EXHIBIT 10.2
AGREEMENT OF PURCHASE AND SALE
DATED AS OF APRIL 7, 2003
AMONG
AMERICAN MEDICAL SYSTEMS, INC.,
ENDOCARE, INC.
AND
▇▇▇▇ MEDICAL TECHNOLOGIES, INC.
THIS AGREEMENT OF PURCHASE AND SALE is entered into as of April 7, 2003,
by and among American Medical Systems, Inc. ("Buyer"), Endocare, Inc.
("Parent"), and ▇▇▇▇ Medical Technologies, Inc. ("Seller").
ARTICLE I.
SALE OF ASSETS AND ASSUMPTION OF LIABILITIES
Section 1.01 Definitions.
(a) "Assignment and Assumption Agreement" shall have the meaning set
forth in Section 3.01(a)(ii).
(b) "Assumed Contract" shall have the meaning set forth in Section 1.03.
(c) "Basket Amount" shall have the meaning set forth in Section 4.05(b).
(d) "▇▇▇▇ of Sale" shall have the meaning set forth in Section
3.01(a)(i).
(e) "Closing" shall have the meaning set forth in Section 1.04.
(f) "Closing Date" shall have the meaning set forth in Section 1.04.
(g) "Consent(s)" shall have the meaning set forth in Section 2.01(d).
(h) "Damages" shall have the meaning set forth in Section 4.02.
(i) "Escrow Agent" shall have the meaning set forth in Section 1.05(a).
(j) "Escrow Funds" shall have the meaning set forth in Section 1.05(a).
(k) "Facility Inventory" shall have the meaning set forth in Section
1.05(b).
(l) "Facility Inventory Estimate" shall have the meaning set forth in
Section 1.05(b).
(m) "Field Inventory" shall have the meaning set forth in Section
1.05(c).
(n) "Income Taxes" shall have the meaning set forth in Section 1.07(a).
(o) "Indemnified Party" shall have the meaning set forth in Section
4.04(a).
(p) "Intellectual Property Assignment" shall have the meaning set forth
in Section 3.01(a)(iii)
(q) "Intellectual Property Rights" shall have the meaning set forth in
Section 2.01(e).
(r) "Knowledge" shall mean as to an entity that such entity shall be
deemed to have Knowledge of a particular fact or other matter if any
individual who is serving as
an executive or corporate-level officer of such entity or its parent
entity is actually aware of such fact or other matter.
(s) "Liens" shall have the meaning set forth in Section 2.01(c).
(t) "Maximum Amount" shall have the meaning set forth in Section
4.05(a).
(u) "Permitted Liens" shall mean any encumbrance for Taxes not yet due
or delinquent or being contested in good faith by appropriate
proceedings for which adequate reserves have been established in
accordance with generally accepted accounting principles and (ii)
any minor imperfections of title or similar encumbrances which
individually or in the aggregate with other such encumbrances does
not impair the value of the property subject to such encumbrance.
(v) "Product" means Seller's Dura II malleable penile implant device and
all accessory items.
(w) "Purchased Assets" shall have the meaning set forth in Section
1.02(a).
(x) "Purchase Price" shall mean all amounts payable by Buyer pursuant to
Section 1.05.
(y) "Schedule or Schedules" means the schedules provided by Seller and
Parent to Buyer at Closing, which are incorporated herein by
reference.
(z) "Taxes" shall have the meaning set forth in Section 1.07(a).
(aa) "Transfer Taxes" shall have the meaning set forth in Section
1.07(a).
Section 1.02 Sale and Purchase of Assets.
(a) Assets to be Purchased. At the Closing, upon satisfaction of all
conditions to the obligations of the parties contained herein (other
than such conditions as will have been waived in accordance with the
terms hereof), Seller shall sell, assign, transfer, convey and
deliver to Buyer and Buyer shall accept and purchase, all of
Seller's right, title and interest in and to all of the assets set
forth on Schedule 1.02 (collectively, the "Purchased Assets"):
(b) Excluded Assets. The Buyer and Seller acknowledge and agree that the
only assets of Seller to be sold to Buyer are the Purchased Assets
specifically identified on Schedule 1.02 and that no other assets of
Seller are being sold under this Agreement.
Section 1.03 Assumption of Liabilities. Except for the following liabilities
(the "Assumed Liabilities"): (i) Seller's obligations under the Assumed
Contracts set forth in Schedule 1.03 (collectively, the "Assumed Contracts"), to
the extent that such obligations are incurred, accrue or arise on or after the
Closing Date, and (ii) Seller's warranty obligations arising from sales of
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the Product, Buyer will not assume, and will not be liable for, any liabilities
or obligations of Seller, whether known, unknown, contingent, absolute,
determined, indeterminable or otherwise on the Closing Date, whether incurred or
accruing prior to, on or after the Closing Date.
Section 1.04 Closing. The closing of the purchase and sale of the Purchased
Assets (the "Closing") will take place on April 7, 2003 (the "Closing Date"), at
the offices of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, unless another date or place is agreed to in writing by the
parties hereto.
Section 1.05 Purchase Price. In consideration for the Purchased Assets acquired
hereunder, Buyer shall pay the following (the "Purchase Price"):
(a) Initial Cash Payment. In consideration for the Purchased Assets
acquired hereunder, Buyer shall pay at Closing an amount equal to
One Million Nine Hundred Thousand Dollars ($1,900,000) as follows:
(i) One Hundred Fifty Thousand Dollars ($150,000) (the "Escrow
Funds") to the escrow agent (the "Escrow Agent") specified in the
Escrow Agreement to be held in escrow to secure any indemnification
obligation of Seller or Parent under Section 4; and (ii) One Million
Seven Hundred Fifty Thousand Dollars ($1,750,000) to Seller, by bank
wire transfer in immediately available funds to such bank account as
is designated in writing by Seller.
(b) Initial Inventory Payment. In addition to the amounts paid under
Section 1.05(a) above, Buyer shall pay to Seller, by bank wire
transfer in immediately available funds to such bank account as is
designated in writing by Seller at Closing, a non-refundable payment
in the amount of Two Hundred Fifty Thousand Dollars ($250,000) (the
"Facility Inventory Estimate"). The Facility Inventory Estimate
represents a good faith estimate of the direct cost of Seller's raw
material, works-in-process and finished goods inventory that has a
minimum of two (2) years shelf life remaining as of the Closing Date
that is located in one of Seller's facilities at the time of the
Closing, as set forth in Schedule 1.05(b) (collectively "Facility
Inventory").
(c) Additional Inventory Payment. Seller shall prepare as Schedule
1.05(c) and deliver just prior to Closing a good faith estimate of
its direct cost of finished goods inventory that is not located in
one of Seller's facilities at the time of Closing (collectively, the
"Field Inventory"). Any item of Field Inventory that is implanted in
a surgical procedure that is covered by a representative of Seller
during the two (2) weeks following the Closing shall constitute a
sale of product by Seller and such item of Field Inventory and any
associated purchase order, shall not be purchased by Buyer. Any item
of Field Inventory that is implanted in a surgical procedure that is
not covered by a representative of Seller during the two (2) weeks
following the Closing shall constitute a sale of product by Buyer
and shall be purchased by Buyer. Seller shall have the option of
having one of its representatives cover any such surgical procedure
during the two (2) weeks following the Closing. Promptly after the
second week following the Closing, Seller shall prepare in good
faith and deliver to Buyer a revised and updated
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statement of Seller's direct cost for all remaining Field Inventory
along with all such Field Inventory and any Facility Inventory not
already delivered to Buyer. Within one week following receipt of
such statement, Field Inventory and remaining Facility Inventory,
Buyer shall pay to Seller, by bank wire transfer in immediately
available funds to such bank account as is designated in writing by
Seller, the value of the Field Inventory and Facility Inventory
received that has a minimum of two (2) years shelf life remaining as
of the Closing Date as set forth in such revised and updated
schedule, less the $250,000 initial inventory payment contemplated
by Section 1.05(b); provided, however, that in the event that the
aggregate value of such Field Inventory and Facility Inventory is
less than the $250,000 initial inventory payment contemplated by
Section 1.05(b), Seller shall pay Buyer the difference.
Section 1.06 Release of Escrow Funds. The Escrow Funds shall not be distributed
to Seller until that date which is twelve (12) months after the Closing Date,
and shall only be distributed in accordance with the terms and conditions of the
Escrow Agreement. In the event that Buyer shall have perfected, prior to the
expiration of such 12-month period, a claim for indemnification pursuant to
Article 4, Buyer shall endeavor in good faith to determine a reasonable estimate
of the maximum amount of such claim and shall instruct the Escrow Agent to
distribute any excess amount of Escrow Funds to Seller in accordance with the
terms of the Escrow Agreement.
Section 1.07 Tax Matters.
(a) Notwithstanding any legal requirements to the contrary, Buyer and
Seller shall each be responsible for and pay fifty percent (50%) of
any Transfer Taxes when due, and Buyer shall, at its own expense,
file all necessary Tax returns and other documentation with respect
to all such Transfer Taxes; provided, however, that, if required by
any legal requirement, Seller will join in the execution of any such
Tax returns and other documentation. "Transfer Taxes" shall mean all
federal, state, local or foreign sales, use, transfer, real property
transfer, mortgage recording, stamp duty, value-added or similar
Taxes that may be imposed in connection with the transfer of
Purchased Assets, together with any interest, additions to Tax or
penalties with respect thereto and any interest in respect of such
additions to Tax or penalties; but excluding all Income Taxes.
"Income Taxes" shall mean any net income, gross income, gross
receipts, franchise, profits, gains or alternative or add-on minimum
Tax or comparable governmental fee or other assessment or charge of
any kind whatsoever, together with any interest or any penalty,
addition to Tax or additional amount and any interest on such
penalty, addition to Tax or additional amount, imposed by any Tax
authority. "Tax" (and, with correlative meaning, "Taxes" and
"Taxable") shall mean any net income, alternative or add-on minimum
tax, gross income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, withholding, payroll, employment,
excise, severance, stamp, occupation, premium, property,
environmental or windfall profit tax, custom, duty or other tax,
together with any interest or any penalty, addition to tax or
additional amount and any interest on such penalty, addition to tax
or additional amount, imposed by any Tax authority.
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(b) Except as provided in Section 1.07(a), Seller shall be responsible
for and shall (i) pay any Taxes (and shall be entitled to all
refunds of any Taxes) arising or resulting from or in connection
with the ownership or operation of the Purchased Assets (including
Income Taxes arising from or relating to the sale of the Purchased
Assets hereunder) attributable to any Taxable period ending on or
before the Closing Date, or, in the case of any Taxable period which
includes the Closing Date, the portion of such period up to and
including the Closing Date, and (ii) pursuant to Section 4.02,
indemnify and hold harmless Buyer and its successors and assigns for
Taxes of Seller or Parent that is imposed with respect to the
Purchased Assets relating to any taxable period or portion thereof
ending on or before the Closing Date (regardless of whether or not
such Taxes result in Liens on the Purchased Assets). Except as
provided in Section 1.07(a), Buyer shall be responsible for and
shall (i) pay any Taxes (and shall be entitled to all refunds of any
Taxes) arising or resulting from or in connection with the ownership
or operation of the Purchased Assets attributable to any Taxable
period beginning after the Closing Date or, in the case of any
Taxable period which includes, but does not begin on, the Closing
Date, the portion of such period beginning after the Closing Date,
and (ii) pursuant to Section 4.03, indemnify and hold harmless
Seller and its successors and assigns for Taxes of Buyer that is
imposed with respect to the Purchased Assets relating to any taxable
period or portion thereof ending after the Closing Date.
(c) All real property, personal property, ad valorem or other similar
Taxes (not including Transfer Taxes or Income Taxes) levied with
respect to the Purchased Assets for a Taxable period which includes
(but does not end on) the Closing Date shall be apportioned between
Seller and Buyer based on the number of days included in such period
up to but not including the Closing Date and the number of days
included in such period beginning on the Closing Date.
Section 1.08 Allocation of Purchase Price. As soon as practicable after the
Closing Date, Buyer shall provide to Seller for Seller's review and approval
(which approval shall not be unreasonably withheld) a proposed allocation of the
Purchase Price among the various classes of Purchased Assets (as such classes
are defined for the purposes of Section 1060 of the Code). All allocations made
pursuant to this Section 1.08 shall be made in accordance with the requirements
of Section 1060 of the Code. None of the parties shall take a position on any
Tax return (including IRS Form 8594), before any Tax authority or in any
judicial proceeding that is in any manner inconsistent with such allocation
without the written consent of the other parties to this Agreement or unless
specifically required pursuant to a determination by an applicable Tax
authority. The parties shall promptly advise each other of the existence of any
tax audit, controversy or litigation related to any allocation hereunder.
Section 1.09 Bulk Transfers. The Seller has requested that Buyer waive, and
Buyer hereby agrees to waive, the requirements of the Uniform Commercial Code
concerning bulk transfers, as in effect in the various states in which the
Purchased Assets are located. The parties expressly agree hereto that Seller's
obligation to indemnify Buyer under Section 4.02 includes any claims by
creditors of Seller against Buyer arising, directly or indirectly, in connection
with such request and waiver.
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Section 1.10 Press Releases. After the Closing, Buyer, Seller and Parent may
issue press releases or other publicity announcing the acquisition of the
Purchased Assets without the consent of the other party, provided that such
issuing party provides the other party a copy of such press release prior to
issuing such press release.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES
Section 2.01 Representations and Warranties of Seller and Parent.
Seller and Parent, jointly and severally, represent and warrant to Buyer
as follows (except as set forth on Schedule 2.01, which exceptions shall be
deemed to be representations and warranties as if made hereunder):
(a) Organization. Each of Parent and Seller is a corporation duly
incorporated, validly existing and in good standing under the laws
of the state of Delaware.
(b) Authorization. Each of Parent and Seller has all requisite corporate
power and authority to enter into and perform its obligations under
this Agreement and to carry out the transactions contemplated
hereby. The respective Boards of Directors of each of Parent and
Seller has duly authorized the execution and delivery of this
Agreement and the other transactions contemplated hereby and, no
other corporate proceedings on the part of Parent or Seller are
necessary to authorize this Agreement and the transactions
contemplated hereby. This Agreement has been duly executed and
delivered by Parent and Seller and constitutes a valid and binding
obligation of Parent and Seller enforceable in accordance with its
terms, except as may be limited by (a) applicable bankruptcy,
insolvency, reorganization, moratorium, and other laws of general
application affecting enforcement of creditors' rights generally,
and (b) laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies.
(c) Title. Except as set forth in Schedule 2.01(c) and except with
respect to Intellectual Property Rights, which are addressed in
Section 2.01(e) below, Seller has good and marketable title to all
of the Purchased Assets, in each case free and clear of all
mortgages, liens, security interests, pledges, charges or
encumbrances of any nature whatsoever ("Liens") other than Permitted
Liens.
(d) Consents and Approvals. Except for filings required for the
assignment of the Intellectual Property Rights set forth on Schedule
1.02 and as otherwise set forth in Schedule 2.01(d), no consent,
approval, order or authorization of or from, or registration,
notification, declaration or filing with (hereinafter sometimes
separately referred to as a "Consent" and sometimes collectively as
"Consents") of any individual or entity, including without
limitation any governmental authority, is required in connection
with the execution, delivery or performance of this Agreement by the
Seller or the consummation by the Seller of the transactions
contemplated herein.
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(e) Intellectual Property Rights. Schedule 1.02 contains a complete list
of all U.S. and foreign patents, patent applications, registered
trademarks and trademark applications owned by Seller, which relate
exclusively to the Products (collectively, "Intellectual Property
Rights"). To Seller's Knowledge, Seller owns, free and clear of all
Liens, except Permitted Liens, all such Intellectual Property
Rights. No judgment, decree, injunction, rule or order against
Seller directly or indirectly relating to Seller's rights in and to
the Intellectual Property Rights has been rendered by any
governmental entity which would limit, cancel or question the
validity of or Seller's rights in and to any of the Intellectual
Property Rights. The Seller has not received written notice, and
does not otherwise have Knowledge, of any pending or threatened
suit, action or proceeding that either does or would limit, cancel
or question the validity of, or Seller's rights in and to, any of
the Intellectual Property Rights. The Seller has not received
written notice, and does not otherwise have Knowledge, of any
allegations, assertions or other indications that the Product
infringes the intellectual property rights of a third party.
(f) Litigation. Except as set forth in Schedule 2.01(f), there is no
action, suit, proceeding at law or in equity by any person or
entity, or any arbitration or any administrative or other proceeding
by or before (or any investigation by) any governmental authority,
pending or, to Parent's or Seller's Knowledge, threatened, against
Parent or Seller, respectively, relating directly to any of the
Purchased Assets, or which questions or challenges the validity of
this Agreement or would prevent Parent or Seller from completing the
transactions contemplated by the Agreement. Neither Parent nor
Seller is not subject to any judgment, order or decree entered in
any lawsuit or proceeding to which it is a party relating directly
to the Purchased Assets.
(g) Tax Matters. There are no Liens for Taxes on the Purchased Assets,
other than Permitted Liens, and no audit of any Tax return with
respect to the Purchased Assets is currently pending or, to Seller's
Knowledge, threatened.
(h) Inventories. Schedule 1.02 sets forth a complete and accurate list
of all quantities of inventory of the Products as of the Closing
Date, including all raw materials, work-in-process and finished
goods, except for obsolete items and items of below-standard
quality. All items of finished goods inventory set forth on Schedule
1.02: (i) are of a quality and quantity usable in the ordinary
course of business; (ii) meet the specifications applicable to such
inventory; and (iii) have an expiration date at least two (2) years
after the Closing Date.
(i) Assumed Contracts. Seller has delivered to Buyer true and complete
copies of all of the Assumed Contracts. All of the Assumed Contracts
are valid and enforceable by and against Seller in accordance with
their respective terms. Neither Seller nor, to Seller's Knowledge,
the other party thereto is in breach of any of their obligations
under any of the Assumed Contracts.
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(j) Orders, Commitments and Returns. All accepted and unfulfilled orders
for the sale of the Products were made in bona fide transactions in
the ordinary course of business. To Seller's Knowledge, there are no
claims against Seller to return the Products by reason of alleged
over-shipments, defective products or otherwise, or of Products in
the hands of customers or distributors under an understanding that
such Products would be returnable.
(k) Dealers and Suppliers. There has not been in the 12-month period
prior to the date hereof any written notice from any material
supplier of any raw materials or components used in manufacturing
the Products of such supplier's intention to discontinue the
relationship.
Section 2.02 Representations and Warranties of Buyer.
Buyer represents and warrants to, and agrees with, Seller as follows:
(a) Organization. Buyer is a corporation duly incorporated, validly
existing and in good standing under the laws of the state of
Delaware.
(b) Binding Obligation. Buyer has all requisite corporate power and
authority to enter into and perform its obligations under this
Agreement and to carry out the transactions contemplated hereby. The
Board of Directors of Buyer has duly authorized the execution and
delivery of this Agreement and the other transactions contemplated
hereby and, no other corporate proceedings on the part of Buyer are
necessary to authorize this Agreement and the transactions
contemplated hereby. This Agreement has been duly executed and
delivered by Buyer and constitutes a valid and binding obligation of
Buyer enforceable in accordance with its terms, except as may be
limited by (a) applicable bankruptcy, insolvency, reorganization,
moratorium, and other laws of general application affecting
enforcement of creditors' rights generally, and (b) laws relating to
the availability of specific performance, injunctive relief, or
other equitable remedies.
(c) Consents and Approvals. No Consents of any individual or entity,
including without limitation any governmental authority, is required
in connection with the execution, delivery or performance of this
Agreement by the Buyer or the consummation by the Buyer of the
transactions contemplated herein.
(d) Litigation. To Buyer's Knowledge, there is no action, suit,
proceeding at law or in equity by any person or entity, or any
arbitration or any administrative or other proceeding by or before
(or any investigation by) any governmental authority, pending or
threatened, against Buyer which questions or challenges the validity
of this Agreement or would prevent Buyer from completing the
transactions contemplated by the Agreement.
ARTICLE III.
CLOSING OBLIGATIONS
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Section 3.01 Seller Closing Deliveries. Notwithstanding any other provision of
this Agreement to the contrary, the obligation of Buyer to complete the
transactions contemplated herein will be subject to the satisfaction at or prior
to the Closing of each of the following conditions:
(a) Seller shall deliver, or cause to be delivered, to Buyer at or prior
to the Closing the following documents:
(i) a ▇▇▇▇ of sale for all of the Purchased Assets substantially
in the form of Schedule 3.01(a)(i) (the "▇▇▇▇ of Sale")
executed by Seller;
(ii) an assignment and assumption of the Assumed Contracts
substantially in the form of Schedule 3.01a(ii) (the
"Assignment and Assumption Agreement") executed by Seller;
(iii) one or more intellectual property assignments, each
substantially in the form of Schedule 3.01(a)(iii) (together,
the "Intellectual Property Assignments") executed by Seller;
(iv) an escrow agreement substantially in the form of Schedule
3.01(a)(iv) (the "Escrow Agreement") executed by Seller,
Parent and the Escrow Agent;
(v) any Consents required to assign the Assumed Contracts to
Buyer; and
(vi) an opinion from ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel to the Seller
and Parent, in a form acceptable to the Buyer and dated as of
the Closing Date.
Section 3.02 Buyer Closing Deliveries. Notwithstanding any other provision of
this Agreement to the contrary, the obligation of Buyer to complete the
transactions contemplated herein will be subject to the satisfaction at or prior
to the Closing of each of the following conditions:
(a) Buyer shall deliver, or cause to be delivered, to Seller at or prior
to the Closing the following documents:
(i) the initial cash payment contemplated by Section 1.05(a) and
the initial inventory payment contemplated by Section 1.05(b);
(ii) the Assignment and Assumption Agreement executed by Buyer;
(iii) the Escrow Agreement executed by Buyer and the Escrow Agent;
and the Intellectual Property Assignment executed by Buyer;
and
(iv) an opinion from ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel to
the Buyer, in a form acceptable to the Seller and Parent,
dated as of the Closing Date.
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ARTICLE IV.
SURVIVAL AND INDEMNIFICATION
Section 4.01 Survival. The representations, warranties and covenants of each
party contained in this Agreement, and all claims in respect of any breach of
any such representation, warranty or covenant, will survive the Closing and
shall expire upon that date which is twelve (12) months after the Closing Date.
Notwithstanding the foregoing, any representation, warranty or covenant that
would otherwise terminate in accordance with this Section 4.01 shall continue to
survive, if a notice of Claim pursuant to this Article 4 shall have been timely
given under Section 4.04 on or prior to such termination date, until the related
claim has been satisfied or otherwise resolved as provided herein. The right to
indemnification or any other remedy based on representations, warranties,
covenants and obligations in this Agreement will not be affected by any
investigation conducted, whether before or after the execution and delivery of
this Agreement or the Closing Date, with respect to the accuracy or inaccuracy
of or compliance with, any such representation, warranty, covenant or
obligation. The waiver of any condition expressly based on the accuracy of any
representation or warranty, or on the performance of or compliance with any
covenant or obligation, will not affect the right to indemnification based on
such representations, warranties, covenants and obligations.
Section 4.02 Indemnification by Seller and Parent. Except as hereinafter set
forth, Seller and Parent shall indemnify and hold harmless Buyer and its
successors and assigns and its and their respective officers, directors,
shareholders, employees and agents, against, and in respect of, any and all
damages, claims, losses, liabilities and expenses, including, without
limitation, reasonable legal, accounting and other expenses (collectively,
"Damages"), which may arise out of: (a) any misrepresentation or other breach or
violation of this Agreement by Seller or Parent; (b) Seller's ownership or
operation of the Purchased Assets prior to the Closing, other than the Assumed
Liabilities; or (c) any product liability claim or other third party claim
relating to the Product, whether presently in existence or arising hereafter
from acts, events, conditions or circumstances existing or occurring prior to
the Closing Date, including, but not limited to, the Pace Litigation (as defined
in Schedule 2.01(f)).
Section 4.03 Indemnification by Buyer. Except as hereinafter set forth, Buyer
shall indemnify and hold harmless Seller and Parent and their successors and
assigns and each of their respective officers, directors, shareholders,
employees and agents, against, and in respect of, any and all Damages, which may
arise out of: (a) any misrepresentation or other breach or violation of this
Agreement by Buyer; (b) Buyer's ownership or operation of the Purchased Assets
after the Closing; or (c) any product liability claim or other third party claim
relating to the Product, whether presently in existence or arising hereafter
from acts, events, conditions or circumstances existing or occurring on or after
the Closing Date.
Section 4.04 Claims for Indemnification.
(a) General. The parties intend that all indemnification claims be made
as promptly as practicable by the party seeking indemnification (the
"Indemnified Party"). Whenever any claim arises for indemnification
hereunder the Indemnified Party will promptly notify the party from
whom indemnification is sought (the
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"Indemnifying Party") of the claim and, when known, the facts
constituting the basis for such claim. The failure to so notify the
Indemnifying Party will not relieve the Indemnifying Party of any
liability that it may have to the Indemnified Party except to the
extent the Indemnifying Party demonstrates that the defense of such
action is prejudiced thereby.
(b) Claims by Third Parties. With respect to claims made by third
parties, if the Indemnifying Party admits to the Indemnified Party
and agrees in writing that it will be obligated under the terms of
its indemnity hereunder in connection with such claim, the
Indemnifying Party will be entitled to assume control of the defense
of such action or claim, at its sole expense, with counsel
reasonably satisfactory to the Indemnified Party; provided, however,
that:
(i) the Indemnified Party will be entitled to participate in the
defense of such claim and to employ counsel at its own expense
to assist in the handling of such claim;
(ii) no Indemnifying Party will consent to the entry of any
judgment or enter into any settlement that (A) does not
include as an unconditional term thereof the giving by each
claimant or plaintiff to each Indemnified Party of a release
from all liability in respect of such claim or (B) would
result in the imposition against the Indemnified Party of
injunctive or other equitable relief; or (C) could materially
interfere with the business, operations or assets of the
Indemnified Party; and,
(iii) if the Indemnifying Party does not assume control of the
defense of such claim in accordance with the foregoing
provisions within ten (10) business days after receipt of
notice of the claim, the Indemnified Party will have the right
to defend such claim in such manner as it may deem appropriate
at the reasonable cost and expense of the Indemnifying Party,
and the Indemnifying Party will promptly reimburse the
Indemnified Party therefor in accordance with this Section
4.04; provided that the Indemnifying Party and the Indemnified
Party will not consent to the entry of any judgment or enter
into any settlement without the written consent of the
Indemnifying Party, which consent will not be unreasonably
withheld or delayed, and that (A) does not include as an
unconditional term thereof the giving by each claimant or
plaintiff to each Indemnified Party of a release from all
liability in respect of such claim or (B) would result in the
imposition against the Indemnified Party of injunctive or
other equitable relief; or (C) could materially interfere with
the business, operations or assets of the Indemnified Party;
provided, further, that if the Indemnified Party assumes the
defense of such claim, the Indemnified Party will keep the
Indemnifying Party reasonably informed of the progress of any
such defense, compromise or settlement and will consult with
and consider reasonable advice from the Indemnifying Party.
Section 4.05 Indemnification Limits.
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(a) Except for fraud, the indemnification provisions set forth in this
Article 4 shall be the exclusive remedy for the Indemnified Party
for a breach of any representation, warranty or covenant by the
Indemnifying Party and shall be in lieu of any rights the
Indemnified Party may have under law or in equity with respect to
any such breaches or otherwise. The liability of each party as an
Indemnifying Party hereunder shall not exceed $1,000,000 in the
aggregate (the "Maximum Amount").
(b) Except for fraud, none of Seller, Parent or Buyer, as the case may
be, will be entitled to indemnification for any Damages under this
Article 4 unless the aggregate of all Damages is more than Fifty
Thousand Dollars ($50,000) (the "Basket Amount"). When the aggregate
amount of all such Damages hereunder equals or exceeds the Basket
Amount, Buyer, Seller or Parent, as the case may be, will be
entitled to full indemnification of all claims, including the Basket
Amount. The parties hereto agree that the Basket Amount is not a
deductible amount, nor that the Basket Amount will be deemed to be a
definition of "material" for any purpose in this Agreement.
Section 4.06 Escrow Funds. The Escrow Funds will be held in an interest-bearing
escrow account as established pursuant to the Escrow Agreement for the purpose
of satisfying claims by Buyer for indemnification under this Article 4 and will
be released to Buyer only in accordance with the terms of the Escrow Agreement.
Subject to, and in accordance with, the terms and conditions set forth in the
Escrow Agreement, the Escrow Agent shall deliver or cause to be delivered to
Seller the balance, if any, of the Escrow Funds.
ARTICLE V.
GENERAL PROVISIONS
Section 5.01 Further Assurances; Cooperation. Each of the parties hereto will,
until, during, and after Closing, execute and deliver such instruments and take
such other actions as the other party or parties, as the case may be, may
reasonably require in order to carry out the intent of this Agreement. Without
limiting the generality of the foregoing, at any time after the Closing, at the
reasonable request of Buyer and without further consideration, Seller will
execute and deliver such instruments of sale, transfer, conveyance, assignment
and confirmation and take such action as Buyer may reasonably deem necessary or
desirable in order to more effectively transfer, convey and assign to Buyer, and
to confirm Buyer's title to, all of the Purchased Assets, and to put Buyer in
actual possession and operating control thereof.
Section 5.02 Notices. All notices, requests, demands, claims and other
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given (i) if
personally delivered, when so delivered, (ii) if mailed, two business days after
having been sent by registered or certified mail, return receipt requested,
postage prepaid and addressed to the intended recipient as set forth below,
(iii) if given by facsimile, once such notice or other communication is
transmitted to the facsimile number specified below and electronic confirmation
is received, provided that such notice or other communication is promptly
thereafter mailed in accordance with the provisions of clause
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(ii) above or (iv) if sent through an overnight delivery service in
circumstances to which such service guarantees next day delivery, the day
following being so sent:
If to Seller or Parent:
Endocare, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Fax (▇▇▇) ▇▇▇-▇▇▇▇
with a required copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax (▇▇▇) ▇▇▇-▇▇▇▇
If to Buyer:
American Medical Systems, Inc.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Executive Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a required copy to:
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Section 5.03 Amendments; No Waivers. Any provision of this Agreement may be
amended or waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by all parties hereto, or in the case of a
waiver, by the party against whom the waiver is to be effective. No waiver by a
party of any default, misrepresentation or breach of warranty or covenant
hereunder, whether intentional or not, shall be deemed to extend to any prior or
subsequent default, misrepresentation or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior or
subsequent occurrence. No failure or delay by a party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.
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Section 5.04 Expenses. All costs, fees and expenses incurred in connection with
the negotiation, preparation, execution, delivery and performance of this
Agreement and in closing and carrying out the transactions contemplated hereby
shall be paid by the party incurring such cost or expense.
Section 5.05 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. No party hereto may assign either this Agreement or any of
its rights, interests or obligations hereunder without the prior written
approval of each other party.
Section 5.06 Governing Law. This Agreement shall be governed by, construed and
enforced in accordance with the internal laws of the State of Delaware
(regardless of the laws that might otherwise govern under applicable principles
of conflicts of law).
Section 5.07 Counterparts. This Agreement may be signed in any number of
counterparts and the signatures delivered by facsimile, each of which shall be
an original, with the same effect as if the signatures thereto and hereto were
upon the same instrument.
Section 5.08 Entire Agreement. This Agreement (including all Exhibits and
Schedules and all other agreements referred to herein or therein which are
hereby incorporated by reference and the other agreements executed
simultaneously herewith) constitutes the entire agreement between the parties
with respect to the subject matter hereof and supersedes all prior agreements,
understandings and negotiations, both written and oral, between the parties with
respect to the subject matter of this Agreement. Neither this Agreement nor any
provision hereof is intended to confer upon any person or entity other than the
parties hereto any rights or remedies hereunder.
Section 5.09 Severability. If any provision of this Agreement shall be held by a
court of competent jurisdiction to be invalid, unenforceable or void, the
remainder of this Agreement shall remain in full force and effect only if, after
excluding the portion deemed to be unenforceable, the remaining terms shall
provide for the consummation of the transactions contemplated hereby in
substantially the same manner as originally set forth at the later of the date
this Agreement was executed or last amended.
Remainder of Page Intentionally Left Blank
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IN WITNESS WHEREOF, Buyer and Seller have executed this Agreement as of
the date first written above.
AMERICAN MEDICAL SYSTEMS, INC.
By: _________________________________
Name: _______________________________
Title: ______________________________
ENDOCARE, INC.
By: _________________________________
Name: _______________________________
Title: ______________________________
▇▇▇▇ MEDICAL TECHNOLOGIES, INC.
By: _________________________________
Name: _______________________________
Title: ______________________________
[SIGNATURE PAGE TO AGREEMENT OF PURCHASE AND SALE]