делавэр по адресу: 84 October Hill Road, Holliston, Massachusetts 01746, тел.: (508) 893-8999; факс: (508) 892-6135 («Изготовитель»), Государственным бюджетным учреждением здравоохранения «Краевая клиническая больница №1 имени профессора С.В. Очаповского, расположенным по адресу: Краснодар 350086 ул. 1 мая, 167 («Больница»), и [фамилия врача], врачом, сотрудником Больницы, назначенным для оказания профессиональных услуг в Больнице (далее – «Главный врач»). Термины с заглавной буквы, использованные, но не определенные Данным Соглашением, имеют такое же значение как в Соглашении (как указано ниже).

 

WHEREAS, the Manufacturer, Hospital and Principal Surgeon have entered into that certain Novel Surgery Agreement dated as of [21 May 2012] (the "Agreement") relating to the Surgery,

 

 

ПРИНИМАЯ ВО ВНИМАНИЕ, что Изготовитель, Больница и Главный врач заключили указанное Соглашение о проведении ранее не проводившейся хирургической операции от [21 мая 2012 года] («Соглашение»), по отношению Хирургической операции;

 

WHEREAS, the Agreement contemplated the Manufacturer providing an In Breath® 3D

Organ Bioreactor (the "Original Device") in connection with the Surgery;

 

 

ПРИНИМАЯ ВО ВНИМАНИЕ, что Соглашение включает применение устройства In Breath® 3D Organ Bioreactor («Устройство») в связи с Хирургической операцией;

 

WHEREAS, since the date of the Agreement, the Manufacturer has developed and owns

the rights to and manufactures a scaffold (the "Scaffold") that the Hospital and Principal Surgeon desire to use in connection with the Surgery;

 

 

ПРИНИМАЯ ВО ВНИМАНИЕ, что с момента заключения Соглашения, Изготовитель разработал, стал правовым владельцем и изготовителем каркаса (далее – «Каркас»), который Больница и Главный врач желают использовать во время проведения Хирургической операции;

 

 

 
 

 

WHEREAS, the Manufacturer has agreed to provide the Scaffold to the Hospital and Principal Surgeon to use in connection with the Surgery;

 

 

ПРИНИМАЯ ВО ВНИМАНИЕ, что Изготовитель согласился предоставить Каркас Больнице и Главному врачу для использования во время проведения Хирургической операции;

 

WHEREAS, the parties hereto desire to enter into this Amendment to amend the Agreement for the purpose of ensuring that the definition of Device in the Agreement includes both the Original Device and the Scaffold;

 

 

ПРИНИМАЯ ВО ВНИМАНИЕ, что стороны данного Дополнительного соглашения желают произвести изменения к Соглашению в целях обеспечения того, чтобы определение термина «Устройство», содержащееся в Соглашении, включало как Устройство, так и Каркас;

 

NOW, THEREFORE, in consideration of the premises and mutual promises and covenants expressed herein the parties agree as follows:

 

 

С УЧЕТОМ ВЫШЕИЗЛОЖЕННОГО, принимая во внимание условия и взаимные обещания сторон, а также договоренности, изложенные в настоящем Дополнительном соглашении, стороны договорились о нижеследующем:

 

Section 1. Amendment .  

Раздел 1. Изменение.

 

The Agreement is hereby amended as of the date hereof as

 

(a)   Preamble. The second WHEREAS clause in the Agreement is hereby amended and restated as follows:

 

"WHEREAS, the Clinical Protocol contemplates the use of an In Breath® 3D Organ Bioreactor and a synthetic bioengineered scaffold (each individually a "Device" and collectively the "Devices") in connection with the Surgery, and Manufacturer owns the rights to and manufactures the Devices;

 

 

 

 

 

 

(b)   References. The initial reference in Section 4, and the references in Sections 5, 6, 7.2, 7.3, 10.1, 12.1, 12.2, 13.1, 16.1 to "Device" shall each refer to "Devices" and where appropriate grammatical references to the singular shall include the plural.

 

 

Настоящим Дополнительным соглашением в Соглашение вносятся следующие изменения, вступающие в силу на дату заключения Дополнительного соглашения:

 

(a)   Преамбула. Второй абзац преамбулы Соглашения настоящим излагается в следующей редакции:

 

«ПРИНИМАЯ ВО ВНИМАНИЕ, что Клинический протокол включает применение устройства In Breath® 3D Organ Bioreactor и синтетического биоинженерного каркаса (каждый по отдельности «Устройство», вместе «Устройства») в связи с Хирургической операцией, и Изготовитель владеет правами на Устройство и его изготовление;»

 

(b)   Ссылки. Начальная ссылка на «Устройство», использованная в разделе 4, а также дальнейшие ссылки в разделах 5, 6, 7.2, 7.3, 10.1, 12.1, 12.2, 13.1 и 16.1, должны толковаться как подразумевающие «Устройства», и в случае необходимости, грамматические ссылки единственного числа также включают множественное.

 

 

 
 

 

Section 2. Miscellaneous .

 

 

Раздел 2. Прочие положения.

 

(a)   This Amendment may be executed in one or more counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same agreement. Delivery of an executed counterpart of a signature page to this Amendment by email or telecopier shall be effective as delivery of a manually executed counterpart of this Amendment.

 

 

(b)   Except as expressly provided in this Amendment, the execution and delivery of this Amendment does not and will not amend, modify or supplement any provision of, or constitute a consent to or a waiver of any noncompliance with the provisions of the Agreement, and, except as specifically provided in this Amendment, the Agreement shall remain in full force and effect in accordance with the terms thereof.

 

 

 

(c)   This Agreement and the Amendment may be executed in both the English language version and the Russian language version.  In the event of discrepancy or conflict, between the English and the Russian language versions , in all cases, the English language version shall control and prevail in all respects.

 

 

(a)   Данное Соглашение может быть подписано в одном или нескольких экземплярах, каждый из которых будет считаться оригиналом, но которые вместе взятые будут составлять одно и то же Соглашение. Обмена сторонами подписанным Дополнительным соглашением с использованием электронной почты или по факсу будет иметь такую же юридическую силу, как лично переданное подписанное соглашение.

 

(b)   За вычетом изменений, оговорённых данным Дополнительным соглашением, подписание и обмена данным Дополнительным соглашением не вносит и не будет вносить какие либо иные поправки, изменения или дополнения, или не является соглашением на или отказ от требования исполнений условий Соглашения, и, за вычетом, условий оговорённых данным Дополнительным соглашением, Соглашение остаётся в силе и действует в соответствии с его условиями.

 

(c)   Соглашение и Дополнительное соглашение составлены на двух языках – английском и русском. В случае несоответствий или разногласий между контекстом на английском или русском языках, редакция на английском языке является преимущественной и преобладающей во всех отношениях.

 

[signatures on following page]

 

 

[Подписи – на следующей странице]

 

 

 
 

 

IN WITNESS WHEREOF, Manufacturer, Hospital and Principal Surgeon have caused this Agreement to be executed as of the date set forth below.

 

В СВИДЕТЕЛЬСТВО ИЗЛОЖЕННОГО ВЫШЕ Изготовитель, Больница и Главный врач подписали настоящее Соглашение на дату, указанную ниже.

 

HOSPITAL/ БОЛЬНИЦА:   MANUFACTURER/ ИЗГОТОВИТЕЛЬ:
     
State Budget Institution of Public Health Department Regional Clinical Hospital #1/ Государственное  бюджетное учреждение здравоохранения «Краевая клиническая больница №1 имени профессора С.В. Очаповского   Harvard Apparatus Regenerative Technology, Inc.
     
Signature/ Подпись:   Signature/ Подпись:
     
/s/ Igor S. Polyakov   /s/ Thomas W. McNaughton
     
Printed Name/ Ф.И.О. прописью:   Printed Name/ Ф.И.О. прописью:
     
Igor S. Polyakov   Thomas W. McNaughton
     
Title/ Должность:   Title/ Должность:
     
Deputy Principal Surgeon   Chief Financial Officer
     
Date Signed/ Дата подписания:   Date Signed/ Дата подписания:
     
25.06.13   26 June 2013
     
PRINCIPAL SURGEON/ ГЛАВНЫЙ ВРАЧ:    
     
Signature/ Подпись:    
     
/s/ of Igor S. Polyakov    
     
Printed Name/ Ф.И.О. прописью:    
     
Igor S. Polyakov    
     
Title/ Должность:    
     
Principal Surgeon    
     
Date Signed/ Дата подписания:    
     
25.06.13    

 

 

 

EXHIBIT 21

 

Subsidiaries of the Registrant

 

Harvard Apparatus Regenerative Technology GmbH (Germany)

 

 

 

EXHIBIT 99.1

[          ], 2013

Dear Harvard Bioscience, Inc. Stockholder:

I am pleased to inform you that on [          ], 2013, the Board of Directors of Harvard Bioscience, Inc. (“Harvard Bioscience”) approved the distribution of all of the shares of common stock of Harvard Apparatus Regenerative Technology, Inc. (“HART”), a wholly owned subsidiary of Harvard Bioscience, to Harvard Bioscience stockholders. HART holds all of the assets and liabilities associated with Harvard Bioscience’s regenerative medicine business.

This distribution will be made pursuant to a plan preliminarily approved by our Board of Directors on April 30, 2013, and finally approved on [          ], 2013, to separate Harvard Bioscience into two independent companies — one for Harvard Bioscience’s core life science research tools business, or LSRT, and HART for its regenerative medicine business. Upon the distribution of HART shares, Harvard Bioscience stockholders will own 100% of the common stock of HART. Harvard Bioscience’s Board of Directors believes that the separation of LSRT and the regenerative medicine business into distinct entities with separate ownership and management is the best way to unlock the full value of these businesses for the benefit of Harvard Bioscience, our stockholders and each of the businesses.

The distribution of HART common stock will occur on [          ], 2013 by way of a pro rata dividend to Harvard Bioscience stockholders. Each Harvard Bioscience stockholder will be entitled to receive one share of HART common stock for every [    ] shares of Harvard Bioscience common stock held by such stockholder at the close of business on [          ], 2013, the Record Date for the distribution. The dividend will be issued in book-entry form only, which means that no physical stock certificates will be issued. No fractional shares of HART common stock will be issued. If you would otherwise have been entitled to a fractional share of HART common stock in the distribution, you will receive the net cash value of such fractional share instead.

Harvard Bioscience has informed us that on June 28, 2013 it received a Supplemental Ruling to the Private Letter Ruling dated March 22, 2013 from the IRS to the effect that, among other things, the spin-off will qualify as a transaction that is tax-free for U.S. federal income tax purposes under Section 355 and 368(a)(1)(D) of the Internal Revenue Code continuing in effect. However, any cash that you receive in lieu of fractional shares generally will be taxable to you. The private letter and supplemental rulings that Harvard Bioscience received are conditions to completing the separation that Harvard Bioscience. You should consult your own tax advisor as to the particular tax consequences of the distribution to you, including potential tax consequences under state, local and non-U.S. tax laws. The separation is also subject to other conditions, including necessary regulatory approvals.

Stockholder approval of the distribution is not required, and you are not required to take any action to receive your HART common stock.

Following the distribution, you will own shares in both Harvard Bioscience and HART. We have applied to have the common stock of HART listed on the NASDAQ Capital Market under the symbol “HART.” Harvard Bioscience’s common stock will continue to trade on the NASDAQ Capital Market under the symbol “HBIO.”

The enclosed information statement, which is being mailed to all Harvard Bioscience stockholders, describes the distribution in detail and contains important information about HART. We urge you to read the information statement carefully.

I want to thank you for your continued support of Harvard Bioscience and we look forward to your support of HART in the future.

Sincerely,

        

[          ]
Chief Executive Officer


 
 

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[          ], 2013

Dear Harvard Apparatus Regenerative Technology, Inc. Stockholder:

It is our pleasure to welcome you as a stockholder of our company, Harvard Apparatus Regenerative Technology, Inc., or HART. We are a Delaware corporation that is a clinical stage regenerative medicine company developing life-saving medical products. As an independent, publicly traded company, we believe we can more effectively focus on our key strategic objectives and maximize long-term value to you as a stockholder.

We have applied to have our common stock listed on the NASDAQ Capital Market under the symbol “HART” in connection with the distribution of our company’s common stock by Harvard Bioscience.

We invite you to learn more about HART by reviewing the enclosed information statement. We look forward to your continued support of our business as a holder of HART common stock.

Sincerely,

          

David Green
Chairman and Chief Executive Officer


 
 

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Information contained herein is subject to completion or amendment. A registration statement on Form 10 relating to these securities has been filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended.

Preliminary Information Statement
(Subject to Completion, Dated July 31, 2013)

Information Statement

HARVARD APPARATUS REGENERATIVE TECHNOLOGY, INC.

This information statement is being furnished in connection with the distribution by Harvard Bioscience, Inc. (“Harvard Bioscience”) to its stockholders (the “Distribution”) of all of its shares of common stock of Harvard Apparatus Regenerative Technology, Inc. (“HART,” “our,” “us” or “we”), a wholly owned subsidiary of Harvard Bioscience that holds the assets and liabilities associated with Harvard Bioscience’s regenerative medicine business. To implement the distribution, Harvard Bioscience will distribute all of its shares of HART common stock on a pro rata basis to the holders of Harvard Bioscience common stock. Each of you, as a holder of Harvard Bioscience common stock, will receive one share of HART common stock for every [    ] shares of Harvard Bioscience common stock that you held at the close of business on           , 2013, the Record Date for the distribution. Harvard Bioscience will not distribute any fractional shares of our common stock. Instead the transfer agent will aggregate fractional shares into whole shares, sell the whole shares in the open market and distribute the aggregate net cash proceeds of the sales pro rata (based on the fractional share such holder would otherwise be entitled to receive) to each holder who otherwise would have been entitled to receive a fractional share in the distribution. The distribution will be effective as of [    ]. Immediately after the distribution is completed, HART will be an independent public company.

No vote of Harvard Bioscience stockholders is required in connection with this distribution. We are not asking you for a proxy and you are requested not to send us a proxy. Harvard Bioscience stockholders will not be required to pay any consideration for the shares of our common stock they receive in the distribution, and they will not be required to surrender or exchange shares of their Harvard Bioscience common stock or take any other action in connection with the distribution.

All of the outstanding shares of our common stock are currently owned by Harvard Bioscience. Accordingly, there currently is no public trading market for our common stock. We have filed an application to list our common stock under the ticker symbol “HART” on the NASDAQ Capital Market. Assuming that our common stock is approved for listing, we anticipate that a limited market, commonly known as a “when-issued” trading market, for our common stock will develop on or shortly before the Record Date for the distribution and will continue up to and including through the date of the Distribution (“Distribution Date”), and we anticipate that “regular-way” trading of our common stock will begin on the first trading day following the Distribution Date.

We are an “emerging growth company” as defined under federal securities law and are subject to reduced public company disclosure. For implications of being an “emerging growth company,” please see “Implications of Being a Public Company” beginning on page 6 of this information statement.

In reviewing this information statement, you should carefully consider the matters described under the caption “Risk Factors” beginning on page 17 of this information statement.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of any of the securities of Harvard Apparatus Regenerative Technology, Inc., or determined whether this information statement is truthful or complete. Any representation to the contrary is a criminal offense.

This information statement does not constitute an offer to sell or the solicitation of an offer to buy any securities.

The date of this information statement is           , 2013.

This information statement was first mailed to Harvard Bioscience stockholders on or about           , 2013.


 
 

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TABLE OF CONTENTS

 
SUMMARY     1  
RISK FACTORS     17  
FORWARD-LOOKING STATEMENTS     36  
THE SEPARATION     38  
DIVIDEND POLICY     50  
CAPITALIZATION     51  
SELECTED HISTORICAL FINANCIAL DATA     52  
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS     53  
BUSINESS     60  
MANAGEMENT     83  
DIRECTOR AND EXECUTIVE COMPENSATION     88  
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT     96  
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS     98  
DESCRIPTION OF SECURITIES     109  
MATERIAL U.S. TAX CONSIDERATIONS FOR NON-U.S. HOLDERS OF COMMON
STOCK
    115  
WHERE YOU CAN FIND MORE INFORMATION     119  
INDEX TO FINANCIAL STATEMENTS     F-1  
SOLVENCY OPINION     Annex A  

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SUMMARY

This summary highlights selected information from this information statement relating to Harvard Apparatus Regenerative Technology, Inc., our separation from Harvard Bioscience and the Distribution of our common stock by Harvard Bioscience to its stockholders. For a more complete understanding of our business and the separation and distribution, you should carefully read the entire information statement.

Except as otherwise indicated or unless the context otherwise requires, the information included in this information statement, including the financial statements of the HART business of Harvard Bioscience, which is primarily comprised of the assets and liabilities used in managing and operating the regenerative medicine business of Harvard Bioscience, assumes the completion of all the transactions referred to in this information statement in connection with the separation and distribution. Except as otherwise indicated or unless the context otherwise requires, “HART,” “we,” “us,” “our” and “our company” refer to Harvard Apparatus Regenerative Technology, Inc. and “Harvard Bioscience” refers to Harvard Bioscience, Inc. and its consolidated subsidiaries (other than HART).

Business Overview

We are a clinical stage regenerative medicine company developing life-saving medical products.

Our first product, the InBreath TM Airway Transplant System, is intended to be used to restore the structure and/or function of a severely damaged airway. The InBreath System is comprised of a porous plastic scaffold made in the size and shape of the natural trachea, bronchus or tracheobronchial tree and a rotating bioreactor used to seed the patient’s own bone marrow cells onto the scaffold prior to implant.

We believe the InBreath System is the first to enable the application of regenerative medicine techniques to the production and transplant of complex, three-dimensional human organs like the trachea. Our bioreactor technology has been used in eight successful human airway transplant surgeries, including in 2008 with what we believe to be the world’s first transplant of a regenerated airway. In addition, we believe the second surgery using our bioreactor technology, as performed in 2011, was the world’s first transplant of a regenerated airway using a synthetic scaffold. The patients who received these two airway transplants are alive at more than five years and more than two years, respectively, following their surgeries, and each of these surgeries was published in The Lancet , one of the world’s most respected peer-reviewed medical journals. The seventh airway transplant surgery took place in April 2013 at Children’s Hospital of Illinois in Peoria with FDA approval under an investigator-led Investigational New Drug application, or IND. This surgery included the first use of the InBreath System in a trachea transplant in the U.S. and the first use of our products in a child, as well as the first transplant using a synthetic scaffold we manufactured. An eighth surgery was performed in July 2013. The eight human airway transplants to date have been led by Professor Paolo Macchiarini, a world-renowned thoracic surgeon of the Karolinska Institutet, one of Europe’s leading research hospitals.

Our products are currently in development and have not yet received regulatory approval for sale anywhere in the world.

We believe our technology could enable surgeons to cure nearly all primary trachea cancers. Our products address the critical challenges to trachea transplant: the shortage of suitable donor tracheas and the risk and expense of lifelong anti-rejection drug therapy. Because the scaffolds are synthetic, our technology will eliminate the need to wait for suitable donor tracheas. Our technology also obviates the need for anti-rejection drug therapy because the surgeon uses the patient’s own bone marrow cells to seed the scaffold. In addition, patients with trachea cancer treated using our products have not required either chemotherapy or radiation therapy after the transplant, thus potentially eliminating the significant side effects and expense of such therapies. Because these substantial costs and risks can be reduced or even eliminated with our technology, we believe our products can both help save lives and reduce overall healthcare costs. None of the surgeries using our products have involved human embryonic stem cells and we do not currently expect surgeons to use such cells with our products.

We intend to apply to the FDA for a Biologics License Application approval to market the InBreath System in the U.S. The initial indication for which we will seek FDA approval will be to repair the airway of a patient whose natural trachea has been surgically removed due to trachea cancer or other source of severe damage to

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the trachea. Because the number of patients treatable in the U.S. each year is well under 200,000 we expect to receive orphan drug designation from the FDA. Orphan drug designation would provide market exclusivity in the U.S. for seven years. This exclusivity is in addition to any exclusivity we may obtain due to our patents. In addition, orphan designation waives the BLA application fee of $672,000.00.

Based on advice from several regulatory consultants with considerable experience of the BLA pathway we expect to receive FDA approval to market the InBreath System in the U.S. by the end of 2017. It is possible we will be able to market the InBreath System in the EU before we can market it in the U.S. In making these estimates we note, for example, that both the orphan drug pathway and ‘Fast track’ review with accelerated review times are available for products intended for the treatment of a serious or life-threatening condition and that demonstrate the potential to address unmet medical needs for such a condition. We believe that both of these criteria apply to the InBreath System. We may also qualify for “breakthrough” status at the FDA as the InBreath System may be a substantial improvement vs. standard of care for trachea cancer patients as the current survival rate for trachea cancer is very low. The rules for what qualifies as “breakthrough” are not yet well established. These assumptions are further discussed under the section called risk factors.

In June 2012 we began a clinical trial of trachea transplants for patients with either trachea cancer or trachea damage in Russia. The first two patients have already been treated and have both passed the one year survival point. We expect at least three more patients to be treated in the Russian clinical trial during 2013. The Russian clinical trial is funded by a $5 million grant from the Russian government to the Krasnodar Regional Hospital, one of Russia’s leading transplant centers. In addition, the EU has approved a separate $5 million grant with Dr. Macchiarini as principal investigator to fund two clinical trials in trachea transplant using our products. We expect these two EU trials to begin in 2014. We intend to combine the Russian and EU clinical data with U.S. clinical data in a single clinical trial to support the approval to market the InBreath System in the U.S. and overseas.

In addition to the trachea, we believe that our products are applicable to the regeneration of other organs. Our collaborators are working on regenerating the lungs, gastrointestinal tract, heart valves and heart using our products. For instance, a collaborator of ours, Dr. Harald Ott of Massachusetts General Hospital, has succeeded in using one of our solid organ bioreactors to regenerate and transplant a whole lung in a rat. Another collaborator of ours, Dr. Robert Simari of the Mayo Clinic, is using one of our bioreactors in his research on the potential regeneration and transplant of human heart valves. We collaborate with several other groups of researchers who are working on regenerating these and other organs.

Market Opportunity

Current treatments for trachea cancer, such as radiation therapy, chemotherapy and surgery have poor outcomes, resulting in median survival of only 10 months and a five-year survival rate of only 15%. Trachea cancer is one of the most fatal of all cancers with 5-year survival rates far below those of breast cancer, prostate cancer or colon cancer. Based on data published in medical journals, we estimate that there are approximately 2,400 trachea or bronchus cancer patients per year worldwide. In addition to trachea cancer, certain types of trachea damage can be treated by transplanting a trachea. In particular, patients may receive a tracheotomy, or surgically created hole in their throat, to allow them to breathe. When the tracheotomies are in place for more than a few days, patients are at an increased risk of dying from pneumonia caused by aspiration of foreign material into the lungs. We estimate that there are approximately 3,900 patients per year worldwide with long-term tracheotomies at risk of death from aspiration pneumonia. In addition, there are approximately 250 patients in the developed world who are born without a trachea, a condition called tracheal agenesis, who may be treatable with a trachea transplant.

Combining patients with trachea and bronchus cancer, trachea trauma and tracheal agenesis, we estimate the total addressable patient population for trachea transplants using the InBreath System is approximately 6,500 per year. While these estimates capture the number of new patients annually that are candidates for transplants using the InBreath System, they exclude what we believe to be a large pool of existing potential patients.

Additionally, we believe that our technology can also be used to address the lung, gastrointestinal tract, heart valve and heart transplant markets. We believe that these markets collectively contain millions of potential patients with life-threatening and expensive conditions, and suffer from a lack of suitable donor organs, in addition to considerable logistical and other expenses in procuring organs.

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Strategy

Our objective is to be the leading regenerative medicine company. We intend to do this by focusing on helping to save human lives by enabling the transplant of regenerated organs. Our business strategy to accomplish this objective includes:

Target life-threatening medical conditions.   Because we address life-threatening conditions, we believe it is easier to get patient informed consent for treatment, hospital ethics committee or Institutional Review Board approval and government regulatory authority approval as the patients often have poor or no treatment alternatives.
Develop products that have a relatively short time to market.   The number of patients with trachea cancer is relatively small and median survival is only 10 months. Thus, we expect the size, length and expense of our trachea transplant trial will be low compared to clinical trials in larger indications with longer survival periods.
Use trachea transplant as a platform to address other organs.   We believe our experience in developing proprietary scaffolds and bioreactors for trachea transplant gives us substantial expertise and intellectual property for developing products addressing diseases impacting other organs like the lungs, gastrointestinal tract, heart valves and heart.
Supply the complete bioreactor and scaffold system.   Our technology includes the bioreactor and scaffold which are used by the surgeon to create the synthetic organ. We believe there is considerable value in supplying the complete bioreactor and scaffold system.
Collaborate with leading surgeons and institutions.   We have and will continue to collaborate with leading surgeons and institutions such as Professor Macchiarini of the Karolinska Institutet, Dr. Harald Ott of Massachusetts General Hospital, and Dr. Robert Simari of the Mayo Clinic. We believe the use of our products by leading surgeons and institutions will increase the likelihood of broad adoption of our products.

Products

InBreath System

The InBreath Airway Transplant System consists of two key components: a scaffold and a bioreactor.

InBreath Scaffolds

The InBreath Scaffold has a physical shape and strength similar to the natural trachea and bronchi. This allows it to resist the forces of compression caused by the muscles, skin, bones and other organs of the neck that surround the trachea and also to resist collapse due to the partial vacuum caused by breathing air into the lungs through the trachea. In addition, the scaffold is porous which allows cells to penetrate the scaffold during the seeding process prior to implant and also allows blood vessels from the body to grow into the scaffold once it is in the body. The scaffold used for the first regenerated trachea transplant in 2008 was a donated human trachea with its cells removed before being seeded with bone marrow cells taken from the patient. All subsequent trachea transplants using our products have utilized synthetic scaffolds. Because the synthetic scaffolds are manufactured, they can be made to the exact dimensions of the patient and in large quantities. The synthetic scaffolds used in surgeries prior to 2013 have been made by third parties. In order to improve the scaffolds, we have collaborated with Professor Macchiarini and others to develop our own scaffold product, and we manufactured the scaffold used in the most recent surgeries in April and July of 2013. Our scaffolds can be made from a variety of plastic polymers but are typically made from polyethylene terephthalate, or PET, which is the same polymer used in the well-known brand of implantable materials known by the trade name Dacron. PET has a long history of safe use in long-term human implants. We intend to continue providing our proprietary scaffolds to surgeons for use in future transplants. We believe that our scaffolds are superior in quality compared to those used in surgeries prior to 2013.

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InBreath Bioreactors

Our InBreath Bioreactor is a device that can be used by a surgeon to seed cells onto our scaffold. The InBreath Bioreactor enables the surgeon to:

seed the patient’s cells on the scaffold under sterile conditions;
automatically rotate the scaffold to allow good cell distribution into the pores of the scaffold; and
remotely monitor the scaffold during the course of the two to three days incubation period before the transplant.

Our InBreath Bioreactor has several novel features such as allowing for separate cell seeding conditions on the inside and outside of the scaffold and for pumping cell culture media through the inside of the scaffold without the need for an external pump and tubes. We believe our InBreath bioreactor is the world’s first bioreactor that has been used to perform a human transplant of a regenerated organ.

Solid Organ Bioreactors

A solid organ bioreactor shares many of the features of the InBreath bioreactor such as the ability to seed cells on an organ scaffold. However, for solid organs like the heart and lungs, the bioreactor must also supply pulsatile blood flow and ventilation to mimic the natural action of the heart and lungs. In addition, the physiology of the heart and lungs is considerably more complex than that of the trachea and so the measuring, monitoring and control equipment needed is considerably more advanced. During the first half of 2010, one of our physician collaborators, Dr. Harald Ott at Massachusetts General Hospital, succeeded in regenerating a lung that was subsequently transplanted into the body of a rat. In collaboration with Dr. Ott and Massachusetts General Hospital, we designed and developed a novel bioreactor that was used to grow the rat lung used in this procedure. We also make similar bioreactors that are used by researchers working on regenerating human lungs, human hearts, human heart valves and part of the human intestinal tract.

Relationship with Harvard Bioscience

We are a wholly-owned subsidiary of Harvard Bioscience. We were incorporated by Harvard Bioscience to provide a means for separating its regenerative medicine business from its other businesses. Harvard Bioscience has been designing and manufacturing devices for life science researchers for over 100 years. Harvard Bioscience first explored the regenerative medicine market in 2007 and began focusing on providing devices to scientists involved in regenerative medicine research in 2008. Since early 2009, Harvard Bioscience’s regenerative medicine business initiative operated as a division of Harvard Bioscience. Harvard Bioscience decided to separate its regenerative medicine business into our company, a separate corporate entity and then to spin off its interest in our business to its stockholders. Prior to the distribution of shares of our common stock to the Harvard Bioscience stockholders, or the Distribution, Harvard Bioscience will contribute the assets of its regenerative medicine business, and approximately $15 million in cash, to our company to fund our operations following the Distribution. Following the Distribution, Harvard Bioscience will no longer be a stockholder of our common stock and will no longer control our operations. Harvard Bioscience has the right to terminate its plans to complete the Distribution if, at any time, Harvard Bioscience’s Board of Directors determines, in its sole discretion, that the Distribution is not in the best interests of Harvard Bioscience or its stockholders. Consequently, we cannot assure you as to when or whether the Distribution will occur. We had no material assets or activities as a separate corporate entity until the contribution to us by Harvard Bioscience of the regenerative medicine assets and business.

The Distribution is also subject to several conditions that must be satisfied (or waived by Harvard Bioscience in its sole discretion), including, among others:

the private letter ruling and a supplemental private letter ruling received from the IRS as provided in more detail below to the effect that, among other things, the spin-off will qualify as a transaction that is tax-free for U.S. federal income tax purposes under Section 355 and 368(a)(1)(D) of the Internal Revenue Code continuing in effect, and Harvard Bioscience’s receipt of an opinion from Burns & Levinson LLP, counsel to Harvard Bioscience, to the effect that the spin-off will qualify as a transaction that is described in Section 355 and 368(a)(1)(D) of the Internal Revenue Code;

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that all actions and filings necessary or appropriate under applicable securities laws in connection with the Distribution will have been taken or made, and, where applicable, become effective or been accepted by the applicable governmental authority;
the approval for listing on the NASDAQ Capital Market of the shares of our common stock to be distributed to the Harvard Bioscience stockholders in the Distribution;
that no order, injunction or decree issued by any court or agency of competent jurisdiction or other legal restraint or prohibition preventing consummation of the spin-off or any of the related transactions are in effect; and
that no other events or developments have occurred that, in the judgment of the Harvard Bioscience Board of Directors, would result in the Distribution not being in the best interest of Harvard Bioscience or its stockholders.

Harvard Bioscience has informed us that on June 28, 2013 it received a Supplemental Ruling to the Private Letter Ruling dated March 22, 2013 from the IRS to the effect that, among other things, the spin-off will qualify as a transaction that is tax-free for U.S. federal income tax purposes under Section 355 and 368(a)(1)(D) of the Internal Revenue Code continuing in effect.

Risks Relating to Our Business

An investment in our common stock involves a high degree of risk. Please read the information in the section captioned “Risk Factors” for a more thorough description of these risks. If any of these risks actually occurs, our business financial condition and results of operations would likely be negatively affected. In such case, the trading price of our common stock would likely decline, and you may lose part, or all, of your investment. Below is a summary of some of the principal risks we believe we face:

We may be unsuccessful in obtaining on a timely basis or at all, the regulatory clearances and approvals needed to commercially market and distribute our products due to adverse outcomes of clinical trials and other reasons.
We may be unsuccessful in launching products or expanding product offerings in the field of regenerative medicine.
Our medical collaborators may fail in their efforts at researching and developing safe and effective regenerative medical protocols and therapies.
Our success will depend partly on our ability to operate without infringing on, or misappropriating, the intellectual property or confidentiality rights of others.
The regenerative medicine market may not expand, or may not expand in the areas targeted by our products.
Future regulatory changes may affect our business.
If we are unable to effectively protect our intellectual property, third parties may use our technology, which would impair our ability to compete in our markets.
Substantial sales of our common stock may occur following the Distribution, which could cause our stock price to decline.
We are currently experiencing operating losses because we have no revenues to offset our operating costs.
We expect to need to raise additional capital to fund our activities until we generate positive cash flows and may not be able to obtain such capital on favorable terms or at all.

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Implications of Being an Emerging Growth Company

We qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As an emerging growth company, we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to public companies. These provisions include:

only two years of audited financial statements in addition to any required unaudited interim financial statements with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure;
reduced disclosure about our executive compensation arrangements;
no non-binding advisory votes required on executive compensation or golden parachute arrangements; and
exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting.

We may take advantage of these exemptions for up to five years or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company on the date that is the earliest of (i) the last day of the fiscal year in which we have total annual gross revenues of $1 billion or more; (ii) the last day of our fiscal year following the fifth anniversary of the date of the completion of the effectiveness of the Registration Statement on Form 10 of which this information statement is a part; (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the Securities and Exchange Commission, or SEC. We may choose to take advantage of some but not all of these exemptions. We have taken advantage of reduced reporting requirements in this information statement. Accordingly, the information contained herein may be different than the information you receive from other public companies in which you hold stock.

The Separation

Overview

On April 30, 2013, the Board of Directors of Harvard Bioscience preliminarily approved a plan to separate Harvard Bioscience into two independent companies (the “Separation”) — one for Harvard Bioscience’s core life science research tools business, or LSRT, and HART for its regenerative medicine business.

In connection with the Separation and prior to the Distribution, we will have entered into a Separation and Distribution Agreement, Intellectual Property Matters Agreement, Product Distribution Agreement, Tax Sharing Agreement, Transition Services Agreement, and Sublicense Agreement with Harvard Bioscience to effect the Separation and Distribution and provide a framework for our relationship with Harvard Bioscience after the Separation. These agreements will govern the relationships among us and Harvard Bioscience subsequent to the completion of the Separation plan and provide for the allocation among us and Harvard Bioscience of Harvard Bioscience’s assets, liabilities and obligations (including employee benefits and tax-related assets and liabilities) attributable to periods prior to the Separation.

The announcement of the proposed Separation plan indicated that the Harvard Bioscience Board of Directors believes that the Separation is the best way to unlock the full value of Harvard Bioscience’s businesses, which the Harvard Bioscience Board of Directors does not believe has been fully recognized by the investment community while the businesses have been operating together. Harvard Bioscience believes that the Separation should not only enhance each company’s strength, but will also improve each company’s strategic, operational and financial flexibility.

The Harvard Bioscience Board of Directors expects to receive an opinion from Duff & Phelps prior to the Distribution to the effect that HART and Harvard Bioscience each will be solvent, adequately capitalized immediately after the Distribution and able to pay its liabilities as they become absolute and mature, and that Harvard Bioscience has sufficient surplus under Delaware law to declare the dividend of HART common stock.

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The Distribution as described in this information statement is subject to the satisfaction or waiver of certain conditions. See “THE SEPARATION — Conditions to the Distribution,” beginning on page 14 of this information statement.

Corporate Information

We were incorporated under the laws of the State of Delaware on May 3, 2012. Our principal executive offices are located at 84 October Hill Road, Holliston, Massachusetts. Our telephone number is (508) 893-8999. We maintain a web site at www.harvardapparatusregen.com . The reference to our web site is intended to be an inactive textual reference only. The information contained on, or that can be accessed through, our web site is not a part of this information statement.

The name “Harvard Apparatus” is used under a license agreement between Harvard Bioscience and Harvard University. Harvard Bioscience has granted us a sublicense under this license agreement with respect to the name “Harvard Apparatus” for use in the name Harvard Apparatus Regenerative Technology. We have filed a trademark application with respect to the InBreath trademark. With respect to certain trademarks used in this information statement, “DACRON” is owned by Invista North America S.A.R.L., “Apligraf” is owned by Novartis AG, and “Dermagraft” is owned by Advanced Biohealing, Inc. Other names used herein are for informational purposes only and may be trademarks of their respective owners.

Questions and Answers about HART and the Separation

What is HART and why is Harvard Bioscience separating HART’s business and distributing HART’s stock?    
    Harvard Apparatus Regenerative Technology, Inc., or HART, is a wholly owned subsidiary of Harvard Bioscience, and was formed to provide a means for separating Harvard Bioscience’s regenerative medicine business from its other businesses. The separation of HART from Harvard Bioscience, or the Separation, and the distribution of HART common stock, or the Distribution, are intended to provide you with equity investments in two separate companies that will be able to focus on each of their respective performance of each business for the reasons discussed in the sections entitled “THE SEPARATION — Reasons for the Separation” beginning on page 38 of this information statement.
Why am I receiving this document?    
    Harvard Bioscience is delivering this document to you because you are a holder of Harvard Bioscience common stock. If you are a holder of Harvard Bioscience common stock as of the close of business on [           ], 2013, you are entitled to receive one share of HART common stock for every [    ] shares of Harvard Bioscience common stock that you held at the close of business on such date. This document will help you understand how the Separation and Distribution will affect your investment in Harvard Bioscience and your investment in HART after the Separation.
Why is the Separation of HART structured as a distribution?    
    Harvard Bioscience believes that a distribution of shares of HART is an efficient way to separate Harvard Bioscience’s businesses in a manner that will provide flexibility, create benefits and value for us and Harvard Bioscience and long-term value for Harvard Bioscience stockholders. Harvard Bioscience also believes a distribution of shares in HART in a transaction that is generally tax-free for U.S. federal income tax purposes is the most tax-efficient way to separate the companies.

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How will the Separation of HART work?    
    The Separation will be accomplished through a series of transactions in which all of the assets and liabilities of Harvard Bioscience’s regenerative medicine device business will be assigned to or assumed by HART and the common stock of HART will then be distributed by Harvard Bioscience to its stockholders on a pro rata basis.
When will the Distribution occur?    
    We expect that Harvard Bioscience will distribute the shares of HART common stock on [           ], 2013 to holders of record of Harvard Bioscience common stock on [           ], 2013, the Record Date.
What do stockholders need to do to participate in the Distribution?    
    Nothing, but we urge you to read this entire document carefully. Stockholders who hold Harvard Bioscience common stock as of the Record Date will not be required to take any action to receive HART common stock in the Distribution. No stockholder approval of the Distribution is required or sought. We are not asking you for a proxy and you are requested not to send us a proxy. You will not be required to make any payment, surrender or exchange your shares of Harvard Bioscience common stock or take any other action to receive your shares of our common stock. If you own Harvard Bioscience common stock as of the close of business on the Record Date, Harvard Bioscience, with the assistance of Registrar & Transfer Company, the distribution agent, will electronically issue shares of our common stock to you or to your brokerage firm on your behalf by way of direct registration in book-entry form. Registrar & Transfer Company will mail you a book-entry account statement that reflects your shares of HART common stock or your bank or brokerage firm will credit your account for the shares. If you sell shares of Harvard Bioscience common stock in the “regular-way” market up to and including through the Distribution Date, you will be selling your right to receive shares of HART common stock in the Distribution. Following the Distribution, stockholders whose shares are held in book-entry form may request that their shares of HART common stock held in book-entry form be transferred to a brokerage or other account at any time, without charge.
Can Harvard Bioscience decide to cancel the Distribution of the common stock even if all the conditions have been met?    
    Yes. The Distribution is subject to the satisfaction or waiver of certain conditions. See “THE SEPARATION — Conditions to the Distribution,” beginning on page 14 of this information statement. Harvard Bioscience has the right to terminate the Distribution, even if all of the conditions are satisfied, if at any time the Board of Directors of Harvard Bioscience determines that the Distribution is not in the best interests of Harvard Bioscience and its stockholders or that market conditions are such that it is not advisable to separate HART from Harvard Bioscience.

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Does HART plan to pay dividends?    
    As we expect to continue to experience losses in the foreseeable future due to our limited anticipated revenues and significant anticipated expenses, we do not expect to declare dividends in the short term. In addition, we currently intend to retain any earnings to support our operations and to finance the growth and development of our business. The declaration and payment of any future dividends by us will be subject to the discretion of our Board of Directors and will depend upon many factors, including our financial condition, earnings, capital requirements of our operating subsidiary, legal requirements, regulatory constraints and other factors deemed relevant by our Board of Directors.
Will HART have any debt?    
    At the time of the spin-off, HART will have no debt.
What are the U.S. federal income tax consequences of the Distribution to Harvard Bioscience stockholders?    
    The Distribution is conditioned upon, among other matters, the private letter ruling and supplemental private letter ruling received by Bioscience from the U.S. Internal Revenue Service (IRS), as discussed in more detail below, in form and substance satisfactory to Harvard Bioscience in its sole discretion, to the effect that the Distribution, together with certain related transactions, will qualify as a reorganization for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Internal Revenue Code of 1986, as amended, which we refer to as the “Code.”
   
    Harvard Bioscience has informed us that on June 28, 2013 it received a Supplemental Ruling to the Private Letter Ruling dated March 22, 2013 from the IRS to the effect that, among other things, the spin-off will qualify as a transaction that is tax-free for U.S. federal income tax purposes under Section 355 and 368(a)(1)(D) of the Internal Revenue Code continuing in effect. Harvard Bioscience also expects to receive an opinion from counsel, to the effect that the Distribution will so qualify. On the basis the Distribution so qualifies, for U.S. federal income tax purposes, you will not recognize any gain or loss, and no amount will be included in your income, upon your receipt of shares of HART common stock pursuant to the Distribution, except with respect to any cash received in lieu of fractional shares.
   
    You should consult your own tax advisor as to the particular consequences of the Distribution to you, including the applicability and effect of any U.S. federal, state and local tax laws, as well as foreign tax laws, which may result in the Distribution being taxable to you. For more information regarding the private letter and supplemental rulings, the tax opinion and certain U.S. federal income tax consequences of the Distribution, see the summary under “THE SEPARATION — Material U.S. Federal Income Tax Consequences of the Distribution” beginning on page 42 of this information statement.

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How will I determine the tax basis I will have in the HART shares I receive in the Distribution?    
    Generally, for U.S. federal income tax purposes, your aggregate basis in your shares of Harvard Bioscience common stock and the shares of HART common stock you receive in the Distribution (including any fractional share for which cash is received) will equal the aggregate basis of Harvard Bioscience common stock held by you immediately before the Distribution. This aggregate basis should be allocated between your shares of Harvard Bioscience common stock and the shares of HART common stock you receive in the Distribution (including any fractional share for which cash is received) in proportion to the relative fair market value of each immediately following the Distribution. For a more detailed discussion see “THE SEPARATION — Material U.S. Federal Income Tax Consequences of the Distribution” beginning on page 42 of this information statement.
   
    You should consult your tax advisor about the particular consequences of the Distribution to you, including the application of state, local and foreign tax laws.
What will the relationship between Harvard Bioscience and HART be following the Separation?    
    Before the Separation, we will enter into a separation and distribution agreement and several other agreements with Harvard Bioscience to effect the Separation and provide a framework for our relationship with Harvard Bioscience after the Separation. These agreements will govern the relationships between us and Harvard Bioscience subsequent to the completion of the Separation plan and provide for the allocation between us and Harvard Bioscience of Harvard Bioscience’s assets, liabilities and obligations (including employee benefits and tax-related assets and liabilities) attributable to periods prior to the Separation. See “Certain Relationships and Related Party Transactions,” included elsewhere in this information statement.
Will I receive physical certificates representing shares of HART common stock following the Separation?    
    No. Following the Separation, neither Harvard Bioscience nor HART will be issuing physical certificates representing shares of HART common stock. Instead, Harvard Bioscience, with the assistance of Registrar & Transfer Company, the distribution agent, will electronically issue shares of our common stock to you or to your bank or brokerage firm on your behalf by way of direct registration in book-entry form.
   
    Registrar & Transfer Company will mail you a book-entry account statement that reflects your shares of HART common stock, or your bank or brokerage firm will credit your account for the shares. A benefit of issuing stock electronically in book-entry form is that there will be none of the physical handling and safekeeping responsibilities that are inherent in owning physical stock certificates.

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What if I want to sell my Harvard Bioscience common stock or my HART common stock?    
    You should consult with your financial advisors, such as your stockbroker, bank or tax advisor. Neither Harvard Bioscience nor HART makes any recommendations on the purchase, retention or sale of shares of Harvard Bioscience common stock or the HART common stock to be distributed.
What is “regular-way” and “ex-distribution” trading of Harvard Bioscience stock?    
    Beginning on or shortly before the Record Date and continuing up to and through the Distribution Date, it is expected that there will be two markets in Harvard Bioscience common stock: a “regular-way” market and an “ex-distribution” market. If you are a holder of record of shares of Harvard Bioscience common stock as of the Record Date and choose to sell those shares in the “regular-way” market after the close of business on the Record Date and up to and including the Distribution Date, you will also be selling the right to receive shares of HART common stock in the Distribution.
   
    However, if you are a holder of record of shares of Harvard Bioscience common stock as of the Record Date and choose to sell those shares in the “ex-distribution” market after the close of business on the Record Date and up to and including the Distribution Date, you will still receive the shares of HART common stock that you would be entitled to receive in the Distribution pursuant to your ownership of the shares of Harvard Bioscience common stock. You are encouraged to consult with your financial advisor regarding the specific implications of selling shares of Harvard Bioscience common stock prior to or on the Distribution Date.
Where will I be able to trade shares of HART common stock?    
    There is not currently a public market for our common stock. We have applied to list our common stock on the NASDAQ Capital Market under the symbol “HART.” We anticipate that trading in shares of our common stock will begin on a “when-issued” basis on [           ], 2013 and will continue up to and including through the Distribution Date and that “regular-way” trading in shares of our common stock will begin on the first trading day following the Distribution Date. During “when-issued” trading, you may purchase or sell our common stock up to and including through the Distribution Date, but your transaction will not settle until after the Distribution Date. We cannot predict the trading prices for our common stock before, on or after the Distribution Date.
Will the number of Harvard Bioscience shares I own change as a result of the Distribution?    
    No. The number of shares of Harvard Bioscience common stock you own will not change as a result of the Distribution.

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What will happen to the listing of Harvard Bioscience common stock?    
    Nothing. Immediately after the Distribution of HART common stock, Harvard Bioscience common stock will continue to trade on the NASDAQ Capital Market under the symbol “HBIO.”
Will the Distribution affect the market price of my Harvard Bioscience shares?    
    Yes. As a result of the Distribution, we expect the trading price of shares of Harvard Bioscience common stock immediately following the Distribution to be lower than immediately prior to the Distribution because the trading price will no longer reflect the value of the HART business. Furthermore, until the market has fully analyzed the value of Harvard Bioscience without the HART business, the prices of Harvard Bioscience shares may fluctuate significantly.
Are there risks to owning HART common stock?    
    Yes. Our business is subject to both general and specific risks relating to our business, our relationship with Harvard Bioscience and our being a separate publicly traded company. Our business is also subject to risks relating to the Separation. These risks are described in the “Risk Factors” section of this information statement beginning on page 17 . We encourage you to read that section carefully.
Where can Harvard Bioscience stockholders get more information?    
    Before the Separation, if you have any questions relating to the Separation, you should contact:
   
    Harvard Bioscience, Inc.
Investor Relations
84 October Hill Road
Holliston, MA 01746
Tel. (508) 893-8999
www.harvardbioscience.com
   
    After the Separation, if you have any questions relating to our common stock, you should contact:
   
    Harvard Apparatus Regenerative Technology, Inc.
Investor Relations
84 October Hill Road
Holliston, MA 01746
Tel. (508) 893-8999
www.harvardapparatusregen.com
   
    After the Separation, if you have any questions relating to the Distribution of our shares, you should contact:
   
    Distribution Agent:
Registrar & Transfer Company
10 Commerce Drive
Cranford, NJ 07016
Tel. 800-456-0596
www.rtco.com

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Summary of the Separation

The following is a summary of the material terms of the Separation and other related transactions.

Distributing company    
    Harvard Bioscience. After the Distribution, Harvard Bioscience will not own any shares of our common stock.
Distributed company    
    Harvard Apparatus Regenerative Technology, Inc., a Delaware corporation and a wholly owned subsidiary of Harvard Bioscience that was formed to hold all of the assets and liabilities of Harvard Bioscience’s regenerative medicine device business. After the Distribution, HART will be an independent public company.
Distribution ratio    
    Each holder of Harvard Bioscience common stock will receive one share of our common stock for every [    ] shares of Harvard Bioscience common stock held on [           ], 2013. Cash will be distributed in lieu of fractional shares, as described below.
Distributed securities    
    All of the shares of HART common stock owned by Harvard Bioscience, which will be 100% of our common stock outstanding immediately prior to the Distribution. Based on the approximately [    ] million shares of Harvard Bioscience common stock outstanding on [           ], 2013 and applying the distribution ratio of one share of HART common stock for every [    ] shares of Harvard Bioscience common stock, approximately [    ] million shares of our common stock will be distributed to Harvard Bioscience stockholders who hold Harvard Bioscience common stock as of the Record Date. The number of shares that Harvard Bioscience will distribute to its stockholders will be reduced to the extent of the cash payments made in lieu of the issuance of fractional shares of our common stock.
Fractional shares    
    Harvard Bioscience will not distribute any fractional shares of our common stock to its stockholders. Instead, the Distribution agent will aggregate fractional shares into whole shares, sell the whole shares in the open market at prevailing market prices and distribute the aggregate net cash proceeds of the sales pro rata to each holder who otherwise would have been entitled to receive a fractional share in the Distribution. Recipients of cash in lieu of fractional shares will not be entitled to any interest on the amounts of payment made in lieu of fractional shares. The receipt of cash in lieu of fractional shares generally will be taxable to the recipient stockholders as described in “THE SEPARATION — Material U.S. Federal Income Tax Consequences of the Distribution” beginning on page 42 of this information statement.
Record Date    
    The record date for the Distribution is the close of business on [           ], 2013, or the Record Date.
Distribution Date    
    The distribution date is [           ], 2013, or the Distribution Date.

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Distribution    
    On the Distribution Date, Harvard Bioscience, with the assistance of Registrar & Transfer Company, the Distribution agent, will electronically issue shares of our common stock to you or to your bank or brokerage firm on your behalf by way of direct registration in book-entry form. You will not be required to make any payment, surrender or exchange your shares of Harvard Bioscience common stock or take any other action to receive your shares of our common stock. If you sell shares of Harvard Bioscience common stock in the “regular-way” market, up to and including through the Distribution Date, you will be selling your right to receive shares of HART common stock in the Distribution. Registered stockholders will receive additional information from the Distribution agent shortly after the Distribution Date. Following the Distribution, stockholders whose shares are held in book-entry form may request that their shares of HART common stock be transferred to a brokerage or other account at any time, without charge. Beneficial stockholders that hold shares through a brokerage firm will receive additional information from their brokerage firms shortly after the Distribution Date.
Conditions to the Distribution    
    The Distribution of our common stock is subject to the satisfaction or, if permissible under the Separation and Distribution Agreement, waiver by Harvard Bioscience of the following conditions, among other conditions described in this information statement:
   
   

•  

the Securities and Exchange Commission, or SEC, shall have declared effective our registration statement on Form 10, of which this information statement is a part, under the Securities Exchange Act of 1934, as amended, or the Exchange Act, and no stop order relating to the registration statement is in effect;

   
   

•  

all permits, registrations and consents required under the securities or blue sky laws of states or other political subdivisions of the United States or of other foreign jurisdictions in connection with the Distribution shall have been received;

   
   

•  

Harvard Bioscience will have received a private letter ruling from the IRS in form and substance satisfactory to Harvard Bioscience in its sole discretion, to the effect that the Distribution, together with certain related transactions, will qualify as a reorganization for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Code;

   
   

•  

the Harvard Bioscience Board of Directors shall have received an opinion from Duff & Phelps to the effect that we and Harvard Bioscience will each be solvent, adequately capitalized immediately after the Distribution and able to pay its liabilities as they become absolute and mature and that Harvard

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    Bioscience has sufficient surplus under Delaware law to declare the dividend of HART common stock;
   
   

•  

all material government approvals and other consents necessary to consummate the Distribution shall have been received; and

   
   

•  

no order, injunction or decree issued by any court of competent jurisdiction or other legal restraint or prohibition preventing consummation of the Distribution or any of the transactions related thereto, including the transfers of assets and liabilities contemplated by the Separation and Distribution Agreement, shall be in effect.

   
    The fulfillment of these conditions does not create any obligation on Harvard Bioscience’s part to effect the Distribution, and the Harvard Bioscience Board of Directors has reserved the right, in its sole discretion, to amend, modify or abandon the Distribution and related transactions at any time prior to the Distribution Date. Harvard Bioscience has the right not to complete the Distribution if, at any time, the Harvard Bioscience Board of Directors determines, in its sole discretion, that the Distribution is not in the best interests of Harvard Bioscience or its stockholders or that market conditions are such that it is not advisable to separate the regenerative medicine device business from Harvard Bioscience.
Stock exchange listing    
    We have filed an application to list our shares of common stock on the NASDAQ Capital Market under the ticker symbol “HART.” We anticipate that on [           ], 2013, trading of shares of our common stock will begin on a “when-issued” basis and will continue up to and including through the Distribution Date. See “THE SEPARATION —  Trading Between the Record Date and Distribution Date,” beginning on page 45 of this information statement.
Transfer agent    
    Registrar & Transfer Company
Risks relating to ownership of our common stock and the Distribution    
    Our business is subject to both general and specific risks and uncertainties relating to our business, our relationship with Harvard Bioscience and our being a separate publicly traded company. Our business is also subject to risks relating to the Separation. You should read carefully “Risk Factors,” beginning on page 17 in this information statement.
U.S. federal income tax consequences    
    On the basis that the Distribution, together with certain related transactions, will qualify as a reorganization for U.S. federal income tax purposes, no gain or loss will be recognized by a stockholder of Harvard Bioscience, and no amount will be included in the income of a stockholder of Harvard Bioscience for U.S. federal income tax purposes, upon the receipt of shares of our common stock pursuant to the Distribution, except with respect to any cash received in lieu of fractional shares. For more information regarding the

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    potential U.S. federal income tax consequences to you of the Distribution, see “THE SEPARATION — Material U.S. Federal Income Tax Consequences of the Distribution” beginning on page 42 of this information statement.
Certain Agreements with Harvard Bioscience    
    In connection with the Distribution, we entered into a Separation and Distribution Agreement and several other agreements with Harvard Bioscience to effect the Separation and Distribution and provide a framework for our relationship with Harvard Bioscience after the Separation. These agreements will govern the relationships among us and Harvard Bioscience subsequent to the completion of the Separation plan and provide for the allocation among us and Harvard Bioscience of Harvard Bioscience’s assets, liabilities and obligations (including employee benefits and tax-related assets and liabilities) attributable to periods prior to the Separation. For a discussion of these arrangements, see “Certain Relationships and Related Party Transactions” beginning on page 98 of this information statement.

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RISK FACTORS

You should carefully consider each of the following risk factors and all of the other information set forth in this information statement. The risk factors generally have been separated into three groups: (i) risks relating to our business, (ii) risks relating to the Separation and (iii) risks relating to our common stock. Based on the information currently known to us, we believe that the following information identifies the most significant risk factors affecting our company in each of these categories of risks. However, the risks and uncertainties our company faces are not limited to those set forth in the risk factors described below. In addition, past financial performance may not be a reliable indicator of future performance and historical trends should not be used to anticipate results or trends in future periods.

If any of the following risks and uncertainties develops into actual events, these events could have a material adverse effect on our business, financial condition or results of operations. In such case, the trading price of our common stock could decline.

Risks Relating to Our Business

Risks Associated with Regulatory Clearances and Approvals

If we fail to obtain, or experience significant delays in obtaining, regulatory clearances or approvals in the U.S. and the EU for our products, or are unable to maintain such clearances or approvals for our products, our ability to commercially distribute and market these products would suffer.

We currently do not have regulatory approval to market any of our products. Our products are subject to rigorous regulation by the FDA, and numerous other federal and state governmental authorities in the U.S., as well as foreign governmental authorities. In the U.S., the FDA permits commercial distribution of new medical products only after approval of a premarket approval application, or PMA or biologics license application, or BLA, unless the product is specifically exempt from those requirements. A PMA or BLA must be supported by extensive data, including, but not limited to, technical, preclinical, clinical trial, manufacturing and labeling data, to demonstrate to the FDA’s satisfaction the safety and efficacy of the product for its intended use.

We intend to seek approvals and clearances in the EU first, and our failure to receive or obtain such clearances or approvals on a timely basis or at all would have an adverse effect on our results of operations.

As further discussed below, there also is a risk that the FDA could seek to regulate the InBreath System solely as more-highly regulated components of a combination product.

It is likely that the InBreath System will be viewed by the FDA as a combination product comprised of a biologic (cells) and medical device component. We cannot be sure how the FDA will regulate our products. The FDA may require us to obtain marketing clearance and approval from multiple FDA centers. The review of combination products is often more complex and more time consuming than the review of products under the jurisdiction of only one center within the FDA.

It is likely that the InBreath System, may be regulated by the FDA as a combination product. For a combination product, the Office of Combination Products, or OCP, within FDA must determine which center or centers within the FDA will review the product and under what legal authority the product will be reviewed. Generally, the center within the FDA that has the primary role in regulating a combination product is determined based on the primary mode of action of the product. Generally, if the primary mode of action is as a device then the Center for Devices and Radiological Health, or CDRH takes the lead. Generally, if the primary mode of action is cellular, then the Center for Biologics Evaluation and Research takes the lead. We intend to apply to OCP for a determination as to which center will take the lead in reviewing the InBreath System. It is possible that the cells seeded on the scaffold in the InBreath System may be reviewed by CBER and that the InBreath System itself may be reviewed by CDRH either in consultation with CBER as part of the BLA or separately as a medical device. The process of obtaining FDA marketing clearance or approval is lengthy, expensive, and uncertain, and we cannot be sure that our products will be cleared or approved in a timely fashion, or at all. In addition, the review of combination products is often more complex and more time consuming than the review of a product under the jurisdiction of only one center within the FDA.

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We cannot be sure that the FDA will not select to have our combination products reviewed and regulated by only one FDA center and/or different legal authority, in which case the path to regulatory approval would be different and could be more lengthy and costly. If the FDA does not approve or clear our products in a timely fashion, or at all, our business and financial condition will be adversely affected.

In the EU, our products may be viewed as advanced therapy medicinal products, which could delay approvals and clearances and increase costs of obtaining such approvals and clearances.

In the EU, we believe that the InBreath System may be regulated as advanced therapy medicinal products or combined advanced therapy medicinal products. In such circumstances, it would be necessary to seek a marketing authorization for these products granted by the European Commission before being marketed in the EU.

The regulatory procedures leading to marketing approval of our products vary among jurisdictions and can involve substantial additional testing. Compliance with the FDA requirements does not ensure clearance or approval in other jurisdictions, and the ability to legally market our products in any one foreign country does not ensure clearance, or approval by regulatory authorities other foreign jurisdictions. The foreign regulatory process leading to the marketing of the products may include all of the risks associated with obtaining FDA approval in addition to other risks. In addition, the time required to comply with foreign regulations and market products may differ from that required to obtain FDA approval, and we may not obtain foreign approval or clearance on a timely basis, if at all.

Risks Associated with Clinical Trials

Clinical trials necessary to support a PMA application, a BLA license, a marketing authorization, or a CE mark for our products will be expensive and will require the enrollment of sufficient patients to adequately demonstrate safety and effectiveness for the product’s target populations. Suitable patients may be difficult to identify and recruit. Delays or failures in our clinical trials will prevent us from commercializing any products and will adversely affect our business, operating results and prospects.

In the U.S., initiating and completing clinical trials necessary to support either PMA applications or BLA licenses, will be time consuming, expensive and the outcome uncertain. Moreover, the FDA may not agree that clinical trial results support an application for the indications sought in the application for the product. In other jurisdictions such as the EU, the conduct of extensive and expensive clinical trials may also be required in order to demonstrate the quality, safety and efficacy of our products, depending on each specific product, the claims being studied, and the target condition or disease. The outcome of these clinical trials, which can be expensive and are heavily regulated, will also be uncertain. Moreover, the results of early clinical trials are not necessarily predictive of future results, and any product we advance into clinical trials may not have favorable results in later clinical trials.

Conducting successful clinical trials will require the enrollment of a sufficient number of patients to support each trial’s claims, and suitable patients may be difficult to identify and recruit. Patient enrollment in clinical trials and completion of patient participation and follow-up depends on many factors, including the size of the patient population, the nature of the trial protocol, the attractiveness of, or the discomfort and risks associated with, the treatments received by enrolled subjects, the availability of appropriate clinical trial investigators, support staff, and proximity of patients to clinical sites and ability to comply with the eligibility and exclusion criteria for participation in the clinical trial and patient compliance. For example, patients may be discouraged from enrolling in our clinical trials if the trial protocol requires them to undergo extensive post-treatment procedures or follow-up to assess the safety and effectiveness of our products, or if they determine that the treatments received under the trial protocols are not attractive or involve unacceptable risks or discomfort. Patients may also not participate in our clinical trials if they choose to participate in contemporaneous clinical trials of competitive products. In addition, patients participating in clinical trials may die before completion of the trial or suffer adverse medical events unrelated to investigational products.

Development of sufficient and appropriate clinical protocols to demonstrate safety and efficacy are required and we may not adequately develop such protocols to support clearance and approval. Further, the FDA and foreign regulatory authorities may require us to submit data on a greater number of patients than we originally anticipated and/or for a longer follow-up period or change the data collection requirements or data analysis

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applicable to our clinical trials. Delays in patient enrollment or failure of patients to continue to participate in a clinical trial may cause an increase in costs and delays in the approval and attempted commercialization of our products or result in the failure of the clinical trial. In addition, despite considerable time and expense invested in our clinical trials, the FDA and foreign regulatory authorities may not consider our data adequate to demonstrate safety and efficacy. Although FDA regulations allow submission of data from clinical trials outside the U.S., there can be no assurance that such data will be accepted or that the FDA will not apply closer scrutiny to such data. Increased costs and delays necessary to generate appropriate data, or failures in clinical trials could adversely affect our business, operating results and prospects. In the U.S., clinical studies for the company's products may be reviewed either under the Investigational Device Exemptions, or IDE pathway (for medical devices) or through the Investigational New Drug, or IND, pathway for biologics or combination products. The first regenerated trachea transplant approved in the U.S. using the InBreath System was approved under the IND pathway through CBER. Future FDA review under the IDE, IND, or both pathways, depending on the products, proposed study design, and study populations, is possible. In the EU, if the regulatory classification of our products is rejected by the ethics committee or competent authority reviewing our request for a positive opinion, we may be required to prepare a new study protocol reflecting a different classification. This process would be costly and time consuming.

If the third parties on which we rely to conduct our clinical trials and to assist us with pre-clinical development do not perform as contractually required or expected, we may not be able to obtain regulatory approval for or commercialize our products.

We do not have the ability to independently conduct our preclinical and clinical trials for our products and we must rely on third parties, such as contract research organizations, medical institutions, clinical investigators and contract laboratories to conduct such trials. If these third parties do not successfully carry out their contractual duties or regulatory obligations or meet expected deadlines, if these third parties need to be replaced, or if the quality or accuracy of the data they obtain is compromised due to the failure to adhere to our clinical protocols or regulatory requirements, or for other reasons, our pre-clinical development activities or clinical trials may be extended, delayed, suspended or terminated, and we may not be able to seek or obtain regulatory approval for, or successfully commercialize, our products on a timely basis, if at all. Our business, operating results and prospects may also be adversely affected. Furthermore, our third-party clinical trial investigators may be delayed in conducting our clinical trials for reasons outside of their control.

The results of our clinical trials may not support our product claims or may result in the discovery of adverse side effects.

Even if our clinical trials are completed as planned, we cannot be certain that their results will support our product claims or that the FDA, foreign competent authorities or notified bodies will agree with our conclusions regarding them. Although we have obtained some positive results from the use of our scaffolds and bioreactors for trachea transplants performed to date, we may not see positive results when the bioreactors, or our scaffolds or other technologies undergo clinical testing in humans in the future. Success in preclinical studies and early clinical trials does not ensure that later clinical trials will be successful, and we cannot be sure that the later trials will replicate the results of prior trials and pre-clinical studies. The clinical trial process may fail to demonstrate that our products are safe and effective for the proposed indicated uses, which could cause us to abandon a product and may delay development of others. Also, patients receiving transplants using our products may experience significant adverse events following the transplants, including serious health complications or death, which may or may not be related to our products, and any such adverse events may cause the delay or termination of our clinical trials. Any delay or termination of our clinical trials will delay the filing of our product submissions and, ultimately, our ability to commercialize our products and generate revenues. It is also possible that patients enrolled in clinical trials will experience adverse side effects that are not currently part of the product’s profile. In addition, our current clinical experience and clinical trial for trachea transplant involves a small patient population. Because of the small sample size, the results may not be indicative of future results.

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Risk Associated with Product Marketing

Even if our products are cleared or approved by regulatory authorities, if we or our suppliers fail to comply with ongoing FDA or other foreign regulatory authority requirements, or if we experience unanticipated problems with our products, these products could be subject to restrictions or withdrawal from the market.

Any product for which we obtain clearance or approval in the U.S. or the EU, and the manufacturing processes, reporting requirements, post-approval clinical data and promotional activities for such product, will be subject to continued regulatory review, oversight and periodic inspections by the FDA and other domestic and foreign regulatory authorities or notified bodies. In particular, we and our suppliers are required to comply with the FDA’s Quality System Regulations, or QSR, and Good Manufacturing Practices, or GMPs, for our medical device products, and International Standards Organization, or ISO, regulations for the manufacture of our products and other regulations which cover the methods and documentation of the design, testing, production, control, quality assurance, labeling, packaging, storage and shipping of any product for which we obtain clearance or approval. Manufacturing may also be subject to controls by the FDA for parts of the system or combination products that the FDA may find are controlled by the biologics regulations. Equivalent regulatory obligations apply in foreign jurisdictions. Regulatory authorities, such as the FDA, the competent authorities of the EU Member States, the European Medicines Agency and notified bodies, enforce the QSR, GMP and other applicable regulations in the U.S. and in foreign jurisdictions through periodic inspections. The failure by us or one of our suppliers to comply with applicable statutes and regulations administered by the FDA and other regulatory authorities or notified bodies in the U.S. or in foreign jurisdictions, or the failure to timely and adequately respond to any adverse inspectional observations or product safety issues, could result in, among other things, any of the following enforcement actions:

untitled letters, warning letters, fines, injunctions, consent decrees and civil penalties;
unanticipated expenditures to address or defend such actions;
customer notifications for repair, replacement, refunds;
recall, detention or seizure of our products;
operating restrictions or partial suspension or total shutdown of production;
withdrawing PMA approvals or BLAs that have already been granted;
withdrawal of the marketing authorization granted by the European Commission or delay in obtaining such marketing authorization;
withdrawal of the CE Certificates of Conformity granted by the notified body or delay in obtaining these certificates;
refusal to grant export approval for our products; and
criminal prosecution.

Postmarket enforcement actions can generate adverse commercial consequences.

Even if regulatory clearance or approval of a product is granted, such clearance or approval may be subject to limitations on the intended uses for which the product may be marketed and reduce our potential to successfully commercialize the product and generate revenue from the product. If the FDA or a foreign regulatory authority determines that our promotional materials, labeling, training or other marketing or educational activities constitute promotion of an unapproved use, it could request that we cease or modify our training or promotional materials or subject us to regulatory enforcement actions. It is also possible that other federal, state or foreign enforcement authorities might take action if they consider our training or other promotional materials to constitute promotion of an unapproved use, which could result in significant fines or penalties under other statutory authorities, such as laws prohibiting false claims for reimbursement.

In addition, we may be required to conduct costly post-market testing and surveillance to monitor the safety or effectiveness of our products, and we must comply with medical device reporting requirements, including the reporting of adverse events and malfunctions related to our products. Later discovery of previously unknown problems with our products, including unanticipated adverse events or adverse events of

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unanticipated severity or frequency, manufacturing problems, or failure to comply with regulatory requirements such as QSR, may result in changes to labeling, restrictions on such products or manufacturing processes, withdrawal of the products from the market, voluntary or mandatory recalls, a requirement to repair, replace or refund the cost of any medical device we manufacture or distribute, fines, suspension of regulatory approvals, product seizures, injunctions or the imposition of civil or criminal penalties which would adversely affect our business, operating results and prospects.

Extensive governmental regulations that affect our business are subject to change, and we could be subject to penalties and could be precluded from marketing our products and technologies if we fail to comply with new regulations and requirements.

As a manufacturer and marketer of medical devices, we are subject to extensive regulation that is subject to change. In March 2010, President Obama signed into law a legislative overhaul of the U.S. healthcare system, known as the Patient Protection and Affordable Care Act of 2010, as amended by the Healthcare and Education Affordability Reconciliation Act of 2010, or the PPACA, which may have far-reaching consequences for most healthcare companies, including medical device companies like us. The PPACA could substantially change the structure of the health insurance system and the methodology for reimbursing medical services, laboratory tests, drugs and devices. These structural changes, as well as those relating to proposals that may be made in the future to change the health care system, could entail modifications to the existing system of private payers and government programs, as well as implementation of measures to limit or eliminate payments for some medical procedures and treatments or subject the pricing of medical products to government control. Government and other third-party payers increasingly attempt to contain health care costs by limiting both coverage and the level of payments of newly approved health care products. In some cases, they may also refuse to provide any coverage of uses of approved products for disease indications other than those for which the regulatory authorities have granted marketing approval. Governments may adopt future legislative proposals and federal, state, foreign or private payers for healthcare goods and services may take action to limit their payments for goods and services.

In the EU, on September 26, 2012, the European Commission proposed a revision of the legislation currently governing medical devices. If adopted by the European Parliament and the Council in their present form, these proposals, which may apply from 2015 or 2016, will impose stricter requirements on medical device manufacturers. Moreover, the supervising competences of the competent authorities of the EU Member States and the notified bodies will be strengthened. The regulation of advanced therapy medicinal products is also in continued development in the EU, with the European Medicines Agency publishing new clinical or safety guidelines concerning advanced therapy medicinal products on a regular basis.

Any of these regulatory changes and events could limit our ability to form collaborations and our ability to commercialize our products, and if we fail to comply with any such new or modified regulations and requirements it could adversely affect our business, operating results and prospects.

If we fail to complete the required IRS forms for exemptions, make timely semi-monthly payments of collected excise taxes, or submit quarterly reports as required by the Medical Device Excise Tax, we may be subject to penalties, such as Section 6656 penalties for any failure to make timely deposits.

Section 4191 of the Internal Revenue Code, enacted by Section 1405 of the Health Care and Education Reconciliation Act of 2010, Public Law 111-152 (124 Stat. 1029 (2010)), in conjunction with the Patient Protection and Affordable Care Act, Public Law 111-148 (124 Stat. 119 (2010)), imposed as of January 1, 2013, an excise tax on the sale of certain medical devices. The excise tax imposed by Section 4191 is 2.3% of the price for which a taxable medical device is sold within the U.S.

The excise tax will apply to future sales of any company medical device listed with the FDA under Section 510(j) of the Federal Food, Drug, and Cosmetic Act and 21 C.F.R. Part 807, unless the device falls within an exemption from the tax, such as the exemption governing direct retail sale of devices to consumers or for foreign sales of these devices. We will need to assess to what extent this excise tax may impact the sales price and distribution agreements under which any of our devices are sold in the U.S. We also expect general and administrative expense to increase due to the medical device excise tax. We will need to submit IRS forms applicable to relevant exemptions, make semi-monthly payments of any collected excise taxes, and

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make timely (quarterly) reports to the IRS regarding the excise tax. To the extent we do not comply with the requirements of the Medical Device Excise Tax we may be subject to penalties.

Financial and Operating Risks

We have not generated any revenue to date and have a history of losses since inception. We anticipate that we will incur losses for the foreseeable future. We may never achieve or sustain profitability.

We have not generated any revenue to date and, from February 2009 through March 31, 2013, have incurred losses of approximately $14.4 million. We expect to continue to experience losses in the foreseeable future due to our limited anticipated revenues and significant anticipated expenses. We do not anticipate that we will achieve meaningful revenues for the foreseeable future. In addition, we expect that we will continue to incur significant operating expenses as we continue to focus on additional research and development, preclinical testing, clinical testing and regulatory review and/or approvals or clearances of our products and technologies. As a result, we cannot predict when, if ever, we might achieve profitability and cannot be certain that we will be able to sustain profitability, if achieved.

Our products are in an early stage of development. If we are unable to develop or market any of our products, our financial condition will be negatively affected, and we may have to curtail or cease our operations.

We are in the early stage of product development. You must evaluate us in light of the uncertainties and complexities affecting an early stage medical company. Our products require additional research and development, preclinical testing, clinical testing and regulatory review and/or approvals or clearances before marketing. In addition, we may not succeed in developing new products as an alternative to our existing portfolio of products. If we fail to successfully develop and commercialize our products, including our bioreactor and scaffold system, our financial condition may be negatively affected, and we may have to curtail or cease our operations.

We have a limited operating history and it is difficult to predict our future growth and operating results.

We have a limited operating history and limited operations and assets. Accordingly, you should consider our prospects in light of the costs, uncertainties, delays and difficulties encountered by companies in the early stage of development. As a development stage company, our development timelines have been and may continue to be subject to delay that could negatively affect our cash flow and our ability to develop or bring products to market, if at all. Our estimates of patient population are based on published data but are subject to uncertainty and possible future revision as they often require inference or extrapolations from one country to another or one patient condition to another.

Our prospects must be considered in light of inherent risks, expenses and difficulties encountered by all early stage companies, particularly companies in new and evolving markets, such as regenerative medicine. These risks include, but are not limited to, unforeseen capital requirements, delays in obtaining regulatory approvals, failure to gain market acceptance and competition from foreseen and unforeseen sources.

Our operations could be adversely affected if we are unable to raise or obtain needed funding.

Substantial time, financial and other resources will be required to complete ongoing development and clinical testing of our products. Regulatory efforts and collaborative arrangements will also be necessary for our products that are currently under development and testing in order for them to be marketed. Our revenues from operations and cash may not be sufficient over the next several years for commercialization of all of the technologies and products we are currently developing. Consequently, we may seek strategic partners for various phases of development, marketing and commercialization of products employing our technologies. Further, we cannot assure you as to the sufficiency of our resources or the time required to complete any ongoing development and clinical testing, since the extent to which we conduct such testing is dependent on resource allocation decisions that we make from time to time based on numerous financial as well as operational conditions.

In addition to development and other costs, we expect to incur capital expenditures from time to time. These capital expenditures will be influenced by our regulatory compliance efforts, our success, if any, at developing

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collaborative arrangements with strategic partners, our needs for additional facilities and capital equipment and the growth, if any, of our business in general. We may seek to raise necessary funds through public or private equity offerings, debt financings, other financing mechanisms, strategic collaborations and licensing arrangements. We may not be able to obtain additional financing on terms favorable to us, if at all. General market conditions may make it very difficult for us to seek financing from the capital markets. In May 2013, we elected not to proceed with planned initial public offering of our common stock. Additional equity financing could result in significant dilution to our stockholders. Debt financing, if available, could result in agreements that include covenants limiting or restricting our ability to take certain actions, such as incurring additional debt, making capital expenditures or paying dividends. Other financing mechanisms may involve selling intellectual property rights, payment of royalties or participation in our revenue or cash flow. In addition, in order to raise additional funds through strategic collaborations or licensing arrangements, we may be required to relinquish rights to our technologies or products. If we cannot raise funds or engage strategic partners on acceptable terms when needed, we may not be able to continue our research and development activities, develop or enhance our products, take advantage of future opportunities, grow our business or respond to competitive pressures or unanticipated requirements.

If we fail to retain key personnel, we may not be able to compete effectively, which would have an adverse effect on our operations.

Our success is highly dependent on the continued services of key management, technical and scientific personnel and collaborators. Our management and other employees may voluntarily terminate their employment at any time upon short notice. The loss of the services of any member of our senior management team, including our Chief Executive Officer and President, David Green, our Chief Financial Officer, Thomas McNaughton, and our other key scientific, technical and management personnel, may significantly delay or prevent the achievement of product development and other business objectives.

If our collaborators do not devote sufficient time and resources to successfully carry out their duties or meet expected deadlines, we may not be able to advance our products in a timely manner or at all.

We are currently collaborating with multiple academic researchers and clinicians at a variety of research and clinical institutions. Our success depends in part on the performance of our collaborators. Some collaborators may not be successful in their research and clinical trials or may not perform their obligations in a timely fashion or in a manner satisfactory to us. Typically, we cannot control the amount of resources or time our collaborators may devote to our programs or potential products that may be developed in collaboration with us. Our collaborators frequently depend on outside sources of funding to conduct or complete research and development, such as grants or other awards. In addition, our academic collaborators may depend on graduate students, medical students, or research assistants to conduct certain work, and such individuals may not be fully trained or experienced in certain areas, or they may elect to discontinue their participation in a particular research program, creating an inability to complete ongoing research in a timely and efficient manner. As a result of these uncertainties, we are unable to control the precise timing and execution of any experiments that may be conducted.

We do not have formal agreements in place with most of our collaborators, who retain the ability to pursue other research, product development or commercial opportunities that may be directly competitive with our programs. If these collaborators elect to prioritize or pursue other programs in lieu of ours, we may not be able to advance product development programs in an efficient or effective manner, if at all. If a collaborator is pursuing a competitive program and encounters unexpected financial or capability limitations, they may be motivated to reduce the priority placed on our programs or delay certain activities related to our programs. Any of these developments could harm or slow our product and technology development efforts.

In particular, we depend upon Dr. Paolo Macchiarini, the surgeon who has led all of the clinical surgeries to date using our technology. Dr. Macchiarini’s team developed the initial version of our InBreath airway bioreactor, which we have licensed from the inventors. We continue to collaborate with Dr. Macchiarini on grant proposals and product development. If Dr. Macchiarini were not available to continue to collaborate with us or perform surgeries it would materially slow development of our products. On September 27, 2012, Dr. Macchiarini was arrested in Italy for attempted fraud and extortion for allegedly attempting to persuade severely ill patients to choose private hospitals in other countries over less expensive Italian public hospitals.

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He was temporarily placed under house arrest and on October 15, 2012 was released from house arrest and is free to travel internationally and to perform surgeries. The case is ongoing. Dr. Macchiarini believes these charges are without merit and has, and intends to continue to, vigorously defend these charges. These allegations do not relate to any surgeries involving our products and have not prevented Dr. Macchiarini from performing further surgeries with our products including the April 2013 surgery in the U.S. and the July 2013 surgery in Sweden. If Dr. Macchiarini decides to terminate his collaboration with us, if the case described above consumes a significant amount of his time, or if the case prevents him from performing surgeries, our product development efforts could be adversely affected and it could cause harm to our reputation or business.

Public perception of ethical and social issues surrounding the use of cell technology may limit or discourage the use of our technologies, which may reduce the demand for our products and technologies and reduce our revenues.

Our success will depend in part upon our collaborators’ ability to develop therapeutic approaches incorporating, or discovered through, the use of cells. If regenerative medicine technology is perceived negatively by the public for social, ethical, medical or other reasons, governmental authorities in the U.S. and other countries may call for prohibition of, or limits on, cell-based technologies and other approaches to regeneration. Although the surgeons using our products have not to date used the more controversial stem cells derived from human embryos or fetuses in the human transplant surgeries using our products, claims that human-derived stem cell technologies are ineffective or unethical may influence public attitudes. The subject of cell and stem cell technologies in general has received negative publicity and aroused public debate in the U.S. and some other countries. Ethical and other concerns about such cells could materially harm the market acceptance of our products.

Our products will subject us to liability exposure.

We face an inherent risk of product liability claims, especially with respect to our products that will be used within the human body, including the scaffolds we manufacture. Product liability coverage is expensive and sometimes difficult to obtain. We may not be able to obtain or maintain insurance at a reasonable cost. We may be subject to claims for liabilities for unsuccessful outcomes of surgeries involving our products, which may include claims relating to patient death. We may also be subject to claims for liabilities relating to patients that suffer serious complications or death during or following transplants involving our products. Our current product liability coverage is $15 million per occurrence and in the aggregate. We will need to increase our insurance coverage if and when we begin commercializing any of our products. There can be no assurance that existing insurance coverage will extend to other products in the future. Any product liability insurance coverage may not be sufficient to satisfy all liabilities resulting from product liability claims. A successful claim may prevent us from obtaining adequate product liability insurance in the future on commercially desirable items, if at all. If claims against us substantially exceed our coverage, then our business could be adversely impacted. Regardless of whether we are ultimately successful in any product liability litigation, such litigation could consume substantial amounts of our financial and managerial resources and could result in, among others:

significant awards against us;
substantial litigation costs;
injury to our reputation and the reputation of our products;
withdrawal of clinical trial participants; and
adverse regulatory action.

Any of these results would substantially harm our business.

If restrictions on reimbursements or other conditions imposed by payers limit our customers’ actual or potential financial returns on our products, our customers may not purchase our products or may reduce their purchases.

Our customers’ willingness to use our products will depend in part on the extent to which coverage for these products is available from government payers, private health insurers and other third-party payers. These

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payers are increasingly challenging the price of medical products and services. Significant uncertainty exists as to the reimbursement status of newly approved treatments and products in the regenerative medicine field, and coverage and adequate payments may not be available for these treatments and products. In addition, third-party payers may require additional clinical trial data to establish or continue reimbursement coverage. These clinical trials, if required, could take years to complete and could be expensive. There can be no assurance that the payers will agree to continue reimbursement or provide additional coverage based upon these clinical trials. Failure to obtain adequate reimbursement would result in reduced sales of our products.

We depend upon a single-source supplier for the hardware and software used for our organ bioreactor control and acquisition system. The loss of this supplier, or future single-source suppliers we may rely on, or their failure to provide us with an adequate supply of their products or services on a timely basis, could adversely affect our business.

We currently have a single supplier for the hardware and software that we use for our organ bioreactor control and acquisition systems. We may also rely on other single-source suppliers for critical components of our products in the future. If we were unable to acquire hardware or software or other products or services from applicable single-source suppliers, we could experience a delay in developing and manufacturing our products.

We use and generate hazardous materials in our business and must comply with environmental laws and regulations, which can be expensive.

Our research, development and manufacturing involves the controlled use of hazardous chemicals, and we may incur significant costs as a result of the need to comply with numerous laws and regulations. For example, certain volatile organic laboratory chemicals we use, such as fluorinated hydrocarbons, must be disposed of as hazardous waste. We are subject to laws and regulations enforced by the FDA, foreign health authorities and other regulatory requirements, including the Occupational Safety and Health Act, the Environmental Protection Act, the Toxic Substances Control Act, the Resource Conservation and Recovery Act, and other current and potential federal, state, local and foreign laws and regulations governing the use, manufacture, storage, handling and disposal of our products, materials used to develop and manufacture our products, and resulting waste products. Although we believe that our safety procedures for handling and disposing of such materials comply with the standards prescribed by state and federal regulations, the risk of accidental contamination or injury from these materials cannot be completely eliminated. In the event of such an accident, we could be held liable for any damages that result and any such liability could exceed our resources.

Our products are novel and will require market acceptance.

Even if we receive regulatory approvals for the commercial use of our products, their commercial success will depend upon acceptance by physicians, patients, third party payers such as health insurance companies and other members of the medical community. Market acceptance of our products is also dependent upon our ability to provide acceptable evidence and the perception of the positive characteristics of our products relative to existing or future treatment methods, including their safety, efficacy and/or other positive advantages. If our products fail to gain market acceptance, we may be unable to earn sufficient revenue to continue our business. Market acceptance of, and demand for, any product that we may develop and commercialize will depend on many factors, both within and outside of our control. If our products do not become widely accepted, our business, financial condition and results of operations would be materially and adversely affected.

Our long-term growth depends on our ability to develop products for other organs.

Our growth strategy includes expanding the use of our products in treatments pertaining to organs other than the trachea, such as lungs, gastrointestinal tract, heart valves and heart. These other organs are more complex than the trachea. There is no assurance that we will be able to successfully apply our technologies to these other more complex organs, which will limit our expected growth.

Our success will depend partly on our ability to operate without infringing on, or misappropriating, the intellectual property or confidentiality rights of others.

We may be sued for infringing on the intellectual property or confidentiality rights of others, including the patent rights, trademarks and trade names and confidential information of third parties. For example, we have

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sublicensed certain rights pertaining to our use of the mark Harvard Apparatus from Harvard Bioscience, including the use in our corporate name. Harvard Bioscience has licensed the rights to such mark from Harvard University. If the license to Harvard Bioscience or our sublicense were terminated, it could have an adverse effect on us. We have also received correspondence from legal counsel to Nanofiber Solutions, Inc., or NFS, claiming that in developing our scaffold product and related intellectual property, we may have committed misappropriation, unauthorized use and disclosure of confidential information, and possible infringement of intellectual property rights of NFS. We have received correspondence from legal counsel to UCL Business PLC, or UCLB, challenging the validity of the assignment of certain patent applications that have been assigned to us by Dr. Macchiarini. We have also received correspondence from an academic researcher implying that one of our products may violate an issued patent. We do not believe that our current products violate this patent. To the extent that any of such claims are valid, if we had utilized, or were to utilize, such patent applications or patents without an agreement from the owner thereof, it could result in infringement of the intellectual property rights of the respective owner. Intellectual property and related litigation is costly and the outcome is uncertain. If we do not prevail in any such intellectual property or related litigation, in addition to any damages we might have to pay, we could be required to stop the infringing activity, or obtain a license to or design around the intellectual property or confidential information in question. If we are unable to obtain a required license on acceptable terms, or are unable to design around any third party patent, we may be unable to sell some of our products and services, which could result in reduced revenue.

We may be involved in lawsuits to protect or enforce our patents that would be expensive and time consuming.

In order to protect or enforce our patent rights, we may initiate patent litigation against third parties. We may also become subject to interference proceedings conducted in the patent and trademark offices of various countries to determine the priority of inventions. The defense and prosecution, if necessary, of intellectual property suits, interference proceedings and related legal and administrative proceedings would be costly and divert our technical and management personnel from their normal responsibilities. We may not prevail in any of these suits should they occur. An adverse determination of any litigation or defense proceedings could put our patents at risk of being invalidated or interpreted narrowly and could put our patent applications at risk of being rejected and patents not being issued.

Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. For example, during the course of this kind of litigation, there could be public announcements of the results of hearings, motions or other interim proceedings or developments in the litigation. Securities analysts or investors may perceive these announcements to be negative, which could cause the market price of our stock to decline.

If we are unable to effectively protect our intellectual property, third parties may use our technology, which would impair our ability to compete in our markets.

Our continued success will depend significantly on our ability to obtain and maintain meaningful patent protection for certain of our products throughout the world. Patent law relating to the scope of claims in the regenerative medicine and medical device fields in which we operate is still evolving. The degree of future protection for our proprietary rights is uncertain. We rely on patents to protect a significant part of our intellectual property and to enhance our competitive position. However, our presently pending or future patent applications may not be accepted and patents might not be issued, and any patent previously issued to us may be challenged, invalidated, held unenforceable or circumvented. Furthermore, the claims in patents which have been issued or which may be issued to us in the future may not be sufficiently broad to prevent third parties from producing competing products similar to our products. We may also operate in countries where we do not have patent rights and in those countries we would not have patent protection. We also rely on trademarks and trade names in our business. The laws of various foreign countries in which we compete may not protect our intellectual property to the same extent as do the laws of the U.S. If we fail to obtain adequate patent protection for our proprietary technology, our ability to be commercially competitive could be materially impaired. It is also possible that our intellectual property may be stolen via cyber-attacks or similar methods.

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In addition to patent protection, we also rely on protection of trade secrets, know-how and confidential and proprietary information. To maintain the confidentiality of trade-secrets and proprietary information, we generally seek to enter into confidentiality agreements with our employees, consultants and strategic partners upon the commencement of a relationship. However, we may not be able to obtain these agreements in all circumstances in part due to local regulations. In the event of unauthorized use or disclosure of this information, these agreements, even if obtained, may not provide meaningful protection for our trade-secrets or other confidential information. In addition, adequate remedies may not exist in the event of unauthorized use or disclosure of this information. The loss or exposure of our trade secrets and other proprietary information would impair our competitive advantages and could have a material adverse effect on our operating results, financial condition and future growth prospects.

Our competitors and potential competitors may have greater resources than we have and may develop products and technologies that are more effective or commercially attractive than our products and technologies or may develop competing relationships with our key collaborators.

We expect to compete with multiple pharmaceutical, biotechnology, medical device and scientific research product companies. Companies working in competing areas include, among others, Aastrom Biosciences, Aldagen, BioTime, Baxter International, Inc., Bose Corporation, Celgene, Cytori Therapeutics, E. I. du Pont de Nemours and Company, Genzyme (acquired by Sanofi-aventis), Harvest Technologies, Mesoblast, Nanofiber Solutions, Organovo, Osiris Therapeutics, Smiths Medical, Tengion, Tissue Genesis, Inc., Tissue Growth Technologies, Transmedics, United Therapeutics and W.L. Gore and Associates. Many of our competitors and potential competitors have substantially greater financial, technological, research and development, marketing, and personnel resources than we do. We cannot, with any accuracy, forecast when or if these companies are likely to bring regenerative medicine medical devices to market for indications that we are also pursuing. Many of these potential competitors may be further along in the process of product development and also operate large, company-funded research and development programs. It is also possible that some of our potential customers could engineer their own solutions to the problem of accurate injections.

We expect that other products will compete with our current and future products based on efficacy, safety, cost, and intellectual property positions. While we believe that these will be the primary competitive factors, other factors include obtaining marketing exclusivity under certain regulations, including the Orphan Drug Act, availability of supply, manufacturing, marketing and sales expertise and capability, and reimbursement coverage. Our competitors may develop or market products that are more effective or commercially attractive than our current or future products and may also develop competing relationships with our key collaborators. In addition, we may face competition from new entrants into the field. We may not have the financial resources, technical expertise or marketing, distribution or support capabilities to compete successfully in the future. The effects of any such actions of our competitors may have a material adverse effect on our business, operating results and financial condition.

If we do not successfully manage our growth, our business goals may not be achieved.

To manage growth, we will be required to continue to improve existing, and implement additional, operational and financial systems, procedures and controls, and hire, train and manage additional employees. Our current and planned personnel, systems, procedures and controls may not be adequate to support our anticipated growth and we may not be able to hire, train, retain, motivate and manage required personnel. Competition for qualified personnel in the technology and regenerative medicine area is intense, and we operate in several geographic locations where labor markets are particularly competitive, including Boston, Massachusetts, where demand for personnel with these skills is extremely high and is likely to remain high. As a result, competition for qualified personnel is intense and the process of hiring suitably qualified personnel is often lengthy and expensive, and may become more expensive in the future. If we are unable to hire and retain a sufficient number of qualified employees or otherwise manage our growth effectively, our ability to conduct and expand our business could be seriously reduced.

We are exposed to a variety of risks relating to our international sales and operations, including fluctuations in exchange rates, local economic conditions and delays in collection of accounts receivable.

We intend to generate significant revenues outside the U.S. in multiple foreign currencies including Euros, British pounds, and in U.S. dollar-denominated transactions conducted with customers who generate revenue

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in currencies other than the U.S. dollar. For those foreign customers who purchase our products in U.S. dollars, currency fluctuations between the U.S. dollar and the currencies in which those customers do business may have a negative impact on the demand for our products in foreign countries where the U.S. dollar has increased in value compared to the local currency.

Since we have operations based outside the U.S. and we generate revenues and incur operating expenses in multiple foreign currencies, we experience currency exchange risk with respect to those foreign currency-denominated revenues and expenses.

We cannot predict the consolidated effects of exchange rate fluctuations upon our future operating results because of the number of currencies involved, the variability of currency exposure and the potential volatility of currency exchange rates. Our international operations subject us to laws regarding sanctioned countries, entities and persons, customs, import-export, laws regarding transactions in foreign countries, the U.S. Foreign Corrupt Practices Act and local anti-bribery and other laws regarding interactions with healthcare professionals. Among other things, these laws restrict, and in some cases prohibit, U.S. companies from directly or indirectly selling goods, technology or services to people or entities in certain countries. In addition, these laws require that we exercise care in structuring our sales and marketing practices in foreign countries.

Local economic conditions, legal, regulatory or political considerations, disruptions from strikes, the effectiveness of our sales representatives and distributors, local competition and changes in local medical practice could also affect our sales to foreign markets. Relationships with customers and effective terms of sale frequently vary by country, often with longer-term receivables than are typical in the U.S.

Risks Related To Separation

We may be unable to achieve some or all of the benefits that we expect to achieve from our separation from Harvard Bioscience.

As a stand-alone, independent public company, we believe that our business will benefit from, among other things, allowing our management to design and implement corporate policies and strategies that are based primarily on the characteristics of our business, allowing us to focus our financial resources wholly on our own operations and implement and maintain a capital structure designed to meet our own specific needs. By separating from Harvard Bioscience there is a risk that our company may be more susceptible to market fluctuations and other adverse events than we would have been were we still a part of Harvard Bioscience. We may not be able to achieve some or all of the benefits that we expect to achieve as a stand-alone, independent regenerative medicine company or such benefits may be delayed or may not occur at all. For example, there can be no assurance that analysts and investors will place a greater value on our company as a stand-alone regenerative medicine company than on our business as a part of Harvard Bioscience.

We have no operating history as an independent company, and we may be unable to make the changes necessary to operate as an independent public company.

Prior to the Separation, our business was operated by Harvard Bioscience as part of its broader corporate organization rather than as a stand-alone company. Harvard Bioscience assisted us by providing financing and certain corporate functions. Following the Distribution, Harvard Bioscience will have no obligation to provide assistance to us other than the interim transitional services which will be provided by Harvard Bioscience. These transitional services include, among other things, financial and managerial services. Because our business has not been operated as an independent company, we cannot assure you that we will be able to successfully implement the changes necessary to operate independently or that we will not incur additional costs operating independently that would have a negative effect on our business, results of operations or financial condition.

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If the Separation and Distribution, together with certain related transactions, does not qualify as a transaction that is generally tax-free for U.S. federal income tax purposes, Harvard Bioscience could be subject to significant tax liability and, in certain circumstances, we could be required to indemnify Harvard Bioscience for material taxes pursuant to indemnification obligations under the tax sharing agreement.

Harvard Bioscience has informed us that on June 28, 2013 it received a Supplemental Ruling to the Private Letter Ruling dated March 22, 2013 from the IRS to the effect that, among other things, the spin-off will qualify as a transaction that is tax-free for U.S. federal income tax purposes under Section 355 and 368(a)(1)(D) of the Internal Revenue Code continuing in effect. The private letter and supplemental rulings and the tax opinion that Harvard Bioscience expects to receive from Burns & Levinson LLP, special counsel to Harvard Bioscience, rely and will rely on certain representations, assumptions and undertakings, including those relating to the past and future conduct of our business, and neither the private letter and supplemental rulings nor the opinion would be valid if such representations, assumptions and undertakings were incorrect. Moreover, the private letter and supplemental rulings do not address all the issues that are relevant to determining whether the Distribution will qualify for tax-free treatment. Notwithstanding the private letter and supplemental rulings and opinion, the IRS could determine the Distribution should be treated as a taxable transaction for U.S. federal income tax purposes if, among other reasons, it determines any of the representations, assumptions or undertakings that were included in the request for the private letter and supplemental rulings are false or have been violated or if it disagrees with the conclusions in the opinion that are not covered by the IRS ruling.

If the Distribution fails to qualify for tax-free treatment, in general, Harvard Bioscience would be subject to tax as if it had sold our common stock in a taxable sale for its fair market value, and Harvard Bioscience stockholders who receive shares of our common stock in the Distribution would be subject to tax as if they had received a taxable Distribution equal to the fair market value of such shares.

Under the tax sharing agreement between Harvard Bioscience and us, we would generally be required to indemnify Harvard Bioscience against any tax resulting from the Distribution to the extent that such tax resulted from (i) an acquisition of all or a portion of our stock or assets, whether by merger or otherwise, (ii) other actions or failures to act by us, or (iii) any of our representations or undertakings being incorrect or violated. For a more detailed discussion, see “Certain Relationships and Related Transactions — Agreements with Harvard Bioscience — Tax Sharing Agreement.” Our indemnification obligations to Harvard Bioscience and its subsidiaries, officers and directors are not limited by any maximum amount. If we are required to indemnify Harvard Bioscience or such other persons under the circumstances set forth in the tax sharing agreement, we may be subject to substantial liabilities.

We may not be able to engage in desirable strategic or capital-raising transactions following the Distribution. In addition, under some circumstances, we could be liable for adverse tax consequences resulting from engaging in significant strategic or capital-raising transactions.

To preserve the tax-free treatment to Harvard Bioscience of the Separation and Distribution, for the two-year period following the Distribution we may be limited, except in specified circumstances, from:

entering into any transaction pursuant to which all or a portion of our stock would be acquired, whether by merger or otherwise;
issuing equity securities beyond certain thresholds;
repurchasing our common stock;
ceasing to actively conduct our regenerative medicine business; and
taking or failing to take any other action that prevents the Separation and Distribution and related transactions from being tax-free.

These restrictions may limit our ability to pursue strategic transactions or engage in new business or other transactions that may maximize the value of our business.

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We may be unable to make, on a timely or cost-effective basis, the changes necessary to operate as an independent company, and we may experience increased costs after the Separation or as a result of the Separation.

Following the completion of the Distribution, Harvard Bioscience will be contractually obligated to provide to us only those services specified in the transition services agreement and the other agreements we enter into with Harvard Bioscience in preparation for the Separation and Distribution. The transition services agreement provides for services to be provided for various time frames of limited length, ranging from six months from the Distribution Date to 12 months thereafter. We may be unable to replace in a timely manner or on comparable terms the services or other benefits that Harvard Bioscience previously provided to us that are not specified in the transition services agreement or the other agreements. Also, upon the expiration of the terms of the required services under the transition services agreement or other agreements, such services will be provided internally or by unaffiliated third parties, and we expect that in some instances, we will incur higher costs to obtain such services than we incurred under the terms of such agreements. We anticipate that we will incur additional incremental expenses associated with being an independent, public company. These additional pretax expenses are estimated to be approximately $1.3 million for the first twelve months following the Separation. In addition, if Harvard Bioscience does not continue to perform effectively the transition services and the other services that are called for under the transition services agreement and other agreements, we may not be able to operate our business effectively and our operating results could be adversely affected. Furthermore, after the expiration of the terms of the required services under transition services agreement and the other agreements, we may be unable to replace in a timely manner or on comparable terms the services specified in such agreements.

Prior to our Separation, we have utilized the executive management team and administrative resources of Harvard Bioscience. Many daily functions have been performed by Harvard Bioscience, including those related to SEC filings and auditing and review by accountants of required financial statements, which will become our responsibility after the Distribution. In addition, there will be a time period during which such new personnel will have to learn the required systems for these functions. The lack of these relationships and resources may harm our operating results, financial condition and our ability to raise any required debt or equity funding.

Our historical and pro forma financial information is not necessarily representative of the results we would have achieved as a separate publicly traded company and may not be a reliable indicator of our future results.

The historical financial and pro forma financial information we have included in this information statement may not reflect what our results of operations, financial position and cash flows would have been had we been an independent publicly traded company during the periods presented or what our results of operations, financial position and cash flows will be in the future when we are an independent company. This is primarily because:

our historical and financial information reflects allocations for services historically provided to us by Harvard Bioscience, which allocations may not reflect the costs we will incur for similar services in the future as an independent company; and
our historical and financial information does not reflect changes that we expect to incur in the future as a result of the Separation, including changes in the cost structure, personnel needs, financing and operations of the contributed business as a result of the Separation and from reduced economies of scale.

Following the Separation and Distribution, we also will be responsible for the additional costs associated with being an independent public company, including costs related to corporate governance and listed and registered securities. Therefore, our financial statements may not be indicative of our future performance as an independent company. For additional information about our past financial performance and the basis of presentation of our financial statements, please see “Selected Historical Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and the notes thereto included elsewhere in this information statement.

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We may have received better terms from unaffiliated third parties than the terms we received in our agreements with Harvard Bioscience.

The agreements related to the Separation, including the separation and distribution agreement, tax sharing agreement, transition services agreement and the other agreements, were negotiated in the context of the Separation while we were still part of Harvard Bioscience and, accordingly, may not reflect terms that would have resulted from arm’s-length negotiations among unaffiliated third parties. The terms of the agreements we negotiated in the context of the Separation related to, among other things, allocation of assets, liabilities, rights, indemnifications and other obligations among Harvard Bioscience and us. We may have received better terms from third parties because third parties may have competed with each other to win our business. Some of the members of our Board of Directors are also members of the Harvard Bioscience Board of Directors. See “Certain Relationships and Related Party Transactions.”

The ownership by our executive officers and some of our directors of shares of common stock, options, or other equity awards of Harvard Bioscience, as well as the continued roles of our executive officers and certain directors with Harvard Bioscience may create, or may create the appearance of, conflicts of interest.

The ownership by our executive officers and some of our directors of shares of common stock, options, or other equity awards of Harvard Bioscience may create, or may create the appearance of, conflicts of interest. Because of their current or former positions with Harvard Bioscience, certain of our executive officers, and some of our directors, own shares of Harvard Bioscience common stock, options to purchase shares of Harvard Bioscience common stock or other equity awards. The individual holdings of common stock, options to purchase common stock of Harvard Bioscience or our company or other equity awards, may be significant for some of these persons compared to such persons’ total assets. Ownership by our directors and officers, after the Separation, of common stock or options to purchase common stock of Harvard Bioscience, or any other equity awards, creates, or, may create the appearance of, conflicts of interest when these directors and officers are faced with decisions that could have different implications for Harvard Bioscience than the decisions have for us. In addition, certain of our directors will remain in service for both our company as well as Harvard Bioscience following any consummation of the Distribution. Certain of our directors are expected to remain on the Board of Directors of Harvard Bioscience following the Distribution. The continued service at both companies creates, or, may create the appearance of, conflicts of interest when these directors are faced with decisions that could have different implications for Harvard Bioscience than the decisions have for us.

Third parties may seek to hold us responsible for liabilities of Harvard Bioscience that we did not assume in our agreements.

In connection with the Separation, Harvard Bioscience has generally agreed to retain all liabilities that did not historically arise from our business. Third parties may seek to hold us responsible for Harvard Bioscience’s retained liabilities. Under our agreements with Harvard Bioscience, Harvard Bioscience has agreed to indemnify us for claims and losses relating to these retained liabilities. However, if those liabilities are significant and we are ultimately liable for them, we cannot assure you that we will be able to recover the full amount of our losses from Harvard Bioscience.

Any disputes that arise between us and Harvard Bioscience with respect to our past and ongoing relationships could harm our business operations.

Disputes may arise between Harvard Bioscience and us in a number of areas relating to our past and ongoing relationships, including:

intellectual property, technology and business matters, including failure to make required technology transfers and failure to comply with non-compete provisions applicable to Harvard Bioscience and us;
labor, tax, employee benefit, indemnification and other matters arising from the Separation;
distribution and supply obligations;
employee retention and recruiting;

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business combinations involving us;
sales or distributions by Harvard Bioscience of all or any portion of its ownership interest in us;
the nature, quality and pricing of transitional services Harvard Bioscience has agreed to provide us; and
business opportunities that may be attractive to both Harvard Bioscience and us.

We may not be able to resolve any potential conflicts, and even if we do, the resolution may be less favorable than if we were dealing with an unaffiliated party.

The agreements we have entered into with Harvard Bioscience may be amended upon agreement between the parties. While we are controlled by Harvard Bioscience, Harvard Bioscience may be able to require us to agree to amendments to these agreements that may be less favorable to us than the original terms of the agreements.

Risks Relating To Our Common Stock

There is no existing market for our common stock and a trading market that will provide you with adequate liquidity may not develop for our common stock.

There is currently no public market for our common stock. We cannot predict the extent to which investor interest in our company will lead to the development of an active trading market in our common stock, or how liquid that market might be.

Our revenues, operating results and cash flows may fluctuate in future periods and we may fail to meet investor expectations, which may cause the price of our common stock to decline.

Variations in our quarterly and year-end operating results are difficult to predict and may fluctuate significantly from period to period. If our sales or operating results fall below the expectations of investors or securities analysts, the price of our common stock could decline substantially. In addition to the other factors discussed under these “Risk Factors,” specific factors that may cause fluctuations in our operating results include:

demand and pricing for our products;
government or private healthcare reimbursement policies;
physician and patient acceptance of any of our current or future products;
manufacturing stoppages or delays;
introduction of competing products or technologies;
our operating expenses which fluctuate due to growth of our business; and
timing and size of any new product or technology acquisitions we may complete.

Once our common stock begins trading, the market price of our shares may fluctuate widely.

We cannot predict the prices at which our common stock may trade after the Distribution of our common stock by Harvard Bioscience. The market price of our common stock may fluctuate widely, depending upon many factors, some of which may be beyond our control, including:

our business profile and market capitalization may not fit the investment objectives of Harvard Bioscience stockholders, and as a result, Harvard Bioscience stockholders may sell our shares after the Distribution.
the success or failure of surgeries and procedures involving the use our products;
the success and costs of preclinical and clinical testing and obtaining regulatory approvals or clearances for our products;
a shift in our investor base;

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our quarterly or annual results of operations, or those of other companies in our industry;
actual or anticipated fluctuations in our operating results due to factors related to our business;
changes in accounting standards, policies, guidance, interpretations or principles;
announcements by us or our competitors of significant acquisitions, dispositions or intellectual property developments or issuances;
the failure to maintain our NASDAQ listing or failure of securities analysts to cover our common stock after the Distribution;
changes in earnings estimates by securities analysts or our ability to meet those estimates;
the operating and stock price performance of other comparable companies; our issuance of equity, debt or other financing instruments after the Distribution.
overall market fluctuations; and
general economic conditions.

Stock markets in general have experienced volatility that has often been unrelated to the operating performance of a particular company. These broad market fluctuations may adversely affect the trading price of our common stock.

Substantial sales of common stock may occur following the Distribution by Harvard Bioscience, which could cause our stock price to decline.

The shares of our common stock that Harvard Bioscience distributes to its stockholders generally will be able to be sold immediately in the public market following the Distribution. Some Harvard Bioscience stockholders, including possibly some of its large stockholders, may sell our common stock received in the Distribution for reasons such as that our business profile or market capitalization as an independent company does not fit their investment objectives. The sales of significant amounts of our common stock, or the perception in the market that this will occur, may result in a decline in the price of our common stock.

Your percentage ownership will be diluted in the future.

Your percentage ownership will be diluted in the future because of equity awards that we expect will be granted to our directors, officers and employees and the accelerated vesting of other equity awards. Prior to the Distribution, our Board of Directors and Harvard Bioscience will have approved our 2013 Equity Incentive Plan, which provides for the grant of equity-based awards, including restricted stock, restricted stock units, stock options, stock appreciation rights and other equity-based awards to our directors, officers and other employees, advisors and consultants. In addition, your percentage ownership will be diluted by our issuance of common stock following the exercise of options, or vesting of restricted stock units, we expect to issue pertaining to the adjustment and conversion of outstanding Harvard Bioscience equity awards upon the effectiveness of the spin-off of our company.

Our costs will increase significantly as a result of operating as a public company, and our management will be required to devote substantial time to complying with public company regulations.

We have historically operated our business as a division of a public company. As a public company with separate SEC reporting, regulatory, and stock exchange listing requirements, we will incur additional legal, accounting, compliance, and other expenses that we have not incurred historically. After the effectiveness of our Registration Statement on Form 10, we will be obligated to file with the SEC annual and quarterly information and other reports that are specified in Section 13 and other sections of the Securities Exchange Act of 1934, as amended, and therefore will need to have the ability to prepare financial statements that are compliant with all SEC reporting requirements on a timely basis. In addition, we will be subject to other reporting and corporate governance requirements, including certain requirements of the NASDAQ Stock Market and certain provisions of the Sarbanes-Oxley Act and its associated regulations, which will impose significant compliance obligations upon us.

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Sarbanes-Oxley and the Dodd-Frank Wall Street Reform and the Consumer Protection Act of 2010, as well as new rules subsequently implemented by the SEC and the NASDAQ Stock Market, have increased regulation of, and imposed enhanced disclosure and corporate governance requirements on, public companies. Our efforts to comply with evolving laws, regulations, and standards in this regard are likely to result in increased marketing, selling, and administrative expenses, as well as a diversion of management’s time and attention from revenue-generating activities to compliance activities. These changes will require a significant commitment of additional resources. We may not be successful in implementing these requirements, and implementing them could materially adversely affect our business, results of operations, and financial condition. We also expect these recent regulations to increase our legal and financial compliance costs, make it more difficult to attract and retain qualified officers and members of our Board of Directors, particularly to serve on our audit committee, and make some activities more difficult, time-consuming, and costly. In addition, if we fail to implement the required controls with respect to our internal accounting and audit functions, our ability to report our results of operations on a timely and accurate basis could be impaired. If we do not implement such required controls in a timely manner or with adequate compliance, we might be subject to sanctions or investigation by regulatory authorities, such as the SEC or the NASDAQ Stock Market. Any such action could harm our reputation and the confidence of investors and clients in our company and could negatively affect our business and cause the price of our common stock to decline.

Provisions of Delaware law, of our amended and restated charter and amended and restated bylaws and our Shareholder Rights Plan may make a takeover more difficult, which could cause our stock price to decline.

Provisions in our amended and restated certificate of incorporation and amended and restated bylaws and in the Delaware corporate law may make it difficult and expensive for a third party to pursue a tender offer, change in control or takeover attempt, which is opposed by management and the Board of Directors. Public stockholders who might desire to participate in such a transaction may not have an opportunity to do so. Prior to the Distribution, our Board of Directors will have adopted a Shareholder Rights Plan that could make it more difficult for a third party to acquire, or could discourage a third party from acquiring, our company or a large block of our common stock. A third party that acquires 20% or more of our common stock could suffer substantial dilution of its ownership interest under the terms of the Shareholder Rights Plan through the issuance of common stock to all stockholders other than the acquiring person. We also have a staggered Board of Directors that makes it difficult for stockholders to change the composition of the Board of Directors in any one year. After the Distribution by Harvard Bioscience, any removal of directors will require a super-majority vote of the holders of at least 75% of the outstanding shares entitled to be cast on the election of directors which may discourage a third party from making a tender offer or otherwise attempting to obtain control of us. These anti-takeover provisions could substantially impede the ability of public stockholders to change our management and Board of Directors. Such provisions may also limit the price that investors might be willing to pay for shares of our common stock in the future.

Any issuance of preferred stock in the future may dilute the rights of our common stockholders.

Our Board of Directors has the authority to issue up to 2,000,000 shares of preferred stock and to determine the price, privileges and other terms of these shares. Our Board of Directors may exercise this authority without any further approval of stockholders. The rights of the holders of common stock may be adversely affected by the rights of future holders of preferred stock.

We do not intend to pay cash dividends on our common stock.

Currently, we do not anticipate paying any cash dividends to holders of our common stock. As a result, capital appreciation, if any, of our common stock will be a stockholder’s sole source of gain.

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The recently enacted JOBS Act will allow us to postpone the date by which we must comply with certain laws and regulations and to reduce the amount of information provided in reports filed with the SEC. We cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.

We are and we will remain an “emerging growth company” until the earliest to occur of (i) the last day of the fiscal year during which our total annual revenues equal or exceed $1 billion (subject to adjustment for inflation), (ii) the last day of the fiscal year following the fifth anniversary of the date of our first sale of common equity securities pursuant to an effective registration statement, (iii) the date on which we have, during the previous three-year period, issued more than $1 billion in non-convertible debt, or (iv) the date on which we are deemed a “large accelerated filer” under the Securities and Exchange Act of 1934, as amended, or the Exchange Act. For so long as we remain an “emerging growth company” as defined in the JOBS Act, we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our common stock less attractive because we will rely on some or all of these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile. If we avail ourselves of certain exemptions from various reporting requirements, our reduced disclosure may make it more difficult for investors and securities analysts to evaluate us and may result in less investor confidence.

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FORWARD-LOOKING STATEMENTS

Forward-looking statements in our public filings or other public statements are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements or other public statements. These forward-looking statements were based on various facts and were derived utilizing numerous important assumptions and other important factors, and changes in such facts, assumptions or factors could cause actual results to differ materially from those in the forward-looking statements. Forward-looking statements include the information concerning our future financial performance, business strategy, projected plans and objectives. Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” “plans,” “may increase,” “may fluctuate,” and similar expression or future or conditional verbs such as “will,” “should,” “would,” “may” and “could” are generally forward looking in nature and not historical facts. You should understand that the following important factors could affect our future results and could cause actual results to differ materially from those expressed in such forward-looking statements:

adverse developments in general business, economic and political conditions or any outbreak or escalation of hostilities on a national, regional or international basis;
changes in international or U.S. economic conditions, such as inflation, interest rate fluctuations, foreign exchange rate fluctuations or recessions;
our ability to attract and retain qualified personnel and key employees and retain senior management;
the amount and timing of costs associated with our development of bioreactors, scaffolds and other devices and products;
the success of our clinical trials and device and product development programs and the number of patients who can be treated with our products;
our ability to obtain and maintain regulatory approval for the bioreactors, scaffolds and other devices and product candidates we pursue;
unpredictable difficulties or delays in the development of new technology;
the availability and price of acceptable raw materials and components from third-party suppliers;
increased competition in the field of regenerative medicine and the financial resources of our competitors;
our failure to comply with regulations and any changes in regulations;
our ability to access debt and equity markets;
our inability to implement our growth strategy;
our ability to obtain and maintain intellectual property protection for our device and product candidates;
difficulties in obtaining or retaining the management and other human resource competencies that we need to achieve our business objectives;
labor relations;
our inability to operate effectively as a stand-alone, publicly traded company; and
the actual costs of separation may be higher than expected.

Other factors not identified above, including the risk factors described in the “Risk Factors” section of this information statement, may also cause actual results to differ materially from those projected by our forward-looking statements. Most of these factors are difficult to anticipate and are generally beyond our control.

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You should consider the areas of risk described above, as well as those set forth under the heading “Risk Factors” above, in connection with considering any forward-looking statements that may be made by us and our businesses generally. Except for our ongoing obligations to disclose material information under the federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events unless we are required to do so by law.

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THE SEPARATION

General

On April 30, 2013, the Board of Directors of Harvard Bioscience preliminarily approved a plan to separate Harvard Bioscience into two independent companies — one for Harvard Bioscience’s core life science research tools business, or LSRT, and HART for its regenerative medicine business, through the completion of a spin-off transaction. The spin-off will be effectuated by means of a pro-rata distribution of 100% of our common stock to the common stockholders of Harvard Bioscience.

The Distribution will be made pursuant to a plan of Separation and Distribution preliminarily approved by our Board of Directors on April 30, 2013, and finally approved on [           ], 2013. Upon the Distribution, Harvard Bioscience stockholders will own 100% of the common stock of HART. Harvard Bioscience’s Board of Directors believes that the Separation of LSRT and the regenerative medicine business into distinct entities with separate ownership and management is the best way to unlock the full value of these businesses for the benefit of Harvard Bioscience, our stockholders and each of the businesses.

Since early 2011, the Harvard Bioscience Board of Directors met numerous times with and without members of Harvard Bioscience’s senior management team to discuss the Separation. In these meetings, the Harvard Bioscience Board of Directors considered, among other things, the benefits to the businesses and to Harvard Bioscience stockholders that are expected to result from the Separation (see “Reasons for the Separation” below), the capital allocation strategies and dividend policies for the separated companies, the allocation of Harvard Bioscience’s existing assets, liabilities and businesses among the separated companies, the terms of certain commercial relationships among the separated companies that will exist following the Separation, the corporate governance arrangements that will be in place at each company following the Separation, and the appropriate members of senior management at each company following the Separation.

In furtherance of this plan, on [           ], 2013, the Harvard Bioscience Board of Directors approved the Distribution. In the Distribution, each holder of Harvard Bioscience common stock will receive on [          ], 2013, the Distribution Date, one share of our common stock for every [    ] shares of Harvard Bioscience common stock held at the close of business on the Record Date, as described below. Harvard Bioscience will not distribute any fractional shares of our common stock. Instead, the distribution agent will aggregate fractional shares into whole shares, sell the whole shares in the open market and distribute the aggregate net cash proceeds of the sales pro rata (based on the fractional share such holder would otherwise be entitled to receive) to each holder who otherwise would have been entitled to receive a fractional share in the Distribution. Following the Distribution, Harvard Bioscience stockholders will own 100% of our common stock.

You will not be required to make any payment, surrender or exchange your shares of Harvard Bioscience common stock or take any other action to receive your shares of our common stock.

Concurrently with the Separation, Harvard Bioscience will transfer all of its assets and liabilities relating to its regenerative medicine business to us, in return for the number of shares of our common stock distributable in the Distribution.

Furthermore, the Distribution as described in this information statement is subject to the satisfaction or waiver of certain conditions. For a more detailed description of these conditions, see “— Conditions to the Distribution.”

Reasons for the Separation

We believe that the business benefits that will occur as a result of the Separation and the Distribution include:

Market recognition of the value of our business .  As we will be a separate public company after the Distribution, potential investors will be able to invest directly in our regenerative medicine business.
Focused management attention .  Our management will be better able to focus its attention on our business. As a company dedicated to the regenerative medicine industry, capitalizing on emerging

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trends, and introducing new products and product extensions of our existing products, we expect to be in a better position to grow our business and to serve our customers more effectively through more efficient deployment of resources, increased operational flexibility, and enhanced responsiveness to customers.
Improved access to capital .  As a separate public company, we will avoid conflicts in the allocation of capital between us and other Harvard Bioscience businesses. Rather, we will have direct access to the capital markets to issue equity or debt securities, which we expect will improve our access to capital and increase our flexibility to invest in innovation, product development, marketing, and production capacity, as well as to pursue strategic acquisitions.
Incentives for employees more directly linked to our performance .  We expect to enhance employee motivation and to strengthen our management’s focus on our business through incentive compensation programs specifically tied to the results of our business operations and the market performance of our common stock. We believe that these incentives will enhance our ability to attract and retain qualified personnel.

The Number of Shares You Will Receive

For every [    ] shares of Harvard Bioscience common stock that you owned at the close of business on [           ], 2013, the Record Date, you will receive one share of our common stock on the Distribution Date. Harvard Bioscience will not distribute any fractional shares of our common stock to its stockholders. Instead, the transfer agent will aggregate fractional shares into whole shares, sell the whole shares in the open market at prevailing market prices and distribute the aggregate net cash proceeds of the sales pro rata (based on the fractional share such holder would otherwise be entitled to receive) to each holder who otherwise would have been entitled to receive a fractional share in the Distribution. The transfer agent, in its sole discretion, without any influence by Harvard Bioscience or us, will determine when, how, through which broker-dealer and at what price to sell the whole shares. Any broker-dealer used by the transfer agent will not be an affiliate of either Harvard Bioscience or us. Recipients of cash in lieu of fractional shares will not be entitled to any interest on the amounts of payment made in lieu of fractional shares.

When and How You Will Receive the Dividend

Harvard Bioscience will distribute the shares of our common stock on the Distribution Date. Registrar & Transfer Company, which currently serves as the transfer agent and registrar for Harvard Bioscience’s common stock, will serve as transfer agent and registrar for our common stock and as distribution agent in connection with the Distribution.

If you own Harvard Bioscience common stock as of the close of business on the Record Date, the shares of HART common stock that you are entitled to receive in the Distribution will be issued electronically, as of the Distribution Date, to you or to your bank or brokerage firm on your behalf by way of direct registration in book-entry form. Registration in book-entry form refers to a method of recording stock ownership when no physical share certificates are issued to stockholders, as is the case in this Distribution. If you sell shares of Harvard Bioscience common stock in the “regular-way” market, up to and including through the Distribution Date, you will be selling your right to receive shares of HART common stock in the Distribution.

Commencing on or shortly after the Distribution Date, if you hold physical stock certificates that represent your shares of Harvard Bioscience common stock and you are the registered holder of the Harvard Bioscience shares represented by those certificates, the distribution agent will mail to you an account statement that indicates the number of shares of our common stock that have been registered in book-entry form in your name. If you have any questions concerning the mechanics of having shares of our common stock registered in book-entry form, we encourage you to contact Registrar & Transfer Company at the address set forth on page 40 of this information statement.

Most Harvard Bioscience stockholders hold their shares of Harvard Bioscience common stock through a bank or brokerage firm. In such cases, the bank or brokerage firm would be said to hold the stock in “street name” and ownership would be recorded on the bank or brokerage firm’s books. If you hold your Harvard Bioscience common stock through a bank or brokerage firm, your bank or brokerage firm will credit your

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account for the shares of our common stock that you are entitled to receive in the Distribution. If you have any questions concerning the mechanics of having shares of our common stock held in “street name,” we encourage you to contact your bank or brokerage firm.

Registrar & Transfer Company, as distribution agent, will not deliver any fractional shares of our common stock in connection with the Distribution. Instead, Registrar & Transfer Company will aggregate all fractional shares and sell them on behalf of the holders who otherwise would be entitled to receive fractional shares. The aggregate net cash proceeds of these sales, which generally will be taxable for U.S. federal income tax purposes, will be distributed pro rata (based on the fractional share such holder would otherwise be entitled to receive) to each holder who otherwise would have been entitled to receive a fractional share in the Distribution. See “Material U.S. Federal Income Tax Consequences of the Distribution” below for an explanation of the tax consequences of the Distribution. If you physically hold Harvard Bioscience common stock certificates and are the registered holder, you will receive a check from the distribution agent in an amount equal to your pro rata share of the aggregate net cash proceeds of the sales. We estimate that it will take approximately four to six weeks from the Distribution Date for the distribution agent to complete the distributions of the aggregate net cash proceeds. If you hold your Harvard Bioscience stock through a bank or brokerage firm, your bank or brokerage firm will receive on your behalf your pro rata share of the aggregate net cash proceeds of the sales and will electronically credit your account for your share of such proceeds.

Results of the Separation

After the Separation, we will be a separate publicly traded company. Immediately following the Distribution, we expect to have approximately [    ] stockholders of record, based on the number of registered stockholders of Harvard Bioscience common stock on [           ], 2013, and approximately [    ] million shares of our common stock outstanding. The actual number of shares to be distributed will be determined on the Record Date and will reflect any exercise of Harvard Bioscience options between the date the Harvard Bioscience Board of Directors declares the dividend for the Distribution and the Record Date for the Distribution.

In connection with the Separation, we entered into a separation and distribution agreement and several other agreements with Harvard Bioscience to effect the Separation and provide a framework for our relationships with Harvard Bioscience after the Separation. These agreements will govern the relationships among us and Harvard Bioscience subsequent to the completion of the Separation plan and provide for the allocation among us and Harvard Bioscience of Harvard Bioscience’s assets, liabilities and obligations (including employee benefits and tax-related assets and liabilities) attributable to periods prior to the Separation. For a more detailed description of these agreements, see “Certain Relationships and Related Party Transactions” beginning on page 98 of this information statement.

The Distribution will not affect the number of outstanding shares of Harvard Bioscience common stock or any rights of Harvard Bioscience stockholders with respect to the common stock that they own. As further discussed below, the outstanding options to acquire common stock and restricted stock units will be adjusted in connection with the Distribution.

Our Relationship with Harvard Bioscience

Harvard Apparatus Regenerative Technology, Inc. was incorporated in May 2012 to provide a means for separating its regenerative medicine business from Harvard Bioscience’s life science research tools businesses. We are currently a wholly-owned subsidiary of Harvard Bioscience. Harvard Bioscience has been designing and manufacturing devices for life science researchers for over 100 years. Harvard Bioscience first focused on providing devices to scientists involved in regenerative medicine research in 2008. Since early 2009, Harvard Bioscience’s regenerative medicine business initiative operated as a part of Harvard Bioscience. Most of our products began as products made and sold by the Harvard Apparatus division of Harvard Bioscience. Harvard Apparatus began at Harvard Medical School in 1901 and is one of the best known and most respected brand names in physiology research. We believe this expertise and reputation are major advantages in attracting leading physicians as collaborators and will ultimately be valuable in selling our products to hospitals and clinicians. We will continue to pursue our business of developing and making devices for regenerative medicine researchers and clinicians.

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Prior to the Distribution, Harvard Bioscience will have contributed to us the assets of its regenerative medicine business and cash of approximately $15 million. We had no material assets or activities as a separate corporate entity until the contribution to us by Harvard Bioscience of the businesses described in this information statement.

For several reasons enumerated in “Reasons for the Separation” below, Harvard Bioscience decided to separate its regenerative medicine business into a separate corporate entity and then spin-off its interest in our company to the Harvard Bioscience stockholders. Prior to the Distribution, we will enter into agreements with Harvard Bioscience that will govern the Separation and various interim and ongoing relationships. These agreements will be in effect as of the completion of the Distribution. These agreements will provide for, among other things, the transfer from Harvard Bioscience to us of assets and the assumption by us of liabilities comprising our businesses, employee and tax-related matters, intellectual property cross licenses, product distribution and manufacturing agreements, non-competition agreements and the transitional services Harvard Bioscience will provide to us and we may provide to Harvard Bioscience. All of the agreements relating to the Separation will be made in the context of a parent-subsidiary relationship and will be entered into in the overall context of the Separation. See “Certain Relationships and Related Transactions —  Agreements with Harvard Bioscience” for a more detailed discussion of these agreements. For more information regarding the assets and liabilities to be transferred to us, see financial statements and accompanying notes included elsewhere in this information statement. The terms of these agreements may be more or less favorable to us than if they had been negotiated with unaffiliated third parties. See “Risk Factors — Risks Related To Separation — We may have received better terms from unaffiliated third parties than the terms we received in our agreements with Harvard Bioscience.”

We intend to establish two wholly owned foreign subsidiaries, one in Germany and the other in Sweden that, in accordance with certain transition agreements between us and Harvard Bioscience, will be provided with services from certain subsidiaries of Harvard Bioscience.

Distribution by Harvard Bioscience of Our Shares

Harvard Bioscience will distribute all of the shares of our common stock it owns to Harvard Bioscience’s stockholders on the Distribution Date by means of a spin-off, which is a pro rata distribution by Harvard Bioscience of the shares of our common stock it owns to holders of Harvard Bioscience’s common stock. Harvard Bioscience’s agreement to complete the Distribution is contingent on the satisfaction or waiver of a variety of conditions, including the private letter and supplemental rulings Harvard Bioscience received from the IRS substantially to the effect that, among other things, the spin-off, together with certain related transactions, will qualify as a transaction that is generally tax-free for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of Internal Revenue Code, or the Code. In addition, Harvard Bioscience has the right to terminate its obligations to complete the Distribution if, at any time, Harvard Bioscience’s Board of Directors determines, in its sole discretion, that the Distribution is not in the best interests of Harvard Bioscience or its stockholders. As a result, the Distribution may not occur by the contemplated time or at all. Following the Distribution, Harvard Bioscience will no longer own any of our outstanding common stock and we will thus be a separate corporate entity. Harvard Bioscience has informed us that on June 28, 2013 it received a Supplemental Ruling to the Private Letter Ruling dated March 22, 2013 from the IRS to the effect that, among other things, the spin-off will qualify as a transaction that is tax-free for U.S. federal income tax purposes under Section 355 and 368(a)(1)(D) of the Internal Revenue Code continuing in effect.

Registrar and Transfer Company, which currently serves as the transfer agent and registrar for Harvard Bioscience’s common stock, will serve as transfer agent and registrar for our common stock and as distribution agent in connection with the Distribution.

Dilution Related to the Distribution by Harvard Bioscience of Our Shares

At the time of Harvard Bioscience’s distribution of our common stock it then owns, holders of Harvard Bioscience stock options and restricted stock units issued previously to employees and directors as part of Harvard Bioscience’s equity compensation plans, including our executive officers and certain of our directors, will receive an adjustment to their stock options and restricted stock units because those securities will not participate in the Distribution. Such adjustment is required under Harvard Bioscience’s employee benefit plans. The adjustments will be based on the estimated value of the entire Distribution, as measured by the

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relationship between Harvard Bioscience’s common stock price just prior to and after the Distribution. It is currently anticipated that Black-Scholes valuation modeling will be used to determine the value that each Harvard Bioscience option has lost at the time of the Distribution. We expect that, for adjustments to the quantity of outstanding stock options and restricted stock units, Harvard Bioscience will provide 80% of the value of the adjustment by issuing the holder additional Harvard Bioscience restricted stock units and options for shares of Harvard Bioscience common stock and 20% of the value of the adjustment will be provided by us issuing restricted stock units and options for shares of our common stock. The share amounts and exercise prices of the adjusted Harvard Bioscience awards and our awards would be adjusted in a manner to ensure the intrinsic value held by the holder pertaining to the existing Harvard Bioscience award is maintained immediately following the Distribution and shall be determined in a manner designed to result in no tax being triggered under Section 409A of the Internal Revenue Code. The exercise price of our common stock options to be issued as part of the Distribution adjustment described above will equal the fair market value of our common stock on the grant date.

The total value of the adjustments to be granted to holders of Harvard Bioscience options and restricted stock units due to Harvard Bioscience’s distribution of its shares of our common stock will depend on Harvard Bioscience’s common stock price just prior to and after the Distribution. Many factors may influence Harvard Bioscience’s common stock price just before and after the Distribution, including, but not limited, to the value of our company reflected in Harvard Bioscience’s common stock price just prior to the Distribution, the liquidity and trading volumes in Harvard Bioscience’s common stock, conditions in Harvard Bioscience’s other businesses, general economic conditions, events outside of Harvard Bioscience’s business that may affect Harvard Bioscience’s stock price and activities in stock markets at large. The total value of the adjustments will also depend on other estimates, including those involved in valuing options. As a result, the number of options for our common stock and the quantity of our restricted stock units to be issued at the time of the Distribution is not known at this time. Subject to the above qualifications, assuming that the market price of Harvard Bioscience’s common stock was $5.70 per share immediately prior to the Distribution and $4.00 per share immediately after the Distribution, and the fair market value of our common stock was $11.00 per share immediately after the Distribution, we expect that we would issue approximately 235,000 options to acquire shares of our common stock and approximately 15,000 restricted stock units as a part of the required adjustment to the outstanding Harvard Bioscience stock options and restricted stock units described above.

Our stock options and restricted stock units issued at the Distribution to holders of Harvard Bioscience stock options and restricted stock units issued previously to employees and directors as part of Harvard Bioscience’s equity compensation plans will vest in tandem with the originally-issued stock options and restricted stock units for the remaining life of the originally-issued stock options and restricted stock units. The continued vesting and exercisability of the stock options and restricted stock units will be conditioned on the recipient’s continued service to or employment with Harvard Bioscience or our company.

Separately, certain of our employees and directors, including our executive officers, are holders of vested and unvested options to buy Harvard Bioscience common stock and unvested restricted stock units pertaining to Harvard Bioscience’s common stock. Vesting and exercisability of such options and restricted stock units will continue through their original expiration dates so long as the individual holder is employed or providing service to us or Harvard Bioscience.

With respect to individual owners of both options and/or restricted stock units issued by our company and those issued by Harvard Bioscience, the compensation expense for such options and restricted stock units will be recognized by the company receiving the individual’s services. However, cash proceeds from the future option exercises will be realized by the company that issued the respective option.

Material U.S. Federal Income Tax Consequences of the Distribution

The following is a summary of the material U.S. federal income tax consequences of the Distribution to U.S. Holders (as defined below) of Harvard Bioscience common stock that receive shares of HART common stock in the Distribution. This summary is based on the Code, the U.S. Treasury regulations promulgated thereunder, and interpretations of the Code and the U.S. Treasury regulations by the courts and the IRS, in effect as of the date hereof, and all of which are subject to change, possibly with retroactive effect. This summary does not discuss all the tax considerations that may be relevant to Harvard Bioscience stockholders in light of their

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particular circumstances, nor does it address the consequences to Harvard Bioscience stockholders subject to special treatment under the U.S. federal income tax laws (such as holders other than U.S. Holders (as defined below), insurance companies, dealers or brokers in securities or currencies, tax-exempt organizations, financial institutions, mutual funds, pass-through entities and investors in such entities, holders who hold their shares as a hedge or as part of a hedging, straddle, conversion, synthetic security, integrated investment or other risk-reduction transaction or who are subject to alternative minimum tax or holders who acquired their shares upon the exercise of employee stock options or otherwise as compensation). In addition, this summary does not address the U.S. federal income tax consequences to those Harvard Bioscience stockholders who do not hold their Harvard Bioscience common stock as a capital asset. Finally, this summary does not address any state, local or foreign tax consequences. HARVARD BIOSCIENCE STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS CONCERNING THE U.S. FEDERAL, STATE AND LOCAL AND NON-U.S. TAX CONSEQUENCES OF THE DISTRIBUTION TO THEM.

For purposes of this discussion, a U.S. Holder is a beneficial owner of Harvard Bioscience common stock that is, for U.S. federal income tax purposes:

An individual who is a citizen or resident of the United States.
A corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States or any state thereof or the District of Columbia.
An estate, the income of which is subject to U.S. federal income taxation regardless of its source.
A trust, if (1) a court within the United States is able to exercise primary supervision over its administration and one or more U.S. persons have the authority to control all of the substantial decisions of such trust or (2) in the case of a trust that was treated as a domestic trust under the law in effect before 1997, a valid election is in place under applicable Treasury regulations.

If a partnership (including any entity treated as a partnership for U.S. federal income tax purposes) holds Harvard Bioscience common stock, the tax treatment of a partner will generally depend on the status of the partner and on the activities of the partnership. Partners in a partnership holding Harvard Bioscience common stock should consult their own tax advisors regarding the tax consequences of the Distribution.

Distribution  — The Distribution is conditioned upon the private letter ruling and supplemental private letter ruling received by Harvard Bioscience from the IRS, as discussed in more detail below, substantially to the effect that the Distribution, together with certain related transactions, will qualify as a reorganization for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Code. Harvard Bioscience has informed us that on June 28, 2013 it received a Supplemental Ruling to the Private Letter Ruling dated March 22, 2013 from the IRS to the effect that, among other things, the spin-off will qualify as a transaction that is tax-free for U.S. federal income tax purposes under Section 355 and 368(a)(1)(D) of the Internal Revenue Code continuing in effect. Harvard Bioscience also expects to receive an opinion from Burns & Levinson LLP, special counsel to Harvard Bioscience, substantially to the effect that the Distribution will so qualify.

On the basis the Distribution so qualifies, in general, for U.S. federal income tax purposes: (i) the Distribution will not result in any taxable income, gain or loss to Harvard Bioscience, except for taxable income or gain possibly arising as a result of certain intercompany transactions; (ii) no gain or loss will be recognized by (and no amount will be included in the income of) U.S. Holders of Harvard Bioscience common stock upon their receipt of shares of HART common stock in the Distribution, except with respect to cash received in lieu of any fractional share measured by the difference between the cash received for such fractional share and the U.S. Holder’s basis in that fractional share, as determined below; (iii) the aggregate basis of the Harvard Bioscience common stock and the HART common stock (including any fractional share interests in HART common stock for which cash is received) in the hands of each U.S. Holder of Harvard Bioscience common stock after the Distribution will equal the aggregate basis of Harvard Bioscience common stock held by the U.S. Holder immediately before the Distribution, allocated between the Harvard Bioscience common stock and the HART common stock in proportion to the relative fair market value of each on the Distribution Date; and (iv) the holding period of the HART common stock received by each U.S. Holder of Harvard Bioscience

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common stock (including any fractional share interests in HART common stock for which cash is received) will include the holding period at the time of the Distribution for the Harvard Bioscience common stock on which the Distribution is made, provided that the Harvard Bioscience common stock is held as a capital asset on the Distribution Date.

Although a private letter ruling from the IRS generally is binding on the IRS, if the factual representations or assumptions made in the letter ruling request are untrue or incomplete in any material respect, we will not be able to rely on the ruling. Furthermore, the IRS will not rule on whether a distribution satisfies certain requirements necessary to obtain tax-free treatment under Section 355 of the Code. Rather, the ruling is based upon representations by Harvard Bioscience that these conditions have been satisfied, and any inaccuracy in such representations could invalidate the ruling. In addition to obtaining the ruling from the IRS, Harvard Bioscience expects to obtain an opinion of Burns & Levinson LLP substantially to the effect that the Distribution, together with certain related transactions, will qualify as a reorganization for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Code. The opinion will rely on the ruling as to matters covered by the ruling. In addition, the opinion will be based on, among other things, certain assumptions and representations made by Harvard Bioscience and us, which if incorrect or inaccurate in any material respect would jeopardize the conclusions reached by counsel in its opinion. The opinion will not be binding on the IRS or the courts.

Notwithstanding receipt by Harvard Bioscience of the private letter and supplemental rulings from the IRS and opinion of counsel, the IRS could assert that the Distribution does not qualify for tax-free treatment for U.S. federal income tax purposes. If the IRS were successful in taking this position, Harvard Bioscience stockholders and Harvard Bioscience could be subject to significant U.S. federal income tax liability. In general, Harvard Bioscience would be subject to tax as if it had sold the HART common stock in a taxable sale for its fair market value and Harvard Bioscience stockholders who receive shares of HART common stock in the Distribution would be subject to tax as if they had received a taxable distribution equal to the fair market value of such shares. In addition, even if the Distribution was otherwise to qualify under Section 355 of the Code, it may be taxable to Harvard Bioscience (but not to Harvard Bioscience stockholders) under Section 355(e) of the Code, if the Distribution was later deemed to be part of a plan (or series of related transactions) pursuant to which one or more persons acquire, directly or indirectly, stock representing a 50 percent or greater interest in Harvard Bioscience or us. For this purpose, any acquisitions of Harvard Bioscience stock or of our common stock within the period beginning two years before the Distribution and ending two years after the Distribution are presumed to be part of such a plan, although we or Harvard Bioscience may be able to rebut that presumption.

U.S. Treasury regulations also generally provide that if a U.S. Holder of Harvard Bioscience common stock holds different blocks of Harvard Bioscience common stock (generally shares of Harvard Bioscience common stock purchased or acquired on different dates or at different prices), the aggregate basis for each block of Harvard Bioscience common stock purchased or acquired on the same date and at the same price will be allocated, to the greatest extent possible, between the shares of HART common stock received in the Distribution in respect of such block of Harvard Bioscience common stock and such block of Harvard Bioscience common stock, in proportion to their respective fair market values, and the holding period of the shares of HART common stock received in the Distribution in respect of such block of Harvard Bioscience common stock will include the holding period of such block of Harvard Bioscience common stock, provided that such block of Harvard Bioscience common stock was held as a capital asset on the Distribution Date. If a U.S. Holder of Harvard Bioscience common stock is not able to identify which particular shares of HART common stock are received in the Distribution with respect to a particular block of Harvard Bioscience common stock, for purposes of applying the rules described above, the U.S. Holder may designate which shares of HART common stock are received in the Distribution in respect of a particular block of Harvard Bioscience common stock, provided that such designation is consistent with the terms of the Distribution. Holders of Harvard Bioscience common stock are urged to consult their own tax advisors regarding the application of these rules to their particular circumstances.

Tax Sharing Agreement  — In connection with the Distribution, we and Harvard Bioscience will enter into a Tax Sharing Agreement pursuant to which we will agree to be responsible for certain liabilities and obligations following the Distribution. In general, under the terms of the Tax Sharing Agreement, in the event

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the Distribution were to fail to qualify for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Code (including as a result of Section 355(e) of the Code) and if such failure were the result of actions taken by us after the Distribution, we would be responsible for all taxes imposed on Harvard Bioscience to the extent such taxes result from such actions. Further, if such failure were the result of any acquisition of our shares or assets or any of our representations or undertakings being incorrect or breached, we would be responsible for all taxes imposed on Harvard Bioscience as a result. For a more detailed discussion, see “Certain Relationships and Related Transactions — Agreements with Harvard Bioscience — Tax Sharing Agreement.” Our indemnification obligations to Harvard Bioscience and its subsidiaries, officers and directors are not limited in amount or subject to any cap. If we are required to indemnify Harvard Bioscience and its subsidiaries and their respective officers and directors under the circumstances set forth in the Tax Sharing Agreement, we may be subject to substantial liabilities.

Information Reporting and Backup Withholding  — U.S. Treasury regulations require certain stockholders who receive stock in a distribution to attach to the stockholder’s U.S. federal income tax return for the year in which the distribution occurs a detailed statement setting forth certain information relating to the tax-free nature of the distribution. In addition, payments of cash to a Harvard Bioscience stockholder in lieu of fractional shares of HART common stock in the Distribution may be subject to information reporting, unless the stockholder provides proof of an applicable exemption. Such payments that are subject to information reporting may also be subject to backup withholding (currently at a rate of 28 percent), unless the stockholder provides a correct taxpayer identification number and otherwise complies with the requirements of the backup withholding rules. Backup withholding does not constitute an additional tax, but merely an advance payment, which may be refunded or credited against a stockholder’s U.S. federal income tax liability, provided the required information is timely supplied to the IRS.

THE FOREGOING IS A SUMMARY OF THE MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE DISTRIBUTION UNDER CURRENT LAW AND FOR GENERAL INFORMATION ONLY. THE FOREGOING DOES NOT PURPORT TO ADDRESS ALL U.S. FEDERAL INCOME TAX CONSEQUENCES OR TAX CONSEQUENCES THAT MAY ARISE UNDER THE TAX LAWS OR THAT MAY APPLY TO PARTICULAR CATEGORIES OF STOCKHOLDERS. EACH HARVARD BIOSCIENCE STOCKHOLDER SHOULD CONSULT THEIR OWN TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES OF THE DISTRIBUTION TO SUCH STOCKHOLDER, INCLUDING THE APPLICATION OF U.S. FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS, AND THE EFFECT OF POSSIBLE CHANGES IN TAX LAWS THAT MAY AFFECT THE TAX CONSEQUENCES DESCRIBED ABOVE.

Market for Common Stock

There is currently no public market for our common stock. We have applied to list our common stock on the NASDAQ Capital Market under the symbol “HART.”

Trading Between the Record Date and Distribution Date

Beginning on or shortly before the Record Date and continuing up to and including through the Distribution Date, there will be two markets in Harvard Bioscience common stock: a “regular-way” market and an “ex-distribution” market. Shares of Harvard Bioscience common stock that trade on the regular way market will trade with an entitlement to shares of our common stock distributed pursuant to the Distribution. Shares that trade on the ex-distribution market will trade without an entitlement to shares of our common stock distributed pursuant to the Distribution. Therefore, if you sell shares of Harvard Bioscience common stock in the “regular-way” market up to and including through the Distribution Date, you will be selling your right to receive shares of HART common stock in the Distribution. If you own shares of Harvard Bioscience common stock at the close of business on the Record Date and sell those shares on the “ex-distribution” market, up to and including through the Distribution Date, you will still receive the shares of our common stock that you would be entitled to receive pursuant to your ownership of the shares of Harvard Bioscience common stock.

Furthermore, beginning on [           ], 2013 and continuing up to and including through the Distribution Date, there will be a “when-issued” market in our common stock. “When-issued” trading refers to a sale or purchase made conditionally because the security has been authorized but not yet issued. The “when-issued” trading market will be a market for shares of our common stock that will be distributed to Harvard Bioscience

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stockholders on the Distribution Date. If you owned shares of Harvard Bioscience common stock at the close of business on the Record Date, you would be entitled to shares of our common stock distributed pursuant to the Distribution. You may trade this entitlement to shares of our common stock, without the shares of Harvard Bioscience common stock you own, on the “when-issued” market. On the first trading day following the Distribution Date, “when issued” trading with respect to our common stock will end and “regular-way” trading will begin.

Conditions to the Distribution

We expect that the Distribution will be effective on [           ], 2013, the Distribution Date, provided that, among other conditions described in this information statement, the following conditions shall have been satisfied or, if permissible under the separation and distribution agreement, waived by Harvard Bioscience:

the SEC shall have declared effective our registration statement on Form 10, of which this information statement is a part, under the Exchange Act, and no stop order relating to the registration statement shall be in effect;
all permits, registrations and consents required under the securities or blue sky laws of states or other political subdivisions of the United States or of other foreign jurisdictions in connection with the Distribution shall have been received;
the private letter ruling and a supplemental private letter ruling that Harvard Bioscience received from the IRS, to the effect that the Distribution, together with certain related transactions, will qualify as a reorganization for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Code;
the Harvard Bioscience Board of Directors shall have received an opinion from Duff & Phelps to the effect that we and Harvard Bioscience each will be solvent, adequately capitalized immediately after the Distribution and able to pay its liabilities as they become absolute and mature and that Harvard Bioscience has sufficient surplus under Delaware law to declare the dividend of HART common stock;
all material government approvals and other consents necessary to consummate the Distribution shall have been received; and
no order, injunction or decree issued by any court of competent jurisdiction or other legal restraint or prohibition preventing consummation of the Distribution or any of the transactions related thereto, including the transfers of assets and liabilities contemplated by the separation and distribution agreement, shall be in effect.

The fulfillment of the foregoing conditions does not create any obligations on Harvard Bioscience’s part to effect the Distribution, and the Harvard Bioscience Board of Directors has reserved the right, in its sole discretion, to amend, modify or abandon the Distribution and related transactions at any time prior to the Distribution Date. Harvard Bioscience has the right not to complete the Distribution if, at any time, the Harvard Bioscience Board of Directors determines, in its sole discretion, that the Distribution is not in the best interests of Harvard Bioscience or its stockholders or that market conditions are such that it is not advisable to separate the regenerative medicine business from Harvard Bioscience.

Opinion of Duff & Phelps

Duff & Phelps was engaged by Harvard Bioscience to provide to the Harvard Bioscience Board of Directors a written opinion as to the sufficiency of the surplus under Delaware law to make the Distribution and as to the solvency and capitalization of each of Harvard Bioscience and HART after giving effect to the Distribution. On March 9, 2013, Duff & Phelps presented to the Harvard Bioscience Board of Directors its preliminary conclusions with respect to the solvency and capitalization of each of Harvard Bioscience and HART and with respect to the surplus of Harvard Bioscience, and Duff & Phelps informed the Harvard Bioscience Board of Directors that Duff & Phelps would continue to monitor both market conditions and the operating performance and financial condition of each of Harvard Bioscience and Harvard Bioscience’s regenerative medicine business, as such market conditions, operating performance and financial condition relate to the opinion.

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On [           ], 2013, Duff & Phelps made a definitive presentation to the Harvard Bioscience Board of Directors and delivered a written opinion to the Harvard Bioscience Board of Directors to the effect that:

(i) Immediately prior to the Distribution, Harvard Bioscience would have adequate capital surplus under the Delaware General Corporation Law to effect the Distribution, and
(ii) Immediately prior to and after giving effect to the Distribution, Harvard Bioscience and HART would be solvent and adequately capitalized.

Duff & Phelps noted that its conclusions were based on information obtained from Harvard Bioscience and public sources of each of Harvard Bioscience and Harvard Bioscience’s regenerative medicine business as such information existed as of [           ], 2013. Duff & Phelps also noted that it had sufficient time, access to information and access to management to prepare its preliminary conclusions.

Duff & Phelps’ opinion is attached to this information statement as Annex A and was filed as an exhibit to an amendment to the Registration Statement on Form 10. The form of opinion sets forth, among other things, the assumptions made, procedures followed, matters considered and limitations on the review undertaken by Duff & Phelps in connection with the opinion. You should read the form of opinion carefully and in its entirety. Duff & Phelps will be providing this opinion for the information and assistance of the Boards of Directors of Harvard Bioscience.

In preparing its opinion, Duff & Phelps undertook a number of inquiries, analyses and other procedures as Duff & Phelps deemed necessary to enable Duff & Phelps to render the opinion described herein. Harvard Bioscience made available to Duff & Phelps those documents and information concerning Harvard Bioscience’s regenerative medicine business and operations which Duff & Phelps reasonable requested, including, without limitation: current and historical financial information, financial projections or forecasts prepared by Harvard Bioscience’s management, third-party appraisals or valuations previously performed, if any, and any other relevant information relating to Harvard Bioscience or the Distribution prepared by Harvard Bioscience or any of its other advisors. Harvard Bioscience provided documentation relating to the Distribution as it became available. Harvard Bioscience also provided Duff & Phelps with reasonable access to Harvard Bioscience’s officers, directors, employees, independent accountants and other advisors. In addition to reviewing documents and information provided by Harvard Bioscience, Duff & Phelps also reviewed industry and selected public company financial data it deemed relevant, to the extent available, obtained from public and other available sources. Duff & Phelps used generally accepted valuation and analytical techniques as the basis for its analysis and opinion.

Harvard Bioscience specifically requested that Duff & Phelps determine whether, as of the Distribution Date and after giving effect to the Distribution:

(i) The assets of each of Harvard Bioscience and HART, as applicable, at a Fair Valuation, exceed its respective Debts (including Contingent Liabilities);
(ii) Each of Harvard Bioscience and HART, as applicable, will not have an unreasonably small amount of assets (or capital) for each of the respective businesses in which each is engaged or in which management has indicated each intends to engage; and
(iii) Each of Harvard Bioscience and HART, as applicable, should be able to pay its respective Debts (including Contingent Liabilities) as they become due.

In addition, Harvard Bioscience specifically requested that Duff & Phelps determine whether, immediately before giving effect to the Distribution, the fair value of the assets of Harvard Bioscience exceeds the sum of (a) its liabilities (including Contingent Liabilities), (b) its capital (as such capital is calculated pursuant to Section 154 of the Delaware General Corporation Law) and (c) the Distribution.

Under Delaware law, distributions may be paid out of surplus, which is defined pursuant to the Delaware General Corporation Law as the excess, if any, at any given time, of the net assets of a corporation (which is the amount by which total assets exceeds total liabilities) over the amount of such corporation’s capital. Solely for the purposes of preparing its preliminary and final conclusions, Duff & Phelps, without making any representation as to the legal sufficiency for any purpose, defined the following terms and phrases:

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Debt ” and “ Liability ” each mean a liability on a right to payment, whether or not the right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured.

Fair Valuation ” means the aggregate amount for which the assets of an entity would change hands between an interested purchaser and a seller in an arm’s length transaction, where both parties are aware of all relevant facts and neither party is under any compulsion to act, with reasonable promptness, not to exceed one year.

Contingent Liabilities ” means the contingent liabilities as either publicly disclosed, set forth in written materials delivered to Duff & Phelps by Harvard Bioscience, or identified to Duff & Phelps by officers or representatives of Harvard Bioscience.

Not have an unreasonably small amount of capital for each of the respective businesses in which each is engaged or in which management has indicated each intends to engage ” and “ able to pay its respective Debts (including Contingent Liabilities), as they become due ” mean that Harvard Bioscience or HART, as applicable, should be able to generate enough cash from operations, asset dispositions, refinancing, or a combination thereof, to meet its obligations (including Contingent Liabilities) as they become due.

For the purposes of preparing its opinion, Duff & Phelps conducted a “balance sheet test” to determine whether, after giving effect to the consummation of the Distribution, the assets of each of Harvard Bioscience and HART, as applicable, at a Fair Valuation, exceed its respective Debts (including Contingent Liabilities). Duff & Phelps has tailored the balance sheet test so as to enable Duff & Phelps to reach a conclusion with respect to each of the determinations Duff & Phelps has been requested to make. The balance sheet test used by Duff & Phelps is a valuation analysis that was performed on a controlling interest basis using selected public company analysis, selected transaction analysis and discounted cash flow analysis. As part of its preliminary conclusions, Duff & Phelps determined, as of the Distribution Date and after giving effect to the Distribution, that each of Harvard Bioscience and HART, as applicable passed the balance sheet test.

For the purposes of preparing its opinion, Duff & Phelps conducted a “capital adequacy test” and cash flow test” to determine whether, after giving effect to the Distribution, (i) each of Harvard Bioscience and HART would be able to pays its respective Debts (including Contingent Liabilities), as they become due and (ii) each of Harvard Bioscience and HART, as applicable, would not have an unreasonably small amount of capital for the respective business in which each is engaged or is proposed to be engaged following the consummation of the Distribution. In performing the capital adequacy test and cash flow test, Duff & Phelps (a) performed a detailed analysis of the cash flows expected to be produced by each of Harvard Bioscience and HART and modeled required debt payments and capital needs, (b) performed a sensitivity analysis on the projected cash flows of each of Harvard Bioscience and HART to assess capital adequacy and the ability to make required debt payments under a reasonable downside scenario, (c) assessed the debt capacity of each of Harvard Bioscience and HART and the ability to access the capital markets under both cases outlined in (a) and (b) above, and (d) analyzed various financial ratios, including interest coverage, fixed charge coverage and leverage ratios.

As part of its opinion, Duff & Phelps determined, after giving pro forma effect to the Distribution, that each of Harvard Bioscience and HART passed the capital adequacy and cash flow tests.

For purposes of preparing its opinion, Duff & Phelps conducted a “capital surplus test” to determine whether, immediately before giving effect to the Distribution, the fair value of the assets of Harvard Bioscience exceeds the sum of (a) its liabilities (including Contingent Liabilities), (b) its capital (as such capital is calculated pursuant to Section 154 of the Delaware General Corporation Law) and (c) the Distribution. As part of its opinion, Duff & Phelps determined that Harvard Bioscience passed the capital surplus test.

The preparation of an opinion of the type described above is a complex process and is not necessary susceptible to a summary description. Selecting portions of the summary set forth above, without considering the summary as a whole, could create an incomplete view of the process underlying Duff & Phelps’ opinion. In addition, analyses underlying opinions of the type described above are based upon forecasts of future results and therefore are not necessarily indicative of actual future results or financial condition. Because such analyses, which are based upon numerous factors or events beyond the control of the parties or their

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respective advisors, are inherently subject to uncertainty, none of Harvard Bioscience, HART or Duff & Phelps or any other person assumes responsibility if future results or financial condition are different from those forecast.

Duff & Phelps and Harvard Bioscience agreed that Duff & Phelps’ engagement was made solely for the benefit of Harvard Bioscience and its Boards of Directors and Duff & Phelps and certain indemnified persons and their respective successors and assigns, and no other person acquired or has any right under or by virtue of Duff & Phelps’ engagement letter. However, Duff & Phelps did agree to allow HART to include its opinion in this information statement. Pursuant to the terms of the engagement letter between Duff & Phelps and Harvard Bioscience, Duff & Phelps assumes no responsibility for the accuracy or completeness of any information provided by or on behalf of Harvard Bioscience or any other information provided or otherwise made available to Duff & Phelps regarding Harvard Bioscience, HART or the spin-off. Duff & Phelps relied upon the accuracy and completeness of all information provided to it by or on behalf of Harvard Bioscience and HART, and Duff & Phelps’ opinion sets forth these and other reasonable limitations. Harvard Bioscience has agreed to indemnify and hold harmless Duff & Phelps and its affiliates, and its and their respective directors, officers, attorneys and other agents, stockholders, employees and controlling persons, from and against all losses which (i) are related to or arise out of any untrue statement or alleged untrue statement of a material fact contained in any oral or written information provided to Duff & Phelps or any other person or (ii) are otherwise related to or arise out of Duff & Phelps’ engagement, role, activities or the performance of professional services on Harvard Bioscience’s behalf pursuant to their engagement. However, Harvard Bioscience will not be responsible for any losses (i) which result from any settlement not approved by Harvard Bioscience in its reasonable judgment or (ii) are determined by a final judgment of a court of competent jurisdiction to have resulted primarily and directly from the fraud, willful misconduct or gross negligence of an indemnified person.

Harvard Bioscience has paid Duff & Phelps a professional fee for its engagement to render its opinion as to the sufficiency of the surplus under Delaware law to make the Distribution of HART common stock and as to the solvency and capitalization of each of Harvard Bioscience and HART after giving effect to the Distribution and will reimburse Duff & Phelps for all out-of-pocket expenses incurred in connection with its engagement. Duff & Phelps’ fee was not contingent upon either the conclusions set forth in Duff & Phelps’ opinion or the consummation of the Distribution. Duff & Phelps have provided no other services to Harvard Bioscience or HART during the last two years.

Reason for Furnishing this Information Statement

This information statement is being furnished solely to provide information to Harvard Bioscience stockholders who are entitled to receive shares of HART common stock in the Distribution. The information statement is not, and is not to be construed as an inducement or encouragement to buy, hold or sell any of our securities. We believe that the information in this information statement is accurate as of the date set forth on the cover. Changes may occur after that date and neither Harvard Bioscience nor HART will undertake any obligation to update such information except in the normal course of our respective public disclosure obligations.

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DIVIDEND POLICY

We have never declared or paid cash dividends. We do not intend to pay cash dividends on our common stock for the foreseeable future, but currently intend to retain any future earnings to fund the development and growth of our business. The payment of cash dividends, if any, on the common stock will rest solely within the discretion of our Board of Directors and will depend, among other things, upon our earnings, capital requirements, financial condition, legal requirements, and other relevant factors as determined by our Board of Directors. There can be no assurance that we will continue to pay any dividends if we do commence the payment of dividends.

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CAPITALIZATION

The following table sets forth our capitalization as of March 31, 2013:

on an actual basis; and
on a pro forma “as adjusted” basis to reflect the receipt of approximately $15 million in cash from Harvard Bioscience as a pro forma transaction:
excludes 3,000,000 shares of our common stock reserved for issuance under the 2013 Equity Incentive Plan, or 2013 Plan, upon the exercise of stock options, restricted stock units, or restricted stock that will be issued under our employee benefit plans, which will include:
approximately 2,100,000 shares of our common stock reserved for issuance in connection with the exercise of the initial option grants to our executives and employees that will be granted following the Distribution, as described in “Director and Executive Compensation — Separation Grants;”
shares of our common stock that may be issued in connection with compensation of our directors, as described in “Director and Executive Compensation — Board of Directors’ Compensation;” and
shares of our common stock that may be issued in connection with the exercise or vesting of options or restricted stock units we issue pertaining to the adjustment and conversion of outstanding Harvard Bioscience equity awards upon the effectiveness of the spin-off, as described in “Director and Executive Compensation — Treatment of Outstanding Harvard Bioscience Equity Awards.”

You should read the information in the following table together with “Use of Proceeds,” “Selected Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our audited and unaudited financial statements and the related notes included elsewhere in this information statement.

   
  As of March 31, 2013
     Historical   Pro forma as adjusted
     (Unaudited)
(in thousands)
Long-term debt   $      —     $  
Total invested equity   $ 92     $ 92  
Stockholders’ equity:
                 
Preferred stock, $0.01 par value; no shares authorized; no shares issued and outstanding            
Common stock, $0.01 par value; 30,000,000 shares authorized; 8,000,000 shares issued and outstanding as adjusted            
Additional paid-in capital           15,000  
Total stockholders’ equity           15,092  
Total capitalization   $ 92     $ 15,092  

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SELECTED HISTORICAL FINANCIAL DATA

The following table sets forth our selected financial data for the periods and as of the dates indicated. You should read the following selected financial data in conjunction with our audited and unaudited financial statements and the related notes thereto included elsewhere in this information statement and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of this information statement.

Our historical results are not necessarily indicative of the results that may be expected in the future and interim results are not necessarily indicative of results to be expected for any other period or the full year.

           
  Three Months Ended   Years ended December 31,   Period from February 24, 2009 (inception)
to March 31, 2013
     March 31, 2013   March 31, 2012   2012   2011   2010
     (unaudited)   (unaudited)                    
(in thousands)
                                                     
Statement of Operations Data:
                                                     
Net revenue   $     $     $     $     $     $  
Cost of product revenues                                    
Gross profit                                    
Operating Expenses:
                                                     
Selling and marketing expenses     20       16       116       215       53       404  
General and administrative expenses     840       423       2,570       1,251       572       5,421  
Research and development expenses     1,160       815       4,027       2,285       727       8,593  
Total operating expenses     2,020       1,254       6,713       3,751       1,352       14,418  
Operating loss     (2,020 )       (1,254 )       (6,713 )       (3,751 )       (1,352 )       (14,418 )  
Loss before income taxes     (2,020 )       (1,254 )       (6,713 )       (3,751 )       (1,352 )       (14,418 )  
Net loss   $  (2,020 )     $  (1,254 )     $  (6,713 )     $  (3,751 )     $  (1,352 )     $  (14,418 )  

         
  As of March 31,   As of December 31,
     2013   2012   2012   2011   2010
     (unaudited)   (unaudited)               
(in thousands)
                                            
Balance Sheet Data:
                                            
Total Assets   $    422     $    438     $    438     $    187     $      1  
Total Liabilities     330       411       411       165       269  
Harvard Bioscience, Inc. invested equity (deficit)   $ 92     $ 27     $ 27     $ 22     $ (268 )  

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

The following management’s discussion and analysis should be read in conjunction with our historical financial statements and the related notes included in this information statement. Management’s discussion and analysis contains forward-looking statements that involve risks and uncertainties, including those we detail under “Risk Factors,” “Special Note Regarding Forward-Looking Statements” and elsewhere in this information statement, such as statements of our plans, objectives, expectations and intentions. Any statements that are not statements of historical fact are forward-looking statements. When used, the words “believe,” “plan,” “intend,” “anticipate,” “target,” “estimate,” “expect” and the like, and/or future tense or conditional constructions (“will,” “may,” “could,” “should,” etc.), or similar expressions, identify certain of these forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements in this information statement. Our actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors. We do not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this information statement.

Overview

Relationship with Harvard Bioscience

Harvard Apparatus Regenerative Technology, Inc. is a wholly-owned subsidiary of Harvard Bioscience, Inc. We were incorporated on May 3, 2012 by Harvard Bioscience to provide a means for separating its regenerative medicine business from its other businesses. Harvard Bioscience has been designing and manufacturing devices for life science researchers for over 100 years. Harvard Bioscience first focused on providing devices to scientists involved in regenerative medicine research in 2008. Since early 2009, Harvard Bioscience’s regenerative medicine business initiative has been operated as a division of Harvard Bioscience. Harvard Bioscience decided to separate its regenerative medicine business into our company, a separate corporate entity, and then to spin off its interest in our business to its stockholders. Prior to the Distribution, Harvard Bioscience will have contributed the assets of its regenerative medicine business and approximately $15 million in cash to us. Following the Distribution, Harvard Bioscience will no longer be a stockholder of our common stock and will no longer control our operations. We had no material assets or activities as a separate corporate entity until the contribution to us by Harvard Bioscience of those assets and that business. We will continue to pursue our business of developing and making devices for regenerative medicine researchers and clinicians.

Our Business

We are a clinical-stage regenerative medicine company developing life-saving medical products. Our first product is the InBreath Airway Transplant System which is comprised of a bioreactor and a synthetic scaffold that can be used by surgeons to create a replacement airway, such as a trachea, a bronchus or tracheobronchial combination, for patients who need an airway transplant. Our bioreactor technology has been used in eight successful human airway transplant surgeries, including what we believe to be the world’s first transplant of a regenerated airway. In addition, we believe the second surgery using our technology was the world’s first transplant of a regenerated airway using a synthetic scaffold.

The seventh airway transplant surgery took place in April 2013 at Children’s Hospital of Illinois in Peoria with FDA approval under an investigator-led Investigational New Drug application, or IND. This surgery included the first use of our InBreath System in a trachea transplant in the U.S. and the first use of our products in a child, as well as the first transplant using a synthetic scaffold we manufactured. The recipient of the implant, a two-year-old girl, initially recovered well but approximately two months after the trachea transplant surgery the patient underwent a second surgery to correct a defect in her esophagus. On July 6, approximately one month after the second surgery and three months after the initial surgery the patient died from complications of the second surgery. Dr. Macchiarini, who led the team performing the trachea surgery, noted that the implanted trachea was not the cause of the patient’s death, pointing out that the girl's native tissue was very fragile. We use our depth of knowledge, our existing technologies and products and continued research and development to develop and provide products to be used by physicians for growing organs outside the body for transplant.

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Business Drivers/Factors Affecting Results of Operations

To date, our business efforts have been focused on developing and providing synthetic scaffolds and bioreactors to regenerative medicine researchers and practitioners. We have not generated revenues to date. Going forward, we intend to generate revenues from the sale of our synthetic scaffolds and bioreactors, some of which will be given to certain key researcher collaborators to accelerate development of new bioreactor technologies and some of which will generate revenues. Until we are able to commercialize our InBreath System upon receipt of regulatory agency approvals to market that product for clinical use we expect our costs to exceed our revenues.

Once we receive regulatory agency approvals to market the InBreath System for surgeons to use in human transplant procedures, especially for trachea transplants, we expect to generate meaningful revenues. At that time we anticipate that we will be paid on a per-procedure basis for the use of the InBreath System. Although we hope to receive regulatory approvals to market our synthetic scaffolds and bioreactors for use by surgeons to perform transplants of additional organs, we expect that approval for our trachea transplant products and successful commercialization thereof will lead to sufficient sales for us to achieve profitability.

Basis of Presentation

Historically, we have operated as part of Harvard Bioscience, and not as a stand-alone company. Financial statements were not previously prepared for us since we did not operate as a separate legal entity prior to the Separation from Harvard Bioscience. The discussion and analysis of our financial condition and results of operations are based on the historical Harvard Bioscience regenerative medicine business financial statements, which we prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements required that we make estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the financial statements and the expenses during the reporting periods presented. Assets and liabilities have been presented at Harvard Bioscience’s book values for those items at the dates of the financial statements. Certain of the expenses were allocated based on estimates of costs incurred by Harvard Bioscience on behalf of the regenerative medicine business or services provided by Harvard Bioscience personnel who were not wholly engaged in the regenerative medicine business but who supported that business directly or indirectly during the reporting periods. Actual results may differ from these estimates under different assumptions or conditions.

Related Party Relationship with Harvard Bioscience

Harvard Bioscience will distribute all of the shares of our common stock it owns to Harvard Bioscience’s stockholders on the Distribution Date by means of a spin-off, which is a pro rata distribution by Harvard Bioscience of the shares of our common stock it owns to holders of Harvard Bioscience’s common stock. Harvard Bioscience’s agreement to complete the Distribution is contingent on the satisfaction or waiver of a variety of conditions. In addition, Harvard Bioscience has the right to terminate its obligations to complete the Distribution if, at any time, Harvard Bioscience’s Board of Directors determines, in its sole discretion, that the Distribution is not in the best interests of Harvard Bioscience or its stockholders. As a result, the Distribution may not occur by the contemplated time or at all.

Prior to the completion of the Distribution, we will enter into agreements with Harvard Bioscience that will govern the Separation and various interim and ongoing relationships. These agreements will be in effect as of the Distribution Date. They will provide for, among other things, the transfer from Harvard Bioscience to us of assets and the assumption by us of liabilities comprising our businesses. In accordance with such agreements, we expect to pay Harvard Bioscience to provide continued services in the areas of accounting, management, payroll, facilities usage, benefits administration, human resources, information services and various other corporate services, operations, and engineering for periods ranging from six months to one year following the Separation and Distribution. All of the agreements relating to the Separation will be made in the context of a parent-subsidiary relationship and will be entered into in the overall context of the Separation. The terms of these agreements may be more or less favorable to us than if they had been negotiated with unaffiliated third parties.

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Results of Operations

Components of Operating Loss

Research and development expense .  Research and development expense consists of salaries and related expenses, including stock-based compensation, for personnel and contracted consultants to develop our new products, primarily synthetic organ scaffolds and 3D organ bioreactors. Other research and development expenses include the costs of outside service providers and material costs for prototype and test units and outside testing facilities performing cell growth and materials experiments. We expense research and development costs as incurred.

General and administrative expense .  General and administrative expense consists primarily of salaries and other related expenses, including stock-based compensation, for personnel in executive, accounting, information technology and human resources roles. Other costs include professional fees for legal and accounting services, insurance, investor relations and facility costs.

Sales and marketing expense .  Sales and marketing expense consists primarily of salaries and related expenses, including stock-based compensation, for personnel performing sales, marketing, and business development roles, and costs associated with their travel and participation in trade shows and conferences. It also includes the costs of catalogs, marketing communications and web site development and maintenance.

Comparison of three months ended March 31, 2013 to three months ended March 31, 2012

Research and Development Expense

Research and development expense increased $0.3 million, or 42%, to $1.2 million for the three months ended March 31, 2013 compared with $0.8 million for the three months ended March 31, 2012. The increase was due to a substantial increase in our activities in organ bioreactor and scaffold research and development. The increased bioreactor and scaffold development costs in 2013 included additional engineering and technical resources. These increases were made to support a greater number of regenerative medicine collaborators and to accelerate the development of several new bioreactors to help further their research efforts, and to develop a synthetic tracheal scaffold product.

General and Administrative Expense

General and administrative expense increased $0.4 million, or 99%, to $0.8 million for the three months ended March 31, 2013 compared with $0.4 million for the three months ended March 31, 2012. Of the $0.4 million increase, $0.3 million was due to greater legal, accounting and facilities related costs associated with the organization and operation of the business. Approximately $0.1 million of the year-to-year increase related to increased management focus from Harvard Bioscience’s senior executives which increased our allocated expense. Payroll-related costs for such individuals were allocated to our business based on the percentage of their time spent managing or supporting our business.

Sales and Marketing Expense

Sales and marketing expense increased approximately $4,000, or 24%, to $20,000 for the three months ended March 31, 2013 compared with $16,000 for the three months ended March 31, 2012. The increase was primarily due to higher business development costs.

Financial Condition, Liquidity and Capital Resources

Sources of liquidity .  We have incurred operating losses and negative operating cash flow since inception, and we had an accumulated deficit of $14.4 million as of March 31, 2013. Since inception, our operations have been funded by contributions from Harvard Bioscience. We are currently investing significant resources in the development and commercialization of our products for use by clinicians and researchers in the field of regenerative medicine. As a result, we expect to incur operating losses and negative operating cash flow for the foreseeable future.

On May 1, 2013 Harvard Bioscience announced its intention to move forward with respect to the HART spin-off. In addition, concurrent with the completion of this spin-off, Harvard Bioscience will contribute approximately $15 million in cash to us.

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Operating activities .  Net cash used in operating activities of $1.9 million for the three months ended March 31, 2013 was primarily a result of our $2.0 million net loss, offset by a $0.1 million add-back of non-cash expenses of stock-based compensation.

Net cash used in operating activities of $1.2 million for the three months ended March 31, 2012 was primarily a result of our $1.3 million net loss, offset by a $0.1 million add-back of non-cash expenses of stock-based compensation.

Investing activities .  Net cash used in investing activities during the three months ended March 31, 2013 and 2012 reflected additions to property, plant and equipment.

Financing activities .  Cash generated from financing activities in all periods presented represented Harvard Bioscience’s funding of our business activities.

Comparison of Years Ended December 31, 2012 and 2011

Research and Development Expense

Research and development expense increased $1.7 million, or 76%, to $4.0 million for the year ended December 31, 2012 compared with $2.3 million for the year ended December 31, 2011. Of the $1.7 million increase, approximately $1.3 million related to an increase in our activities in organ bioreactor research and development and $0.4 million represented increased efforts with respect to a clinical infusion pump product we have been developing. The increased bioreactor development costs in 2012 included additional engineering and technical resources. These increases were made to support a greater number of regenerative medicine collaborators and to accelerate the development of several new bioreactors to help further their research efforts. The increased activities related to organ bioreactor development also included the costs related to three trachea transplant procedures, compared with two such procedures in the year ended December 31, 2011.

General and Administrative Expense

General and administrative expense increased $1.3 million, or 105%, to $2.6 million for the year ended December 31, 2012 compared with $1.3 million for the year ended December 31, 2011. Of the $1.3 million increase, $0.3 million was due to greater legal fees associated with the organization and operation of the business. Approximately $0.6 million of the year-to-year increase related to increased management focus from Harvard Bioscience’s senior executives which increased our allocated expense. Payroll-related costs for such individuals were allocated to our business based on the percentage of their time spent managing or supporting our business. Also, we established a quality assurance and regulatory compliance function during 2011 which accounted for approximately $0.1 million of the year-to-year general and administrative expense increase, audit costs increased by $0.1 million and various other costs increased by a combined $0.2 million year-to-year.

Sales and Marketing Expense

Sales and marketing expense decreased approximately $0.1 million, or 46%, to $0.1 million for the year ended December 31, 2012 compared with $0.2 million for the year ended December 31, 2011. The decrease was primarily due to lower catalog and marketing communication costs.

Comparison of the Years Ended December 31, 2011 and 2010

Research and Development Expense

Research and development expense increased $1.6 million, or 214%, to $2.3 million for the year ended December 31, 2011 compared with $0.7 million for the year ended December 31, 2010. Of the $1.6 million increase, approximately $1.2 million related to an increase in resources devoted to our development of a clinical infusion pump product and $0.4 million reflected increased efforts in our organ bioreactor development program, including the costs related to our support of two human trachea transplants during 2011. Approximately $1.1 million of the year-to-year cost increase in the clinical infusion pump project represented additional engineering headcount and consulting costs related to design and engineering services. The increased bioreactor-related research and development costs in 2011 included the effects of three of our scientists devoting a much greater percentage of their time to the regenerative medicine business in that year compared with the prior year, and the payroll-related costs of one scientist hired during 2011.

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General and Administrative Expense

General and administrative expense increased approximately $0.7 million, or 119%, to $1.3 million for the year ended December 31, 2011 compared with $0.6 million for the year ended December 31, 2010. Of the $0.7 million increase, approximately $0.3 million of the year-to-year increase related to increased management focus from Harvard Bioscience’s senior executives which increased our allocated expense. Payroll-related costs for such individuals were allocated to our business based on the percentage of their time spent managing or supporting our business. Of the $0.7 million year-to-year increase in general and administrative expense, $0.2 million represented other Harvard Bioscience costs allocated to our business and $0.1 million represented an increase in professional fees.

Sales and Marketing Expense

Sales and marketing expense increased approximately $0.2 million, or 303%, to $0.2 million for the year ended December 31, 2011 compared with $53,000 for the year ended December 31, 2010. The increase was primarily due to the costs to publish a catalog, brochures and marketing literature, greater tradeshow participation and web site content development.

Financial Condition, Liquidity and Capital Resources

Sources of liquidity .  We have incurred operating losses and negative operating cash flow since inception, and we had an accumulated deficit of $12.4 million as of December 31, 2012. Since inception, our operations have been funded by contributions from Harvard Bioscience. We are currently investing significant resources in the development and commercialization of our products for use by clinicians and researchers in the field of regenerative medicine. As a result, we expect to incur operating losses and negative operating cash flow for the foreseeable future. Prior to the Distribution, Harvard Bioscience will contribute approximately $15 million in cash to us.

Operating activities .  Net cash used in operating activities of $5.9 million for the twelve months ended December 31, 2012 was primarily a result of our $6.7 million net loss, reduced by the $0.6 million add-back of non-cash expenses ($0.5 million of stock-based compensation and $0.1 million of depreciation) and $0.2 million favorable effect from the change in working capital.

Net cash used in operating activities of $3.6 million for the twelve months ended December 31, 2011 was primarily a result of our $3.8 million net loss, offset by the add-back of non-cash expenses of $0.3 million of stock-based compensation.

Net cash used in operating activities of $1.0 million for the year ended December 31, 2010 was primarily a result of our $1.4 million net loss, partially offset by a $0.1 million add-back of non-cash stock-based compensation expense and a $0.2 million favorable effect from the change in working capital.

Investing activities .  Net cash used in investing activities during the twelve month periods ended December 31, 2012 and 2011 reflected additions to property, plant and equipment.

Financing activities .  Cash generated from financing activities in all periods presented represented Harvard Bioscience’s funding of our business activities.

Tax Attributes Relating to Historical Operating Losses

All tax attributes, including net operating losses and tax credits, related to our operating losses through the date of the Separation will remain with Harvard Bioscience following the Separation.

Option Vesting, Compensation Expense and Exercise Proceeds

In connection with the Distribution, we expect to issue options to purchase our common stock and restricted stock units to Harvard Bioscience employees and directors who hold options and restricted stock units issued by Harvard Bioscience prior to the Distribution.

Such stock options and restricted stock units that we issue at the Distribution will vest in tandem with the stock options and restricted stock units originally issued by Harvard Bioscience for the remaining life of such stock options and restricted stock units. The continued vesting and exercisability of the stock options and restricted stock units we issue will be conditional on the recipient’s continued service to or employment with Harvard Bioscience or our company.

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Separately, certain of our employees and directors, including our executive officers, are holders of vested and unvested options to buy Harvard Bioscience common stock and unvested restricted stock units pertaining to Harvard Bioscience’s common stock. Vesting and exercisability of such options and restricted stock units will continue through their original expiration dates so long as the individual holder is employed or providing service to us or Harvard Bioscience.

With respect to individual owners of both options and/or restricted stock units issued by our company and those issued by Harvard Bioscience, the compensation expense for such options and restricted stock units will be recognized by the company receiving the individual’s services. However, cash proceeds from the future option exercises will be realized by the company that issued the respective option.

Future Funding Requirements

We have generated operating losses each year to date. We do not expect to generate sufficient revenues to achieve annual earnings or positive cash flows until we obtain regulatory approval and commercialize one of our organ bioreactors and synthetic scaffold systems. Until that time, we expect to maintain or increase our ongoing development activities. Also, after the Distribution and upon our listing on NASDAQ, we expect to incur additional costs associated with operating as a publicly-traded company.

Harvard Bioscience will no longer fund our operations following the Distribution. Based on our current operating plan, we believe that the approximately $15 million cash contribution from Harvard Bioscience will be sufficient to fund our operating expenses, working capital needs and capital expenditures for at least 18 months following the Distribution. We have based our estimates on assumptions that may prove wrong, and we may use our available capital resources sooner than we expect. Further, our strategy or business plan may change in the future, possibly changing the rate of our spending or need for additional capital. We may need to secure future funding through equity offerings, debt financings, government funding, marketing and distribution arrangements and other collaborations or strategic alliances. Equity offerings would dilute the ownership interests of existing stockholders. Debt financing, if available, could result in agreements that include covenants limiting or restricting our ability to take certain actions, such as incurring additional debt, making capital expenditures or paying dividends. If we raise additional funds through government funding, marketing and distribution arrangements or other collaborations or strategic alliances we may have to relinquish rights to our technologies or future revenue streams, or grant licenses on terms that may not be favorable to us. We cannot assure you that we will be successful in raising additional capital on favorable terms or at all. In addition, to preserve the tax-free treatment to Harvard Bioscience of the Distribution, for the two-year period following the Distribution we will be limited in issuing equity securities beyond certain thresholds which may limit our ability to raise additional capital.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements, including unrecorded derivative instruments that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Effect of Inflation and Changes in Prices

We do not expect inflation and changes in price to have a material effect on our operations in the next year.

Recent Authoritative Accounting Guidance

Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.

Critical Accounting Policies and Estimates

Our financial statements, which appear at page F- 1 , have been prepared in accordance with accounting principles generally accepted in the U.S., which require that we make certain assumptions and estimates and, in connection therewith, adopt certain accounting policies. Our significant accounting policies are set forth in

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Note 2 to our financial statements included in this information statement. Of those policies, we believe that the policies discussed below may involve a higher degree of judgment and may be more critical to an accurate reflection of our financial condition and results of operations.

Stock-Based Compensation

We account for stock-based payment awards in accordance with the provisions of FASB ASC 718, Compensation — Stock Compensation , which requires us to recognize compensation expense for all stock-based payment awards, including stock options and restricted stock units, made to employees and directors. All amounts shown in the financial statements presented in this information statement related to stock-based compensation pertain to Harvard Bioscience employees who were participants in the Harvard Bioscience stock option plans and/or the Harvard Bioscience Employee Stock Purchase Plan and were directly involved in the regenerative medicine business and were allocated based upon each participant’s time spent on our business.

We value stock-based payment awards, except restricted stock awards, at grant date using the Black-Scholes option pricing model. Our determination of fair value of stock-based payment awards has been affected by the Harvard Bioscience common stock price as well as assumptions regarding a number of complex and subjective variables, such as expected stock price volatility and employee forfeitures over the terms of the awards.

Stock-based compensation expense recognized under FASB ASC 718 for the three month periods ended March 31, 2013 and 2012, and the years ended December 31, 2012, 2011 and 2010 was $0.1 million, $0.1 million, $0.5 million, $0.3 million and $0.1 million, respectively, which consisted of stock-based compensation expense related to employee stock options, the Harvard Bioscience Employee Stock Purchase Plan and restricted stock units. We record stock compensation expense on a straight-line basis over the requisite service period for all awards granted. Also, we expect to grant to certain of our executives, employees and our directors upon the Distribution, grants of options for shares of our common stock in order to, among other things, provide executives, employees and directors with a stock-based incentive and align their interests with those of our stockholders. The value of the stock option grants will be expensed ratably over a four-year vesting term. We expect some of these grants to be performance-based options which will be earned upon achievement of certain milestones.

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BUSINESS

We are a clinical-stage regenerative medicine company developing life-saving medical products.

Our first product, the InBreath TM Airway Transplant System, is intended to be used to restore the structure and/or function of a severely damaged airway. The InBreath System is comprised of a porous plastic scaffold made in the size and shape of the natural trachea, bronchus or tracheobronchial tree and a rotating bioreactor used to seed the patient’s own bone marrow cells onto the scaffold prior to implant. The InBreath System can be used by surgeons to create a replacement trachea, or airway, for patients who need an airway transplant.

We believe InBreath System is the first to enable the application of regenerative medicine techniques to the production and transplant of complex, three-dimensional human organs like the trachea. Our bioreactor technology has been used in seven successful human airway transplant surgeries, including in 2008 with what we believe to be the world’s first transplant of a regenerated airway. In addition, we believe the second surgery using our bioreactor technology, as performed in 2011, was the world’s first transplant of a regenerated airway using a synthetic scaffold. The patients who received these two airway transplants are alive more than five years and more than two years, respectively, following their surgeries, and each of these surgeries were published in The Lancet , one of the world’s most respected peer-reviewed medical journals. The seventh airway transplant surgery took place in April 2013 at Children’s Hospital of Illinois in Peoria with FDA approval under an investigator-led IND. This surgery included the first use of the InBreath System in a trachea transplant in the U.S. and the first use of our products in a child, as well as the first transplant using a synthetic scaffold we manufactured. An eighth surgery was performed in July 2013. The eight human airway transplants to date have been led by Dr. Paolo Macchiarini, a world-renowned thoracic surgeon of the Karolinska Institutet, one of Europe’s leading research hospitals.

We believe our technology could enable surgeons to cure nearly all primary trachea cancers. Our products address the critical challenges to trachea transplant: the shortage of suitable donor tracheas and the risk and expense of lifelong anti-rejection drug therapy. Because the scaffolds are synthetic, our technology will eliminate the need to wait for suitable donor tracheas. Our technology also obviates the need for anti-rejection drug therapy because the surgeon uses the patient’s own bone marrow cells to seed the scaffold. In addition, patients with trachea cancer treated using our products have not required either chemotherapy or radiation therapy after the transplant, thus potentially eliminating the significant side effects and expense of such therapies. Because these substantial costs and risks can be reduced or even eliminated with our technology, we believe our products can both help save lives and reduce overall healthcare costs. None of the surgeries using our products have involved human embryonic stem cells and we do not currently expect surgeons to use such cells with our products.

In addition to the trachea, we believe that our products are applicable to the regeneration of other organs. Our collaborators are working on regenerating the lungs, gastrointestinal tract, heart valves and heart using our products. For instance, a collaborator of ours, Dr. Harald Ott of Massachusetts General Hospital, has succeeded in using one of our solid organ bioreactors to regenerate and transplant a whole lung in a rat. In addition to Dr. Ott, we are collaborating with several other research groups in the U.S. and Europe on lung regeneration. Two collaborators of ours, one at a major U.S. pediatric hospital and one at a major European teaching hospital, have used our bioreactors in research on the regeneration of an esophagus. Another collaborator of ours, Dr. Robert Simari of the Mayo Clinic, has used one of our bioreactors in his research on the regeneration and transplant of human heart valves. In addition to Dr. Simari’s work on heart valve regeneration, we are collaborating with three additional research groups in the U.S. and in Europe on heart regeneration.

The first six airway transplant surgeries took place in Spain, Sweden and Russia under compassionate-use regulations on patients who had exhausted alternative treatment options. The seventh airway transplant surgery took place in the U.S. at Children’s Hospital of Illinois in Peoria. The eighth surgery took place in Sweden.

We intend to apply to the FDA for a Biologics License Application approval to market the InBreath System in the U.S. The initial indication for which we will seek FDA approval will be to repair the airway of a patient whose natural trachea has been surgically removed due to trachea cancer or other source of severe damage to the trachea. Because the number of patients treatable in the U.S. each year is well under 200,000 we expect to receive orphan drug designation from the FDA. Orphan drug designation would provide market exclusivity in

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the U.S. for seven years. This exclusivity is in addition to any exclusivity we may obtain due to our patents. In addition, orphan designation waives the BLA application fee of $672,000.00.

Based on advice from several regulatory consultants with considerable experience of the BLA pathway we expect to receive FDA approval to market the InBreath System in the U.S. by the end of 2017. It is possible we will be able to market the InBreath System in the EU before we can market it in the U.S. In making these estimates we note, for example, that both the orphan drug pathway and ‘Fast track’ review with accelerated review times are available for products intended for the treatment of a serious or life-threatening condition and that demonstrate the potential to address unmet medical needs for such a condition. We believe that both of these criteria apply to the InBreath System. We may also qualify for “breakthrough” status at the FDA as the InBreath System may be a substantial improvement vs. standard of care for trachea cancer patients as the current survival rate for trachea cancer is very low. The rules for what qualifies as “breakthrough” are not yet well established. These assumptions are further discussed under the section called risk factors.

In June 2012 we began a clinical trial of trachea transplants for patients with either trachea cancer or trachea damage in Russia. The first two patients have already been treated and have both passed the one year survival point. We expect at least three more patients to be treated in the Russian clinical trial during 2013. The Russian clinical trial is funded by a $5 million grant from the Russian government to the Krasnodar Regional Hospital, one of Russia’s leading transplant centers. In addition, the EU has approved a separate $5 million grant with Dr. Macchiarini as principal investigator to fund two clinical trials in trachea transplant using our products. We expect these two EU trials to begin in 2014. We intend to combine the Russian and EU clinical data with U.S. clinical data in a single clinical trial to support the approval to market the InBreath System in the U.S. and overseas.

Industry Overview

The first human organ transplant was a kidney transplant performed in 1954. The donor of the kidney was the identical twin of the recipient and therefore there was no immune rejection of the organ. The recipient lived for eight years following the transplant and the surgeon who performed the transplant, Dr. Joseph Murray, went on to win the Nobel Prize for this work. The recipient of the first heart transplant, performed in 1967 by Dr. Christiaan Barnard, lived only 18 days. The patient did not die because the new heart failed, but because of pneumonia that the patient acquired due to the patient’s immune system being compromised by the anti-rejection drugs that the patient had to take. These two cases illustrate both the promise and the challenges of organ transplantation: donor organs can greatly extend life, but there is a critical shortage of donors and, unless the donor is the identical twin of the recipient, the recipient’s body will always reject the donor organ. In order to combat this rejection, the patient must take lifelong anti-rejection drugs which compromise the immune system and greatly increase the risk of the patient dying from infections.

In the 1960s, anti-rejection drugs were very poor and hence very few organ transplants took place. In the 1970s, better anti-rejection drugs, particularly cyclosporine, were developed and by the late 1970s many heart transplant patients were living up to five years with their donor hearts. In 1983, the FDA approved cyclosporine for use in organ transplantation, and the first lung transplant patient survived more than six years. Although the improved anti-rejection drugs increased the life expectancy for patients receiving organ transplants, they came with harmful side effects that shortened the recipient’s natural life span. In addition to the side effects, the anti-rejection drugs are also very expensive and can cost $20,000 to $30,000 per year and must be taken for as long as the patient lives. Despite the side effects and costs, organ transplants have become common enough that the shortage of donors is now the key constraint to organ transplants. To increase the number of organ transplants the U.S. government made a huge effort to increase organ donation. This included Congress passing seven separate pieces of legislation, Medicare paying for donor transplants, several Surgeons General making personal appeals for more organ donors and the U.S. Department of Health and Human Services making the Emmy award-winning documentary No Greater Love on the benefits of organ donation. Despite all these efforts, waiting lists for organ transplants continued to grow and by 2011 there were over 100,000 Americans waiting for a donor organ.

In the late 1980s, the field of regenerative medicine emerged as scientists began to apply principles of engineering and cell biology to develop techniques that could restore, maintain or improve body function. Regenerative medicine now includes products that use cells to repair damaged organs and to grow organs

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outside the body for transplant into the patient. Early successes in regenerative medicine included the skin grafting products Apligraf and Dermagraft, which were approved by the FDA in 1998 and 2001, respectively. Apligraf has since been used to treat over 200,000 patients. However, the regeneration of more complex three-dimensional structures like the trachea proved much harder than two-dimensional structures like the skin. Additional progress came with using regenerated tissue grafts to increase urinary bladder capacity and with regenerating blood vessels for grafting between veins and arteries.

In 2008, a milestone was reached when the two fields of organ transplant and regenerative medicine were combined with the world’s first transplant of a regenerated airway. Even though the airway scaffold came from a donor, because the patient’s own bone marrow cells were used to seed the scaffold after the cells from the donor had been removed, the patient did not require anti-rejection drugs. Other than the transplant of organs between genetically identical twins, such as the first kidney described above, we believe this regenerated airway transplant was the world’s first organ transplant that has not required anti-rejection drugs. In 2011, another milestone was reached with the world’s first transplant of a regenerated airway using a synthetic scaffold. In 2013, additional milestones were reached with the first regenerated trachea transplant in the U.S. and the first regenerated trachea transplant using a synthetic scaffold in a child. The patients getting these transplants have also not needed to take anti-rejection drugs, and because the scaffolds were made in a laboratory, the patients did not have to wait for a suitable donor organ to become available. These breakthroughs open the possibility that the waiting lists for organ transplants can be reduced or even eliminated.

Overview of the Trachea Transplant Market

Trachea cancer is a devastating and almost always fatal disease. Current treatments such as radiation therapy, chemotherapy and surgery have poor outcomes, resulting in median survival of only 10 months and a five-year survival rate of only 15%. Trachea cancer is one of the most fatal of all cancers with 5-year survival rates far below those of breast cancer, prostate cancer or colon cancer. Surgically removing a tracheal tumor is often the best way to treat tracheal cancer. However, surgery generally cannot be performed if the tumor is more than 2cm (about ¾ of an inch) in diameter because the remaining tissue cannot be stretched enough to bridge the gap left by removing the tumor. Because it is hard to detect trachea cancer in its early stages, many patients are only diagnosed when the tumor is already too large to be surgically removed. In these cases the patients receive palliative treatment only and typically survive less than a year. These patients are the vast majority of trachea cancer patients and we believe that the InBreath Airway Transplant System could enable surgeons to cure nearly all primary trachea cancers.

According to an article published in The Annals of Surgical Oncology in 2009 , the incidence of trachea cancer is approximately one per one million of population, reflecting an addressable market of approximately 900 trachea cancer patients per year in the developed world. In addition, the incidence of bronchial cancers is estimated in published articles to range from 0.1% to 2% of lung cancers. We believe we have been conservative in estimating the number of bronchial cancers at 0.2% of lung cancers reflecting an addressable market of approximately 1,500 bronchial cancer patients per year in the developed world. Therefore, we estimate the total addressable market for trachea and bronchus cancer combined is approximately 2,400 patients per year in the developed world. In addition to trachea cancer, certain types of trachea damage can be treated by transplanting a trachea. In particular, patients may receive a tracheotomy, or surgically created hole in their throat, to allow them to breathe. When the tracheotomies are in place for more than a few days, patients are at increased risk of dying from pneumonia caused by aspiration of foreign material into the lungs. We estimate that there are approximately 3,900 trachea damage patients per year worldwide. In addition, there are approximately 250 patients in the developed world who are born without a trachea, a condition called tracheal agenesis, who may be treatable with a trachea transplant.

Combining patients with trachea and bronchial cancer, trachea trauma and tracheal agenesis, we estimate the total addressable patient population for airway transplants using our products is approximately 6,500 per year. While we cannot predict what the total potential market will be when and if we obtain regulatory approval to market our trachea products, based solely on there being at least 6,500 patients per year at the time of such approval, we estimate the total potential market for airway transplants that use our products could exceed $600 million per year if we were able to charge at least $100,000 per procedure for the InBreath System.

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While these estimates capture the number of new patients annually that are candidates for transplants using our products, they exclude what we believe to be a much larger pool of existing potential patients.

Patients with trachea cancer typically are treated with radiation therapy, chemotherapy or a combination of both. There are a number of common significant side effects of radiation therapy and chemotherapy, including pain, fatigue, hair loss and kidney and bladder problems. Such therapies are also expensive, with chemotherapy alone typically costing $24,000 per patient annually. Even with these therapies median survival is only 10 months.

While surgery is a preferred treatment option for trachea cancer, it is rarely performed because most trachea cancers are not diagnosed until it is too late for surgery to be a viable option. A trachea or bronchus transplant has also not been a viable option to date due to the difficulties of finding an anatomical match between the donor and the patient. Even if a donor trachea were available, the patient would require anti-rejection drugs for the remainder of his or her life to prevent rejection of the donor trachea. This therapy is expensive, typically costing $20,000 to $30,000 per patient annually. There is also a risk to the patient as anti-rejection drugs suppress the immune system causing even a mild infection to become potentially life threatening.

Previous attempts to implant a tracheal prosthetic have been unsuccessful in improving long-term survival as they have been unable to allow the body to create a functional lining of the trachea which is essential to the clearance of mucus. Without the clearance of mucus, patients have poor prognosis and typically die from pneumonia or respiratory failure shortly after transplant.

Patients that contract aspiration pneumonia caused by tracheotomies are treated with antibiotics that often fail, leading to the death of the patient. Trachea transplant is almost never used to treat these patients today due to the lack of suitable donor tracheas.

Nearly all patients that are born without a trachea die within a few minutes of birth due to lack of oxygen. On rare occasions a hole forms between the patient’s esophagus and lungs that can allow a surgeon to insert a breathing tube to connect the lungs with the mouth. However, we know of no patient born with tracheal agenesis who has survived more than six years.

Our Solution

We believe the use of the medical device products we are currently developing, together with the patient’s own cells, will provide a system for surgeons that is a major advance over the current therapeutic options for treating trachea cancer and trachea trauma and may be applicable to other medical conditions requiring organ transplants. We believe our products are the first to enable the application of regenerative medicine techniques to the production and transplant of complex, three-dimensional organs like the trachea. With continued development, we believe that our technologies will be applicable to the repair or transplant of other important human organs such as the lungs, gastrointestinal tract, heart valves, and heart. Our bioreactor technology was used in both the world’s first transplant of a regenerated airway in 2008 and in the world’s first transplant of a synthetic regenerated airway in 2011. The complete InBreath System combining our scaffolds with our bioreactors was used for the first time in April 2013.

We believe our products will overcome the major challenges in trachea and other organ transplantation. Unlike traditional organ transplants, our products will eliminate the need for a donor because the scaffold will be manufactured in a factory. In addition, for hollow organs, such as the trachea, our technology enables the production of a transplant that precisely matches the patient’s anatomy. Because the surgeon uses the patient’s own bone marrow cells to seed the scaffold, our technology also eliminates the risk and expense of lifelong anti-rejection drug therapy. In addition, patients with trachea cancer treated using our products have not required either chemotherapy or radiation therapy after the transplant, thus eliminating the significant side effects and expense of such therapies. Because these substantial costs can be reduced or even eliminated with our technology, we believe our products can both help save lives and reduce overall healthcare costs.

Further, human embryonic stem cells have not been used in any of the procedures involving our trachea transplant products. This eliminates both the medical risks and ethical controversy associated with regenerative medicine approaches using human embryonic stem cells and other controversial sources of cells.

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We believe the use of our products together with the patient’s own bone marrow cells solves both the major challenges facing organ transplant: a synthetic scaffold avoids the need to wait for a donor and the use of the patient’s own cells avoids the risk and costs of anti-rejection drug therapy. The first application of our products is in treating trachea cancer but we believe the technology can be developed to apply to other important human organ transplants as well.

Our Strategy

Our objective is to be the leading regenerative medicine company focused on helping save human lives. Our business strategy to accomplish this objective includes:

Target life-threatening medical conditions.   We are focused on creating products to help surgeons treat serious conditions like trachea cancer, and diseases requiring GI tract, heart or lung transplant. We are not targeting relatively low-severity conditions that have reasonable alternative treatment options like damage to the skin, bones, muscles, ears or nose. By targeting life-threatening conditions, we believe it is easier to get patient informed consent for treatment, hospital ethics committee or Institutional Review Board approval and government regulatory authority approval as the patients often have poor or no treatment alternatives. We believe it will also be easier for our customers to get reimbursement for treatments for life-threatening conditions that have poor and/or more expensive alternative treatments.

Develop products that have a relatively short time to market.   Since the number of patients with trachea cancer is relatively small, we expect the number of patients that we would likely need to enroll in a clinical trial would be relatively small. A small number of patients implies a relatively fast and inexpensive clinical trial. In addition, since survival is likely to be a key endpoint in any trachea transplant trial and median survival in trachea cancer is only 10 months we expect we would be able to conduct a clinical trial in a relatively short period of time compared to clinical trials in indications with higher survival rates and longer survival periods. We intend to work closely with regulatory agencies and clinical experts to design and size the clinical studies appropriately based on the specific conditions our products are intended to treat.

Use trachea transplant as a platform to address other organs.   We believe our experience in developing proprietary scaffolds and bioreactors for trachea transplant gives us substantial expertise and intellectual property for developing products addressing diseases impacting other organs like the lungs, gastrointestinal tract, heart valves, and heart. We intend to use such expertise and intellectual property to develop medical products to help treat other serious medical conditions requiring organ transplants.

Supply the complete bioreactor and scaffold system.   Our technology includes the bioreactor and scaffold which are used by the surgeon to create the synthetic organ. We believe there is considerable value in supplying the complete bioreactor and scaffold system.

Collaborate with leading surgeons and institutions.   We have and will continue to collaborate with leading surgeons and institutions. For example, we have collaborated with Professor Macchiarini of the Karolinska Institutet to improve our bioreactors and to create our scaffolds for use in trachea transplant; we have collaborated with Dr. Harald Ott of Massachusetts General Hospital to develop our lung bioreactor system, and we have collaborated with Dr. Robert Simari of the Mayo Clinic to develop our heart valve bioreactor. It is these collaborators who have developed the cell seeding and surgical techniques for use with our products. We believe the use of our products by leading surgeons and institutions will increase the likelihood that other surgeons and institutions will use our products.

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Our Products

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InBreath Airway Transplant System

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The InBreath System in use during the first U.S. surgery in April 2013. The scaffold is shown after seeding with the patient’s bone marrow cells immediately prior to transfer to the operating room.

The InBreath Airway Transplant System is intended to be used to restore the structure and/or function of the trachea or tracheaobronchial tree subsequent to resections of tracheal or tracheobronchial tumors or in cases where the trachea or tracheobronchial tree has been damaged to such an extent that only palliative care is available as a treatment option.

The InBreath System consists of two key components: a scaffold and a bioreactor.

InBreath Scaffold Component

The InBreath Scaffold has a physical shape and strength similar to the natural trachea. This allows it to resist the forces of compression caused by the muscles, skin, bones and other organs of the neck that surround the trachea and also to resist collapse due to the partial vacuum caused by breathing air into the lungs through the trachea. In addition, the scaffold is porous which allows cells to penetrate the scaffold during the seeding process prior to implant and also allows blood vessels from the body to grow into the scaffold once it is in the body. The scaffold used for the first regenerated trachea transplant in 2008 was a donated human trachea with its cells removed before being seeded with bone marrow cells taken from the patient. All subsequent trachea transplants using our products have utilized synthetic scaffolds. Because the synthetic scaffolds are manufactured, they can be made to the exact dimensions of the patient and in large quantities. The synthetic scaffolds used in surgeries prior to 2013 have been made by third parties including NFS as well as Dr. Alex Seifalian and other scientists at University College London. The scaffold used in the first surgery using a synthetic scaffold was made in collaboration with University College London and Dr. Macchiarini. The NFS

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scaffolds were made in collaboration with our company and Dr. Macchiarini. In order to improve the scaffolds, we have collaborated with Professor Macchiarini and others to develop our own scaffold product and we manufactured the scaffolds used in the surgeries performed in April and July 2013. Our scaffolds can be made from a variety of plastic polymers but are typically made from polyethelyne terephthalate, or PET, which is the same polymer used in the well-known brand of implantable materials known by the trade name Dacron. PET has a long history of safe use in long-term human implants. We intend to continue providing our proprietary scaffolds to surgeons for use in future transplants. We believe that our scaffolds are superior in quality compared to those used in surgeries prior to 2013. Our scaffolds have several novel features including the sandwiching of stiff rings between layers of porous fabric to simulate the natural rigidity and flexibility of the natural trachea.

InBreath Bioreactors

Our InBreath bioreactor is a device that can be used by a surgeon to seed cells onto a scaffold as part of the manufacturing process of the InBreath Airway Transplant System. The InBreath bioreactor enables the surgeon to:

seed the patient’s cells on the scaffold under sterile conditions;
automatically rotate the scaffold to allow good cell distribution into the pores of the scaffold; and
remotely monitor the scaffold during the course of the two to three days incubation period before the transplant.

Our InBreath bioreactor has novel features such as allowing for pumping cell culture media through the inside of the scaffold without the need for an external pump and tubes. We believe our InBreath hollow organ bioreactor is the world’s first bioreactor that has been used to perform a human transplant of a regenerated organ.

Solid Organ Bioreactors

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Automated Solid Organ Bioreactor

A solid organ bioreactor shares many of the features of a hollow organ bioreactor such as the ability to seed cells on an organ scaffold and keep them sterile and healthy during the growth phase prior to transplant. However, for solid organs like the heart and lungs, the bioreactor must also supply pulsatile blood flow and ventilation to mimic the natural action of the heart and lungs. In addition, the physiology of the heart and lung is considerably more complex than that of the trachea and so the measuring, monitoring and control equipment needed is considerably more advanced. During the first half of 2010, one of our physician collaborators, Dr. Harald Ott at Massachusetts General Hospital, succeeded in regenerating a lung that was subsequently transplanted into the body of a rat showing near normal lung function. In collaboration with Dr. Ott and Massachusetts General Hospital, we designed and developed a novel bioreactor that was used to grow the rat lung used in this procedure. The work was published in Nature Medicine in July 2010.

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We have collaborated with Dr. Ott since 2008 and continue to develop organ bioreactor technologies for his use. The current generation bioreactor, pictured above, is considerably more advanced as it is capable of controlled decellularization and recellularization of an organ, including an organ as large as a human lung. We intend to continue developing bioreactors in collaboration with Dr. Ott and other leading researchers with the goal of eventually using our products to perform a first-in-human transplant of a regenerated lung.

In addition to our human lung bioreactor we also make a similar system for the human heart. This system was also developed in collaboration with Dr. Ott and others. We are also collaborating with leading clinical researchers to develop bioreactors for esophagus, heart valve, liver and kidney regeneration. The heart valve bioreactor is still in development. It is being developed in conjunction with Dr. Robert Simari at the Mayo Clinic. The other collaborations are currently confidential, but are all with physicians at well-respected academic medical centers. None of these technologies has yet to be extensively tested in animals.

Clinical Experience

World’s First Human Transplant of a Regenerated Airway

In 2008, our InBreath airway bioreactor technology was used to perform the world’s first human transplant of a regenerated airway. The surgery was conducted by Dr. Macchiarini and his team of surgeons in Barcelona, Spain. The patient had suffered a collapse of her airway following a severe tuberculosis infection. To create the regenerated airway, a donor trachea was obtained and stripped of its cells, and then the patient’s own bone marrow cells were used to seed the donor trachea and prepare it for implantation. Following such regeneration, the regenerated airway was then implanted into the patient. This patient recently passed the five-year survival point. In addition to improving her breathing, because the cells used in the transplant were her own cells taken from her own bone marrow, she has not had to take anti-rejection drugs after the surgery. This surgery was published in The Lancet in November 2008.

World’s First Successful Transplantation of a Synthetic Tissue Engineered Trachea

In June 2011, our InBreath bioreactor was used for the world’s first successful transplantation of a synthetic tissue engineered trachea. For the first time in history, a patient was given a new trachea made from a synthetic scaffold seeded with his own cells and grown in our bioreactor. The operation was performed at the Karolinska University Hospital in Stockholm, Sweden by Dr. Paolo Macchiarini and his team of surgeons. The patient had been suffering from late-stage trachea cancer, which before the surgery would have been inoperable. He was given only a few weeks to live and as such the transplant surgery using our product was a last-resort measure to save the patient’s life. The patient required a tracheo-bronchial scaffold transplant, whereby the scaffold mimics the branched shape of the airway. To create the new synthetic trachea, Dr. Alex Seifalian and other scientists at University College London developed a plastic scaffold shaped like the patient’s natural airway and Dr. Macchiarini seeded it with the patient’s own bone marrow cells. This seeding process prepared the synthetic trachea for implantation and thereafter the regenerated synthetic trachea was implanted into the patient. Because the cells used to regenerate the trachea were the patient’s own, there has been no rejection of the transplant, and, like the first patient described above, this patient is not taking anti-rejection drugs. This patient recently passed the two-year survival point. This surgery was published in The Lancet on November 24, 2011.

World’s Second Successful Transplantation of a Synthetic Tissue Engineered Trachea

In November 2011, our InBreath bioreactor was again used by Dr. Macchiarini to seed the cells on a synthetic scaffold to treat a patient who was suffering from late-stage trachea cancer and required a tracheo-bronchial transplant. The operation was performed at the Karolinska University Hospital by Dr. Macchiarini and his team of surgeons. The procedure was similar to the world’s first successful transplantation of a synthetic tissue engineered trachea performed in June 2011, with the exception that the plastic scaffolding material was changed to a fiber construction rather than a porous solid construction. The fibrous scaffold seeded in our bioreactor for this November 2011 procedure was manufactured by NFS and was made in a different laboratory than the one made for the June 2011 patient. The patient recovered well from the transplant surgery and was discharged home from the hospital. Approximately four months after the surgery, the patient passed away from pneumonia secondary to a tracheal tumor. There is no indication that our bioreactor or the

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third-party scaffold played any role in his death. This patient, like the June 2011 patient, had undergone extensive radiation and chemotherapy treatment prior to the transplant, and his tumor was not responsive to these forms of treatment.

June 2012 Russian Transplants

In June 2012, our InBreath bioreactors were used for the world’s first two successful laryngo-trachea transplants, using synthetic laryngo-trachea scaffolds seeded with cells taken from the patients’ bone marrow. The surgeries took place at the Krasnodar Regional Hospital in Krasnodar, Russia and were performed by Professors Porhanov and Macchiarini and their team. These two surgeries differed from those for the June and November 2011 procedures described above in that the patients in those prior surgeries both had late stage trachea cancer and both required a tracheo-bronchial scaffold. These Russian patients each had trachea trauma caused by automobile accidents. Both of the Russian patients required laryngo-trachea transplants, whereby the scaffold mimics the shape of the windpipe from the larynx to the point where the trachea branches into the two bronchi which lead to the lungs. Both patients had difficulties breathing and talking and had suffered repeated infections prior to the surgeries. The scaffolds in these two cases were fibrous scaffolds manufactured by NFS and similar to the one used in the November 2011 surgery, but were made with a different fiber formulation. Both patients have recently passed the one-year survival point.

August 2012 and July 2013 Transplants

In August 2012 a sixth patient received a trachea transplant created using our InBreath bioreactor. The surgery took place at the Karolinksa Hospital and was performed by Dr. Macchiarini and his team of surgeons. The patient was in critical condition and the trachea transplant was performed in an emergency procedure in an attempt to save the patient’s life. This patient recently passed the 10 month survival point. In July this year, this patient had the original scaffold, which was not manufactured by us, removed and a new scaffold manufactured by us implanted to replace the explanted one. This was done due to the partial collapse of the previous scaffold. This eighth surgery was performed in Sweden at the Karolinksa Hospital and was performed by Dr. Macchiarini and his team of surgeons.

First Successful U.S. Transplantation of a Synthetic Tissue Engineered Trachea; First Successful Pediatric Transplantation; First Use of Synthetic Tissue Engineered Trachea Manufactured by HART

On April 9 2013, our InBreath System was used in the first successful transplant of a regenerated trachea in the United States. The recipient of the implant, a two-year-old girl, initially recovered well but approximately two months after the trachea transplant surgery the patient underwent a second surgery to correct a defect in her esophagus. On July 6, approximately one month after the second surgery and three months after the initial surgery the patient died from complications of the second surgery. Dr. Macchiarini, who led the team performing the trachea surgery, noted that the implanted trachea was not the cause of the patient’s death, pointing out that the girl's native tissue was very fragile.

The surgery was also the world’s first successful pediatric regenerated trachea transplant using a synthetic scaffold. The patient was born on August 22, 2010 in Seoul, South Korea with tracheal agenesis (lack of a trachea), and was only able to breathe through a tube inserted in her esophagus that connected to her lungs. Tracheal agenesis is 100 percent fatal, and children born with the condition typically die shortly after birth. The patient had lived in the intensive care unit for two and a half years at Seoul National Hospital before being transported to Illinois for the surgery. This was the first regenerated trachea transplant surgery using a scaffold manufactured by us. Other than the use of a scaffold manufactured by us the procedure was similar to the other surgeries described above. The procedure was performed by a team led by Dr. Macchiarini and Drs. Mark J. Holterman and Richard Pearl both of Children’s Hospital of Illinois. The surgery was approved by the FDA under an Investigational New Drug application made by Dr. Holterman.

All these patients have been treated under compassionate-use protocols meaning their prognosis was very poor. Typically, their bodies are very weak as a result of extensive treatments that often include radiation, chemotherapy and prior surgeries. We believe that patients that undergo such extensive treatments are inherently susceptible to serious medical complications following the transplants. These transplant surgeries are typically the last-resort measure to save the patient’s life. We expect that some transplant patients are likely to suffer serious complications or death following the transplants due to issues that are not directly related to the use of our products.

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We expect at least four more patients to be treated with the InBreath System in 2013.

Clinical Trials

Overview

In order to market the InBreath System widely, we will need to successfully complete clinical trials. The first indication for which we intend to seek approval is to repair or replace the airway in a patient who has had a cancerous trachea removed or other severe damage to the trachea. Because trachea and bronchus cancers are relatively rare diseases, affecting only approximately 2,400 patients per year in the developed world but are quickly fatal, (e.g., median survival in trachea cancer is only 10 months) we anticipate that our clinical trials will involve relatively few patients and will have a relatively short follow up period. If, in the U.S., the regulatory pathway is the biologics pathway, then we will seek approval under the Orphan Drug pathway. The Orphan Drug pathway can be used if the disease or condition for which the regenerated trachea is intended affects fewer than 200,000 people in the U.S. This pathway is advantageous because, although the safety and efficacy standards for orphan drug products are the same as for all biologics, approval under this pathway could grant the company a seven year exclusivity on marketing the product for that indication in the U.S. As regenerated trachea products are implantable products, if they were classified as medical devices in the EU, we would need to conduct related clinical studies, unless we can justify relying on already-existing clinical data. If, in the EU, the regenerated trachea products are classified as medicinal products, it would be possible to seek orphan medicinal product classification if we can demonstrate that the products are intended to treat a condition affecting no more than five per 10,000 persons in the EU, or that they are intended for treating a serious or debilitating disease and it is unlikely that without incentives marketing the products would generate sufficient return to justify the necessary related investment. If the regenerated trachea products were classified as orphan medicinal products, they could be entitled to market exclusivity for ten years. We believe we meet the standard to be classified as an orphan medicinal product in the EU.

Russian and EU Clinical Trials

The two Russian transplants, both performed in June 2012, began a clinical trial of trachea transplants for patients with either trachea cancer or trachea damage. This clinical trial is a single arm, open-label study. This means that there is no control group of patients that are being used to compare the treatment to standard of care. The outcome of the trial is being measured principally on the basis of survival. The first two patients treated have already reached the one-year survival point. Six month follow-up on these two patients has been presented at the European Society of Thoracic Surgeons conference. In summary, the patients are both alive, mobile, with fluent breathing and with no signs of external infection. Proliferating epithelial tissue was seen on the inside of the scaffold. Both patients developed granulation tissue at the anastomoses (i.e., at the joins between the natural trachea and the scaffold) which was treated with mitomycin therapy. At approximately four months post-surgery both patients developed critical scaffold malformations which were treated using stents. The authors concluded that “The first transplantation of nanocomposite tracheao-laryngeal complex covered with patient own stem cells (a 6-month follow-up period) demonstrated reliable immediate results, but the technology of the nanocomposite scaffold needs to be improved.” The scaffolds used in these two patients were not made by us but were made by a third party. We developed our own scaffold technology in part in order to improve the quality of the scaffolds. We believe that the scaffolds that we made that was used in the first U.S. surgery in April 2013 and July 2013 surgery were a significant improvement over the scaffolds used in the Russian patients.

We anticipate that at least three additional patients will be treated in this clinical trial during 2013.

The Russian clinical trial is funded by a $5 million grant from the Russian government to the Krasnodar Regional Hospital, one of Russia’s leading transplant centers.

The EU has also approved a separate $5 million grant, with Dr. Macchiarini as the principal investigator, to fund two clinical trials in trachea transplant, using our products. We expect the first of these two EU trials to begin in 2014.

We intend to combine the Russian and EU clinical data with U.S. clinical data in a single clinical trial to support the approval to market the InBreath System in the U.S. and overseas.

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Research and Development

Our primary research and development activities are in designing and testing synthetic organ scaffolds and engineering and making electromechanical devices like our 3D organ bioreactors. As of June 30, 2013, we employed 12 full-time engineers and scientists and we also hire other consultants and part-time employees from time to time.

In addition to our in-house engineering and scientific development team, we collaborate with leaders in the field of regenerative medicine who are performing the fundamental research and surgeries in this field to develop and test new products that will advance and improve the procedures being performed. As these procedures become more common, we will work with our collaborators to further enhance our products to make them more efficient and easier to use by surgeons. In addition to Drs. Macchiarini, Holterman, Porhanov and Ott we collaborate with a small number of other leaders in the field of regenerative medicine. Collaboration typically involves us developing new technologies specifically to address issues these researchers and clinicians face. In certain instances, we have entered into agreements that govern the ownership of the technologies developed in connection with these collaborations. These agreements are discussed below in “Intellectual Property and Related Agreements.” We do not have a collaboration agreement with Dr. Ott. Sometimes we are paid for our products directly, sometimes we are partners on grants and sometimes we give away or loan our technologies to the researchers or clinicians in return for feedback to improve the designs and/or license rights to intellectual property. We are not currently party to any other collaboration agreements with the entities or individuals with whom we collaborate. We are named in the $5 million EU grant for which Dr. Macchiarini is the principal investigator. We have and will continue to work with Dr. Macchiarini with respect to the two clinical trials in trachea transplant using our products funded by such EU grant.

In addition to our human lung bioreactor we also make a similar system for the human heart. This system was also developed in collaboration with Dr. Ott and others. We are also collaborating with leading clinical researchers to develop bioreactors for esophagus, heart valve, liver and kidney regeneration. The heart valve bioreactor is still in development. It is being developed in conjunction with Dr. Robert Simari at the Mayo Clinic. The other collaborations are currently confidential, but are all with physicians at well-respected academic medical centers. None of these technologies has yet to be extensively tested in animals.

Manufacturing

For our electromechanical devices like our bioreactors, we perform final assembly and test components we buy from third parties like machine shops, parts distributors, molding facilities and printed circuit board manufacturers. These operations are performed primarily at our Holliston, MA headquarters.

For our scaffolds we use a process called electrospinning to create the fabric part of the scaffold. The rings that mimic the natural rings of the trachea are fabricated separately and the fabric and rings are combined. Electrospinning is a well-known fabrication process invented in 1934. It is useful for cell culture applications as it can create extremely thin fibers (much thinner than a human hair) that can make a fabric with pores approximately the same size as a cell. The electrospinning process parameters can be tuned to create a structure that is very reminiscent of the natural structure of the collagen fibers in a decellularized human trachea. Our scaffolds are made from a polymer that does not dissolve in the human body, in other words our scaffolds are intended to be permanent. We believe permanent scaffolds are a better approach than using resorbable materials as it is hard to control the strength of the scaffold as the polymer resorbs.

Sales and Marketing

We expect that most transplants with our trachea transplant products will be performed at a relatively small number of major hospitals in the U.S., EU and other developed countries. As a result we expect to need only a fairly small field sales force. We expect to price the system commensurate with the medical value created for the patient and the high costs avoided with the use of our products. We expect to be paid by the hospital that buys the products from us. We expect that the hospital would seek reimbursement from payors for the entire transplant procedure, including the use of our products.

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Harvard Bioscience is the exclusive distributor for the research versions of our clinical products. Harvard Bioscience can only sell the products to the research markets in accordance with the terms of our distribution agreement. We retain all rights to manufacture and sell all our products for clinical use.

Intellectual Property and Related Agreements

We actively seek to protect our products and proprietary information by means of U.S. and foreign patents, trademarks and contractual arrangements. Our success will depend in part on our ability to obtain and enforce patents on our products, processes and technologies to preserve our trade secrets and other proprietary information and to avoid infringing on the patents or proprietary rights of others.

We have rights in the patent and the patent applications listed below. The patent or patents that may issue based on the patent applications are scheduled to expire as provided below:

   
Patent/Technology   Jurisdiction   Expiration
Patent application covering aspects of syringe devices and methods for delivering cells to tissues   Canada, Europe, U.S.   2030
Patent application covering aspects of clinical scale bioreactors and tissue engineering   Australia, Canada, Europe,
Japan, Russia, U.S.
  2030
Issued Patent covering aspects of liquid distribution in a rotating bioreactor   Germany   2031
Issued Patent covering aspects of liquid distribution in a rotating bioreactor   Germany   2021
Patent application covering aspects of liquid distribution in a rotating bioreactor   PCT – international stage   2032
Patent application covering aspects of synthetic scaffolds and organ and tissue transplantation   PCT – international stage   2032
Patent application covering aspects of synthetic scaffolds and organ and tissue transplantation   U.S.   2032
Patent applications relating to infrared-based methods for evaluating tissue health including methods for evaluating burns   PCT – international stage   2033
Patent application relating to methods and compositions for producing elastic scaffolds for use in tissue engineering   PCT – international stage   2033
Patent application relating to support configurations for tubular tissue scaffolds, and airway scaffold configurations   U.S.   2033
Patent application relating to support configurations for tubular tissue scaffolds, and airway scaffold configurations   PCT – international stage   2033
Patent application relating to methods and compositions for promoting the structural integrity of scaffolds for tissue engineering   U.S.   2033
Patent application relating to methods and compositions for promoting the structural integrity of scaffolds for tissue engineering   PCT – international stage   2033
Provisional patent applications relating to engineered hybrid organs   U.S.   N/A
Provisional patent application relating to bioreactors with supports to facilitate culturing organs   U.S.   N/A
Provisional patent application relating to bioreactor adaptors for tubular tissue scaffolds   U.S.   N/A

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We also rely on unpatented proprietary technologies in the development and commercialization of our products. We also depend upon the skills, knowledge and experience of our scientific and technical personnel, as well as those of our advisors, consultants and other contractors. To help protect our proprietary know-how that may not be patentable, and our inventions for which patents may be difficult to enforce, we rely on trade secret protection and confidentiality agreements to protect our interests. To this end, we require employees, consultants and advisors to enter into agreements that prohibit the disclosure of confidential information and, where applicable, require disclosure and assignment to us of the ideas, developments, discoveries and inventions that arise from their activities for us. Additionally, these confidentiality agreements require that our employees, consultants and advisors do not bring to us, or use without proper authorization, any third party’s proprietary technology.

Patent Rights Assignment — Dr. Macchiarini

We have entered into a patent rights assignment with Dr. Macchiarini pursuant to which he has assigned to us all of his rights to inventions associated with scaffold design and the clinical protocol used in the world’s first transplant of a synthetic regenerated trachea.

Novel Surgery Agreements

We have entered into novel surgery agreements with each of the State Budget Institution of Public Health Department Regional Clinical Hospital #1 in Krasnodar, Russia, or the Krasnodar Hospital, the employer of Dr. Porhanov, and OSF Healthcare System and Children’s Hospital of Illinois, the employer of Dr. Holterman, pertaining to trachea transplant surgical procedures conducted at such facilities. Such agreements require us to provide our InBreath Bioreactors and/or InBreath Scaffolds for the procedures and the hospitals to provide all other equipment and services. Such agreements also provide that we will own all inventions arising from the use of our InBreath Bioreactor and/or InBreath Scaffolds in connection with such procedures, and each hospital has granted us an option to license all inventions independently developed by the hospital in connection with such procedures.

Exclusive License Agreement and Sponsored Research Agreement — InBreath Bioreactor

We have an exclusive license agreement with Sara Mantero and Maria Adelaide Asnaghi to intellectual property rights relating to our InBreath Bioreactor. Under this agreement, we have worldwide rights to intellectual property (including patents, data, and know-how) relating to the hollow organ bioreactor, related techniques, and improvements thereof. We have exclusive worldwide rights to make, use and sell the hollow organ bioreactor, and the right to grant sublicenses and distribution rights. Under this agreement, we are obligated to pay the licensor royalties at various percentage rates in the low to mid single digits pertaining to the applicable bioreactors we sell. This agreement terminates on the expiration date of the last to expire patent rights that may exist pertaining to inventions of Dr. Mantero or Ms. Asnaghi relating to the hollow organ bioreactor technology or improvements, or August 6, 2016 if on such date no such patent rights exist.

We have entered into a sponsored research agreement with Sara Mantero, Maria Adelaide Asnaghi, and the Department of Bioengineering of the Politecnico Di Milano, or PDM. Under the terms of this agreement, PDM is required to use its facilities and best efforts to conduct a research program relating to the development of bioreactors, clinical applications, and automated seeding processes. We are required to provide engineering support to PDM with respect to bioreactor designs. Intellectual property developed by PDM or its employees, including Dr. Mantero or Ms. Asnaghi, under this sponsored research agreement will be owned by Dr. Mantero or Ms. Asnaghi and covered by our exclusive license agreement described above. In addition, we have an option to an exclusive license for intellectual property relating to new technology that may not be covered by the exclusive license agreement. We will own any inventions and discoveries that we solely develop in connection with the research program and any inventions and discoveries that are jointly developed in connection with the research program will be owned jointly by the parties. The sponsored research agreement will continue until terminated by a party thereto upon 90 days prior written notice.

Sublicense Agreement with Harvard Bioscience

We have entered into a sublicense agreement with Harvard Bioscience pursuant to which Harvard Bioscience has granted us a perpetual, worldwide, royalty-free, exclusive, except as to Harvard Bioscience and its subsidiaries, license to use the mark “Harvard Apparatus” in the name Harvard Apparatus Regenerative

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Technology. The mark “Harvard Apparatus” is used under a license agreement between Harvard Bioscience and Harvard University, and we have agreed to be bound by such license agreement in accordance with our sublicense agreement. We currently have no affiliation with Harvard University.

Government Regulation — Medical Device Products

Our product components are medical devices subject to extensive regulation by the FDA and other U.S. federal and state regulatory bodies and comparable authorities in other countries. To ensure that medical products distributed domestically and internationally are safe and effective for their intended use, the FDA and comparable authorities in other countries have imposed regulations that govern, among other things, the following activities that we or our partners perform and will continue to perform:

product design and development;
product testing;
product manufacturing;
product labeling;
product storage;
premarket clearance, approval or CE marking of products;
advertising and promotion;
product marketing, sales and distribution; and
post-market surveillance reporting, including reporting of death or serious injuries.

Medical Device Excise Tax

Section 4191 of the Internal Revenue Code, enacted by Section 1405 of the Health Care and Education Reconciliation Act of 2010, Public Law 111-152 (124 Stat. 1029 (2010)), in conjunction with the Patient Protection and Affordable Care Act, Public Law 111-148 (124 Stat. 119 (2010)), imposed as of January 1, 2013, an excise tax on the sale of certain medical devices. The excise tax imposed by Section 4191 is 2.3% of the price for which a taxable medical device is sold within the U.S.

The excise tax will apply to future sales of any company medical device listed with the FDA under Section 510(j) of the Federal Food, Drug, and Cosmetic Act and 21 C.F.R. Part 807, unless the device falls within an exemption from the tax, such as the exemption governing direct retail sale of devices to consumers or for foreign sales of these devices. We will need to assess to what extent this excise tax may impact the sales price and distribution agreements under which any of our devices are sold in the U.S. We also expect general and administrative expense to increase due to the medical device excise tax. We will need to submit IRS forms applicable to relevant exemptions, make semi-monthly payments of any collected excise taxes, and make timely (quarterly) reports to the IRS regarding the excise tax.

FDA’s Approval Requirements

Implantable medical devices, such as the InBreath Scaffold component of the InBreath System, generally require clinical trials to obtain premarket approval (PMA) by the FDA. A premarket approval application must be supported by extensive data including, but not limited to, technical, preclinical, clinical trials, manufacturing and labeling to demonstrate to the FDA’s satisfaction the safety and effectiveness of the device for its intended use.

After a premarket approval application is sufficiently complete, the FDA will accept the application and begin an in-depth review of the submitted information. By statute, the FDA has 180 days to review the “accepted application,” although, generally, review of the application can take between one and three years, but it may take significantly longer. During this review period, the FDA may request additional information or clarification of information already provided. Also during the review period, an advisory panel of experts from outside the FDA may be convened to review and evaluate the application and provide recommendations to the FDA as to the approvability of the device. In addition, the FDA will conduct a preapproval inspection of the

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manufacturing facility to ensure compliance with quality system regulations. New premarket approval applications or premarket approval application supplements are required for modifications that affect the safety or effectiveness of the device, including, for example, certain types of modifications to the device’s indication for use, manufacturing process, labeling and design. Premarket approval supplements often require submission of the same type of information as a premarket approval application, except that the supplement is limited to information needed to support any changes from the device covered by the original premarket approval application, and may not require as extensive clinical data or the convening of an advisory panel. None of our products are currently approved under a premarket approval.

Clinical Trials

Clinical trials are almost always required to support a premarket approval application. If the device presents a “significant risk,” as defined by the FDA, to human health, the FDA requires the device sponsor to file an investigational device exemption, or IDE, application with the FDA and obtain IDE approval prior to commencing the human clinical trials. The investigational device exemption application must be supported by appropriate data, such as animal and laboratory testing results, showing that it is safe to test the device in humans and that the testing protocol is scientifically sound. The investigational device exemption application must be approved in advance by the FDA for a specified number of patients, unless the product is deemed a “non-significant risk” device and eligible for more abbreviated investigational device exemption requirements. Clinical trials for a significant risk device may begin once the investigational device exemption application is approved by the FDA and the appropriate institutional review boards at the clinical trial sites. Future clinical trials may require that we obtain an investigational device exemption from the FDA prior to commencing clinical trials and that the trial be conducted under the oversight of an institutional review board at the clinical trial site. Our clinical trials must be conducted in accordance with FDA regulations and federal and state regulations concerning human subject protection, including informed consent and healthcare privacy. A clinical trial may be suspended by the FDA or the investigational review board at any time for various reasons, including a belief that the risks to the study participants outweigh the benefits of participation in the study. Even if a study is completed, the results of our clinical testing may not demonstrate the safety and efficacy of the device, or may be equivocal or otherwise not be sufficient to obtain approval of our product. Similarly, in Europe the clinical study must be approved by the local ethics committee and in some cases, including studies of high-risk devices, by the Ministry of Health in the applicable country.

Pervasive and Continuing FDA Regulation

After a device is placed on the market, numerous regulatory requirements continue to apply. These include:

product listing and establishment registration, which helps facilitate FDA inspections and other regulatory action;
Quality System Regulation, or QSR, which requires manufacturers, including third-party manufacturers, to follow stringent design, testing, control, documentation and other quality assurance procedures during all aspects of the manufacturing process;
labeling regulations and FDA prohibitions against the promotion of products for uncleared, unapproved or off-label use or indication;
clearance of product modifications that could significantly affect safety or efficacy or that would constitute a major change in intended use of one of our cleared devices;
approval of product modifications that affect the safety or effectiveness of one of our approved devices;
medical device reporting regulations, which require that manufacturers comply with FDA requirements to report if their device may have caused or contributed to a death or serious injury, or has malfunctioned in a way that would likely cause or contribute to a death or serious injury if the malfunction of the device or a similar device were to recur;
post-approval restrictions or conditions, including post-approval study commitments;
post-market surveillance regulations, which apply when necessary to protect the public health or to provide additional safety and effectiveness data for the device;

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the FDA’s recall authority, whereby it can ask, or under certain conditions order, device manufacturers to recall from the market a product that is in violation of governing laws and regulations;
regulations pertaining to voluntary recalls; and
notices of corrections or removals.

We and our third-party manufacturers must register with the FDA as medical device manufacturers and must obtain all necessary state permits or licenses to operate our business. As manufacturers, we and our third-party manufacturers are subject to announced and unannounced inspections by the FDA to determine our compliance with quality system regulation and other regulations. We have not yet been inspected by the FDA.

Failure to comply with applicable regulatory requirements can result in enforcement action by the FDA, which may include any of the following sanctions:

untitled letters, warning letters, fines, injunctions, consent decrees and civil penalties;
unanticipated expenditures to address or defend such actions
customer notifications for repair, replacement, refunds;
recall, detention or seizure of our products;
operating restrictions or partial suspension or total shutdown of production;
refusing or delaying our requests for 510(k) clearance or premarket approval of new products or modified products;
operating restrictions;
withdrawing 510(k) clearances on PMA approvals that have already been granted;
refusal to grant export approval for our products; or
criminal prosecution.

Further, we are subject to various federal and state laws concerning health care fraud and abuse, including false claims laws, anti-kickback laws and physician self-referral laws. Violations of these laws can result in criminal and/or civil punishment, including fines, imprisonment and, in the U.S., exclusion from participation in government health care programs. The scope of these laws and related regulations is expanding and their interpretation is evolving. There is very little precedent related to these laws and regulations. Increased funding for enforcement of these laws and regulations has resulted in greater scrutiny of marketing practices in our industry and resulted in several investigations by various government authorities. If a governmental authority were to determine that we do not comply with these laws and regulations, then we and our officers and employees could be subject to criminal and civil sanctions, including exclusion from participation in federal health care reimbursement programs.

Combination Product/Biologic

Government Regulation Combination Products/Biologics

We believe that some of our products, such as the InBreath Airway Transplant System, may be defined as combination products consisting of two or more regulated components, a biologic and a medical device. In the U.S., a combination product usually is assigned by the FDA to one of the agency’s centers, such as the CBER or the CDRH with the chosen center to take the lead in pre-marketing review and approval of the combination product. Other FDA centers also may review the product in regard to matters that are within their expertise. The FDA selects the lead center based on an assessment of the combination product’s “primary mode of action.” Some products also may require approval or clearance from more than one FDA center.

To determine which FDA center or centers will review a combination product submission, companies may submit a request for assignment to the FDA. Those requests may be handled formally or informally. In some cases, jurisdiction may be determined informally based on FDA experience with similar products. However, informal jurisdictional determinations are not binding on the FDA. Companies also may submit a formal

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Request for Designation to the FDA Office of Combination Products. The Office of Combination Products will review the request and make its jurisdictional determination within 60 days of receiving a Request for Designation. We believe that regenerative medicine products containing cells will likely be reviewed by CBER, while the unseeded scaffolds and bioreactor products used to aid in the generation of regenerative medicine products may be reviewed by the CDRH either in consultation with CBER as part of the BLA or separately as a medical device.

Domestic Regulation of Our Products and Business

The testing, manufacturing, and potential labeling, advertising, promotion, distribution, import and marketing of our products are subject to extensive regulation by governmental authorities in the U.S. and in other countries. In the U.S., the FDA, under the Public Health Service Act, the Federal Food, Drug and Cosmetic Act, and its implementing regulations, regulates biologics and medical device products.

The labeling, advertising, promotion, marketing and distribution of biopharmaceuticals, or biologics and medical devices also must be in compliance with the FDA and U.S. Federal Trade Commission, or FTC, requirements which include, among others, standards and regulations for off-label promotion, industry sponsored scientific and educational activities, promotional activities involving the internet, and direct-to-consumer advertising. The FDA and FTC have very broad enforcement authority, and failure to abide by these regulations can result in penalties, including the issuance of a warning letter directing us to correct deviations from regulatory standards and enforcement actions that can include seizures, injunctions and criminal prosecution. Recently, promotional activities for FDA-regulated products of other companies have been the subject of enforcement action brought under healthcare reimbursement laws and consumer protection statutes. In addition, under the federal Lanham Act and similar state laws, competitors and others can initiate litigation relating to advertising claims. In addition, we are required to meet regulatory requirements in countries outside the U.S., which can change rapidly with relatively short notice.

The FDA has broad post-market and regulatory enforcement powers. Manufacturers of biologics and medical devices are subject to unannounced inspections by the FDA to determine compliance with applicable regulations, and these inspections may include the manufacturing facilities of some of our subcontractors. Failure by manufacturers or their suppliers to comply with applicable regulatory requirements can result in enforcement action by the FDA or other regulatory authorities. Potential FDA enforcement actions include:

untitled letters, warning letters, fines, injunctions, consent decrees and civil penalties;
unanticipated expenditures to address or defend such actions;
customer notifications for repair, replacement, refunds;
recall, detention or seizure of our products;
operating restrictions or partial suspension or total shutdown of production;
operating restrictions;
withdrawing PMA approvals that have already been granted;
refusal to grant export approval for our products; or
criminal prosecution.

In addition, other government authorities influence the success of our business, including the availability of adequate reimbursement from third party payors, including government programs such as Medicare and Medicaid. Medicare and Medicaid reimbursement policies can also influence corresponding policies of private insurers and managed care providers, which can further affect our business.

Biologics Regulation

Biological products must satisfy the requirements of the Public Health Services Act and its implementing regulations. In order for a biologic product to be legally marketed in the U.S., the product must have a BLA approved by the FDA.

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The BLA Approval Process

The steps for obtaining FDA approval of a BLA to market a biopharmaceutical, or biologic product in the U.S. include:

completion of preclinical laboratory tests, animal studies and formulation studies under the FDA’s GLP regulations;
submission to the FDA of an IND application, for human clinical testing, which must become effective before human clinical trials may begin and which must include Institutional Review Board, or IRB, approval at each clinical site before the trials may be initiated;
performance of adequate and well-controlled clinical trials in accordance with Good Clinical Practices, or GCP, to establish the safety, purity, and potency of the product for each indication;
submission to the FDA of a BLA, which contains detailed information about the chemistry, manufacturing and controls for the product, reports of the outcomes of the clinical trials, and proposed labeling and packaging for the product;
the FDA’s acceptance of the BLA for filing;
for any biological product containing an active ingredient not previously approved, automatic referral to an appropriate advisory committee for review prior to approval, unless the FDA decides otherwise;
satisfactory review of the contents of the BLA by the FDA, including the satisfactory resolution of any questions raised during the review or by the advisory committee, if applicable;
satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the product is produced to assess compliance with cGMP regulations, to assure that the facilities, methods and controls are adequate to ensure the product’s identity, strength, quality and purity; and
FDA approval of the BLA.

Preclinical studies include laboratory evaluations of product chemistry, toxicity and formulation, as well as animal studies.

An IND will automatically become effective 30 days after receipt by the FDA, unless before that time the FDA raises concerns or questions about issues such as the conduct of the trials as outlined in the IND. In that case, the IND sponsor and the FDA must resolve any outstanding FDA concerns or questions before clinical trials can proceed.

Clinical trials are subject to extensive monitoring, recordkeeping and reporting requirements. Clinical trials must be conducted under the oversight of an IRB for the relevant clinical trial sites and must comply with FDA regulations, including but not limited to those relating to GCP. Adverse events must be reported and investigated timely. To conduct a clinical trial, a company is also required to obtain the patients’ informed consent in form and substance that complies with both FDA requirements and state and federal privacy and human subject protection regulations. The sponsor, the FDA or the IRB could suspend a clinical trial at any time for various reasons, including a belief that the risks to trial subjects outweigh the anticipated benefits. A protocol for each clinical trial and any subsequent protocol amendments must be submitted to the FDA as part of the IND. In addition, an IRB at each site at which the trial is conducted must approve the protocol and any amendments. Foreign studies performed under an IND must meet the same requirements that apply to U.S. studies. The FDA will accept a foreign clinical trial not conducted under an IND only if the trial is well-designed, well-conducted, performed by qualified investigators in accordance with international principles for GCP, and conforms to the ethical principles contained in the Declaration of Helsinki, or with the laws and regulations of the country in which the research was conducted, whichever provides greater protection of the human subjects. The FDA, however, has substantial discretion in deciding whether to accept data from foreign non-IND clinical trials.

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Clinical trials involving biopharmaceutical products are typically conducted in three sequential phases. The phases may overlap or be combined. A fourth, or post-approval, phase may include additional clinical trials. These phases are described generally below. We note, however, that the exact number of study subjects required for each specific intended use, and our intent to combine or “telescope” various study phases together, are both areas where we will actively seek FDA feedback to streamline the clinical evaluation process. Briefly, the phases of clinical development generally include the following:

Phase I.  Phase I clinical trials involve the initial introduction of the product into human subjects to determine the adverse effects associated with increasing doses. Such Phase I studies frequently are highly abbreviated or combined with Phase II studies (as outlined below), when the product involves the patient’s own cells.
Phase II.  Phase II clinical trials usually involve studies in a limited patient population to evaluate the efficacy of the product for specific, targeted indications, to determine dosage tolerance and optimal dosage, and to identify possible adverse effects and safety risks. Products that contain the patient’s own cells frequently are studied for initial safety and effectiveness determinations in combined or “telescoped” Phase I/II clinical studies.
Phase III.  If the product is found to be potentially effective and to have an acceptable safety profile in Phase II (or sometimes Phase I) trials, the clinical trial program will be expanded to further demonstrate clinical efficacy, optimal dosage and safety within an expanded patient population at geographically dispersed clinical trial sites. As noted, the exact number of subjects needed, the duration of clinical follow-up, and the endpoints by which safety and efficacy are demonstrated are based on the condition being treated.
Post-Approval (Phase IV).  Post-approval clinical trials are required of or agreed to by a sponsor as a condition of, or subsequent to marketing approval. Further, if the FDA becomes aware of new safety information about an approved product, it is authorized to require post approval trials of the biological product. These trials are used to gain additional experience from the treatment of patients in the intended therapeutic indication and to document a clinical benefit in the case of biologics approved under accelerated approval regulations. If the FDA approves a product while a company has ongoing clinical trials that were not necessary for approval, a company may be able to use the data from these clinical trials to meet all or part of any Phase IV clinical trial requirement. These clinical trials are often referred to as Phase III/IV post approval clinical trials. Failure to promptly conduct Phase IV clinical trials could result in withdrawal of approval for products approved under accelerated approval regulations.

Clinical testing may not be completed successfully within any specified time period, if at all. The FDA closely monitors the progress of each of the three phases of clinical trials that are conducted under an IND and may, at its discretion, reevaluate, alter, suspend, or terminate the testing based upon the data accumulated to that point and the FDA’s assessment of the risk/benefit ratio to the patient. The FDA or the sponsor may suspend or terminate clinical trials at any time for various reasons, including a finding that the subjects or patients are being exposed to an unacceptable health risk. The FDA can also request that additional pre-clinical studies or clinical trials be conducted as a condition to product approval. Additionally, new government requirements may be established that could delay or prevent regulatory approval of our products under development. Furthermore, IRBs have the authority to suspend clinical trials in their respective institutions at any time for a variety of reasons, including safety issues.

Certain information about clinical trials, including a description of the trial, participation criteria, location of trial sites, and contact information, is required to be sent to the NIH for inclusion in a publicly-assessable database. Sponsors also are subject to certain state laws imposing requirements to make publicly available certain information on clinical trial results. In addition, the FDA Amendments Act of 2007 directs the FDA to issue regulations that will require sponsors to submit to the NIH the results of certain controlled clinical trials, other than Phase I studies.

Assuming successful completion of the required clinical testing, the results of the preclinical studies and of the clinical trials, together with other detailed information, including information on the chemistry,

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manufacture and composition of the product, are submitted to the FDA in the form of a BLA requesting approval to market the product for one or more indications. In most cases, the BLA must be accompanied by a substantial user fee. The FDA will initially review the BLA for completeness before it accepts the BLA for filing. There can be no assurance that the submission will be accepted for filing or that the FDA may not issue a refusal-to-file, or RTF. If a RTF is issued, there is opportunity for dialogue between the sponsor and the FDA in an effort to resolve all concerns. If the BLA submission is accepted for filing, the FDA will begin an in-depth review of the BLA to determine, among other things, whether a product is safe and effective for its intended use and whether the product is being manufactured in accordance with cGMP to assure and preserve the product’s identity, strength, quality and purity. If the biological product contains a new active ingredient not previously approved, the BLA automatically will be referred to an appropriate advisory committee for review prior to approval of the biological product, unless the FDA decides otherwise and specifies such reasons in a complete response letter to the sponsor. The FDA, however, is not bound by the opinion of the advisory committee.

Companies also may seek fast track designation for their products. Fast track products are those that are intended for the treatment of a serious or life-threatening condition and that demonstrate the potential to address unmet medical needs for such a condition. If awarded, the fast track designation applies to the product only for the indication for which the designation was received. Fast track products are eligible for two means of potentially expediting product development and FDA review of BLAs. First, a fast track product may be approved on the basis of either a clinical endpoint or a surrogate endpoint that is reasonably likely to predict clinical benefit. Approvals of this kind may be subject to requirements for appropriate post-approval studies to validate the surrogate endpoint or otherwise confirm the effect on the clinical endpoint, and to certain other conditions. Second, if the FDA determines after review of preliminary clinical data submitted by the sponsor that a fast track product may be effective, it may begin review of portions of a BLA before the sponsor submits the complete BLA, thereby accelerating the date on which review of a portion of the BLA can begin. There can be no assurance that any of our other products will receive designation as fast track products. And even if they are designated as fast track products, we cannot assure you that our products will be reviewed or approved more expeditiously for their fast track indications than would otherwise have been the case or will be approved promptly, or at all. Furthermore, the FDA can revoke fast track status at any time.

In addition, products studied for their safety and effectiveness in treating serious or life-threatening illnesses and that provide meaningful therapeutic benefit over existing treatments may receive accelerated approval and may be approved on the basis of adequate and well-controlled clinical trials establishing that the product has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit or on the basis of an effect on a clinical endpoint other than survival or irreversible morbidity. As a condition of approval, the FDA may require that a sponsor of a product receiving accelerated approval perform adequate and well-controlled post-approval clinical trials to verify and further define the product’s clinical benefit and safety profile. There can be no assurance that any of our products will receive accelerated approval. Even if accelerated approval is granted, the FDA may withdraw such approval if the sponsor fails to conduct the required post-approval clinical trials, or if the post-approval clinical trials fail to confirm the early benefits seen during the accelerated approval process.

Fast track designation and accelerated approval should be distinguished from priority review although products awarded fast track status may also be eligible for priority review. Products regulated by the CBER may receive priority review if they provide significant improvement in the safety or effectiveness of the treatment, diagnosis, or prevention of a serious or life-threatening disease. Products awarded priority review are given abbreviated review goals by the agency. Under the Prescription Drug User Fee Act of 2007, the agency has agreed to the performance goal of reviewing products awarded priority review within six months, whereas products under standard review receive a ten-month target. The review process, however, is often significantly extended by FDA requests for additional information or clarification regarding information already provided in the submission. Priority review is requested at the time the BLA is submitted, and the FDA makes a decision as part of the agency’s review of the application for filing. If the InBreath System is regulated as a biologic through the BLA process, we intend to seek priority review. We cannot guarantee that the FDA will grant the designation and cannot predict if awarded, what impact, if any, it will have on the review time for approval of our product.

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If granted, fast track designation, accelerated approval, and priority review may expedite the approval process, but they do not change the standards for approval.

Before approving a BLA, the FDA will generally inspect the facility or the facilities at which the finished product and its components are manufactured to ensure compliance with cGMP. If the FDA determines the application, manufacturing process or manufacturing facilities are not acceptable, it will either issue “not approvable” letter or an “approvable” letter. A “not approvable” letter means that the FDA refuses to approve the application because the BLA or manufacturing facilities do not satisfy the regulatory criteria for approval. An “approvable” letter means that the FDA considers the BLA and manufacturing facilities to be favorable, but the letter will outline the deficiencies and provide the applicant with an opportunity to submit additional information or data to address the deficiencies. If and when those conditions have been met to the FDA’s satisfaction, the FDA will typically issue an approval letter. Notwithstanding the submission of any requested additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval. Separate approval is required for each proposed indication. If we want to expand the use of an approved product, we will have to design additional clinical trials, submit the trial designs to the FDA for review and complete those trials successfully.

The testing and approval process requires substantial time, effort and financial resources, and each may take several years to complete. Data obtained from clinical activities are not always conclusive, which could delay, limit or prevent regulatory approval. The FDA may not grant approval on a timely basis, or at all. We may encounter difficulties or unanticipated costs in our efforts to secure necessary governmental approvals, which could delay or preclude us from marketing our products. The FDA may limit the indications for use or place other conditions, such as post approval studies, on any approvals that could restrict the commercial application of the products. After approval, some types of changes to the approved product, such as adding new indications, manufacturing changes and additional labeling claims, are subject to further testing requirements and FDA review and approval.

Post-Approval Requirements

After regulatory approval of a product is obtained, companies are required to comply with a number of post-approval requirements relating to manufacturing, labeling, packaging, adverse event reporting, storage, advertising, promotion, distribution and recordkeeping. For example, as a condition of approval of a BLA, the FDA may require post-approval testing and surveillance to monitor the product’s safety or efficacy. In addition, holders of an approved BLA are required to keep extensive records, to report certain adverse reactions and production deviations and problems to the FDA, to provide updated safety and efficacy information and to comply with requirements concerning advertising and promotional labeling for their products. If we fail to comply with the regulatory requirements of the FDA and other applicable U.S. and foreign regulatory authorities, or previously unknown problems with any approved commercial products, manufacturers or manufacturing processes are discovered, we could be subject to administrative or judicially imposed sanctions or other setbacks. Accordingly, manufacturers must continue to expend time, money and effort in the area of production and quality control to maintain compliance with cGMP and other aspects of regulatory compliance.

Specifically, our products could be subject to voluntary recall if we or the FDA determine, for any reason, that our products pose a risk of injury or are otherwise defective. Moreover, the FDA can order a mandatory recall if there is a reasonable probability that our device would cause serious adverse health consequences or death. In addition, the FDA could suspend the marketing of or withdraw a previously approved product from the market upon receipt of newly discovered information regarding the product’s safety or effectiveness.

Orphan Drug Designations

The Orphan Drug Act provides incentives to manufacturers to develop and market drugs and biologics for rare diseases and conditions affecting fewer than 200,000 persons in the U.S. at the time of application for orphan drug designation, or more than 200,000 individuals in the U.S. and for which there is no reasonable expectation that the cost of developing and making a drug or biological product available in the U.S. for this type of disease or condition will be recovered from sales of the product. Orphan product designation must be requested before submitting a new drug application, or NDA, or BLA. After the FDA grants orphan product designation, the identity of the therapeutic agent and its potential orphan use are disclosed publicly by the

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FDA. Orphan product designation does not convey any advantage in or shorten the duration of the regulatory review and approval process. The first developer to receive FDA marketing approval for an orphan biologic is entitled to a seven year exclusive marketing period in the U.S. for that product as well as a waiver of the BLA user fee. The exclusivity prevents FDA approval of another application for the same product for the same indication for a period of seven years, except in limited circumstances where there is a change in formulation in the original product and the second product has been proven to be clinically superior to the first.

International

We plan to seek required regulatory approvals and comply with extensive regulations governing product safety, quality, manufacturing and reimbursement processes in order to market our products in other major foreign markets. The regulation of our products in the EU and in other foreign markets varies significantly from one jurisdiction to another. The classification of the particular products and related approval or CE marking procedures can involve additional product testing and additional administrative review periods. The time required to obtain these foreign approvals or to CE mark our products may be longer or shorter than that required in the U.S., and requirements for approval may differ from the FDA requirements. Regulatory approval in one country does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one country may negatively impact the regulatory process in others. To date, we have not initiated any discussions with any foreign regulatory authorities with respect to seeking regulatory approval of our products.

In the EU, the Directive 93/42/EEC provides the basic definition of a medical device and lays down the technical and procedural obligations which must be followed by the manufacturer of a medical device prior to affixing a CE mark to the product. Products falling within the scope of the Directive 93/42/EEC are subject to a conformity assessment procedure which often includes the intervention of a notified body. Medical devices must comply with the Essential Requirements laid down in Annex I to the Directive. Directive 93/42/EEC requires that manufacturers maintain a Technical File related to their products and to have clinical data supporting the safety and performance of the products during normal conditions of use. Manufacturers must also comply with quality system requirements which can be met by, among other things, demonstration of compliance with the ISO 13485:2003 standard. If the outcome of the conformity assessment conducted by the notified body is positive, the manufacturer will be issued a related CE Certificate of Conformity by its notified body and will be entitled to affix the CE mark to its medical devices after having signed a related Declaration of Conformity.

The marketing authorization of products containing viable human tissues or cells in the EU is governed by Regulation 1394/2007/EC on advanced therapy medicinal products, read in combination with Directive 2001/83/EC of the European parliament and of the Council, commonly known and the Community code on medicinal products. Regulation 1394/2007/EC lays down specific rules concerning the authorization, supervision and pharmacovigilance of medicinal products, cell therapy medicinal products and tissue engineered products. Manufacturers of advanced therapy medicinal products must demonstrate the quality, safety and efficacy of their products to the European Medicines Agency which is required to provide an opinion regarding the application for marketing authorization. The European Commission grants or refuses marketing authorization in light of the opinion delivered by the European Medicines Agency. Regulation 1394/2007/EC also applies to combination products which consist of medical devices and advanced therapy medicinal products. In light of Regulation 1394/2007/EC, a medical device which forms part of a combined advanced therapy medicinal product must meet the Essential Requirements laid down in Annex I to Directive 93/42/EEC. The manufacturer of the combination product must include evidence of such compliance in its marketing authorization application. The application for a marketing authorization for a combined advanced therapy medicinal product must also, where available, include the results of the assessment of the medical device part by a notified body in accordance with Directive 93/42/EEC.

Legislation similar to the Orphan Drug Act has been enacted in other jurisdictions, including the EU. The orphan legislation in the EU is available for therapies addressing conditions that affect five or fewer out of 10,000 persons. The marketing exclusivity period is for ten years, although that period can be reduced to six years if, at the end of the fifth year, available evidence establishes that the product is sufficiently profitable not to justify maintenance of market exclusivity.

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Employees

At June 30, 2013, Harvard Bioscience had 19 employees working in our business, of whom 16 are based in the U.S., one is in Germany and two are in Sweden. Thirteen of these employees are principally engaged in research, development, clinical and regulatory activities. None of our employees are unionized. In general, we consider our relations with our employees to be good.

Properties

On or prior to the Distribution Date, we expect to enter into a sublease of approximately 10,000 square feet of mixed use space of the facility located at 84 October Hill Road, Holliston, Massachusetts from Harvard Bioscience, which will be our corporate headquarters. Our principal facilities incorporate manufacturing, laboratory, development, sales and marketing, and administration functions. We believe our current facilities are adequate for our needs for the foreseeable future.

Competition

We are not aware of any companies whose products are directly competitive with our bioreactor and scaffold system. However, in our key markets we may in the future compete with multiple pharmaceutical, biotechnology, medical device and scientific research instrument companies, including, among others, Aastrom Biosciences, Aldagen, BioTime, Baxter International, Inc., Bose Corporation, Celgene, Cytori Therapeutics, E. I. du Pont de Nemours and Company, Genzyme (acquired by Sanofi-aventis), Harvest Technologies, Mesoblast, Nanofiber Solutions, Organovo, Osiris Therapeutics, Tengion, Tissue Genesis, Inc., Tissue Growth Technologies, Transmedics, United Therapeutics and W.L. Gore and Associates.

Many of our potential competitors have substantially greater financial, technological, research and development, marketing, and personnel resources than we do. We cannot forecast if or when these or other companies may develop competitive products.

We expect that other products will compete with products and potential products based on efficacy, safety, cost, and intellectual property positions. While we believe that these will be the primary competitive factors, other factors include, in certain instances, obtaining marketing exclusivity under the Orphan Drug Act, availability of supply, manufacturing, marketing and sales expertise and capability, and reimbursement coverage.

Legal Proceedings

On December 17, 2012, we received correspondence from legal counsel to Nanofiber Solutions, Inc., or NFS, claiming that in developing our scaffold product and related intellectual property, we may have committed misappropriation, unauthorized use and disclosure of confidential information, and possible infringement of intellectual property rights of NFS. NFS’ legal counsel has also threatened us with legal action, including seeking an injunction, if we are unable to respond in a satisfactory manner to NFS’ claims. Additionally, we have received correspondence from legal counsel to UCLB challenging the validity of the assignment of certain patent applications that have been assigned to us by Dr. Macchiarini. We believe that these claims are without merit, and we will vigorously seek to protect our rights regarding such claims. Until we are able to resolve these respective matters with NFS and UCLB, we believe it is likely that each of NFS and UCLB will continue to pursue the matters against us. Our legal counsel has corresponded with NFS’ and UCLB’s respective counsel since our receipt of the initial correspondence. While we are still investigating the matters, we do not believe that the matters will have a material adverse effect on our business, financial position or results of operations. In addition we have also received correspondence from an academic researcher implying that one of our products may violate an issued patent. We do not believe that our current products violate this patent.

While we are not currently a party to any legal proceedings, from time to time we may be a party to a variety of legal proceedings that arise in the normal course of our business.

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MANAGEMENT
  
Our Directors and Executive Officers

The following table sets forth information as of March 31, 2013, regarding individuals who serve as our directors and/or executive officers.

   
Name   Age   Position(s)
David Green   49   President, Chief Executive Officer and Chairman of the Board of Directors
Thomas McNaughton   53   Chief Financial Officer
John F. Kennedy   64   Director
Thomas Robinson   54   Director
James J. McGorry   57   Director

David Green — President, Chief Executive Officer, and Chairman

Mr. Green has served as our President, Chief Executive Officer, and Chairman of our Board of Directors since May 3, 2012. Mr. Green has also been the President and a member of the Board of Directors of Harvard Bioscience since March 1996 and President and interim CEO since May 2013. Upon completion of the Distribution, Mr. Green will no longer be the President and CEO of Harvard Bioscience but will remain a director. Mr. Green’s previous experiences include working as a strategy consultant with Monitor Company, a strategy consulting company, in Cambridge, Massachusetts and Johannesburg, South Africa from June 1991 until September 1995 and a brand manager for household products with Unilever PLC, a packaged consumer goods company, in London from September 1985 to February 1989. Mr. Green currently sits on the Advisory Board of the Harvard Business School Healthcare Initiative and on the Executive Advisory Board of The University of Massachusetts Lowell Nanomanufacturing Center. Mr. Green graduated from Oxford University with a B.A. Honors degree in physics and holds a M.B.A. degree with distinction from Harvard Business School.

We believe Mr. Green’s qualifications to sit on our Board of Directors include his executive leadership experience, his experience founding the regenerative medicine business at Harvard Bioscience, his significant operating and management expertise and the knowledge and understanding of our company that he has acquired over 16 years of service as the President and director of Harvard Bioscience.

Mr. Green will no longer be employed at Harvard Bioscience following the Distribution. Nevertheless, while Mr. Green will devote substantially all his time to our company’s day to day operations, for a brief period of time following the Distribution, he may provide some transition services on behalf of our company to Harvard Bioscience in accordance with the Transition Services Agreement to be entered into between us and Harvard Bioscience in connection with the Separation.

Thomas McNaughton — Chief Financial Officer

Mr. McNaughton has served as our Chief Financial Officer since May 3, 2012. Mr. McNaughton has also been the Chief Financial Officer of Harvard Bioscience since November 2008. Upon completion of the Distribution, Mr. McNaughton will no longer be the Chief Financial Officer of Harvard Bioscience. From 2007 to 2008, Mr. McNaughton was a consultant providing services primarily to an angel-investing group and a silicon manufacturing start-up. From 2005 to 2007, Mr. McNaughton served as Vice President of Finance and Chief Financial Officer for Tivoli Audio, LLC, a venture capital-backed global manufacturer of premium audio systems. Prior to joining Tivoli Audio, LLC, from 1990 to 2005, Mr. McNaughton served in various managerial positions in the areas of financial reporting, treasury, investor relations, and acquisitions within Cabot Corporation, a global manufacturer of fine particulate products, and served from 2002 to 2005 as Finance Director, Chief Financial Officer of Cabot Supermetals, a $350 million Cabot division that provides high purity tantalum and niobium products to the electronics and semiconductor industries. Mr. McNaughton practiced from 1982 to 1990 as a Certified Public Accountant in the audit services group of Deloitte & Touche, LLP. Mr. McNaughton holds a B.S. in accounting and finance from Babson College.

Mr. McNaughton will no longer be employed at Harvard Bioscience following the Distribution. Nevertheless, while Mr. McNaughton will devote substantially all his time to our company’s day to day operations, for a

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brief period of time following the Distribution, he may provide some transition services on behalf of our company to Harvard Bioscience in accordance with the Transition Services Agreement to be entered into between us and Harvard Bioscience in connection with the Separation.

John F. Kennedy — Director

Mr. Kennedy has served as a member of our Board of Directors since December 3, 2012. From June 2006 until his retirement in October 2008, Mr. Kennedy served as President and Chief Financial Officer of Nova Ventures Corporation, the management company providing executive management services to the operating companies of Nova Holdings LLC, Nova Analytics Corporation and Nova Technologies Corporation. From 2002 to 2006, Mr. Kennedy served as the President and Chief Financial Officer of Nova Analytics Corporation, a worldwide supplier and integrator of analytical instruments. From 1999 to 2002, Mr. Kennedy served as the Senior Vice President, Finance, Chief Financial Officer and Treasurer of RSA Security Inc., an e-business security company. Prior to joining RSA Security, Mr. Kennedy was Chief Financial Officer of Decalog, NV, a developer of enterprise investment management software, from 1998 to 1999. From 1993 to 1998, Mr. Kennedy served as Vice President of Finance, Chief Financial Officer and Treasurer of Natural MicroSystems Corporation, a telecommunications company. Mr. Kennedy, a former CPA, also practiced as a public accountant at KPMG for six years. Mr. Kennedy currently serves on the Boards of Directors of Harvard Bioscience and Datacom Systems, Inc. Mr. Kennedy holds an M.S.B.A. in Accounting from the University of Massachusetts Amherst.

We believe Mr. Kennedy’s qualifications to sit on our Board of Directors include his executive leadership experience, his significant operating, accounting and financial management expertise and the knowledge and understanding of our company and industry that he has acquired over 11 years of service on the Board of Directors of Harvard Bioscience.

Thomas Robinson — Director

Mr. Robinson has served as a member of our Board of Directors since December 3, 2012. Since September 2011, Mr. Robinson has served as a partner with RobinsonButler, an executive search firm. In 2010, Mr. Robinson served as managing director at Russell Reynolds Associates. From 1998 to 2010, Mr. Robinson served as managing partner of the North American medical technology practice, which includes the medical device, hospital supply/distribution and medical software areas, of Spencer Stuart, Inc., a global executive search firm. From 2002 to 2010, Mr. Robinson was a member of Spencer Stuart’s board services practice, which assists corporations to identify and recruit outside directors. From 1998 to 2000, Mr. Robinson headed Spencer Stuart’s North American biotechnology specialty practice. From 1993 to 1997, Mr. Robinson served as president of the emerging markets business at Boston Scientific Corporation, a global medical devices manufacturer. From 1991 to 1993, Mr. Robinson also served as president and chief operating officer of Brunswick Biomedical, a cardiology medical device company. Mr. Robinson currently serves on the Board of Directors of Cynosure, Inc. He received his M.B.A. from Harvard Business School and his B.A. in mathematics and economics from Brown University.

We believe Mr. Robinson’s qualifications to sit on our Board of Directors include his executive leadership experience in, and knowledge of, the medical device and regenerative medicine industries, and his significant expertise in the areas of public company corporate governance and operations.

James J. McGorry — Director

Mr. McGorry has served as a member of our Board of Directors since February 25, 2013. Mr. McGorry is a seasoned life science executive with over twenty-five years of leadership experience in both medical technology and biotechnology businesses. From 2011 to 2012, Mr. McGorry was Executive Vice-President of Accellent, a medical device contract-manufacturing firm. From 1998 to 2010, Mr. McGorry worked at Genzyme Corporation as a Senior Vice President in both BioSurgery and Oncology. At Genzyme Corporation, he was responsible for commercial operations resulting in global expansion, product extensions and profitable growth. From 1985 to 1996, Mr. McGorry worked at American Hospital Supply Corporation, which merged to form Baxter Healthcare. Mr. McGorry received his MBA from Duke University Fuqua School of Business and his B.A. from the United States Military Academy at West Point.

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We believe Mr. McGorry’s qualifications to sit on our Board of Directors include his significant executive leadership, operating and management experience in, and knowledge of, the life sciences, medical technology and biotechnology industries.

The Board of Directors

Our business and affairs are managed under the direction of our Board of Directors. We currently have five directors, three of whom are considered independent under the independence requirements of the NASDAQ Stock Market. Our directors will have discretion to increase or decrease the size of the Board of Directors. Our Board of Directors will be divided into three classes with staggered terms, which means that directors in one of the classes will be elected each for a new three-year term. Class I directors will have an initial term expiring in 2014, Class II directors will have an initial term expiring in 2015 and Class III directors will have an initial term expiring in 2016.

Director Independence

Mr. Kennedy, Mr. Robinson and Mr. McGorry meet NASDAQ’s listing standards for independence. Mr. Green does not meet these standards because he is our employee.

The NASDAQ listing rules require that the Board of Directors be comprised of a majority of independent directors. We intend to rely on the phase-in-periods provided by Rule 4350(a)(5) of the NASDAQ rules and Rule 10A-3(b)(iv)(A) of the Exchange Act, which provide for phase-in compliance where the issuer has not previously been required to file public company reports under Section 13(a) or 15(d) of the Exchange Act. Accordingly, we plan to have a Board of Directors comprised of a majority of independent directors and an audit committee comprised solely of independent directors within one year of our listing.

There are no family relationships among any of the individuals who are expected to serve as members of our Board of Directors and as our executive officers following the Distribution.

Board Committees

Prior to the Distribution, our Board of Directors will have an audit committee, a compensation committee and a nominating and corporate governance committee.

The table below provides committee assignments for each of the committees of our Board of Directors:

     
Name   Audit
Committee
  Compensation Committee   Nominating and Corporate Governance Committee
John F. Kennedy   X*               
Thomas Robinson        X*          
James J. McGorry             X*

* Indicates Committee Chair

Audit Committee

The audit committee will be established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended. We are relying on the phase-in-periods provided by Rule 4350(a)(5) of the NASDAQ Rules and Rule 10A-3(b)(iv)(A) of the Exchange Act. Accordingly, we plan to have an audit committee comprised solely of independent directors as defined by the NASDAQ listing standards within one year of our listing, and at least one director will satisfy the definition of audit committee financial expert as determined by the SEC.

The audit committee will be responsible for reviewing and discussing with management our policies with respect to risk assessment and risk management. The Board of Directors and the audit committee will discuss matters relating to risks that arise or may arise.

Upon completion of the Distribution, the audit committee will consist of John F. Kennedy. Mr. Kennedy is considered independent under the NASDAQ listing standards and an audit committee financial expert under

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SEC rules. Prior to the consummation of the Distribution, our Board of Directors will adopt a written charter under which the audit committee will operate. A copy of the charter, which will satisfy the applicable standards of the SEC and NASDAQ, will be available without charge on the investor relations portion of our web site.

Compensation Committee

Each member of the compensation committee will be independent as defined by the NASDAQ listing standards, subject to the phase-in periods provided by Rule 4350(a)(5) of the NASDAQ Rules. Accordingly, we plan to have a compensation committee comprised solely of independent directors within one year of our listing.

Upon completion of the Distribution, the compensation committee will consist of Thomas Robinson. Mr. Robinson is considered an independent director under the NASDAQ listing standards. Prior to the consummation of the Distribution, our Board of Directors will adopt a written charter under which the compensation committee will operate. A copy of the charter, which will satisfy the applicable standards of the SEC and NASDAQ, will be available without charge on the investor relations portion of our web site.

Nominating and Corporate Governance Committee

Upon completion of the Distribution, the nominating and corporate governance committee will consist of James J. McGorry. Mr. McGorry is considered an independent director under the NASDAQ listing standards. Prior to the Distribution, our Board of Directors will adopt a written charter under which the nominating and corporate governance committee will operate. A copy of the charter, which will satisfy the applicable standards of the SEC and the NASDAQ Stock Market, will be available without charge on the investor relations portion of our web site.

Board Leadership Structure and the Board’s Role in Risk Oversight

Our Board of Directors believes that the combined role of Chairman of the Board and Chief Executive Officer promotes and facilitates information flow between management and the Board of Directors, which is essential to effective governance. Having considered the particular circumstances of our company, including our status as a “controlled company,” the individual attributes of our current directors, including our Chairman of the Board and Chief Executive Officer, the effective manner in which certain of our directors historically have performed their duties as Harvard Bioscience directors, and the critical need for stability and continuity of leadership and decision-making necessary in connection with the Separation, it is our Board of Directors’ belief that, at this time, there is no need to separate the offices of Chairman of the Board and Chief Executive Officer.

Management is responsible for the day-to-day management of risks we face while the Board of Directors, as a whole and through its committees, will oversee risk management. The audit committee is responsible for reviewing and discussing with management our policies with respect to risk assessment and risk management. The Board of Directors and the audit committee will review and discuss, including with management, risks that arise or may arise. For example, the audit committee will discuss financial risk, including with respect to financial reporting and internal controls, with management and our independent registered public accounting firm and the steps management has taken to minimize those risks. Our Board of Directors will also administer its risk oversight function through the required approval by the Board of Directors (or a committee of the Board of Directors) of significant transactions and other material decisions.

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Code of Business Conduct and Ethics

Effective upon the Distribution, our Board of Directors will adopt a written Code of Business Conduct and Ethics applicable to our directors, chief executive officer, chief financial officer and all other officers and employees of our company and our subsidiaries. Copies of the Code of Business Conduct and Ethics will be available without charge on the investor relations portion of our web site upon completion of the Distribution or upon request in writing to Harvard Apparatus Regenerative Technology, Inc., 84 October Hill Rd., Holliston, MA 01746, Attention: Corporate Secretary.

Compensation Committee Interlocks and Insider Participation

None of the members of our compensation committee is an officer or employee of our company. David Green currently serves as a member of the Board of Directors of Harvard Bioscience.

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DIRECTOR AND EXECUTIVE COMPENSATION

Board of Directors’ Compensation

No compensation has been paid to our non-employee directors since our inception. Upon the completion of the Distribution, all of our non-employee directors will receive a non-qualified stock option to purchase 25,000 shares of our common stock vesting one year from the date of grant and granted on the eleventh trading day following the Distribution Date. Each non-employee that is elected to the our Board of Directors following the Distribution is entitled to receive a non-qualified stock option to purchase 25,000 shares of our common stock vesting one year from the date of grant and granted on the fifth business day following his or her initial election to the Board of Directors.

Each non-employee director also receives an annual retainer of $30,000 paid in four equal quarterly installments. Each non-employee director is also entitled to receive a non-qualified stock option to purchase 25,000 shares of our common stock vesting one year from the date of grant and granted on the fifth business day following our annual meeting of stockholders.

Directors who are also our employees will receive no additional compensation for service as a director.

Executive Compensation

As an emerging growth company, we have opted to comply with the executive compensation disclosure rules applicable to “smaller reporting companies” as such term is defined in the rules promulgated under the Securities Act. We have only two executive officers, David Green, our Chief Executive Officer, and Thomas McNaughton, our Chief Financial Officer, who will be our named executive officers. No compensation was paid to our executive officers during the fiscal year ended December 31, 2012. Our officers were paid by Harvard Bioscience and the expense of such compensation was allocated to us in connection with the preparation of our financial statements included in this information statement.

Employment Agreements — Named Executive Officers

Prior to the Distribution, we will enter into employment agreements with our named executive officers that will have a term that commences upon the Distribution. The anticipated material terms of those agreements are summarized below.

David Green

Mr. Green’s employment agreement will have a term of two years, but shall automatically renew for successive two year periods unless either party provides 90 days’ notice that it does not wish to extend the agreement. Mr. Green’s employment agreement provides for an annual base salary in the amount of five hundred four thousand seven hundred dollars ($504,700) which shall be reevaluated on an annual basis by the Board of Directors or the compensation committee. Mr. Green will be eligible to receive cash incentive compensation as determined by the Board of Directors or the compensation committee, and shall also be eligible to participate in all of our employee benefit plans, including without limitation, retirement plans, stock option plans, and medical insurance plans. Mr. Green is also entitled to use a car leased for him by us.

Mr. Green’s employment agreement also provides for payments to be made to Mr. Green in the event of his termination under certain circumstances. If Mr. Green’s employment is terminated by us without “cause” (as such term is defined in Mr. Green’s employment agreement) or by Mr. Green for “good reason” (as such term is defined in Mr. Green’s employment agreement), we are obligated to pay Mr. Green two times the sum of his average annual base salary for the prior three fiscal years or annual salary for the prior fiscal year, whichever is higher, and his average annual cash incentive compensation for the prior three fiscal years or annual cash incentive compensation for the prior fiscal year, whichever is higher. Such payment is conditioned upon Mr. Green’s execution of a general release of claims against us. In addition, all of Mr. Green’s stock options or stock based awards that would otherwise vest within the 24 month period following such termination shall accelerate and become immediately exercisable.

We shall continue to pay health insurance premiums for health insurance coverage for Mr. Green and his immediate family for a period of one year following his termination without cause or for good reason.

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Mr. Green may also be entitled to certain payments in the event of a change in control of our company. If Mr. Green’s employment is terminated by us without cause or by Mr. Green for good reason within 18 months of a change in control of our company, Mr. Green is entitled to receive a lump sum cash payment in an amount equal to three times the sum of Mr. Green’s most recent annual salary and his most recent cash incentive compensation. In addition, in the event of a change in control, all of Mr. Green’s stock options or stock based awards shall accelerate and become immediately exercisable. We shall continue to pay health insurance premiums for health insurance coverage for Mr. Green and his immediate family for a period of one year following his termination as a result of a change in control. Any distribution of the shares of our common stock by Harvard Bioscience to its stockholders will be expressly excluded from the definition of change in control in Mr. Green’s employment agreement. Mr. Green will not be entitled to severance payments unless mutually agreed upon in writing if Mr. Green is terminated for cause, due to death or disability, or he terminates his employment without good reason. In the event Mr. Green is terminated due to death or disability, we shall continue to pay health insurance premiums for health insurance coverage for Mr. Green and his immediate family for a period of one year following his termination. Mr. Green is also eligible to receive a gross up payment in the event that any amounts received pursuant to the terms of his employment agreement are subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended, or any interest or penalties on such excise tax are incurred by Mr. Green. Such payment shall be equal to the amount of (i) the excise tax, (ii) any federal, state or local tax resulting from the gross up payment and (iii) any interest and/or penalties assessed with respect to such excise tax.

Pursuant to the terms of his employment agreement, Mr. Green is also subject to certain confidentiality, non-solicitation and non-competition obligations. The non-solicitation and non-competition obligations survive during the term of his agreement and for a period of 12 months thereafter.

For purposes of Mr. Green’s employment agreement, “cause” shall mean: (A) conduct by Mr. Green constituting a material act of willful misconduct in connection with the performance of his duties; (B) criminal or civil conviction of Mr. Green, a plea of nolo contendere by Mr. Green or conduct by Mr. Green that would reasonably be expected to result in material injury to our reputation if he were retained in his position with us; (C) continued, willful and deliberate non-performance by Mr. Green of his duties; (D) a breach by Mr. Green of his confidentiality, non-solicitation and non-competition obligations to us; or (E) a violation by Mr. Green of our employment policies. For purposes of Mr. Green’s employment agreement, “good reason” shall mean the occurrence of any of the following events: (A) a substantial diminution or other substantive adverse change, not consented to by Mr. Green, in his responsibilities, powers, or duties; (B) any removal of Mr. Green’s title of President and Chief Executive Officer; (C) an involuntary reduction in Mr. Green’s annual salary except for across-the-board reductions similarly affecting substantially all management employees; (D) a breach by us of any of our other material obligations under Mr. Green’s employment agreement; (E) the involuntary relocation of our offices at which Mr. Green is principally employed to a location more than 30 miles from our current offices; or (F) our failure to obtain the agreement from any successor company to us to assume and agree to perform Mr. Green’s employment agreement.

Thomas McNaughton

Mr. McNaughton’s employment agreement will have a term of two years, but shall automatically renew for successive two year periods unless either party provides 90 days’ notice that it does not wish to extend the agreement. Mr. McNaughton’s employment agreement provides for an annual base salary in the amount of three hundred nine thousand ($309,000) which shall be reevaluated on an annual basis by the Board of Directors or the compensation committee. Mr. McNaughton will be eligible to receive cash incentive compensation as determined by the Board of Directors or the compensation committee, and shall also be eligible to participate in all of our employee benefit plans, including without limitation, retirement plans, stock option plans, stock purchase plans and medical insurance plans.

Mr. McNaughton’s employment agreement also provides for payments to be made to Mr. McNaughton in the event of his termination under certain circumstances. If Mr. McNaughton’s employment is terminated by us without “cause” (as such term is defined in Mr. McNaughton’s employment agreement) or by Mr. McNaughton for “good reason” (as such term is defined in Mr. McNaughton’s employment agreement), we are obligated to pay Mr. McNaughton the sum of his average annual base salary for the prior three fiscal years or annual salary for the prior fiscal year, whichever is higher, and his average annual cash incentive

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compensation for the prior three fiscal years or annual cash incentive compensation for the prior fiscal year, whichever is higher. Such payment is conditioned upon Mr. McNaughton’s execution of a general release of claims against us. In addition, all of Mr. McNaughton’s stock options or stock based awards that would otherwise vest within the 18 month period following such termination shall accelerate and become immediately exercisable. We shall continue to pay health insurance premiums for health insurance coverage for Mr. McNaughton and his immediate family for a period of one year following his termination without cause or for good reason.

Mr. McNaughton may also be entitled to certain payments in the event of a change in control of our company. If Mr. McNaughton’s employment is terminated by us without cause or by Mr. McNaughton for good reason within 18 months of a change in control of our company, Mr. McNaughton is entitled to receive a lump sum cash payment in an amount equal to the sum of Mr. McNaughton’s most recent annual salary and his most recent cash incentive compensation. In addition, in the event of a change in control, all of Mr. McNaughton’s stock options or stock based awards shall accelerate and become immediately exercisable. We shall continue to pay health insurance premiums for health insurance coverage for Mr. McNaughton and his immediate family for a period of one year following his termination as a result of a change in control. Any distribution of the shares of our common stock by Harvard Bioscience to its stockholders will be expressly excluded from the definition of change in control in Mr. McNaughton’s employment agreement.

Mr. McNaughton will not be entitled to severance payments unless mutually agreed upon in writing if Mr. McNaughton is terminated for cause, due to death or disability, or he terminates his employment without good reason. In the event Mr. McNaughton is terminated due to death or disability, we shall continue to pay health insurance premiums for health insurance coverage for Mr. McNaughton and his immediate family for a period of one year following his termination.

Mr. McNaughton is also eligible to receive a gross up payment in the event that any amounts received pursuant to the terms of his employment agreement are subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended, or any interest or penalties on such excise tax are incurred by Mr. McNaughton. Such payment shall be equal to the amount of (i) the excise tax, (ii) any federal, state or local tax resulting from the gross up payment and (iii) any interest and/or penalties assessed with respect to such excise tax. Pursuant to the terms of his employment agreement, Mr. McNaughton is also subject to certain confidentiality, non-solicitation and non-competition obligations. The non-solicitation and non-competition obligations survive during the term of his agreement and for a period of 12 months thereafter.

For purposes of Mr. McNaughton’s employment agreement, “cause” shall mean: (A) conduct by Mr. McNaughton constituting a material act of willful misconduct in connection with the performance of his duties; (B) criminal or civil conviction of Mr. McNaughton, a plea of nolo contendere by Mr. McNaughton or conduct by Mr. McNaughton that would reasonably be expected to result in material injury to our reputation if he were retained in his position with us; (C) continued, willful and deliberate non-performance by Mr. McNaughton of his duties; (D) a breach by Mr. McNaughton of his confidentiality, non-solicitation and non-competition obligations to us; or (E) a violation by Mr. McNaughton of our employment policies.

For purposes of Mr. McNaughton’s employment agreement, “good reason” shall mean the occurrence of any of the following events: (A) a substantial diminution or other substantive adverse change, not consented to by Mr. McNaughton, in his responsibilities, powers, or duties; (B) any removal of Mr. McNaughton’s title of Chief Financial Officer; (C) an involuntary reduction in Mr. McNaughton’s annual salary except for across-the-board reductions similarly affecting substantially all management employees; (D) a breach by us of any of our other material obligations under Mr. McNaughton’s employment agreement; (E) the involuntary relocation of our offices at which Mr. McNaughton is principally employed to a location more than 30 miles from our current offices; or (F) our failure to obtain the agreement from any successor company to us to assume and agree to perform Mr. McNaughton’s employment agreement.

Separation Grants

In connection with the Distribution, our compensation committee and independent directors will grant an aggregate of approximately 2,100,000 options to acquire our common stock with an exercise price equal to the fair market value on the grant date to our named executive officers and certain other employees. These options are referred to herein as the Separation Grants. All of these options will be granted on the eleventh trading

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day after the Distribution Date and except as noted below with respect to certain Milestone Grants, will vest annually in four equal annual installments on January 1 of each year for four consecutive years commencing with the January 1 immediately following the date of grant. The options to be granted to Mr. Green and Mr. McNaughton will respectively include (i) an option in an amount that, assuming it was exercised at the time of an initial public offering by the Company following the Distribution Date that results in twenty five percent of our common stock being issued, would provide the named executive with a certain percentage of our outstanding common stock immediately following such offering, being six percent (6%) for Mr. Green and one and a half percent (1.5%) for Mr. McNaughton, or the Initial Grants, and (ii) an option in an amount of up to one half of the shares subject to the Initial Grant for each individual, or the Milestone Grants. With respect to the Milestone Grant, the option shall vest in one third increments subject to certain performance milestones to be determined by our Board of Directors.

These grants are intended to:

provide the named executive officers and other employees receiving grants an immediate equity interest in our company in order to align their interests with those of our stockholders; and
induce certain of the named executive officers to execute their employment agreements with our company pertaining to their executive roles at our company, the term of which will commence at the time of the Distribution, and to waive their rights under their employment agreements with Harvard Bioscience to terminate their employment for “good reason” due to a substantial diminution or other substantive adverse change in their responsibilities, powers, or duties arising from their new roles at our company.

Based on eight million of our shares being outstanding immediately after the Distribution, the option grants to our named executive officers would be as described below:

   
  Value   Options
David Green   $            900,000  
Thomas McNaughton   $            225,000  
All Named Executive Officers   $            1,119,938  

The number of stock options to be granted to named executive officers will be based on a percentage of our company's outstanding common stock as provided above. The Black-Scholes value of our stock options as set forth above is based on a number of assumptions, including an exercise price equal to $[       ], however the actual exercise price may vary from such assumption and cannot be determined as it will be based on a volume weighted average over the ten (10) trading day period preceding the date of grant.

Treatment of Outstanding Harvard Bioscience Equity Awards

At the time of the Distribution, holders of Harvard Bioscience stock options and restricted stock units issued previously to employees and directors as part of Harvard Bioscience’s equity compensation plans will receive an adjustment to their stock options and restricted stock units because those securities will not participate in the Distribution. The adjustments will be based on the estimated value of the entire Distribution, as measured by the relationship between Harvard Bioscience’s common stock price just prior to and after the Distribution. We expect that, for adjustments to the quantity of outstanding stock options and restricted stock units, Harvard Bioscience will provide 80% of the value of the adjustment by issuing the holder additional Harvard Bioscience restricted stock units and options for shares of Harvard Bioscience common stock and 20% of the value of the adjustment will be provided by us issuing restricted stock units and options for shares of our common stock. Such modified awards will otherwise have substantially identical terms, including term and vesting provisions, as the existing Harvard Bioscience equity awards. The continued vesting and exercisability of the stock options and restricted stock units will be conditioned on the recipient’s continued service to or employment with Harvard Bioscience or our company.

Separately, certain of our employees and directors, including our executive officers, are holders of vested and unvested options to buy Harvard Bioscience common stock and unvested restricted stock units pertaining to

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Harvard Bioscience’s common stock. Vesting and exercisability of such options and restricted stock units will continue through their original expiration dates so long as the individual holder is employed or providing service to us or Harvard Bioscience.

With respect to individual owners of both options and/or restricted stock units issued by our company and those issued by Harvard Bioscience, the compensation expense for such options and restricted stock units will be recognized by the company receiving the individual’s services. However, cash proceeds from the future option exercises will be realized by the company that issued the respective option.

Employment Benefit Plans

2013 Equity Incentive Plan

Prior to the Distribution, Harvard Bioscience and our Board of Directors approved our 2013 Equity Incentive Plan, or 2013 Plan, pursuant to which our Board of Directors can grant incentive stock options, non-qualified stock options, stock appreciation rights, deferred stock awards, restricted stock awards, unrestricted stock awards, performance shares and dividend equivalent rights to employees, directors and consultants. In addition, the issuance of awards in partial substitution for equity awards of common stock of Harvard Bioscience immediately prior to the spin-off of our company by Harvard Bioscience are authorized to be issued under the 2013 Plan.

Shares Available .  The maximum number of shares authorized for issuance under the 2013 Plan is 3,000,000 shares of common stock. The 2013 Plan also includes an “evergreen” provision. Under the evergreen provision, the maximum number of shares of stock available for grant and issuance under the 2013 Plan shall be increased on January 1 of each year during the term of the Plan by 4% of the number of shares issued and outstanding on the date of adoption of the Plan. In addition, under the 2013 Plan, our Board of Directors has the express authority to increase the maximum number of shares of stock available for grant and issuance under the 2013 Plan in an amount equal to that number which enables us to issue the full amount of adjustment awards to be issued in connection with the spin-off of our company by Harvard Bioscience as provided above, provided that in no event shall the maximum aggregate number of shares of stock available for grant and issuance under the 2013 Plan, taking into account the total number of such adjustment awards issued, exceed forty percent (40%) of the number of shares issued and outstanding as of the date of adoption of the 2013 Plan. The shares underlying any awards that are forfeited, canceled or are otherwise terminated (other than by exercise) under the 2013 Plan will be added back to the shares authorized for issuance under the 2013 Plan. Shares tendered or held back upon exercise of an option or settlement of an award to cover the exercise price or tax withholding are not available for future issuance under the 2013 Plan. In addition, upon exercise of stock appreciation rights, the gross number of shares exercised shall be deducted from the total number of shares remaining available for issuance under the 2013 Plan.

Plan Administration .  The 2013 Plan will be administered by the compensation committee of the Board of Directors. The administrator of the 2013 Plan has full power and authority to select the participants to whom awards will be granted, to make any combination of awards to participants, to accelerate the exercisability or vesting of any award, subject to limitations, and to determine the specific terms and conditions of each award, subject to the provisions of the 2013 Plan. The administrator may delegate to the Chief Executive Officer the authority to grant awards to employees, other than our executive officers, provided that the administrator includes a limitation as to the number of shares that may be awarded and provides specific guidelines regarding such awards.

Eligibility and Limitations on Grants .  All full-time and part-time officers, employees, non-employee directors and other key persons, including consultants, are eligible to participate in the 2013 Plan, subject to the discretion of the administrator. Approximately      individuals are currently eligible to participate in the 2013 Plan.

Performance-Based Compensation .  To ensure that certain awards granted under the 2013 Plan, including awards of restricted stock, deferred stock, cash-based awards or performance shares to a “Covered Employee” (as defined in the Code) qualify as “performance-based compensation” under Section 162(m) of the Code, the 2013 Plan provides that the compensation committee may require that the vesting of such awards be conditioned on the satisfaction of performance criteria including: (1) return on equity, assets, capital or

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investment; (2) pre-tax or after-tax profit levels; (3) cash flow, funds from operations or similar measure; (4) total shareholder return; (5) changes in the market price of the our common stock; (6) revenues, sales or market share; (7) net income (loss) or earnings per share; (8) expense margins or operating efficiency (including budgeted spending limits) or (9) project development milestones, any of which may be measured either in absolute terms or as compared to any incremental increase or as compared to results of a peer group and, for financial measures, may be based on numbers calculated in accordance with U.S. generally accepted accounting principles or on an as adjusted basis. These performance criteria may be expressed in terms of overall company performance or the performance of a division, business unit, or an individual. The compensation committee will select the particular performance criteria within 90 days following the commencement of a performance cycle, and each performance cycle must be at least three months long. Subject to adjustments for stock splits and similar events, the maximum award of restricted stock or deferred stock or performance shares (or combination thereof) granted to any one individual that is intended to qualify as “performance-based compensation” under Section 162(m) of the Code will not exceed 1,000,000 shares, or $2,000,000 in the case of a performance-based award that is a cash-based award for any performance cycle, and options or stock appreciation rights with respect to no more than 1,000,000 shares may be granted to any one individual during any calendar year period.

Stock Options .  The exercise price of stock options awarded under the 2013 Plan may not be less than the fair market value of the common stock on the date of the option grant. The term of each stock option may not exceed ten years from the date of grant. The administrator will determine at what time or times each option may be exercised and, subject to the provisions of the 2013 Plan, the period of time, if any, after retirement, death, disability or termination of employment during which options may be exercised.

To qualify as incentive stock options, stock options must meet additional federal tax requirements, including a $100,000 limit on the value of shares subject to incentive stock options which first become exercisable in any one calendar year, and a shorter term and higher minimum exercise price in the case of certain stockholders that hold more than ten percent of the combined voting power of all classes of our stock.

Automatic Grants to Non-Employee Directors .  The 2013 Plan provides for the automatic grant of a non-qualified stock option to purchase shares of common stock to non-employee directors. Each person who is a non-employee director on the Distribution Date will be granted, on the eleventh trading date after the Distribution Date, an option to acquire 25,000 shares of common stock. Each non-employee director who is first elected to serve as a director after the Distribution, shall be granted, on the fifth business day after such election (provided that if such election is made prior to the fifth trading day after the Distribution Date, then such grant date shall be the eleventh trading day after the Distribution Date), an option to acquire 25,000 shares of common stock. The exercise price of the automatically granted stock options is equal to 100% of the fair market value of the common stock on the date of grant (provided further that with respect to the initial grants made to individuals who are non-employee directors on the Distribution Date, the fair market value of such grants shall mean the arithmetic average of the daily dollar volume-weighted average price of our common stock for each of the ten (10) trading days immediately preceding the date of grant) and, unless otherwise provided by the administrator, shall vest and be exercisable as to all of the shares of stock covered thereby as of the first anniversary of the grant date. The automatically granted stock options expire ten years after the date of grant.

Stock Appreciation Rights .  The administrator may award a stock appreciation right independently of a stock option. The administrator may award stock appreciation rights subject to such conditions and restrictions as the administrator may determine, provided that the exercise price may not be less than the fair market value of the common stock on the date of grant and no stock appreciation right may be exercisable more than ten years after the date of grant. Additionally, during the participant’s lifetime, all stock appreciation rights are exercisable only by the participant or the participant’s legal representative.

Restricted Stock .  The administrator may award shares to participants subject to such conditions and restrictions as the administrator may determine. These conditions and restrictions may include the achievement of certain performance goals and/or continued employment with our company through a specified restricted period. However, in the event these awards to employees have a performance-based goal, the restriction period

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will be at least one year, and in the event these awards to employees have a time-based restriction, the restriction period will be at least three years.

Deferred Stock .  The administrator may award phantom stock units to participants subject to such conditions and restrictions as the administrator may determine. These conditions and restrictions may include the achievement of certain performance goals and/or continued employment with our company through a specified restricted period. However, in the event these awards to employees have a performance-based goal, the restriction period will be at least one year, and in the event these awards to employees have a time-based restriction, the restriction period will be at least three years. At the end of the deferral period, the participants shall be paid, to the extent vested, in shares.

Unrestricted Stock .  The administrator may grant shares (at par value or for a purchase price determined by the administrator) that are free from any restrictions under the 2013 Plan. Unrestricted stock may be issued to participants in recognition of past services or other valid consideration, and may be issued in lieu of cash compensation to be paid to such individuals.

Performance Shares .  The administrator may grant performance share awards that entitle the recipient to acquire shares of common stock upon the attainment of specified performance goals. The administrator determines the performance goals, performance periods and other terms of any such awards. However, performance share awards to employees will have a restriction period of at least one year.

Cash-Based Awards .  Each cash-based award shall specify a cash-denominated payment amount, formula or payment ranges as determined by the administrator. Payment, if any, with respect to a cash-based award may be made in cash or in shares of common stock, as the administrator determines.

Dividend Equivalent Rights .  The administrator may award dividend equivalent rights under the 2013 Plan subject to such conditions and restrictions as the administrator may determine, provided that dividend equivalent rights may only be granted in tandem with restricted stock awards, deferred stock awards, performance share awards or unrestricted stock awards. Dividend equivalents credited to the holder may be paid currently or may be deemed to be reinvested in additional shares of stock, which may thereafter accrue additional equivalents.

Tax Withholding .  Participants in the 2013 Plan are responsible for the payment of any federal, state or local taxes that we are required by law to withhold upon any option exercise or vesting of other awards. Subject to approval by the administrator, participants may elect to have the minimum tax withholding obligations satisfied either by authorizing us to withhold shares to be issued pursuant to an option exercise or other award, or by transferring to us shares having a value equal to the amount of such taxes.

Change of Control Provisions .  In the event of a merger, sale or dissolution of our company, or a similar “sale event” (as defined in the 2013 Plan) and upon a change of control all outstanding awards under the 2013 Plan, unless otherwise provided for in a particular award agreement, all stock options and stock appreciation rights will automatically become fully exercisable and all other awards with conditions and restrictions relating solely to the passage of time will become fully vested and non-forfeitable as of the effective time of the sale event or change of control, except as may be otherwise provided in the relevant award agreement. The term change of control is defined in the 2013 Plan and generally refers to any person becoming the beneficial owner of more than twenty five percent voting power of our securities having the right to vote in an election of our Board of Directors, our Board of Directors at the time of the effectiveness of the 2013 Plan (or those added by approval of such directors) ceasing for any reason to constitute at least a majority of our board of directors, the consummation of a consolidation, merger or consolidation or sale or other disposition of all or substantially all of our assets, and/or the approval by our stockholders of any plan or proposal for the liquidation or dissolution of us. In addition, upon a sale event, all outstanding awards under the 2013 Plan will terminate unless the parties to the transaction, in their discretion, provide for assumption, continuation or appropriate substitutions or adjustments of such awards. In the event of such termination in connection with a sale event, each holder of an option or a stock appreciation right will be permitted to exercise such award for a specified period prior to the consummation of the sale event. The administrator may also provide for a cash payment with respect to outstanding options and stock appreciation rights in exchange for the cancellation of such awards.

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Term .  No awards of incentive stock options may be granted under the 2013 Plan after the 10-year anniversary of the date that the 2013 Plan was approved by the Board of Directors. No other awards may be granted under the 2013 Plan after the 10-year anniversary of the date that the 2013 Plan was approved by stockholders.

Amendments .  Stockholder approval will be required to amend the 2013 Plan if the administrator determines that this approval is required to ensure that incentive stock options qualify as such under the Code, or that compensation earned under awards qualifies as performance-based compensation under the Code or as required under the applicable securities exchange or market system rules. Otherwise, the Board of Directors may amend or discontinue the 2013 Plan at any time, and the administrator may amend or cancel any outstanding award for the purpose of satisfying changes in law or for any other lawful purpose, provided that no such amendment may adversely affect the rights under any outstanding award without the holder’s consent.

Repricing .  Other than in the event of a necessary adjustment in connection with a change in our stock or a merger or similar transaction, the administrator may not “reprice” or otherwise reduce the exercise price of outstanding stock options or stock appreciation rights without stockholder approval.

Employee Stock Purchase Plan

Prior to the Distribution, Harvard Bioscience and our Board of Directors approved the 2013 employee stock purchase plan. This plan will be effective as of the date of the Distribution. Under this plan, participating employees can authorize us to withhold a portion of their base pay during consecutive six-month payment periods for the purchase of shares of our common stock. Under this plan, 150,000 shares of common stock are authorized for issuance. Once implemented by our Board of Directors, offerings will commence on each January 1 and July 1 thereafter and will have a duration of six months. Generally, all employees who are customarily employed for more than 20 hours per week as of the first day of the applicable offering period are eligible to participate in the plan. Any employee who owns or is deemed to own shares of stock representing in excess of 5% of the combined voting power of all classes of our stock may not participate in the plan. During each offering, a participating employee may purchase shares under the plan by authorizing payroll deductions of up to 10% of his cash compensation during the offering period. Unless the employee has previously withdrawn from the offering, his accumulated payroll deductions will be used to purchase shares of our common stock on the last business day of the period at a price equal to 85% of the fair market value of our common stock on the first or last day of the offering period, whichever is lower. Under applicable tax rules, an employee may purchase no more than $25,000 worth of our common stock in any calendar year under the plan. We have not issued any shares to date under the plan.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

As of the date of this information statement, all of the outstanding shares of our common stock are beneficially owned by Harvard Bioscience. After the Distribution, Harvard Bioscience will not own any shares of our common stock.

The following tables provide information with respect to the anticipated beneficial ownership of our common stock, following consummation of the Distribution, by:

each stockholder who is expected to beneficially own more than 5% of our outstanding common stock;
each person expected to serve on our Board of Directors as of the Distribution Date;
each person named in the Summary Compensation Table; and
all of our executive officers and directors as a group.

Except as otherwise noted below, we based the share amounts on each person’s beneficial ownership of Harvard Bioscience common stock on [         ], 2013, giving effect to a distribution ratio of [    ] share of our common stock for every one share of Harvard Bioscience common stock held by such person. The shares beneficially owned by each director and executive officer noted below excludes (i) the Separation Grants and the initial director option grants as such will not be exercisable within 60 days of [         ], 2013, as well as (ii) any restricted stock units or options that are to be issued to our directors or executive officers as part of the equitable adjustment to the equity awards issued by Harvard Bioscience and held by such individuals at the time of the Distribution, as the amount of such awards cannot be determined at this time.

To the extent our directors and executive officers own Harvard Bioscience common stock on the Record Date, they will participate in the Distribution on the same terms as other holders of Harvard Bioscience common stock.

Except as otherwise noted in the footnotes below, each person or entity identified in the tables below has sole voting and investment power with respect to the securities owned by such person or entity.

Immediately following the Distribution, we estimate that approximately [    ] million shares of our common stock will be issued and outstanding, based on the number of shares of Harvard Bioscience common stock expected to be outstanding as of the Record Date. The actual number of shares of our common stock outstanding following the Distribution will be determined on the Record Date.

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  Common Stock
Beneficially Owned
Name and Address of Beneficial Owner (1)   Shares   Percent (2)
Chane Graziano
23610 Peppermill Ct.
Bonita Springs, FL 34105
                  %  
BlackRock, Inc
40 East 52 nd Street
New York, NY 10022
                  % (3)  
David Green                   % (4)  
Central Square Management LLC
Kelly Cardwell
1813 N. Mill Street Suite F
Naperville, IL 60563
                  % (5)  
FMR Corp
Edward C. Johnson 3d
82 Devonshire Street
Boston, MA 02109
                  % (6)  
F&C Asset Management plc
80 George Street
Edinburgh EH2 3BU
United Kingdom
                  % (7)  
Thomas McNaughton                   %  
Thomas Robinson              *  
John F. Kennedy              *  
James McGorry              *  
All Executive Officers and Directors, as a group (5 persons)              %  

* Represents less than 1% of all of the outstanding shares of Common Stock.
(1) Unless otherwise indicated, the address for all persons shown is c/o Harvard Bioscience, Inc., 84 October Hill Road, Holliston, Massachusetts 01746.
(2) Based on      shares outstanding on [         ], 2013.
(4) This information is based solely upon a Schedule 13G filed by BlackRock, Inc. with the Securities and Exchange Commission on June 7, 2013 reporting beneficial ownership as of May 31, 2013.
(5) This information is based solely upon a Schedule 13G/A filed by Central Square Management LLC and Kelly Cardwell with the Securities and Exchange Commission on February 14, 2013 reporting beneficial ownership as of December 31, 2012. Central Square Management LLC (“CSM LLC”) reported that the shares are beneficially owned by certain private investment funds (the “Funds”), for which CSM LLC serves as investment manager and for which affiliates of CSM LLC serve as the general partner, and held in a managed account (the “Account”) for which CSM LLC acts as investment manager. Mr. Cardwell serves as the managing member of CSM LLC, as well as the managing member of each of the general partners of the Funds. Each of CSM LLC and Mr. Cardwell have disclaimed beneficial ownership of such shares except to the extent of its or his pecuniary interest therein.
(6) This information is based solely upon a Schedule 13G/A filed jointly by FMR LLC and Edward C. Johnson 3d with the Securities and Exchange Commission on February 14, 2013 reporting beneficial ownership as of December 31, 2012. FMR LLC reported sole voting power with respect to 1,955,947 shares. Edward C. Johnson 3d reported beneficial ownership of the shares beneficially owned by FMR LLC as a result of his relationship as Chairman and a stockholder of FMR LLC.
(7) This information is based solely upon a Schedule 13G/A filed by F&C Asset Management plc. with the Securities and Exchange Commission on January 29, 2013 reporting beneficial ownership as of December 31, 2012. F&C Asset Management plc reported having sole voting and investment power of all shares.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Transactions with Related Persons

Our audit committee charter will set forth the standards, policies and procedures that we follow for the review, approval or ratification of any related person transaction that we are required to report pursuant to Item 404(a) of Regulation S-K promulgated by the SEC. Under the audit committee charter, which will be in writing, the audit committee must conduct an appropriate review of these related person transactions on an ongoing basis, and the approval of the audit committee is required for all such transactions. The audit committee relies on management to identify related person transactions and bring them to the attention of the audit committee. We do not have any formal policies and procedures regarding the identification by management of related person transactions.

Employment Agreements

Prior to the Distribution, we will have entered into employment agreements with our named executive officers that will have a term that commences upon the Distribution. For more information regarding our agreements with our Chief Executive Officer and Chief Financial Officer, see “Director and Executive Compensation.”

Indemnification Agreements

We have entered into or plan to enter into indemnification agreements with each of our directors and executive officers, the form of which is attached as an exhibit to the registration statement of which this information statement is a part. These agreements provide that we will, among other things, indemnify and advance expenses to our directors and officers for certain expenses, including attorneys’ fees, judgments, fines and settlement amounts incurred by any such person in any action or proceeding, including any action by us arising out of such person’s services as our director or officer, or any other company or enterprise to which the person provides services at our request. We believe that these agreements are necessary to attract and retain qualified persons as directors and officers.

Our Relationship with Harvard Bioscience

Prior to the Distribution, we are a wholly-owned subsidiary of Harvard Bioscience. Harvard Bioscience will distribute all of the shares of our common stock it then owns to Harvard Bioscience’s stockholders by means of a spin-off, which is a pro rata distribution by Harvard Bioscience of the shares of our common stock it owns to holders of Harvard Bioscience’s common stock. At such point Harvard Bioscience will no longer be a stockholder of our common stock and will no longer control our operations.

Directors and Officers of Harvard Bioscience

Some of our directors and officers continue to serve as directors and officers of Harvard Bioscience, our parent company. David Green, our President and Chief Executive Officer and Chairman of our Board of Directors, currently serves as the interim CEO and President and a director of Harvard Bioscience. Thomas McNaughton serves as the Chief Financial Officer of Harvard Bioscience as well as our Chief Financial Officer. It is anticipated that Messrs. Green and McNaughton will resign as officers of Harvard Bioscience at the time of the Distribution of our common stock by Harvard Bioscience. Mr. Green intends to remain a director of Harvard Bioscience following the Distribution. John F. Kennedy, one of our directors, is a director of Harvard Bioscience and intends to continue in such position following the Distribution.

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Agreements with Harvard Bioscience

Before the Separation, subject to the respective approval of our Board of Directors and the Board of Directors of Harvard Bioscience, we will enter into a separation and distribution agreement and several other agreements with Harvard Bioscience to effect the Separation and provide a framework for our relationships with Harvard Bioscience after the Separation. These agreements will govern the relationships between us and Harvard Bioscience subsequent to the completion of the Separation and provide for the allocation between us and Harvard Bioscience of Harvard Bioscience’s assets, liabilities and obligations (including employee benefits and tax-related assets and liabilities) related to its regenerative medicine business, attributable to periods prior to the Separation. In addition to the separation and distribution agreement, which contains many of the key provisions related to the Separation and the Distribution of our shares of common stock to Harvard Bioscience stockholders, these agreements include:

an intellectual property matters agreement;
a product distribution agreement;
a tax sharing agreement;
a transition services agreement; and
a sublicense agreement.

The principal agreements described below are filed as exhibits to the Registration Statement on Form 10 that this information statement is filed as an exhibit to, and the summaries of each of these agreements below set forth the terms of the agreements that we believe are material. These summaries are qualified in their entireties by reference to the full text of the applicable agreements, which are incorporated by reference into this information statement.

The terms of the agreements described below that will be in effect following the Separation have not yet been finalized; changes, some of which may be material, may be made prior to the Separation.

Intellectual Property Matters Agreement

The intellectual property matters agreement governs various arrangements between us and Harvard Bioscience. The agreement provides for the transfer by Harvard Bioscience of all patents, patent applications and inventions not yet filed as patents, as well as any other trade secrets or know-how, that were originated in our business following our establishment as a division of Harvard Bioscience. The agreement also provides for cross-licenses whereby we will have a worldwide royalty free license to use in our business certain of Harvard Bioscience’s currently existing intellectual property, technology and know-how, and Harvard Bioscience will have a worldwide royalty free license to use in certain of its businesses our currently existing intellectual property, technology and know-how. The transfer of the intellectual property from Harvard Bioscience to us that was originated in our business and the cross-licenses described above shall remain in effect in perpetuity.

In addition, in accordance with the intellectual property matters agreement, we will grant Harvard Bioscience an exclusive, worldwide license to use that intellectual property, including any technology or intellectual property developed in the future during the five year period of time following the date of the agreement, for use within the industries and fields in which Harvard Bioscience is currently operating now and in the future, excluding the fields and industries in which we operate. In addition, Harvard Bioscience will grant to us an exclusive, worldwide license to all technology or intellectual property developed in certain divisions of its business in the future during the five year period of time following the date of the agreement, for use within the industries and fields in which we operate. Such licenses are subject to expiration in the event the licensee ceases to actively use the licensed technology or suffers certain insolvency events, as well as upon the expiration of patents that may be included in the licensed technology. Such licenses will be royalty-free for a period of five years following the date of the agreement, provided the parties have agreed that if following such royalty-free five year period, a licensee desires to continue the license, the parties will negotiate in good faith the payment terms and conditions of a continued license.

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The intellectual property matters agreement also provides that for a period of ten years following the date of the agreement, each company will be subject to non-competition and non-solicitation provisions which restrict its ability to compete with the other company in such company’s respective field as well as soliciting and hiring employees of the other company under certain circumstances.

Product Distribution Agreement

We have entered into a product distribution agreement with Harvard Bioscience pursuant to which each company will become the exclusive distributor for the other party for products such other party develops for sale in the markets served by the other. In addition, Harvard Bioscience has agreed, that except for certain existing activities of its German subsidiary, to the extent that any Harvard Bioscience businesses desire to resell or distribute any bioreactor that is then manufactured by us, we will be the exclusive manufacturer of such bioreactors and Harvard Bioscience will purchase such bioreactors from us. The product distribution agreement has an initial term of ten years, provided that either party may terminate the agreement earlier in the case of material breach by the other party after written notice and a sixty day period to cure and certain other instances pertaining to insolvency events impacting a party. In addition, either party may terminate its obligations as a distributor with respect to a particular product, after written notice and a sixty day period to cure, if such party determine that the other party is unwilling or unable to supply such product.

Separation and Distribution Agreement

The separation and distribution agreement sets forth the agreements between us and Harvard Bioscience regarding the principal corporate transactions required to effect the Separation and the Distribution of our shares to Harvard Bioscience’s stockholders, and other agreements governing the relationship between Harvard Bioscience and us.

The Separation

The separation and distribution agreement will identify assets to be transferred, liabilities to be assumed and contracts to be assigned to each of us and Harvard Bioscience as part of the separation of Harvard Bioscience into two companies, and it will provide for when and how these transfers, assumptions and assignments will occur. In particular, the separation and distribution agreement will provide, among other things, that, subject to the terms and conditions contained therein:

certain assets related to the businesses and operations of Harvard Bioscience’s regenerative medicine business, which we refer to as the HART Assets, will be transferred to us or one of our subsidiaries;
certain liabilities (including whether accrued, contingent or otherwise) arising out of or resulting from the HART Assets, and other liabilities related to the businesses and operations of Harvard Bioscience’s regenerative medicine business, which we refer to as the HART Liabilities, will be retained by or transferred to us or one of our subsidiaries;
all of the assets and liabilities (including whether accrued, contingent or otherwise) other than the HART Assets and HART Liabilities (such assets and liabilities, other than the HART Assets and the HART Liabilities, are referred to as the Excluded Assets and Excluded Liabilities, respectively) will be retained by or transferred to Harvard Bioscience or one of its subsidiaries; and
certain shared contracts will be assigned, in part to us or our applicable subsidiaries or be appropriately amended.

Except as may expressly be set forth in the separation and distribution agreement or any other transaction agreements, all assets will be transferred on an “as is,” “where is” basis and the respective transferees will bear the economic and legal risks that (1) any conveyance will prove to be insufficient to vest in the transferee good title, free and clear of any security interest, and (2) any necessary consents or governmental approvals are not obtained or that any requirements of laws or judgments are not complied with.

Information in this information statement with respect to the assets and liabilities of the parties following the Separation is presented based on the allocation of such assets and liabilities pursuant to the separation and distribution agreement, unless the context otherwise requires. Certain of the liabilities and obligations to be assumed by one party or for which one party will have an indemnification obligation under the separation and

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distribution agreement and the other transaction agreements relating to the Separation are, and following the Separation may continue to be, the legal or contractual liabilities or obligations of the other party. Each party that continues to be subject to such legal or contractual liability or obligation will rely on the applicable party that assumed the liability or obligation or the applicable party that undertook an indemnification obligation with respect to the liability or obligation, as applicable, under the separation and distribution agreement to satisfy the performance and payment obligations or indemnification obligations with respect to such legal or contractual liability or obligation.

Claims

In general, each party to the separation and distribution agreement will assume liability for all pending, threatened and unasserted legal matters related to its own business or its assumed or retained liabilities and will indemnify the other party for any liability to the extent arising out of or resulting from such assumed or retained legal matters.

Intercompany Accounts

The separation and distribution agreement will provide that, subject to any provisions in the separation and distribution agreement or any other transaction agreement to the contrary, at or prior to the Distribution, all intercompany accounts between Harvard Bioscience and its subsidiaries, on the one hand, and our company and our subsidiaries, on the other hand, will be settled.

Further Assurances

To the extent that any transfers contemplated by the separation and distribution agreement have not been consummated on or prior to the date of the Separation, the parties will agree to cooperate to effect such transfers as promptly as practicable following the date of the Separation. In addition, each of the parties will agree to cooperate with the other party and use commercially reasonable efforts to take or to cause to be taken all actions, and to do, or to cause to be done, all things reasonably necessary under applicable law or contractual obligations to consummate and make effective the transactions contemplated by the separation and distribution agreement and the other transaction agreements.

The Distribution

The separation and distribution agreement governs the rights and obligations of Harvard Bioscience and our company regarding the Distribution. There are various conditions to the completion of the Distribution. In addition, Harvard Bioscience may terminate its obligation to complete the Distribution at any time if the Harvard Bioscience Board of Directors, in its sole discretion, determines that the Distribution is not in the best interests of Harvard Bioscience or its stockholders. Consequently, we cannot assure you as to when or whether the Distribution will occur.

The separation and distribution agreement provides that Harvard Bioscience’s obligation to complete the Distribution is subject to several conditions that must be satisfied (or waived by Harvard Bioscience in its sole discretion), including, among others:

the completion of the Separation and the related transactions in accordance with the plan of reorganization set forth in the separation and distribution agreement;
the SEC declaring effective our registration statement on Form 10, of which this information statement is a part;
our receipt of approximately $15 million in cash from Harvard Bioscience;
all actions and filings necessary or appropriate under federal, state or foreign securities laws have been taken and, where applicable, become effective or been accepted by the applicable governmental authority;
the transaction agreements relating to the Separation have been duly executed and delivered by the parties;
Harvard Bioscience is satisfied in its sole discretion that it will own at least 80.1% of the total voting power with respect to the election and removal of directors of our outstanding common stock immediately prior to the Distribution;

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such other actions as Harvard Bioscience or we may, based upon the advice of counsel, reasonably request to be taken prior to the Separation and the Distribution in order to assure the successful completion of the Separation and the Distribution and the other transactions contemplated by the separation and distribution agreement will have been taken;
no termination of the separation and distribution agreement has occurred;
the private letter and supplemental private letter ruling that Harvard Bioscience received from the IRS to the effect that, among other things, the contribution by Harvard Bioscience of the regenerative medicine business to us and the Distribution will qualify as a transaction that is tax-free for U.S. federal income tax purposes under Section 355 and 368(a)(1)(D) of the Internal Revenue Code continuing in effect, and Harvard Bioscience’s receipt of an opinion from Burns & Levinson LLP, counsel to Harvard Bioscience, to the effect that the contribution and Distribution will qualify as a transaction that is described in Section 355 and 368(a)(1)(D) of the Internal Revenue Code;
all governmental approvals necessary to consummate the Distribution have been obtained and are in full force and effect;
the approval for listing on the NASDAQ Capital Market of the shares of our common stock to be distributed to the Harvard Bioscience stockholders in the Distribution;
no order, injunction or decree issued by any court or agency of competent jurisdiction or other legal restraint or prohibition preventing consummation of the Distribution or any of the related transactions are in effect, and no other event outside the control of Harvard Bioscience has occurred or failed to occur that prevents the consummation of the Distribution or any of the related transactions;
no other events or developments have occurred that, in the judgment of the Harvard Bioscience Board of Directors, would result in the Distribution not being in the best interest of Harvard Bioscience or its stockholders; and
the Harvard Bioscience Board of Directors shall have received an opinion from Duff & Phelps to the effect that we and Harvard Bioscience each will be solvent, adequately capitalized immediately after the Distribution and able to pay its liabilities as they become absolute and mature and that Harvard Bioscience has sufficient surplus under Delaware law to declare the dividend of HART common stock.

Harvard Bioscience has the right to terminate its obligation to complete the Distribution if, at any time, Harvard Bioscience’s Board of Directors determines, in its sole discretion, that the Distribution is not in the best interests of Harvard Bioscience or its stockholders. In the event of such termination following the Separation, neither party will have any liability to the other party under the separation and distribution agreement in respect of the Distribution. We will cooperate with Harvard Bioscience to accomplish the Distribution and will, at Harvard Bioscience’s direction, promptly take any and all actions necessary or desirable to effect the Distribution, including, without limitation, the registration under the Securities Act of our common stock on an appropriate registration form or forms to be designated by Harvard Bioscience.

Covenants

We have agreed that, for so long as Harvard Bioscience beneficially owns at least 50 percent of the total voting power of our outstanding capital stock entitled to vote in the election of our Board of Directors, we will not (without Harvard Bioscience’s prior written consent):

take any action that would limit the ability of Harvard Bioscience to transfer its shares of our common stock or limit the rights of any transferee of Harvard Bioscience as a holder of our common stock;
if Harvard Bioscience beneficially owns at least 80% of the total voting power of our outstanding capital stock entitled to vote in the election of our Board of Directors, issue any shares of our capital stock or any rights, warrants or options to acquire our common stock if this could cause Harvard Bioscience to own (1) less than 80% of the total voting power of our outstanding capital

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stock entitled to vote in the election of our Board of Directors, (2) less than 80% of any class of capital stock not entitled to vote in the election of our Board of Directors, or (3) less than 80% of the value of our outstanding capital stock;
take any actions that could reasonably result in Harvard Bioscience being in breach of or in default under any contract or agreement; and
incur any indebtedness.

Employee Matters

The separation and distribution agreement will also allocate liabilities and responsibilities relating to employee compensation, benefit plans, programs and other related matters in connection with the Separation, including the treatment of outstanding incentive awards and certain retirement and welfare benefit obligations. The separation and distribution agreement provides for certain adjustments with respect to Harvard Bioscience equity compensation awards that will occur when Harvard Bioscience completes the Distribution. Such adjustment is required under the Harvard Bioscience employee benefit plans and it is anticipated that each outstanding Harvard Bioscience option to purchase Harvard Bioscience common stock shall be converted on the date of the Distribution into both an adjusted Harvard Bioscience option to purchase Harvard Bioscience common stock and an option to purchase our common stock. It is currently anticipated that Black-Scholes valuation modeling will be used to determine the value that each Harvard Bioscience option has lost at the time of the Distribution and then to ensure the holder maintains such lost value, 80% of such lost value will be provided back to the holder by making appropriate adjustments to the share amount and exercise price of the existing Harvard Bioscience option and 20% of such lost value will be provided back to the holder through the issuance of an option to purchase our common stock. The share amounts and exercise prices of the adjusted Harvard Bioscience options and our options would be adjusted in a manner to ensure the intrinsic value held by the holder pertaining to the existing Harvard Bioscience award is maintained immediately following the Distribution and shall be determined such that tax is not triggered under Section 409A of the Internal Revenue Code.

Similar to the adjustment of the existing Harvard Bioscience options, with respect to each unvested Harvard Bioscience restricted stock unit outstanding at the time of the Distribution, such Harvard Bioscience restricted stock unit shall be converted on the Distribution Date into both an adjusted Harvard Bioscience restricted stock unit and a restricted stock unit in our company. Immediately following the Distribution, the market prices of Harvard Bioscience and our common stock will be used to determine the value that each Harvard Bioscience restricted stock unit lost at the time of the Distribution and then to ensure the holder maintains such lost value, 80% of such lost value will be provided back to the holder by making appropriate increase of the share amount of the existing Harvard Bioscience restricted stock unit and 20% of such lost value will be provided back to the holder through the issuance of our restricted stock unit. The share amounts of the adjusted Harvard Bioscience restricted stock unit and our restricted stock unit would be set in a manner to ensure the intrinsic value held by the holder pertaining to the existing Harvard Bioscience award is maintained immediately following the Distribution and shall be determined such that tax is not triggered under Section 409A of the Internal Revenue Code.

Auditors and Audits; Annual Financial Statements and Accounting

We have agreed that, for so long as Harvard Bioscience is required to consolidate our results of operations and financial position or account for its investment in our company under the equity method of accounting, we will:

not change our independent auditors without Harvard Bioscience’s prior written consent;
use our best efforts to enable our independent auditors to complete their audit of our financial statements in a timely manner so as to permit timely filing of Harvard Bioscience’s financial statements;
provide to Harvard Bioscience and its independent auditors all information required for Harvard Bioscience to meet its schedule for the filing and distribution of its financial statements and to make

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available to Harvard Bioscience and its independent auditors all documents necessary for the annual audit of our company as well as access to the responsible company personnel so that Harvard Bioscience and its independent auditors may conduct their audits relating to our financial statements;
adhere to certain specified Harvard Bioscience accounting policies and notify and consult with Harvard Bioscience regarding any changes to our accounting principles and estimates used in the preparation of our financial statements, and any deficiencies in, or violations of law in connection with, our internal control over financial reporting; and
consult with Harvard Bioscience regarding the timing and content of our earnings releases and cooperate fully (and cause our independent auditors to cooperate fully) with Harvard Bioscience in connection with any of its public filings.

Releases

Except as otherwise provided in the separation and distribution agreement or any other transaction agreements, each party will release and forever discharge the other party and its respective subsidiaries and affiliates from all liabilities existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged to have existed on or before the Separation. The releases will not extend to obligations or liabilities under any agreements between the parties that remain in effect following the Separation, which agreements include, but are not limited to, the separation and distribution agreement, the transition services agreement, the tax sharing agreement, and certain commercial agreements and the transfer documents in connection with the Separation.

Indemnification

In addition, the separation and distribution agreement will provide for cross-indemnities principally designed to place financial responsibility for the obligations and liabilities of our business with us and financial responsibility for the obligations and liabilities of Harvard Bioscience’s business with Harvard Bioscience. Specifically, each party will indemnify, defend and hold harmless the other party, its affiliates and subsidiaries and its officers, directors, employees and agents for any losses arising out of or otherwise in connection with:

the liabilities that each such party assumed or retained pursuant to the separation and distribution agreement (which, in the case of our company, would include the HART liabilities and, in the case of Harvard Bioscience, would include the excluded liabilities) and the other transaction agreements;
the operation of such party’s business (other than, in the case of Harvard Bioscience, our business);
any guarantee, indemnification obligation, surety bond or other credit support agreement, arrangement, commitment or understanding for the benefit of such party or its subsidiaries by the other party or any of its subsidiaries that survives following the Separation date; and
any breach by such party of the separation and distribution agreement or the other transaction agreements.

Also, we will indemnify, defend and hold harmless Harvard Bioscience, its affiliates and subsidiaries and its officers, directors, employees and agents for any losses arising out of or otherwise in connection with any untrue statement or alleged untrue statement of a material fact or omission or alleged omission to state a material fact required to be stated in the registration statement of which this information statement is a part or in this information statement or necessary to make the statements in such registration statement or this information statement not misleading.

The separation and distribution agreement also specifies procedures with respect to claims subject to indemnification and related matters.

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Access to Information

Under the separation and distribution agreement, following the Separation, we and Harvard Bioscience are obligated to provide each other access to information as follows:

subject to applicable confidentiality obligations and other restrictions, we and Harvard Bioscience will give each other any information within each other’s possession that the requesting party reasonably needs to comply with requirements imposed on the requesting party by a governmental authority, for use in any proceeding or to satisfy audit, accounting or similar requirements, or to comply with its obligations under the separation and distribution agreement or any ancillary agreement;
we will maintain in effect at our own cost and expense adequate systems and controls to the extent necessary to enable Harvard Bioscience and its subsidiaries to satisfy their respective reporting, accounting, audit and other obligations, and we will provide to Harvard Bioscience in such form as Harvard Bioscience may request, at no charge to Harvard Bioscience, all financial and other data and information as Harvard Bioscience determines necessary or advisable in order to prepare its financial statements and reports or filings with any governmental authorities, including copies of all quarterly and annual financial information and other reports and documents we intend to file with the SEC prior to such filings (as well as final copies upon filing), and copies of our budgets and financial projections;
subject to certain exceptions we and Harvard Bioscience will use reasonable efforts to make available to each other, our past, present and future directors, officers, other employees and representatives to the extent reasonably required as witnesses in any legal, administrative or other proceedings in which the other party may become involved;
the company providing information, consultant or witness services under the separation and distribution agreement will be entitled to reimbursement from the other for reasonable expenses incurred in providing this assistance;
we will retain certain information owned by us or in our possession relating to our business in accordance with Harvard Bioscience’s record retention policy and, if we intend to destroy this information prior to the end of the retention period required by Harvard Bioscience’s retention policy, we must give Harvard Bioscience the opportunity to take possession of the information; and
we and Harvard Bioscience will hold in strict confidence all proprietary information concerning or belonging to the other party for a five year period after the Separation, unless legally required to disclose such proprietary information.

Insurance

The separation and distribution agreement provides for the allocation among the parties of rights and obligations under existing insurance policies with respect to occurrences prior to the Separation and will set forth procedures for the administration of insured claims. In addition, the separation and distribution agreement will allocate between the parties the right to proceeds and the obligation to incur certain deductibles under certain insurance policies. The separation and distribution agreement will also provide that Harvard Bioscience will obtain, subject to the terms of the agreement, certain directors and officers insurance policies to apply against certain pre-separation claims, if any.

Expenses

All third-party fees, costs and expenses paid or incurred in connection with the Separation and the Distribution will be paid by Harvard Bioscience. Except as otherwise set forth above or as provided in the separation and distribution agreement or other transaction agreements, all other costs and expenses will be borne by the party incurring such costs and expenses.

Termination

The separation and distribution agreement may be terminated and the Distribution may be amended, modified or abandoned at any time prior to the Separation date by the mutual consent of Harvard Bioscience and

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HART. Harvard Bioscience also has the right to terminate its obligation to complete the Distribution if, at any time, Harvard Bioscience’s Board of Directors determines, in its sole discretion, that the Distribution is not in the best interests of Harvard Bioscience or its stockholders. In the event of a termination of the separation and distribution agreement on or after the completion of the Separation, only the provisions of the separation and distribution agreement that obligate the parties to pursue the Distribution will terminate. The other provisions of the separation and distribution agreement and the other transaction agreements that Harvard Bioscience and we enter into will remain in full force and effect.

Tax Sharing Agreement

Allocation of Taxes

Prior to the Distribution, we and Harvard Bioscience will enter into a tax sharing agreement that will govern the parties’ respective rights, responsibilities and obligations with respect to tax liabilities and benefits, tax attributes, the preparation and filing of tax returns, the control of audits and other tax proceedings and other matters regarding taxes. In general, under the tax sharing agreement:

With respect to any periods (or portions thereof) ending at or prior to the Distribution, Harvard Bioscience is responsible for any U.S. federal income taxes (including any interest or penalties thereon and any audit adjustment) and any U.S. state or local income taxes (including any interest or penalties thereon and any audit adjustment) reportable on a consolidated, combined or unitary return.
After the Distribution, Harvard Bioscience will be responsible for U.S. federal, state or local income taxes reportable on returns that include only Harvard Bioscience and its subsidiaries (excluding us and our subsidiaries), and we will be responsible for any U.S. federal, state or local income taxes reportable on returns that include only us and our subsidiaries.
Harvard Bioscience is responsible for any non-income taxes reportable on returns that include only Harvard Bioscience and its subsidiaries (excluding us and our subsidiaries), and after the Distribution, we are responsible for any non-income taxes filed on returns that include only us and our subsidiaries.

We are generally not entitled to receive payment from Harvard Bioscience in respect of any of our tax attributes or tax benefits or any reduction of taxes of Harvard Bioscience. Moreover, Harvard Bioscience is generally entitled to refunds of income taxes with respect to periods (or portions thereof) ending at or prior to the Distribution. If we realize any refund, credit or other reduction in otherwise required tax payments in any period (or portion thereof) beginning after the Distribution as a result of an audit adjustment resulting in taxes for which Harvard Bioscience would otherwise be responsible, then, subject to certain exceptions, Harvard Bioscience will be entitled to such refund, credit or reduction. Further, if any taxes result to Harvard Bioscience as a result of a reduction in our tax attributes for a period (or portion thereof) ending at or prior to the Distribution pursuant to an audit adjustment (relative to the amount of such tax attribute reflected on Harvard Bioscience’s tax return as originally filed), then, subject to certain exceptions, Harvard Bioscience will be responsible for paying the amount of any such taxes.

Our obligations under the tax sharing agreement are not limited in amount or subject to any cap. Further, even if we are not responsible for tax liabilities of Harvard Bioscience and its subsidiaries under the tax sharing agreement, we nonetheless could be liable under applicable tax law for such liabilities.

The tax sharing agreement also assigns responsibilities for administrative matters, such as the filing of returns, payment of taxes due, retention of records and conduct of audits, examinations or similar proceedings. In addition, the tax sharing agreement provides for cooperation and information sharing with respect to tax matters. Harvard Bioscience is primarily responsible for preparing and filing any tax return with respect to the Harvard Bioscience affiliated group for U.S. federal income tax purposes and with respect to any consolidated, combined or unitary group for U.S. state or local income tax purposes that includes Harvard Bioscience or any of its subsidiaries. Under the tax sharing agreement, we generally will be responsible for preparing and filing any tax returns that include only us and our subsidiaries for tax periods beginning after the Distribution.

Harvard Bioscience generally has exclusive authority to control tax contests related to any tax returns of the Harvard Bioscience affiliated group for U.S. federal income tax purposes and with respect to any consolidated,

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combined or unitary group for U.S. state or local income tax purposes that includes Harvard Bioscience or any of its subsidiaries. We generally have exclusive authority to control tax contests with respect to tax returns that include only us and our subsidiaries for tax periods beginning after the Distribution.

Preservation of the Tax-free Status of the Distribution

Harvard Bioscience and we intend the contribution and Distribution, taken together, to qualify as a reorganization pursuant to which no gain or loss is recognized by Harvard Bioscience or its stockholders for federal income tax purposes under Sections 355, 368(a)(1)(D) and related provisions of the Internal Revenue Code. Harvard Bioscience has informed us that on June 28, 2013 it received a Supplemental Ruling to the Private Letter Ruling dated March 22, 2013 from the IRS to the effect that, among other things, the spin-off will qualify as a transaction that is tax-free for U.S. federal income tax purposes under Section 355 and 368(a)(1)(D) of the Internal Revenue Code continuing in effect. Harvard Bioscience also intends to seek an opinion from its outside tax advisor to such effect. In connection with the ruling and the opinion, we made or will make, respectively, certain representations regarding our company and our business and Harvard Bioscience made or will make, respectively, certain representations regarding it and its business.

We have also agreed to certain restrictions that are intended to preserve the tax-free status of the contribution and the Distribution. We may take certain actions otherwise prohibited by these covenants if Harvard Bioscience receives a private letter ruling from the IRS or if we obtain, and provide to Harvard Bioscience, an opinion from a U.S. tax counsel or accountant of recognized national standing, in either case, acceptable to Harvard Bioscience in its sole and absolute discretion to the effect that such action would not jeopardize the tax-free status of the contribution and the Distribution. These covenants include restrictions on our:

issuance or sale of stock or other securities (including securities convertible into our stock but excluding certain compensatory arrangements);
sales of assets outside the ordinary course of business; and
entering into any other corporate transaction which would cause us to undergo a 50 percent or greater change in our stock ownership.

We have generally agreed to indemnify Harvard Bioscience and its affiliates against any and all tax-related liabilities incurred by them relating to the contribution or the Distribution to the extent caused by an acquisition of our stock or assets, or other actions of ours. This indemnification applies even if Harvard Bioscience has permitted us to take an action that would otherwise have been prohibited under the tax-related covenants as described above.

Transition Services Agreement

Prior to the Distribution, we and Harvard Bioscience will enter into a transition services agreement in connection with the Separation pursuant to which, Harvard Bioscience will provide us, on a transitional basis, certain administrative, human resources, treasury and support services and other assistance, consistent with the services provided by Harvard Bioscience before the Distribution. Pursuant to the transition services agreement, Harvard Bioscience will provide certain support services to us, including, among others, accounting, management, payroll, facilities usage, benefits contributions, human resources, information systems and various other corporate services, as well as operations and engineering support. The charges for the transition services generally are intended to allow Harvard Bioscience to fully recover the costs directly associated with providing the services, plus all out-of-pocket costs and expenses, generally without profit. The charges of each of the transition services generally will be based on either a pre-determined flat fee or an allocation of the cost incurred by Harvard Bioscience providing the service, including certain fees and expenses of third-party service providers. We will be provided with reasonable information that supports the charges for such transition service by Harvard Bioscience.

We have been preparing for the transition of the services to be provided by Harvard Bioscience under the transition services agreement from Harvard Bioscience, or third-party providers on behalf of Harvard Bioscience, to us. We anticipate that we will be in a position to complete the transition of those services on or before one year following the Distribution Date.

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The services provided under the transition services agreement will terminate at various times specified in the agreement (generally one year after the completion of the Distribution). We may terminate certain specified services by giving prior written notice to the provider of such services and paying any applicable termination charge.

While at the time of the Distribution, Harvard Bioscience is not expected to require any transition services from HART, Harvard Bioscience will have the right to request certain services if it determines such services are necessary during the term of the agreement.

Subject to certain exceptions, the liabilities of each party under the transition services agreement will generally be limited to the aggregate charges (excluding any third-party costs and expenses included in such charges) actually paid to such party pursuant to the transition services agreement. The transition services agreement also provides that neither party will not be liable to the other of such service for any special, indirect, incidental or consequential damages.

Sublicense Agreement

We have entered into a sublicense agreement with Harvard Bioscience pursuant to which Harvard Bioscience has granted us a perpetual, worldwide, royalty-free, exclusive, except as to Harvard Bioscience and its subsidiaries, license to use the mark “Harvard Apparatus” in the name Harvard Apparatus Regenerative Technology. The mark “Harvard Apparatus” is used under a license agreement between Harvard Bioscience and Harvard University, and we have agreed to be bound by such license agreement in accordance with our sublicense. We currently have no affiliation with Harvard University.

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DESCRIPTION OF SECURITIES

We have provided below a summary description of our capital stock as it will be in effect upon completion of the Distribution. This description is not complete. You should read the full text of our amended and restated certificate of incorporation and amended and restated by-laws, which will be filed as exhibits to the registration statement of which this information statement is a part, as well as the provisions of applicable Delaware law.

Distributions of Securities

Except for our issuance of the common stock upon formation to Harvard Bioscience, our sole stockholder, in the past three years, we have not sold any securities, including sales of reacquired securities, new issues, securities issued in exchange for property, services, or other securities, and new securities resulting from the modification of outstanding securities, which were not registered under the Securities Act of 1933, as amended.

Authorized Capital Stock

Our authorized capital stock will consist of up to 30 million shares of common stock, par value $0.01 per share, and 2,000,000 shares of preferred stock, par value $0.01 per share.

Common Stock

Shares Outstanding.   Upon completion of the Distribution, we expect that approximately      shares of our common stock will be issued and outstanding.

Dividends.   Subject to prior dividend rights of the holders of any preferred stock, holders of shares of our common stock are entitled to receive dividends when, as and if declared by our Board of Directors out of funds legally available for that purpose.

Voting Rights.   Each outstanding share of common stock will be entitled to one vote per share on all matters submitted to a vote of the stockholders. The holders of our common stock will not be entitled to cumulative voting of their shares in elections of directors.

Other Rights.   In the event of any liquidation, dissolution or winding up of our company, after the satisfaction in full of the liquidation preferences of holders of any preferred stock, holders of shares of our common stock are entitled to ratable distribution of the remaining assets available for distribution to stockholders. The shares of our common stock are not subject to redemption by operation of a sinking fund or otherwise. Holders of shares of our common stock are not currently entitled to pre-emptive rights.

Fully Paid.   The issued and outstanding shares of our common stock are fully paid and non-assessable. Any additional shares of common stock that we may issue in the future will also be fully paid and non-assessable.

Undesignated Preferred Stock

We have no outstanding shares of preferred stock. Our Board of Directors may, from time to time, authorize the issuance of one or more classes or series of preferred stock without stockholder approval. We have no current intention to issue any shares of preferred stock.

Our amended and restated certificate of incorporation permits us to issue up to 2,000,000 shares of preferred stock from time to time. Subject to the provisions of our amended and restated certificate of incorporation and limitations prescribed by law, our Board of Directors is authorized to adopt resolutions to issue shares, establish the number of shares, change the number of shares constituting any series, and provide or change the voting powers, designations, preferences and relative rights, qualifications, limitations, or restrictions on shares of our preferred stock, including dividend rights, terms of redemption, conversion rights, and liquidation preferences, in each case without any action or vote by our stockholders. Any shares of preferred stock that we redeem, purchase, or acquire may be reissued except as otherwise provided by law.

2013 Equity Incentive Plan

Prior to the Distribution, Harvard Bioscience and our Board of Directors approved our 2013 Equity Incentive Plan pursuant to which our Board of Directors can grant stock options to employees, directors and consultants. The 2013 Equity Incentive Plan will also permit the company to make grants of incentive stock options,

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non-qualified stock options, stock appreciation rights, deferred stock awards, restricted stock awards, unrestricted stock awards, performance shares and dividend equivalent rights. We currently have reserved 3,000,000 shares of common stock for the issuance of awards under the 2013 Equity Incentive Plan. Refer to “Management — Employment Benefit Plans — 2013 Equity Incentive Plan” for a more comprehensive discussion of our 2013 Equity Incentive Plan.

Employee Stock Purchase Plan

Prior to the Distribution, Harvard Bioscience and our Board of Directors approved a stock purchase plan. Under this plan, participating employees can authorize us to withhold a portion of their base pay during consecutive six-month payment periods for the purchase of shares of our common stock. At the conclusion of the period, participating employees can purchase shares of the company’s common stock at 85% of the lower of the fair market value of our common stock at the beginning or end of the period. Shares are issued under the plan for the six-month periods ending June 30 and December 31. Under this plan, 150,000 shares of common stock are authorized for issuance. Refer to “Management — Employment Benefit Plans —  Employee Stock Purchase Plan” for a more comprehensive discussion of our Employee Stock Purchase Plan.

Rights Plan

We expect our Board of Directors will adopt a rights agreement on or prior to the Distribution Date. Pursuant to the rights agreement, one preferred stock purchase right will be issued for each outstanding share of our common stock. Each right issued will be subject to the terms of the rights agreement.

Our Board of Directors believes that the rights agreement will protect our stockholders from coercive or otherwise unfair takeover tactics. In general terms, our rights agreement works by imposing a significant penalty upon any person or group that acquires 20% or more of our outstanding common stock, without the approval of our Board of Directors.

Anti-takeover Effects of our Rights Plan, Our Certificate of Incorporation and By-laws and Delaware Law

Our rights plan and some provisions of our amended and restated certificate of incorporation and amended and restated by-laws and of Delaware law could make the following more difficult:

acquisition of us by means of a tender offer;
acquisition of us by means of a proxy contest or otherwise; or
removal of our incumbent officers and directors.

These provisions, which are summarized below, are expected to discourage coercive takeover practices and inadequate takeover bids. These provisions are also designed to encourage persons seeking to acquire control of us to first negotiate with our Board of Directors. We believe that the benefits of increased protection give us the potential ability to negotiate with the proponent of an unsolicited proposal to acquire or restructure us and outweigh the disadvantages of discouraging those proposals because negotiation of the proposals could result in an improvement of their terms.

Classified Board

Our amended and restated certificate of incorporation and amended and restated by-laws provide that our Board of Directors is divided into three classes. The term of the first class expires at our 2014 annual meeting of our stockholders, the term of our second class of directors expires at our 2015 annual meeting of our stockholders and the term of our third class of directors expires at our 2016 annual meeting of our stockholders. At each of our annual meetings of stockholders, the successors of the class of directors whose term expires at that meeting of stockholders will be elected for a three-year term, one class being elected each year by our stockholders.

Removal of Directors

Our amended and restated certificate of incorporation provides that a director may only be removed from office for cause by the affirmative vote of holders of shares representing at least a majority of the votes entitled to be cast on such matter by the then-outstanding shares of all classes and series of our capital stock,

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provided that after such time that Harvard Bioscience ceases to beneficially own at least a majority of the voting power of all classes of our capital stock, any removal of directors will require the vote of the holders of at least 75% of the outstanding shares entitled to be cast on the election of directors by the then-outstanding shares of all classes and series of capital stock, voting together as a single class. This system of electing and removing directors may discourage a third party from making a tender offer or otherwise attempting to obtain control of us because it generally makes it more difficult for stockholders to replace a majority of the directors.

Size of Board and Vacancies

Our amended and restated certificate of incorporation and amended and restated by-laws provide that our Board of Directors will fix the exact number of directors to comprise our Board of Directors. Subject to any rights that holders of any series of our undesignated preferred stock (as described below) may have to elect directors and to fill vacancies on our Board of Directors, newly created directorships resulting from any increase in our authorized number of directors will be filled by a majority of our Board of Directors then in office and any vacancies in our Board of Directors resulting from death, resignation, retirement, disqualification, removal from office or other cause will be filled generally by the majority vote of our remaining directors in office, even if less than a quorum is present or by a sole remaining director.

Elimination of Stockholder Action by Written Consent

Our amended and restated certificate of incorporation and amended and restated by-laws expressly eliminate the right of our stockholders to act by written consent and stockholder action must take place at the annual or special meeting of our stockholders; provided, however, for so long as Harvard Bioscience beneficially owns shares of our common stock representing at least a majority of the votes that would be entitled to be cast on such action, any action required or permitted to be taken by the stockholders may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action to be taken, are signed by the holders of outstanding stock having at least the minimum number of votes necessary to authorize such action.

Stockholder Meetings

Under our amended and restated certificate of incorporation and amended and restated by-laws, only our Board of Directors, pursuant to a resolution adopted by a majority of our directors, may call special meetings of our stockholders.

Requirements for Advance Notification of Stockholder Nominations and Proposals

Our amended and restated by-laws have advance notice procedures with respect to stockholder proposals and nominations of candidates for election as directors other than nominations made by or at the direction of our Board of Directors or a committee of our Board of Directors. The business to be conducted at an annual meeting will be limited to business properly brought before the annual meeting by or at the direction of our Board of Directors or a duly authorized committee thereof or by a stockholder of record who has given timely written notice to our secretary of that stockholder’s intention to bring such business before such meeting in accordance with the amended and restated by-laws.

Delaware Anti-takeover Law

Upon the Distribution, we will be governed by Section 203 of the General Corporation Law of the State of Delaware, or DGCL. Section 203, subject to certain exceptions, prohibits a Delaware corporation from engaging in any business combination with any interested stockholder for a period of three years following the time that such stockholder became an interested stockholder, unless:

prior to such time, the Board of Directors of the corporation approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder; or
upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85.0% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding specified shares; or

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at or subsequent to such time, the business combination is approved by the Board of Directors and authorized at an annual or special meeting of stockholders, by the affirmative vote of at least 66 2/3% of the outstanding voting stock that is not owned by the interested stockholder. The stockholders cannot authorize the business combination by written consent.

The application of Section 203 may limit the ability of stockholders to approve a transaction that they may deem to be in their best interests.

In general, Section 203 defines “business combination” to include:

any merger or consolidation involving the corporation and the interested stockholder; or
any sale, lease, exchange, mortgage, pledge, transfer or other disposition of 10.0% or more of the assets of the corporation to or with the interested stockholder; or
subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any of its stock to the interested stockholder; or
any transaction involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series of the corporation beneficially owned by the interested stockholder; or
the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation.

In general, Section 203 defines an “interested stockholder” as any person that is:

the owner of 15% or more of the outstanding voting stock of the corporation; or
an affiliate or associate of the corporation who was the owner of 15% or more of the outstanding voting stock of the corporation at any time within three years immediately prior to the relevant date; or
the affiliates and associates of the above.

Under specific circumstances, Section 203 makes it more difficult for an “interested stockholder” to effect various business combinations with a corporation for a three-year period, although the stockholders may, by adopting an amendment to the corporation’s certificate of incorporation or by-laws, elect not to be governed by this section, effective twelve months after adoption.

Our amended and restated certificate of incorporation and by-laws do not exclude us from the restrictions imposed under Section 203. We anticipate that the provisions of Section 203 may encourage companies interested in acquiring us to negotiate in advance with our Board of Directors since the stockholder approval requirement would be avoided if a majority of the directors then in office approve either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder.

Supermajority Voting

Our amended and restated certificate of incorporation provides that amendments which require the vote of our stockholders and which relate to provisions in the amended and restated certificate of incorporation relating to the general powers of the Board of Directors, the number, classes and tenure of directors, filling vacancies on the Board of Directors, removal of directors, limitation of liability of directors, special meetings of stockholders, stockholder action by written consent, the amendment provision of our amended and restated by-laws and the supermajority amendment provision of the amended and restated certificate of incorporation shall require the affirmative vote of the holders of at least 75% of the outstanding shares of each class of our stock entitled to vote on such amendment as a class.

Our amended and restated certificate of incorporation and amended and restated by-laws provide that amendments to the amended and restated by-laws may be made either (i) by a vote of at least a majority of our entire Board of Directors or (ii) by a vote of the holders of at least a majority of the combined voting power of the outstanding shares of all classes and series of our capital stock entitled to vote on such amendment as a class, until such time as Harvard Bioscience ceases to beneficially own at least a majority of

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the voting power of all classes of our capital stock, after which any amendment will require the vote of the holders of at least 75% of the outstanding shares of each class of our stock entitled to vote on such amendment as a class.

No Cumulative Voting

Our amended and restated certificate of incorporation and amended and restated by-laws do not provide for cumulative voting in the election of directors.

Undesignated Preferred Stock

The authorization in our amended and restated certificate of incorporation of undesignated preferred stock makes it possible for our Board of Directors to issue our preferred stock with voting or other rights or preferences that could impede the success of any attempt to change control of us. The provisions in our amended and restated certificate of incorporation authorizing such preferred stock may have the effect of deferring hostile takeovers or delaying changes of control of our management.

Restrictions on Payment of Dividends

We are incorporated in Delaware and are governed by Delaware law. Delaware law allows a corporation to pay dividends only out of surplus, as determined under Delaware law.

Transfer Agent and Registrar

The transfer agent and registrar for our common stock is Registrar & Transfer Company.

NASDAQ Capital Market Listing

We have filed an application to list our shares of common stock on the NASDAQ Capital Market. We expect that our shares will trade under the ticker symbol “HART.”

Limitation on Liability of Directors and Indemnification of Directors and Officers

Section 145 of the DGCL provides that a corporation may indemnify directors and officers as well as other employees and individuals against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement in connection with any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, in which such person is made a party by reason of the fact that the person is or was a director, officer, employee or agent of the corporation (other than an action by or in the right of the corporation — a “derivative action”), if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person’s conduct was unlawful. A similar standard is applicable in the case of derivative actions, except that indemnification only extends to expenses (including attorneys’ fees) incurred in connection with the defense or settlement of such action, and the statute requires court approval before there can be any indemnification where the person seeking indemnification has been found liable to the corporation. The statute provides that it is not exclusive of other indemnification that may be granted by a corporation’s by-laws, disinterested director vote, stockholder vote, agreement or otherwise.

Our amended and restated certificate of incorporation provides that no director shall be liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation on liability is not permitted under the DGCL, as now in effect or as amended. Currently, Section 102(b)(7) of the DGCL requires that liability be imposed for the following:

any breach of the director’s duty of loyalty to our company or our stockholders;
any act or omission not in good faith or which involved intentional misconduct or a knowing violation of law;
unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the DGCL; and
any transaction from which the director derived an improper personal benefit.

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Our amended and restated certificate of incorporation and amended and restated by-laws provide that, to the fullest extent authorized or permitted by the DGCL, as now in effect or as amended, we will indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding by reason of the fact that such person, or a person of whom he or she is the legal representative, is or was our director or officer, or by reason of the fact that our director or officer is or was serving, at our request, as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans maintained or sponsored by us. We will indemnify such persons against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with such action if such person acted in good faith and in a manner reasonably believed to be in our best interests and, with respect to any criminal proceeding, had no reason to believe such person’s conduct was unlawful. A similar standard is applicable in the case of derivative actions, except that indemnification only extends to expenses (including attorneys’ fees) incurred in connection with the defense or settlement of such actions, and court approval is required before there can be any indemnification where the person seeking indemnification has been found liable to us. Any amendment of this provision will not reduce our indemnification obligations relating to actions taken before an amendment.

We intend to obtain policies that insure our directors and officers and those of our subsidiaries against certain liabilities they may incur in their capacity as directors and officers. Under these policies, the insurer, on our behalf, may also pay amounts for which we have granted indemnification to the directors or officers.

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MATERIAL U.S. TAX CONSIDERATIONS FOR NON-U.S. HOLDERS OF COMMON STOCK

The following is a general discussion of material U.S. federal income and estate tax considerations relating to ownership and disposition of our common stock by a non-U.S. holder. For purposes of this discussion, the term “non-U.S. holder” means a beneficial owner of our common stock that is not, for U.S. federal income tax purposes:

an individual who is a citizen or resident of the U.S.;
a corporation, or other entity treated as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the U.S. or of any political subdivision of the U.S.;
an estate the income of which is subject to U.S. federal income taxation regardless of its source; or
a trust, if a U.S. court is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have authority to control all substantial decisions of the trust or if the trust has a valid election to be treated as a U.S. person under applicable U.S. Treasury Regulations.

An individual may be treated as a resident instead of a nonresident of the U.S. in any calendar year for U.S. federal income tax purposes if the individual was present in the U.S. for at least 31 days in that calendar year and for an aggregate of at least 183 days during the three-year period ending with the current calendar year. For purposes of this calculation, all of the days present in the current year, one-third of the days present in the immediately preceding year, and one-sixth of the days present in the second preceding year are counted. Residents of the U.S. are taxed for U.S. federal income tax purposes as if they were U.S. citizens.

This discussion is based on current provisions of the Code, existing and proposed U.S. Treasury Regulations promulgated thereunder, current administrative rulings, and judicial decisions, all publicly available and as in effect as of the date of this information statement and all of which are subject to change or to differing interpretation, possibly with retroactive effect. Any change or differing interpretation could alter the tax consequences to non-U.S. holders described in this information statement. In addition, the IRS could challenge one or more of the tax consequences described in this information statement and we have not obtained nor do we intend to obtain an opinion of counsel with respect to the U.S. federal income or estate tax consequences to a non-U.S. holder of acquiring, holding, and disposing of our common stock.

This discussion addresses only non-U.S. holders that hold shares of our common stock as a capital asset (generally, property held for investment). This discussion does not address all aspects of U.S. federal income and estate taxation that may be relevant to a particular non-U.S. holder in light of that non-U.S. holder’s individual circumstances nor does it address any aspects of U.S. state, local, or non-U.S. taxes. This discussion also does not consider any specific facts or circumstances that may apply to a non-U.S. holder and does not address the special tax rules applicable to particular non-U.S. holders, such as:

insurance companies;
tax-exempt organizations;
financial institutions;
brokers or dealers in securities;
regulated investment companies;
pension plans;
controlled foreign corporations;
passive foreign investment companies;
owners that hold our common stock as part of a straddle, hedge, conversion transaction, synthetic security, or other integrated investment; and
certain U.S. expatriates.

In addition, this discussion does not address the tax treatment of partnerships or persons who hold their common stock through partnerships or other entities that are pass-through entities for U.S. federal income tax

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purposes. A partner in a partnership or other pass-through entity that will hold our common stock should consult his, her, or its own tax advisor regarding the tax consequences of the purchase, ownership, and disposition of our common stock through a partnership or other pass-through entity, as applicable.

Non-U.S. holders may be subject to different tax treatment than U.S. citizens and residents.

Investors should consult their own tax advisors regarding the U.S. federal, state, local, and non-U.S. income and other tax considerations of acquiring, holding, and disposing of our common stock.

Dividends

If we pay distributions on our common stock, those distributions generally will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. If a distribution exceeds our current and accumulated earnings and profits, the excess will be treated as a tax-free return of the non-U.S. holder’s investment, up to such holder’s tax basis in the common stock. Any remaining excess will be treated as capital gain, subject to the tax treatment described below under the heading “— Gain on Disposition of Common Stock.”

Dividends paid to a non-U.S. holder generally will be subject to withholding of U.S. federal income tax at a 30% rate or such lower rate as may be specified by an applicable income tax treaty between the U.S. and such holder’s country of residence. If we determine, at a time reasonably close to the date of payment of a distribution on our common stock, that the distribution will not constitute a dividend because we do not anticipate having current or accumulated earnings and profits, we intend not to withhold any U.S. federal income tax on the distribution as permitted by U.S. Treasury Regulations.

Dividends that are treated as effectively connected with a trade or business conducted by a non-U.S. holder within the U.S. and, if an applicable income tax treaty so provides, that are attributable to a permanent establishment or a fixed base maintained by the non-U.S. holder within the U.S. are generally exempt from the 30% withholding tax if the non-U.S. holder satisfies applicable certification and disclosure requirements. However, such U.S. effectively connected income is taxed on a net income basis at the same graduated U.S. federal income tax rates applicable to U.S. persons (as defined in the Code). Any U.S. effectively connected income received by a non-U.S. holder that is a corporation may also, under certain circumstances, be subject to an additional “branch profits tax” at a 30% rate or such lower rate as may be specified by an applicable income tax treaty between the U.S. and such holder’s country of residence.

A non-U.S. holder of our common stock who claims the benefit of an applicable income tax treaty between the U.S. and such holder’s country of residence generally will be required to provide a properly executed IRS Form W-8BEN (or successor form) and satisfy applicable certification and other requirements. Non-U.S. holders are urged to consult their own tax advisors regarding their entitlement to benefits under a relevant income tax treaty.

A non-U.S. holder that is eligible for a reduced rate of U.S. withholding tax under an income tax treaty may obtain a refund or credit of any excess amounts withheld by timely filing an appropriate claim with the IRS.

Gain on Disposition of Common Stock

A non-U.S. holder generally will not be subject to U.S. federal income tax on gain recognized on a disposition of our common stock unless:

the gain is effectively connected with the non-U.S. holder’s conduct of a trade or business in the U.S. and, if an applicable income tax treaty so provides, the gain is attributable to a permanent establishment or fixed base maintained by the non-U.S. holder in the U.S.; in these cases, the non-U.S. holder will be taxed on a net income basis at the regular graduated rates and in the manner applicable to U.S. persons, and if the non-U.S. holder is a foreign corporation, an additional branch profits tax at a 30% rate, or such lower rate as may be specified by an applicable income tax treaty, may also apply;
the non-U.S. holder is a nonresident alien present in the U.S. for 183 days or more in the taxable year of the disposition and certain other requirements are met, in which case the non-U.S. holder

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will be subject to a 30% tax (or such lower rate as may be specified by an applicable income tax treaty) on the net gain derived from the disposition, which may be offset by U.S.-source capital losses of the non-U.S. holder, if any; or
we are, or have been at any time during the five-year period preceding such disposition (or the non-U.S. holder’s holding period, if shorter), a “U.S. real property holding corporation,” unless our common stock is regularly traded on an established securities market and the non-U.S. holder held no more than 5% of our outstanding common stock, directly or indirectly, during the shorter of the five year period ending on the date of the disposition or the period that the non-U.S. holder held our common stock. Generally, a corporation is a “U.S. real property holding corporation” if the fair market value of its “U.S. real property interests” equals or exceeds 50% of the sum of the fair market value of its worldwide real property interests plus its other assets used or held for use in a trade or business. Although there can be no assurance, we believe that we are not currently, and we do not anticipate becoming, a “U.S. real property holding corporation” for U.S. federal income tax purposes. No assurance can be provided that our common stock will be regularly traded on an established securities market for purposes of the rule described above.

Information Reporting and Backup Withholding

We must report annually to the IRS and to each non-U.S. holder the gross amount of the distributions on our common stock paid to such holder and the tax withheld, if any, with respect to such distributions. Non-U.S. holders may have to comply with specific certification procedures to establish that the holder is not a U.S. person (as defined in the Code) in order to avoid backup withholding at the applicable rate, currently 28%, with respect to dividends on our common stock. Generally, a non-U.S. holder will comply with such procedures if it provides a properly executed IRS Form W-8BEN (or other applicable Form W-8) or otherwise meets documentary evidence requirements for establishing that it is a non-U.S. holder, or otherwise establishes an exemption. Dividends paid to non-U.S. holders subject to withholding of U.S. federal income tax, as described above under the heading “— Dividends,” will generally be exempt from U.S. backup withholding.

Information reporting and backup withholding generally will apply to the proceeds of a disposition of our common stock by a non-U.S. holder effected by or through the U.S. office of any broker, U.S. or foreign, unless the holder certifies its status as a non-U.S. holder and satisfies certain other requirements, or otherwise establishes an exemption. Generally, information reporting and backup withholding will not apply to a payment of disposition proceeds to a non-U.S. holder where the transaction is effected outside the U.S. through a non-U.S. office of a broker. However, for information reporting purposes, dispositions effected through a non-U.S. office of a broker with substantial U.S. ownership or operations generally will be treated in a manner similar to dispositions effected through a U.S. office of a broker. Non-U.S. holders should consult their own tax advisors regarding the application of the information reporting and backup withholding rules to them.

Copies of information returns may be made available to the tax authorities of the country in which the non-U.S. holder resides or is incorporated under the provisions of a specific treaty or agreement.

Backup withholding is not an additional tax. Rather, any amounts withheld under the backup withholding rules from a payment to a non-U.S. holder can be refunded or credited against the non-U.S. holder’s U.S. federal income tax liability, if any, provided that an appropriate claim is timely filed with the IRS.

Legislation Relating to Foreign Accounts

The Foreign Account Tax Compliance Act, or FATCA, was enacted in March 2010. Generally, FATCA imposes a 30% withholding tax on dividends on, and gross proceeds from the sale or other disposition of, our common stock if paid to a foreign entity unless (i) if the foreign entity is a “foreign financial institution,” the foreign entity undertakes certain due diligence, reporting, withholding, and certification obligations, (ii) if the foreign entity is not a “foreign financial institution,” the foreign entity identifies certain of its U.S. investors, or (iii) the foreign entity is otherwise excepted under FATCA.

Although this legislation is effective with respect to amounts paid after December 31, 2012, under proposed regulations issued by the U.S. Department of the Treasury on February 8, 2012, withholding under FATCA will only apply (1) to payments of dividends on our common stock made after December 31, 2013 and (2) to

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payments of gross proceeds from a sale or other disposition of our common stock made after December 31, 2014. These proposed regulations are not final and will not be effective until they have been issued in final form. There can be no assurance as to when the final regulations will be issued or whether the final regulations will be substantially different from the proposed regulations. If withholding under FATCA is required on any payment related to our common stock, investors not otherwise subject to withholding (or that otherwise would be entitled to a reduced rate of withholding) on such payment may be required to seek a refund or credit from the IRS. Non-U.S. holders should consult their own tax advisors regarding the possible implications of FATCA on their investment in our common stock.

Federal Estate Tax

Common stock owned or treated as owned by an individual who is a non-U.S. holder (as specially defined for U.S. federal estate tax purposes) at the time of death will be included in the individual’s gross estate for U.S. federal estate tax purposes and, therefore, may be subject to U.S. federal estate tax, unless an applicable estate tax or other treaty provides otherwise.

The preceding discussion of material U.S. federal tax considerations is for general information only. It is not tax advice. Investors should consult their own tax advisors regarding the particular U.S. federal, state, local, and non-U.S. tax consequences of purchasing, holding, and disposing of our common stock, including the consequences of any proposed changes in applicable laws.

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WHERE YOU CAN FIND MORE INFORMATION

We have filed a registration statement on Form 10 with the SEC with respect to the shares of our common stock that Harvard Bioscience stockholders will receive in the Distribution. This information statement is a part of that registration statement and, as allowed by SEC rules, does not include all of the information you can find in the registration statement or the exhibits to the registration statement. For additional information relating to our company and the Distribution, reference is made to the registration statement and the exhibits to the registration statement. Statements contained in this information statement as to the contents of any contract or document referred to are not necessarily complete and in each instance, if the contract or document is filed as an exhibit to the registration statement, we refer you to the copy of the contract or other document filed as an exhibit to the registration statement. Each such statement is qualified in all respects by reference to the applicable document.

After the Distribution, we will file annual, quarterly and special reports, proxy statements and other information with the SEC. We intend to furnish our stockholders with annual reports containing consolidated financial statements audited by an independent registered public accounting firm. The registration statement is, and any of these future filings with the SEC will be, available to the public over the Internet on the SEC’s website at http://www.sec.gov. You may read and copy any filed document at the SEC’s public reference rooms in Washington, D.C. at 100 F Street, N.E., Washington, D.C. 20549 and at the SEC’s regional offices in New York at 233 Broadway, New York, New York 10279 and in Chicago at Citicorp Center, 500 W. Madison Street, Suite 1400, Chicago, Illinois 60661. Please call the SEC at 1-800-SEC-0330 for further information about the public reference rooms.

We will maintain an Internet site at http://www.harvardapparatusregen.com , which we expect to be operational on or before the date that the Form 10 is declared effective. Our website and the information contained on that site, or connected to that site, are not incorporated into this information statement or the registration statement on Form 10.

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INDEX TO FINANCIAL STATEMENTS

Harvard Apparatus Regenerative Technology, Inc.

 
Report of Independent Registered Public Accounting Firm     F-2  
Audited Financial Statements:
        
Balance Sheets     F-3  
Statements of Operations     F-4  
Statements of Invested Equity (Deficit)     F-5  
Statements of Cash Flows     F-6  
Notes to Financial Statements     F-7  
Unaudited Financial Statements:
        
Balance Sheets     F-16  
Statements of Operations     F-17  
Statements of Cash Flows     F-18  
Notes to Unaudited Financial Statements     F-19  

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders
Harvard Bioscience, Inc.:

We have audited the accompanying balance sheets of Harvard Apparatus Regenerative Technology, Inc., a business segment of Harvard Bioscience, Inc. and development stage company, (the Company) as of December 31, 2012 and 2011, and the related statements of operations, invested equity (deficit), and cash flows for the years ended December 31, 2012, 2011 and 2010, and for the period from February 24, 2009 (inception) to December 31, 2012. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Harvard Apparatus Regenerative Technology, Inc., a business segment of Harvard Bioscience, Inc. and development stage company as of December 31, 2012 and 2011, and the results of its operations and its cash flows for the years ended December 31, 2012, 2011 and 2010, and for the period from February 24, 2009 (inception) to December 31, 2012, in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

Boston, Massachusetts
February 28, 2013

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HARVARD APPARATUS REGENERATIVE TECHNOLOGY, INC.
A BUSINESS SEGMENT OF HARVARD BIOSCIENCE, INC.
(A Development Stage Company)
  
BALANCE SHEETS
(In thousands)

   
  December 31, 2012   December 31, 2011
ASSETS
                 
Current assets:
                 
Cash and cash equivalents   $     $  
Accounts receivables, net            
Inventories, net            
Total current assets            
Plant, property and equipment, net     438       187  
Total non-current assets     438       187  
Total assets   $ 438     $ 187  
LIABILITIES AND INVESTED EQUITY
                 
Current liabilities:
                 
Accounts payable   $ 179     $ 49  
Accrued and other current liabilities     232       116  
Total current liabilities     411       165  
Total liabilities     411       165  
Invested equity:
                 
Harvard Bioscience investment     12,425       5,707  
Accumulated deficit     (12,398 )       (5,685 )  
Total invested equity     27       22  
Total liabilities and invested equity   $ 438     $ 187  

 
 
See accompanying notes to financial statements.

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HARVARD APPARATUS REGENERATIVE TECHNOLOGY, INC.
A BUSINESS SEGMENT OF HARVARD BIOSCIENCE, INC.
(A Development Stage Company)
  
STATEMENTS OF OPERATIONS
(In thousands)

       
  Years Ended December 31,   Period from February 24, 2009 (inception) to December 31, 2012
     2012   2011   2010
Revenues   $     $     $     $  
Cost of product revenues                        
Gross profit                        
Selling and marketing expenses     116       215       53       384  
General and administrative expenses     2,570       1,251       572       4,581  
Research and development expenses     4,027       2,285       727       7,433  
Operating expenses     6,713       3,751       1,352       12,398  
Operating loss     (6,713 )       (3,751 )       (1,352 )       (12,398 )  
Loss before income taxes     (6,713 )       (3,751 )       (1,352 )       (12,398 )  
Income taxes                        
Net loss   $ (6,713 )     $ (3,751 )     $ (1,352 )     $ (12,398 )  

 
 
See accompanying notes to financial statements.

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HARVARD APPARATUS REGENERATIVE TECHNOLOGY, INC.
A BUSINESS SEGMENT OF HARVARD BIOSCIENCE, INC.
(A Development Stage Company)
  
STATEMENTS OF INVESTED EQUITY (DEFICIT)
(In thousands)

     
  Harvard Bioscience Investment   Accumulated Deficit   Total Invested
Equity (Deficit)
Net loss from February 24, 2009 (inception) to December 31, 2009   $     $ (582 )     $ (582 )  
Investment by Harvard Bioscience     512             512  
Balance at December 31, 2009     512       (582 )       (70 )  
Net loss           (1,352 )       (1,352 )  
Investment by Harvard Bioscience     1,154             1,154  
Balance at December 31, 2010     1,666       (1,934 )       (268 )  
Net loss           (3,751 )       (3,751 )  
Investment by Harvard Bioscience     4,041             4,041  
Balance at December 31, 2011     5,707       (5,685 )       22  
Net loss           (6,713 )       (6,713 )  
Investment by Harvard Bioscience     6,718             6,718  
Balance at December 31, 2012   $ 12,425     $ (12,398 )     $ 27  

 
 
See accompanying notes to financial statements.

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HARVARD APPARATUS REGENERATIVE TECHNOLOGY, INC.
A BUSINESS SEGMENT OF HARVARD BIOSCIENCE, INC.
(A Development Stage Company)
  
STATEMENTS OF CASH FLOWS
(In thousands)

       
  Years ended December 31,   Period from February 24, 2009 (inception) to December 31, 2012
     2012   2011   2010
Cash flows used in operating activities:
                                   
Net loss:   $ (6,713 )     $ (3,751 )     $ (1,352 )     $ (12,398 )  
Adjustments to reconcile net loss to net cash used in operating activities:
                                   
Stock-based compensation expense     511       261       105       908  
Depreciation     59       21             80  
Changes in operating assets and liabilities:
                                   
Increase (decrease) in accounts payable     130       (3 )       46       179  
Increase (decrease) in accrued and other current liabilities     116       (101 )       153       232  
Net cash used in operating activities     (5,897 )       (3,573 )       (1,048 )       (10,999 )  
Cash flows used in investing activities:
                                   
Additions to property, plant and equipment     (310 )       (207 )       (1 )       (518 )  
Net cash used in investing activities     (310 )       (207 )       (1 )       (518 )  
Cash flows from financing activities:
                                   
Investment by Harvard Bioscience     6,207       3,780       1,049       11,517  
Net cash provided by financing activities     6,207       3,780       1,049       11,517  
Net increase (decrease) in cash and cash equivalents                        
Cash and cash equivalents at beginning of the period                        
Cash and cash equivalents at end of period   $     $     $     $  

 
 
See accompanying notes to financial statements.

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HARVARD APPARATUS REGENERATIVE TECHNOLOGY, INC.
A BUSINESS SEGMENT OF HARVARD BIOSCIENCE, INC.
(A Development Stage Company)
  
NOTES TO FINANCIAL STATEMENTS

1. Overview and Basis of Presentation

Overview

Harvard Apparatus Regenerative Technology, Inc. (“HART” or “the Company”) is a business segment of Harvard Bioscience, Inc. (“Harvard Bioscience” or “Parent”). The Company is engaged in the development and commercialization of devices for use by clinicians and researchers in the field of regenerative medicine.

Since inception, the Company has devoted substantially all of its efforts to business planning, research and development, recruiting management and technical staff, and acquiring operating assets. Accordingly, HART is considered to be in the development stage.

HART is a wholly-owned subsidiary of Harvard Bioscience. HART was incorporated on May 3, 2012 by Harvard Bioscience to provide a means for separating its regenerative medicine device business from its other businesses. Harvard Bioscience has been designing and manufacturing devices for life science researchers for over 100 years. Harvard Bioscience first focused on providing devices to scientists involved in regenerative medicine research in 2008. Since early 2009, Harvard Bioscience’s regenerative medicine device business initiative has been operated as a division of Harvard Bioscience. Harvard Bioscience decided to separate its regenerative medicine device business into HART, a separate corporate entity, to authorize HART to raise capital by selling equity and then to spin off its interest in HART to its stockholders.

Basis of Presentation

The Company has historically operated as part of Harvard Bioscience, and not as a stand-alone company. The financial statements presented herein, and discussed below, have been prepared on a stand-alone basis and are derived from the financial statements and accounting records of Harvard Bioscience using the historical basis of assets and liabilities of HART. The financial statements reflect the Company’s financial position, results of operations and cash flows in conformity with accounting principles generally accepted in the United States (“GAAP”).

The Company’s financial statements include expenses of Harvard Bioscience allocated to HART for certain functions provided by Harvard Bioscience, including, but not limited to, general corporate expenses related to executive services, finance, treasury, corporate income tax, human resources, legal services and investor relations. These expenses have been allocated to HART on the basis of headcounts, time devoted to HART activities, percentage of operating expenses or other relevant measures. The Company believes the assumptions and allocations underlying the financial statements are reasonable and appropriate under the circumstances. Both HART and Harvard Bioscience consider the basis on which the expenses have been allocated to be a reasonable reflection of the utilization of services provided to or the benefits received by the Company during the periods presented. However, the amounts recorded for these transactions and allocations are not necessarily representative of the amounts that would have been reflected in the financial statements had HART operated independently of Harvard Bioscience. Accordingly, the financial statements for these years are not necessarily indicative of our future results of operations, financial position, and cash flows.

Harvard Bioscience has historically used a centralized approach to cash management and financing of its operations. Transactions relating to HART are accounted for through the Harvard Bioscience investment account for HART. Accordingly, none of the cash, cash equivalents or debt at the Harvard Bioscience corporate level has been assigned to HART in the financial statements.

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HARVARD APPARATUS REGENERATIVE TECHNOLOGY, INC.
A BUSINESS SEGMENT OF HARVARD BIOSCIENCE, INC.
(A Development Stage Company)
  
NOTES TO FINANCIAL STATEMENTS

2. Summary of Significant Accounting Policies and Recently Issued Accounting Pronouncements

(a) Use of Estimates

The process of preparing financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Such estimates include, but not limited to, stock-based compensation, accruals, depreciation and income taxes. Actual results could differ from those estimates and changes in estimates may occur.

(b) Property, Plant and Equipment

Property, plant and equipment are carried at cost and depreciated using the straight-line method over the estimated useful lives of the assets as follows:

 
Leasehold Improvements   7 years
Machinery and Equipment   3 years
Computer equipment and software   3 years

Maintenance and repairs are charged to expense as incurred, while any additions or improvements are capitalized.

(c) Income Taxes

HART operations were historically included in Harvard Bioscience’s consolidated U.S. federal and certain state income tax returns. The provision for income taxes has been determined as if HART had filed separate tax returns for the periods presented. Accordingly, the effective tax rate of HART in the future years could vary from its historical effective tax rates depending on the future legal structure of HART and related tax elections. The historical deferred tax assets, including the operating losses and credit carryforwards generated by HART, will remain with Harvard Bioscience subsequent to the separation.

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to be applied to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

A valuation allowance is recorded when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Accordingly, the Company provides a valuation allowance, if necessary, to reduce deferred tax assets to amounts that are realizable.

Tax positions taken or expected to be taken in the course of preparing our tax returns are required to be evaluated to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet a more-likely-than-not threshold would be recorded as a tax expense in the current year.

(d) Impairment of Long-Lived Assets

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. An asset, or group of assets, are considered to be impaired when the undiscounted estimated net cash flows expected to be generated by the asset, or group of assets, are less than its carrying amount. The impairment recognized is the amount by which the carrying amount exceeds the fair market value of the impaired asset, or group of assets.

(e) Stock-based Compensation

Stock-based compensation expense for HART represents an allocation from Harvard Bioscience’s stock-based compensation expense for employees whose time has been allocated to HART.

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HARVARD APPARATUS REGENERATIVE TECHNOLOGY, INC.
A BUSINESS SEGMENT OF HARVARD BIOSCIENCE, INC.
(A Development Stage Company)
  
NOTES TO FINANCIAL STATEMENTS

2. Summary of Significant Accounting Policies and Recently Issued Accounting Pronouncements  – (continued)

Harvard Bioscience maintains the 2000 Stock Option and Incentive Plan (the “Plan”) for the benefit of certain of its officers, directors and employees, including HART employees. All options and awards granted under the Plan consist of Harvard Bioscience common shares.

Harvard Bioscience accounts for stock-based payment awards in accordance with the provisions of FASB ASC 718, “ Compensation — Stock Compensation ”, which requires the Company to recognize compensation expense for all stock-based payment awards made to employees and directors including employee stock options and restricted stock units. Harvard Bioscience issues new shares upon stock option exercises and upon vesting of the restricted stock units.

Stock-based compensation expense recognized is based on the value of the portion of stock-based payment awards that is ultimately expected to vest and has been reduced for estimated forfeitures. Harvard Bioscience values stock-based payment awards, except restricted stock units, at grant date using the Black-Scholes option-pricing model (“Black-Scholes model”). The determination of fair value of stock-based payment awards on the date of grant using an option-pricing model is affected by Harvard Bioscience’s stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to Harvard Bioscience’s expected stock price volatility over the term of the awards and actual and projected employee stock option exercise behaviors.

The fair value of restricted stock units are based on the market price of Harvard Bioscience’s stock on the date of grant and are recorded as compensation expense ratably over the applicable service period, which is generally four years. Unvested restricted stock units are forfeited in the event of termination of employment or engagement with Harvard Bioscience.

(f) Research and Development

Research and development costs are charged to expense as incurred. Research and development costs consist of personnel related expenses, including salaries, benefits, travel, and other related expenses, including stock-based compensation; costs associated with regulatory filings, laboratory and other supplies; and related facility maintenance.

(g) Harvard Bioscience, Inc. Investment

The financial statements of HART represent a combination of various components of Harvard Bioscience. Because a direct ownership relationship did not exist among all the components comprising HART, Harvard Bioscience’s investment in HART is shown in lieu of stockholder’s equity in the financial statements.

(h) Segment Reporting

The Company operates in one segment. The Company is engaged in the development and commercialization of devices for use by clinicians and researchers in the field of regenerative medicine.

(i) Recently Issued Accounting Pronouncements

There are no recently issued accounting standards which are not yet effective which the Company believes would materially impact the financial statements.

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HARVARD APPARATUS REGENERATIVE TECHNOLOGY, INC.
A BUSINESS SEGMENT OF HARVARD BIOSCIENCE, INC.
(A Development Stage Company)
  
NOTES TO FINANCIAL STATEMENTS

3. Liquidity

The Company has incurred operating losses and negative cash flow since inception, and had an accumulated deficit of $12.4 million as of December 31, 2012. Since inception, the Company has received funding for operating losses from Harvard Bioscience. The Company is currently investing significant resources in development and commercialization of devices for use by clinicians and researchers in the field of regenerative medicine. The Company expects to continue to incur operating losses and negative cash flows. If the planned separation from Harvard Bioscience does not occur and the Company does not raise capital externally to fund its operating losses into 2014, then Harvard Bioscience will continue to fund the Company’s business activities into 2014.

4. Related Party Transactions

Cost Allocations

For each of the periods presented, HART’s operations were fully integrated with Harvard Bioscience, including executive services, finance, treasury, corporate income tax, human resources, legal services and investor relations. The accompanying financial statements reflect the application of certain estimates and allocations of operating expenses and the Company believes the methods used to allocate these operating expenses are reasonable. The allocation methods include time devoted to HART activities, headcount, percentage of operating expenses or other relevant measures. Allocation of expenses for these services of $1.1 million, $0.7 million and $0.4 million for the years ended December 31, 2012, 2011 and 2010, respectively, are reflected in the total operating expenses in the statements of operations, in addition to direct expenses. The Company’s financial statements may not be indicative of the future performance and do not necessarily reflect what the results of operations, financial position and cash flows would have been had the Company operated as an independent, publicly-traded company during the periods presented.

5. Property, Plant and Equipment

Property, plant and equipment consist of the following:

   
  December 31,
     2012   2011
     (in thousands)
Leasehold improvements   $    143     $    115  
Machinery and Equipment     265        
Computer equipment and software     110       85  
Capital work in progress           8  
       518       208  
Less: accumulated depreciation     (80 )       (21 )  
Property, plant and equipment, net   $ 438     $ 187  

6. Leases

Harvard Bioscience leases certain real and personal property from unrelated third parties under non-cancelable operating leases. Total rent expense allocations to the Company were $31,801, $18,313 and $12,014 for the years ended December 31, 2012, 2011 and 2010, respectively.

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HARVARD APPARATUS REGENERATIVE TECHNOLOGY, INC.
A BUSINESS SEGMENT OF HARVARD BIOSCIENCE, INC.
(A Development Stage Company)
  
NOTES TO FINANCIAL STATEMENTS

7. Accrued Expenses

Accrued expenses consist of:

   
  December 31,
     2012   2011
     (in thousands)
Accrued compensation and payroll   $     53     $     21  
Other     179       95  
Total   $ 232     $ 116  

8. Stock-Based Compensation

Stock-based compensation expense for HART represents an allocation from Harvard Bioscience’s stock-based compensation expense for employees whose time has been allocated to HART.

Harvard Bioscience maintains the Plan for the benefit of certain of its officers, directors and employees. The following disclosure represents the Company’s portion of the Plan maintained by Harvard Bioscience in which the employees participated. All options and awards granted under the Plan consist of Harvard Bioscience common shares. Accordingly, the amounts presented are not necessarily indicative of future performance and do not necessarily reflect the results that the Company would have experienced as an independent, publicly-traded company for the periods presented.

Employee options and awards become fully vested over a period of approximately three years and seven months, with the first quarter vesting after approximately seven months of the grant date and the remaining vesting equally over a period of three years thereafter.

The fair value of options granted was determined using the Black-Scholes option-pricing model. The determination of fair value on the date of the grant is affected by the grant date market price of Harvard Bioscience common shares and a number of other variables. These variables include, but are not limited to, the expected stock price volatility of Harvard Bioscience common shares over the term of the awards and actual and projected employee stock option exercise behaviors. The fair value of restricted stock units was determined by the number of shares granted and the grant date market price of Harvard Bioscience common shares.

The compensation expense recognized for all equity-based awards is net of estimated forfeitures and is recognized using the straight-line method over the applicable service period.

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HARVARD APPARATUS REGENERATIVE TECHNOLOGY, INC.
A BUSINESS SEGMENT OF HARVARD BIOSCIENCE, INC.
(A Development Stage Company)
  
NOTES TO FINANCIAL STATEMENTS

8. Stock-Based Compensation  – (continued)

The following summarizes all stock option transactions under the Plan from January 1, 2010 to December 31, 2012:

       
  Stock Options   Restricted Stock Units
     Stock Options Outstanding   Weighted Average Exercise Price   Restricted Stock Units Outstanding   Grant Date Fair Value
Balance at December 31, 2009     95,100     $ 3.18           $  
Granted     60,763       3.61       54,108       3.61  
Exercised                        
Cancelled/forfeited                        
Balance at December 31, 2010     155,863       3.35       54,108       3.61  
Granted     167,106       5.64       38,688       5.64  
Exercised                        
Vested (RSUs)                 (13,527 )        
Cancelled/forfeited                        
Balance at December 31, 2011     322,969       4.53       79,269       4.60  
Granted     299,371       3.57       128,194       3.57  
Exercised                        
Vested (RSUs)                 (23,199 )        
Cancelled/forfeited                        
Balance at December 31, 2012     622,340     $    4.07       184,264     $    3.90  

The following table summarizes information concerning currently outstanding and exercisable options as of December 31, 2012 (Aggregate Intrinsic Value, in thousands):

             
  Options Outstanding   Options Exercisable
Range of Exercise Price   Number Outstanding at December 31, 2012   Weighted Average Remaining Contractual Life in Years   Weighted Average Exercise Price   Aggregate Intrinsic Value   Shares Exercisable at December 31, 2012   Weighted Average Exercise Price   Aggregate Intrinsic Value
$3.18 – 3.18     95,100       6.39     $    3.18     $    114       74,025     $    3.18     $     89  
3.57 – 3.57     299,371       9.42       3.57       242             3.57        
3.61 – 3.61     60,763       7.43       3.61       47       33,801       3.61       26  
5.64 – 5.64     167,106       8.42       5.64             44,476       5.64        
$3.18 – 5.64     622,340       8.49     $ 4.07     $ 403       152,302     $ 3.99     $ 115  

The aggregate intrinsic value in the preceding table represents the total pre-tax intrinsic value based on Harvard Bioscience’s closing stock price of $4.38 as of December 31, 2012, which would have been received by the option holders had all option holders exercised their options as of that date. The total number of in-the-money options that were exercisable as of December 31, 2012 was 107,826.

For the year ended December 31, 2012, the total compensation costs related to unvested awards not yet recognized is $1.3 million and the weighted average period over which it is expected to be recognized is 2.58 years.

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HARVARD APPARATUS REGENERATIVE TECHNOLOGY, INC.
A BUSINESS SEGMENT OF HARVARD BIOSCIENCE, INC.
(A Development Stage Company)
  
NOTES TO FINANCIAL STATEMENTS

8. Stock-Based Compensation  – (continued)

Stock-based compensation expense related to employee stock options and restricted stock units for the years ended December 31, 2012, 2011 and 2010 was allocated as follows:

     
  Years Ended December 31,
     2012   2011   2010
          (in thousands)     
Sales and marketing   $ 1     $     $  
General and administrative     427       208       85  
Research and development     83       53       20  
Total stock-based compensation   $    511     $    261     $    105  

The Company did not capitalize any stock-based compensation.

The weighted-average estimated value of employee stock options granted during 2012, 2011 and 2010 was $1.82, $2.94 and $1.97, respectively, using the Black-Scholes option-pricing model with the following weighted-average assumptions:

     
  Years Ended December 31,
     2012   2011   2010
Volatility     55.09 %       54.24 %       55.96 %  
Risk-free interest rate     0.80 %       2.01 %       2.22 %  
Expected holding period     5.98 years       5.94 years       6.13 years  
Dividend yield     0.0 %       0 %       0 %  

The expected holding period represents an estimate of the period of time options are expected to remain outstanding and is based on historical exercise and termination data. The risk-free interest rate is based upon the observed Treasury bill interest rates with a term that approximates the expected holding period of the option. Expected volatilities are based on the historical volatility of Harvard Bioscience’s stock price over the expected holding period of the options.

9. Income Taxes

HART operations were historically included in Harvard Bioscience’s consolidated U.S. federal and certain state income tax returns. The provision for income taxes has been determined as if HART had filed separate tax returns for the periods presented. Accordingly, the effective tax rate of HART in the future years could vary from its historical effective tax rates depending on the future legal structure of HART and related tax elections. The historical deferred tax assets, including the operating loss and credit carryforwards generated by HART, will remain with Harvard Bioscience subsequent to the separation.

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HARVARD APPARATUS REGENERATIVE TECHNOLOGY, INC.
A BUSINESS SEGMENT OF HARVARD BIOSCIENCE, INC.
(A Development Stage Company)
  
NOTES TO FINANCIAL STATEMENTS

9. Income Taxes  – (continued)

Income tax benefit for the years ended December 31, 2012, 2011 and 2010 differed from the amount computed by applying the U.S. federal income tax rate of 34% to pre-tax continuing operations loss as a result of the following:

     
  Years ended December 31,
     2012   2011   2010
     (in thousands)
Computed “expected” income tax benefit   $  (2,282 )     $  (1,275 )     $    (460 )  
Increase (decrease) in income taxes resulting from:
                          
Foreign tax rate and regulation differential     40       35       9  
State income taxes, net of federal income tax benefit     (402 )       (225 )       (81 )  
Non-deductible stock-based compensation expense     48       27       9  
Tax credits           (167 )       (52 )  
Change in valuation allowance allocated to income tax expense     2,596       1,605       575  
Total income taxes   $     $     $  

Income taxes are based on the following pre-tax continuing operations loss for the years ended December 31, 2012, 2011 and 2010:

     
  Years ended December 31,
     2012   2011   2010
     (in thousands)
Domestic   $  (6,374 )     $  (3,456 )     $  (1,276 )  
Foreign     (339 )       (295 )       (76 )  
Total   $ (6,713 )     $ (3,751 )     $ (1,352 )  

The components of HART’s deferred taxes for the years ended December 31, 2012 and 2011 are as follows:

   
  Years ended December 31,
     2012   2011
     (in thousands)
Deferred tax assets:
                 
Operating loss and credit carryforwards   $ 4,828     $ 2,344  
Stock-based compensation     209       97  
Total deferred tax assets     (5,037 )       (2,441 )  
Less: valuation allowance     (5,037 )       (2,441 )  
Deferred tax assets, net   $     $  

The amounts recorded as deferred tax assets as of December 31, 2012 and 2011 represent the amount of tax benefits of existing deductible temporary differences or carryforwards that are more likely than not to be realized through the generation of sufficient future taxable income within the carryforward period. Significant management judgment is required in determining any valuation allowance recorded against deferred tax assets and liabilities. Due to the operating results, the Company’s cumulative loss position and uncertainty surrounding its forecasts, the Company concluded that a full valuation allowance was needed to offset its deferred tax assets.

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HARVARD APPARATUS REGENERATIVE TECHNOLOGY, INC.
A BUSINESS SEGMENT OF HARVARD BIOSCIENCE, INC.
(A Development Stage Company)
  
NOTES TO FINANCIAL STATEMENTS

9. Income Taxes  – (continued)

At December 31, 2012, the Company had federal, state and foreign net operating loss carryforwards available to offset future taxable income of approximately $11.7 million. The operating loss carryforwards will begin to expire in 2029. The Company also had federal and state general business credit carryforwards available to reduce future federal and state regular income taxes of approximately $0.3 million, which begin to expire in 2019. As mentioned above net operating loss and credit carryforwards have full valuation allowances set up against them.

Total valuation allowances for deferred tax assets as of December 31, 2012 was $5.0 million.

At December 31, 2012, the Company had recorded no liabilities related to uncertain tax positions.

10. Commitments and Contingent Liabilities

From time to time, the Company may be involved in various claims and legal proceedings arising in the ordinary course of business. There are no such matters pending that the Company expects to be material in relation to the business, financial condition, results of operations or cash flows.

11. Subsequent Events

The Company has evaluated all events subsequent to the balance sheet date of December 31, 2012, through February 28, 2013, which is the date these financial statements were issued, and have determined that there are no subsequent events that require disclosure.

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HARVARD APPARATUS REGENERATIVE TECHNOLOGY, INC.
A BUSINESS SEGMENT OF HARVARD BIOSCIENCE, INC.
(A Development Stage Company)

BALANCE SHEETS
(unaudited, in thousands)

   
  March 31, 2013   December 31, 2012
ASSETS
                 
Current assets:
                 
Cash and cash equivalents   $     $  
Prepaid expenses     5        
Total current assets     5        
Plant, property and equipment, net     417       438  
Total non-current assets     417       438  
Total assets   $ 422     $ 438  
LIABILITIES AND INVESTED EQUITY
                 
Current liabilities:
                 
Accounts payable   $ 193     $ 179  
Accrued and other current liabilities     137       232  
Total current liabilities     330       411  
Total liabilities     330       411  
Invested equity:
                 
Harvard Bioscience investment     14,510       12,425  
Accumulated deficit     (14,418 )       (12,398 )  
Total invested equity     92       27  
Total liabilities and invested equity   $ 422     $ 438  

 
 
See accompanying notes to unaudited financial statements.

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HARVARD APPARATUS REGENERATIVE TECHNOLOGY, INC.
A BUSINESS SEGMENT OF HARVARD BIOSCIENCE, INC.
(A Development Stage Company)

STATEMENTS OF OPERATIONS
(unaudited, in thousands)

     
  Three months ended March 31,   Period from February 24, 2009 (inception) to March 31, 2013
     2013   2012
Revenues   $     $     $  
Cost of product revenues                  
Gross profit                  
Selling and marketing expenses     20       16       404  
General and adminstrative expenses     840       423       5,421  
Research and development expenses     1,160       815       8,593  
Operating expenses     2,020       1,254       14,418  
Operating loss     (2,020 )       (1,254 )       (14,418 )  
Loss before income taxes     (2,020 )       (1,254 )       (14,418 )  
Income taxes                  
Net loss   $  (2,020 )     $  (1,254 )     $  (14,418 )  

 
 
See accompanying notes to unaudited financial statements.

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HARVARD APPARATUS REGENERATIVE TECHNOLOGY, INC.
A BUSINESS SEGMENT OF HARVARD BIOSCIENCE, INC.
(A Development Stage Company)

STATEMENTS OF CASH FLOWS
(unaudited, in thousands)

     
  Three months ended March 31,   Period from February 24, 2009 (inception) to March 31, 2013
     2013   2012
Cash flows used in operating activities:
                          
Net loss:   $   (2,020 )     $   (1,254 )     $  (14,418 )  
Adjustments to reconcile net income to net cash used in operating activities:
                          
Stock-based compensation expense     136       85       1,044  
Depreciation     38       12       118  
Changes in operating assets and liabilities:
Accounts payable
    13             192  
Prepaid expenses     (5 )             (5 )  
Accrued and other current liabilities     (94 )       (44 )       138  
Net cash used in operating activities     (1,932 )       (1,210 )       (12,931 )  
Cash flows used in investing activities:
                          
Additions to property, plant and equipment     (18 )       (4 )       (536 )  
Net cash used in investing activities     (18 )       (4 )       (536 )  
Cash flows from financing activities:
                          
Investment by Harvard Bioscience     1,950       1,214       13,467  
Net cash provided by financing activities     1,950       1,214       13,467  
Net increase (decrease) in cash and cash equivalents                  
Cash and cash equivalents at beginning of the period                  
Cash and cash equivalents at end of period   $     $     $  

 
 
See accompanying notes to unaudited financial statements.

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HARVARD APPARATUS REGENERATIVE TECHNOLOGY, INC.
A BUSINESS SEGMENT OF HARVARD BIOSCIENCE, INC.
(A Development Stage Company)
  
NOTES TO UNAUDITED FINANCIAL STATEMENTS

1. Overview and Basis of Presentation

Overview

Harvard Apparatus Regenerative Technology, Inc. (“HART” or “the Company”) is a business segment of Harvard Bioscience, Inc. (“Harvard Bioscience” or “Parent”). The Company is engaged in the development and commercialization of devices for use by clinicians and researchers in the field of regenerative medicine.

Since inception, the Company has devoted substantially all of its efforts to business planning, research and development, recruiting management and technical staff, and acquiring operating assets. Accordingly, HART is considered to be in the development stage.

HART is a wholly-owned subsidiary of Harvard Bioscience. HART was incorporated on May 3, 2012 by Harvard Bioscience to provide a means for separating its regenerative medicine device business from its other businesses. Harvard Bioscience has been designing and manufacturing devices for life science researchers for over 100 years. Harvard Bioscience first focused on providing devices to scientists involved in regenerative medicine research in 2008. Since early 2009, Harvard Bioscience’s regenerative medicine device business initiative has been operated as a division of Harvard Bioscience. On May 1, 2013, Harvard Bioscience announced that HART would withdraw its Registration Statement on Form S-1, filed previously with the Securities and Exchange Commission as part of a plan for an initial public offering of HART common stock. The registration statement had not yet been declared effective. At that time Harvard Bioscience also announced its intention to separate its regenerative medicine device business into HART, a separate corporate entity, to capitalize HART via a cash contribution of $15 million and then to spin off its interest in HART to Harvard Bioscience’s stockholders. As part of that process, HART would file a Registration Statement on Form 10 with the SEC to become a public reporting company.

In connection with the separation, Harvard Bioscience and HART expect to enter into a series of agreements, including a Separation and Distribution Agreement, Intellectual Property Matters Agreement, Product Distribution Agreement, Tax Sharing Agreement, Transition Services Agreement, Sublicense Agreement, and Sublease Agreement. Consummation of the separation is subject to certain conditions, including approval for listing of HART common stock on an exchange, and the effectiveness of the registration statement filed with the Securities and Exchange Commission in connection with the separation. Approval by Harvard Bioscience’s stockholders is not required as a condition to the consummation of the proposed separation.

Basis of Presentation

The Company has historically operated as part of Harvard Bioscience, and not as a stand-alone company. The financial statements presented herein, and discussed below, have been prepared on a stand-alone basis and are derived from the financial statements and accounting records of Harvard Bioscience using the historical basis of assets and liabilities of HART. The financial statements reflect the Company’s financial position, results of operations and cash flows in conformity with accounting principles generally accepted in the United States (“GAAP”).

The Company’s financial statements include expenses of Harvard Bioscience allocated to HART for certain functions provided by Harvard Bioscience, including, but not limited to, general corporate expenses related to executive services, finance, treasury, corporate income tax, human resources, legal services and investor relations. These expenses have been allocated to HART on the basis of headcount, time devoted to HART activities, percentage of operating expenses or other relevant measures. The Company believes the assumptions and allocations underlying the financial statements are reasonable and appropriate under the circumstances. Both HART and Harvard Bioscience consider the basis on which the expenses have been allocated to be a reasonable reflection of the utilization of services provided to or the benefits received by the Company during the periods presented. However, the amounts recorded for these transactions and allocations are not necessarily representative of the amounts that would have been reflected in the financial statements

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TABLE OF CONTENTS

HARVARD APPARATUS REGENERATIVE TECHNOLOGY, INC.
A BUSINESS SEGMENT OF HARVARD BIOSCIENCE, INC.
(A Development Stage Company)
  
NOTES TO UNAUDITED FINANCIAL STATEMENTS

1. Overview and Basis of Presentation  – (continued)

had HART operated independently of Harvard Bioscience. Accordingly, the financial statements for these periods are not necessarily indicative of HART’s future results of operations, financial position, and cash flows.

Harvard Bioscience has historically used a centralized approach to cash management and financing of its operations. Transactions relating to HART are accounted for through the Harvard Bioscience investment account for HART. Accordingly, none of the cash, cash equivalents or debt at the Harvard Bioscience corporate level has been assigned to HART in the financial statements.

The unaudited financial statements of HART as of March 31, 2013 and for the three months ended March 31, 2013 and 2012 and for the period from February 24, 2009 (inception) to March 31, 2013 have been prepared by the Company pursuant to the rules and regulations of the SEC for interim financial reporting. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations.

2. Summary of Significant Accounting Policies and Recently Issued Accounting Pronouncements

The accounting policies underlying the accompanying unaudited financial statements are those set forth in Note 2 to the audited financial statements included in this document.

(a) Unaudited Interim Financial Information

The accompanying interim balance sheet as of March 31, 2013, statements of operations and cash flows for the three months ended March 31, 2013 and 2012 and for the period from February 24, 2009 (inception) to March 31, 2013 are unaudited. The interim unaudited financial statements have been prepared in accordance with GAAP on the same basis as the annual audited financial statements and, in the opinion of management, reflect all adjustments necessary for a fair statement of the Company’s financial position as of March 31, 2013 and the results of its operations and cash flows for the three months ended March 31, 2013 and 2012 and for the period from February 24, 2009 (inception) to March 31, 2013. The financial data and other information disclosed in these notes related to the three month periods ended March 31, 2013 and 2012 and for the period from February 24, 2009 (inception) to March 31, 2013 are unaudited. The results for the three months ended March 31, 2013 and 2012 and for the period from February 24, 2009 (inception) to March 31, 2013 are not necessarily indicative of results to be expected for the year ending December 31, 2013, any other interim periods or any future year or period.

(b) Recently Issued Accounting Pronouncements

There are no recently issued accounting standards which are not yet effective which the Company believes would materially impact the financial statements.

3. Liquidity

The Company has incurred operating losses and negative cash flow since inception, and had an accumulated deficit of $14.4 million as of March 31, 2013. Since inception, the Company has received funding for operating losses from Harvard Bioscience. The Company is currently investing significant resources in development and commercialization of devices for use by clinicians and researchers in the field of regenerative medicine. The Company expects to continue to incur operating losses and negative cash flows. Harvard Bioscience will continue to fund the Company’s business activities into 2014.

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HARVARD APPARATUS REGENERATIVE TECHNOLOGY, INC.
A BUSINESS SEGMENT OF HARVARD BIOSCIENCE, INC.
(A Development Stage Company)
  
NOTES TO UNAUDITED FINANCIAL STATEMENTS

4. Related Party Transactions

Cost Allocations

For each of the periods presented, HART’s operations were fully integrated with Harvard Bioscience, including executive services, finance, treasury, corporate income tax, human resources, legal services and investor relations. The accompanying financial statements reflect the application of certain estimates and allocations of operating expenses and the Company believes the methods used to allocate these operating expenses are reasonable. The allocation methods include time devoted to HART activities, headcount, percentage of operating expenses or other relevant measures. Allocation of expenses for these services of $0.6 million and $0.5 million for the three month periods ended March 31, 2013 and 2012, respectively, are reflected in the total operating expenses in the statements of operations, in addition to direct expenses. The Company’s financial statements may not be indicative of the future performance and do not necessarily reflect what the results of operations, financial position and cash flows would have been had the Company operated as an independent, publicly-traded company during the periods presented.

Agreements with Harvard Bioscience

In connection with the separation, the Company expects to enter into a series of agreements with Harvard Bioscience, including a Separation and Distribution Agreement, Intellectual Property Matters Agreement, Tax Sharing Agreement, Transition Services Agreement, Sublicense Agreement and a Sublease Agreement. Some of these agreements will require us to pay fees to Harvard Bioscience for services provided subsequent to the separation.

5. Stock-Based Compensation

Stock-based compensation expense for HART represents an allocation from Harvard Bioscience’s stock-based compensation expense for employees whose time has been allocated to HART.

Harvard Bioscience maintains the 2000 Stock Option and Incentive Plan (the “Plan”) for the benefit of certain of its officers, directors and employees. The following disclosure represents the Company’s portion of the Plans maintained by Harvard Bioscience in which the employees participated. All options and awards granted under the Plan consist of Harvard Bioscience common shares. Accordingly, the amounts presented are not necessarily indicative of future performance and do not necessarily reflect the results that the Company would have experienced as an independent, publicly-traded company for the periods presented.

Employee options and awards become fully vested over a period of approximately three years and seven months, with the first quarter vesting after approximately seven months of the grant date and the remaining vesting equally over a period of three years thereafter.

The fair value of options granted was determined using the Black-Scholes option pricing model. The determination of fair value on the date of the grant is affected by the grant date market price of Harvard Bioscience common shares and a number of other variables. These variables include, but are not limited to, the expected stock price volatility of Harvard Bioscience common shares over the term of the awards and actual and projected employee stock option exercise behaviors. The fair value of restricted stock units was determined by the number of shares granted and the grant date market price of Harvard Bioscience common shares.

The compensation expense recognized for all equity-based awards is net of estimated forfeitures and is recognized using the straight-line method over the applicable service period.

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HARVARD APPARATUS REGENERATIVE TECHNOLOGY, INC.
A BUSINESS SEGMENT OF HARVARD BIOSCIENCE, INC.
(A Development Stage Company)
  
NOTES TO UNAUDITED FINANCIAL STATEMENTS

5. Stock-Based Compensation  – (continued)

The following summarizes all stock option transactions under the Plan from January 1, 2013 through March 31, 2013:

       
  Stock Options   Restricted Stock Units
     Stock Options Outstanding   Weighted Average Exercise
Price
  Restricted Stock Units Outstanding   Grant Date
Fair Value
Balance at December 31, 2012     622,340     $     4.07       184,264     $     3.90  
Granted                        
Exercised     (13,489 )       3.58              
Vested (RSUs)                 (49,995 )        
Cancelled/forfeited     (7,500 )       4.96              
Balance at March 31, 2013     601,351     $ 4.07       134,269     $ 3.87  

There were no stock options or RSUs granted during the three months ended March 31, 2013.

Stock-based compensation expense for the three month periods ended March 31, 2013 and 2012 consisted of stock-based compensation expense related to employee stock options and RSUs.

Stock-based compensation expense for the three month periods ended March 31, 2013 and 2012, was allocated as follows:

   
  Three months ended March 31,
     2013   2012
     (in thousands)
General and administrative   $      120     $       68  
Reseaich and development     16       17  
Total stock-based compensation   $ 136     $ 85  

The Company did not capitalize any stock-based compensation.

6. Income Taxes

HART operations were historically included in Harvard Bioscience’s consolidated U.S. federal and certain state income tax returns. The provision for income taxes has been determined as if HART had filed separate tax returns for the periods presented. Accordingly, the effective tax rate of HART in the future years could vary from its historical effective tax rates depending on the future legal structure of HART and related tax elections. The historical deferred tax assets, including the net operating loss and credit carryforwards, generated by HART will remain with Harvard Bioscience subsequent to the separation.

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TABLE OF CONTENTS

HARVARD APPARATUS REGENERATIVE TECHNOLOGY, INC.
A BUSINESS SEGMENT OF HARVARD BIOSCIENCE, INC.
(A Development Stage Company)
  
NOTES TO UNAUDITED FINANCIAL STATEMENTS

6. Income Taxes  – (continued)

At March 31, 2013 and December 31, 2012, the Company had deferred tax assets of $6.1 million and $5.0 million, respectively, which principally related to net operating loss carryforwards. The Company has a full valuation allowance on its deferred tax assets. Significant management judgment is required in determining any valuation allowance recorded against deferred tax assets and liabilities. Due to the Company’s operating results, its cumulative loss position and uncertainty surrounding its forecasts, the Company concluded that a full valuation allowance was needed to offset its deferred tax assets.

7. Commitments and Contingent Liabilities

From time to time, we may be involved in various claims and legal proceedings arising in the ordinary course of business. There are no such matters pending that we expect to be material in relation to our business, financial condition, results of operations or cash flows.

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TABLE OF CONTENTS

Annex A

SOLVENCY OPINION