TRANSITION SERVICES AGREEMENT

EXHIBIT 10.2

TRANSITION SERVICES AGREEMENT

This Transition Services Agreement is dated as of May 5, 2016 (this “Agreement”), by and between Deerfield SS, LLC, a Delaware limited liability company (“Deerfield”) and Nuo Therapeutics, Inc. (“Nuo”, and collectively with Deerfield, the “Parties”, and each individually a “Party”).

RECITALS:

WHEREAS, on January 26, 2016 (the “Petition Date”), Nuo commenced a Chapter 11 bankruptcy proceeding in the United States Bankruptcy Court for the District of Delaware (the “Court”) in Case No. 16-10192 (MFW), in which proceeding Nuo operated as a debtor and debtor-in-possession;

WHEREAS, Nuo proposed and the Court has confirmed a Plan of Reorganization (the “Plan”) by entry of that certain Order Granting Final Approval of Disclosure Statement and Confirming Debtor’s Plan of Reorganization, dated April 25, 2016 [Docket Entry No. 367];

WHEREAS, pursuant to the Plan, Nuo’s existing Amended and Restated License Agreement dated as of October 16, 2015 (as amended by letter agreement dated as of April 20, 2016, the “License Agreement”) between Nuo and Arthrex, Inc. (“Arthrex”) is being assigned to Deerfield;

WHEREAS, the Plan provides that concurrently with the consummation of the transactions contemplated thereby, the Parties will enter into this Agreement whereby Nuo will provide Deerfield the Services (as defined herein) during the Transition Period (as defined herein);

WHEREAS, pursuant to the License Agreement, the assumption by Arthrex of all rights related to manufacture and supply of the Product Line (as such terms is defined in the License Agreement) was to occur no later than March 31, 2016 but is now targeted to occur on or around September 30, 2016 and Nuo’s continued manufacture and supply of the Product Line until such assumption by Arthrex is part of the consideration to Deerfield’s assumption of the License Agreement and support of the Plan;

AGREEMENT:

NOW, THEREFORE, for good and valuable consideration, the receipt and legal sufficiency of which is hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:

SECTION 1
DEFINITIONS

For the purposes of this Agreement, the following terms will have the definitions hereinafter specified:

1.1           “Action” means any suit, charge, legal proceeding, investigation, audit, grievance, administrative enforcement proceeding or arbitration proceeding by or before any Governmental Authority or arbitrator.

1.2            “Affiliate” means with respect to any Person, any Person that directly or indirectly controls, is controlled by or is under common control with such Person, where “control” (including, with correlative meaning, the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct, or cause the direction of, the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

1.3           “Business Day” means any day other than a Saturday, a Sunday or any other day on which the Federal Reserve Bank of New York is closed.

1.4           “Force Majeure” means any event beyond the reasonable control of a Party or its Affiliates that delays or interrupts the performance of the obligations or covenants of such Party (or, if applicable, such Affiliate) hereunder, including (a) an intervening act of God or public enemy, war, invasion, armed conflict, act of foreign enemy, blockade, revolution, terrorist attack, sabotage, civil commotions, interference by civil or military authorities; (b) mechanical breakdowns (that could not have been prevented by industry standard maintenance), obstruction, strikes or other similar events; or (c) natural disasters, riot or other public disorder, epidemic, quarantine restriction, strike, or labor protest.

1.5           “Governmental Authority” means any government or political subdivision, whether federal, state, local or foreign, or any agency of any such government or political subdivision, or any federal, state, local or foreign court.

1.6           “Law” means any law, statute, code, ordinance, regulation, Order or rule of any Governmental Authority.

1.7           “Order” means any order, judgment, ruling, injunction, assessment, award, decree or writ issued, promulgated or entered by or with any Governmental Authority.

1.8           “Original License” means the Distributor Agreement and License dated August 7, 2013 between Nuo and Arthrex.

1.9           “Person” means any natural person, sole proprietorship, partnership, corporation, limited liability company, joint venture, unincorporated society or association, trust or other legal entity or Governmental Authority.

1.10         “Products” has the meaning provided therefor in the License Agreement.

1.11         “Service” or “Services” shall mean those services listed and described on Schedule A attached hereto to be provided pursuant to the terms and in the manner described herein.

1.12         “Transition Period” shall mean, with respect to each Service, the period beginning on the date of this Agreement and continuing until such time as Arthrex has fully assumed responsibility for the Service, and such period shall not exceed beyond October 15, 2016, unless extended by mutual agreement of the Parties.

SECTION 2
SERVICES

2.1         Transition Services.

(a)          During the Transition Period, Nuo agrees to provide to Deerfield or its Affiliate, which may be the holder of the License Agreement, all of the Services set forth on Schedule A to this Agreement. In every case, all of the Services will be provided in accordance with the terms, limitations and conditions set forth herein and on Schedule A.

(b)          Nuo acknowledges that during the Transition Period, Deerfield will be transitioning the Services being performed by Nuo hereunder to Arthrex or one or more vendors. During the Transition Period, Nuo agrees to provide reasonable assistance to Deerfield, Arthrex, and any third party vendors selected by Deerfield or Arthrex to effect such transfer in a manner designed (to the extent reasonably possible) to minimize disruptions to the business operations of Arthrex, provided that Nuo shall be reimbursed by Deerfield or Arthrex for the reasonable out-of-pocket expenses incurred by Nuo thereof in connection with the performance of its obligations under this Section 2.1(b), such reimbursement to be made promptly after receipt of a written request therefor accompanied by such reasonable documentation as Deerfield or Arthrex may request in connection therewith; provided, however, Deerfield shall not be obligated to reimburse any expense totaling more than Five Thousand Dollars ($5,000) unless Nuo obtained the prior consent of Deerfield to incur such expenses.

2.2           Quality of Services. Nuo represents and warrants that the Services provided to Deerfield by Nuo and its Affiliates hereunder will be provided in good faith, in accordance with practices and standards historically exercised by Nuo for the provision of such Services and in material compliance with applicable Laws and the terms of the License Agreement and Original License, if applicable. Except as set forth in the immediately preceding sentence, Nuo makes no representations or warranties of any kind, express or implied, with respect to the Services, including without limitation any warranties of merchantability or fitness for a particular purpose, which are specifically disclaimed.

SECTION 3
PAYMENT

3.1          Payment of Services.

(a)          In consideration for providing the Services, Deerfield will pay to Nuo, for each full calendar month during which any Service is performed hereunder: (i) the fee set forth for such Services on Schedule A and reimbursement for the actual cost of any Product purchased by Nuo for Arthrex as required by the License Agreement; and (ii) all reasonable and documented out-of-pocket expenses incurred by Nuo in providing such Services it being understood and agreed that if any Services shall be provided for less than a full calendar month (including in respect of the calendar month in which this Agreement shall be executed), the fees payable in respect thereof shall be prorated based on the number of days in such calendar month in which such Services were provided in relation to the total number of days in such calendar month; provided, however, Deerfield shall not be obligated to pay any expense totaling more than Five Thousand Dollars ($5,000) unless Nuo obtained the prior consent of Deerfield to incur such expenses.

(b)          A single written statement will be rendered each calendar month by Nuo to Deerfield for Services delivered during the preceding calendar month, which statement will include the applicable Product cost, fee or fees set forth for such Services on Schedule A and all reasonable and documented out-of-pocket expenses incurred by Nuo in providing such Services during such preceding calendar month (the “Monthly Statement”). Monthly Statements will be substantiated by supporting written information and will itemize in reasonable detail the basis for such Monthly Statement. Each Monthly Statement will be delivered promptly on the invoice date and payable to Nuo in immediately available funds within ten (10) days after the receipt by Deerfield of payment by Arthrex to Deerfield for such Product and Services, but in no event later than ninety (90) days after the invoice date of such Monthly Statement. The Monthly Statement shall be sent to the recipient at the address for Deerfield and in the manner set forth in Section 6.2. If any payment is not paid when due, Nuo shall send a notice of such overdue payment to Deerfield (a “Payment Notice”). If Deerfield does not make such overdue payment within ten (10) Business Days after receiving a Payment Notice, Nuo shall have the right to cease providing any or all of the Services it provides and terminate those Services upon delivery of ten (10) days’ prior written notice to Deerfield; provided, however, Nuo shall not cease providing any Service or terminate this Agreement if such lack of payment is due to a good faith dispute regarding such payment and any amounts not in dispute have been duly paid by Deerfield.

SECTION 4
TERM

4.1           General. Each Service will commence on the Effective Date and will continue until the end of the Transition Period. This Agreement will commence as of the Effective Date hereof and shall remain in force until the earlier of (a) expiration of the Transition Period, (b) termination of this Agreement by Nuo or Deerfield in accordance with Section 3.1(b), or 4.4(a), as applicable.

4.2           Amounts Due.

In the event of a termination or expiration of this Agreement, all outstanding amounts due from Deerfield under Sections 2.1(b) and 3.1, up through and including the date of termination or expiration, will become due and payable to Nuo and Nuo shall send or cause to be sent a final invoice in respect thereof, which shall thereafter be paid in accordance with the terms set forth in Section 3.1(b) hereof. The fee for any terminated or expired Service will be prorated on the terms set forth in Section 3.1(a) hereof.

4.3           Survival. The provisions in Sections 3.1, 4.2, 4.3, 5, and 6.2 through 6.14 hereof shall survive the expiration or other termination of this Agreement.

4.4          Termination of Agreement or Services.

(a)          At any time on written notice to the other Party, Nuo or Deerfield, as applicable, shall have the right to terminate this Agreement or all or any of the Services: (i) if the other Party commits a material breach of any of the terms or conditions of this Agreement (other than non-payment by the other Party of any invoice in respect of a Service, which shall be governed by Section 3.1(b)) and, if such breach may be cured, the other Party fails to remedy the breach within thirty (30) days of receiving such notice; or (ii) pursuant to Section 5.3.

(b)          Deerfield may terminate the use of all or any of the Services upon at least thirty (30) days’ prior notice thereof in accordance with Section 6.2. Notwithstanding anything contained in this Agreement to the contrary, if Nuo, prior to the end of the Transition Period for such Service, breaches its obligation to provide such Service, Nuo shall be liable to Deerfield for any costs incurred by Deerfield for such Services obtained from any third party provided that Deerfield shall be required to deliver to Nuo reasonable evidence of the amount of costs so incurred by Deerfield.

SECTION 5
LIABILITIES; INDEMNIFICATION

5.1          [RESERVED]

5.2          [RESERVED]

5.3          Performance Remedy; Specific Performance.

(a)          In the event that Nuo fails to provide a Service hereunder, or the quality of a Service is not in accordance with Section 2.2 (a “Failure”), Deerfield may give Nuo prompt written notice thereof. Following receipt of any such notice, Nuo will use commercially reasonable efforts to promptly remedy any such Failure. If, within fifteen (15) days following the delivery of such written notice, Nuo has not provided such Service or improved the quality thereof to be in compliance with the terms set forth in this Agreement, and if as a result of any such Failure, it becomes reasonably necessary for Deerfield to obtain any applicable Service from another provider, then Deerfield may terminate the applicable Service and Nuo shall be required to pay to Deerfield the amount of any reasonable cost (in excess of the cost of the Service to be provided by Nuo hereunder) that is actually paid by Deerfield to a third party service provider, provided that Deerfield shall be required to deliver to Nuo reasonable evidence of the amount of costs so incurred by Deerfield.

(b)           The Parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. Subject to Section 6.5, the Parties agree that, without the necessity of posting bond or other undertaking, the parties shall be entitled to seek an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in accordance with this Agreement, this being in addition to any other remedy to which such party is entitled at law or in equity.

5.4          Indemnification.

(a)          Nuo will indemnify and hold harmless each of Deerfield and its Affiliates for any Actions, assessments, losses, damages, deficiencies, costs, expenses, liabilities, judgments, awards, fines, interest, sanctions, penalties and charges (including any amounts paid in settlement in accordance with this Agreement), including reasonable costs, fees and expenses of attorneys, accountants, consultants, experts and other third party representatives required to investigate, mitigate or avoid the same, arising from a claim by a third party (“Losses”) that are incurred by Deerfield or its Affiliates, as the case may be, if and to the extent that any such Loss arises out of or relates to (i) any material breach of this Agreement by Nuo or any of its Affiliates providing Services hereunder or (ii) the gross negligence, bad faith or fraud of Nuo or any of its Affiliates providing services hereunder in connection with the performance of the Services hereunder.

SECTION 6
GENERAL PROVISIONS

6.1          Access.

During the Transition Period, Deerfield will have reasonable access upon prior written notice to information or records kept by Nuo for the purposes of the delivery of Services under this Agreement.

6.2           Notices. Any notice or other communication provided for herein or given hereunder to a party hereto must be in writing, and (a) sent by facsimile transmission, (b) sent by electronic mail, (c) delivered in person, (d) mailed by first class registered or certified mail, postage prepaid, or (e) sent by Federal Express or other overnight courier of national reputation, addressed as follows:

To Nuo:

207A Perry Parkway, Suite 1

Gaithersburg, MD 20877

Attention: CEO

Fax: 240 ###-###-####

Email: ***@***

If to Deerfield to:

New York, New York 10017

Attention: David J. Clark

Fax: (646) 536-5662

Email: ***@***

6.3           Relationship between Parties. Nothing contained in this Agreement shall be construed as creating a partnership, joint venture, agency, trust or other association of any kind, each Party being individually responsible only for its obligations as set forth in this Agreement. Nuo shall provide the Services hereunder in the capacity of an independent contractor and not as an employee or agent of Deerfield.

6.4           Assignment; Binding Effect. This Agreement and the rights hereunder and all the provisions hereof shall be binding upon and shall inure to the benefit of the Parties and their respective successors and permitted assigns. The Parties acknowledge and agree that a Party may assign its rights and delegate its duties under this Agreement to one or more of its Affiliates that normally performs the contemplated Services; provided, however, that the assigning Party will remain fully responsible for compliance with the terms of this Agreement the same as if such delegation or designation were not effected.

6.5           Governing Law; Jurisdiction. All issues and questions concerning the construction, validity, interpretation and enforceability of this Agreement and the Schedules hereto, and all claims and disputes arising hereunder or thereunder or in connection herewith or therewith, whether purporting to be sound in contract or tort, or at law or in equity, shall be governed by, and construed in accordance with, the Laws of the State of Delaware, without giving effect to any choice of Law or conflict of Law rules or provisions (whether of the State of Delaware or any other jurisdiction) that would cause the application of the Laws of any jurisdiction other than the State of Delaware. The Parties hereto hereby agree and consent to be subject to the exclusive jurisdiction of the federal and state courts in Wilmington, Delaware, and hereby waive the right to assert the lack of personal or subject matter jurisdiction or improper venue in connection with any such suit, action or other proceeding. In furtherance of the foregoing, each of the Parties hereto (a) waives the defense of inconvenient forum, (b) agrees not to commence any suit, action or other proceeding arising out of this Agreement or any transactions contemplated hereby other than in any such court, and (c) agrees that a final judgment in any such suit, action or other proceeding shall be conclusive and may be enforced in other jurisdictions by suit or judgment or in any other manner provided by Law. EACH PARTY HERETO HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY AND WITH AND UPON THE ADVICE OF COMPETENT COUNSEL IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY LITIGATION, ACTION, PROCEEDING, CROSS-CLAIM, OR COUNTERCLAIM IN ANY COURT (WHETHER BASED ON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF, RELATING TO OR IN CONNECTION WITH (i) THIS AGREEMENT OR THE VALIDITY, PERFORMANCE, INTERPRETATION, COLLECTION OR ENFORCEMENT HEREOF OR (ii) THE ACTIONS OF SUCH PARTY IN THE NEGOTIATION, AUTHORIZATION, EXECUTION, DELIVERY, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.

6.6           Counterparts; Electronic Transmission. This Agreement may be executed in two or more counterparts (any of which may be delivered by facsimile or email transmission followed promptly by an executed original), each of which will be deemed an original, but all of which together will constitute one and the same instrument.

6.7           Captions. The captions contained in this Agreement are for convenience of reference only and do not form a part of this Agreement.

6.8           Complete Agreement. This Agreement and the Schedules attached hereto constitute the entire agreement between the Parties with respect to the subject matter hereof and supersede all prior agreements and understandings between the Parties with respect to such subject matter.

6.9          Interpretation.

(a)          When a reference is made in this Agreement to a Section or Schedule, such reference shall be to a Section or Schedule of or to this Agreement unless otherwise indicated.

(b)          Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.”

(c)          Unless the context requires otherwise, the terms “hereof,” “herein,” “hereby,” “hereto” and derivative or similar words in this Agreement refer to this entire Agreement.

(d)          Unless the context requires otherwise, words in this Agreement using the singular or plural number also include the plural or singular number, respectively, and the use of any gender herein shall be deemed to include the other genders.

(e)          References in this Agreement to “dollars” or “$” are to U.S. dollars.

(f)          This Agreement was prepared jointly by the Parties and no rule that it be construed against the drafter will have any application in its construction or interpretation.

6.10         Waiver and Amendment. This Agreement may be amended or modified only by an instrument in writing duly executed by each Party. Except as otherwise provided in this Agreement, any failure of any Party to comply with any obligation, covenant, agreement or condition herein may be waived by the Party entitled to the benefits thereof only by a written instrument signed by the Party granting such waiver, but such waiver or failure to insist upon strict compliance with such obligations, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure.

6.11         Third Party Beneficiaries. Each Party intends that this Agreement does not benefit or create any right or cause of action in or on behalf of any Person other than the Parties hereto, and no such right shall be created.

6.12         Force Majeure. If a Party or any of its Affiliates or any other Person (including any vendor or supplier to such Party or any Affiliate thereof) is affected by an event of Force Majeure such that such Party or any Affiliate thereof is unable to fulfill all or part of its obligations under this Agreement (including providing such Party’s Services), such Party must give written notice thereof to the other Party, and thereafter and so long as such Force Majeure circumstances shall remain in effect, the affected Party and its Affiliates will be relieved of their obligations hereunder and shall not be in default or breach hereunder as a result thereof.

6.13         Severability. Any term of provision of this Agreement that is invalid or unenforceable in any jurisdiction will, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rending invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, the provision will be interpreted to be only so broad as is enforceable.

[The remainder of this page is intentionally left blank]

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

[Signature Page to the Transition Services Agreement]

SCHEDULE A

SCHEDULE B