EXHIBIT 99.1
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: /s/ ▇. ▇▇▇▇▇ Call
--------------------------------
Name: ▇. ▇▇▇▇▇ Call
Title: EVP/CFO
ENDOCARE, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: Chairman
▇▇▇▇ MEDICAL TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: President
[SIGNATURE PAGE TO AGREEMENT OF PURCHASE AND SALE]